exv99w3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
of AMB Property Corporation:

We have completed integrated audits of AMB Property Corporation’s 2005 and 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2005 and an audit of its 2003 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements and financial statement schedule

In our opinion, the consolidated financial statements listed in the index appearing in Exhibit 99.3 present fairly, in all material respects, the financial position of AMB Property Corporation and its subsidiaries at December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing in Exhibit 99.3 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 2 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity, in 2003.

Internal control over financial reporting

Also, in our opinion, management’s assessment, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A in the 2005 Annual Report on Form 10-K, that the Company maintained effective internal control over financial reporting as of December 31, 2005 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control — Integrated Framework issued by the COSO. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding

F-1

AMB PROPERTY CORPORATION

CONSOLIDATED BALANCE SHEETS
As of December 31, 2005 and 2004


	December 31,			December 31,
	2005			2004
	(Dollars in thousands, except share and per share
	amounts)
ASSETS
Investments in real estate:
Land	$	1,527,072		$	1,509,145
Buildings and improvements		4,273,716			4,305,622
Construction in progress		997,506			711,377

Total investments in properties		6,798,294			6,526,144
Accumulated depreciation and amortization		(697,388	)		(615,646	)

Net investments in properties		6,100,906			5,910,498
Investments in unconsolidated joint ventures		118,653			55,166
Properties held for contribution, net		32,755			—
Properties held for divestiture, net		17,936			87,340

Net investments in real estate		6,270,250			6,053,004
Cash and cash equivalents		232,881			109,392
Restricted cash		34,352			37,201
Mortgage and loan receivables		21,621			13,738
Accounts receivable, net of allowance for doubtful accounts of $6,302 and $5,755, respectively		178,682			109,028
Deferred financing costs, net		25,026			28,340
Other assets		39,927			36,240

Total assets	$	6,802,739		$	6,386,943


LIABILITIES AND STOCKHOLDERS’ EQUITY
Debt:
Secured debt	$	1,912,526		$	1,892,524
Unsecured senior debt securities		975,000			1,003,940
Unsecured debt		23,963			9,028
Unsecured credit facilities		490,072			351,699

Total debt		3,401,561			3,257,191
Security deposits		47,055			40,260
Dividends payable		46,382			41,103
Accounts payable and other liabilities		170,307			180,923

Total liabilities		3,665,305			3,519,477
Commitments and contingencies (Note 14)
Minority interests:
Joint venture partners		853,643			828,622
Preferred unitholders		278,378			278,378
Limited partnership unitholders		89,114			89,326

Total minority interests		1,221,135			1,196,326
Stockholders’ equity:
Series L preferred stock, cumulative, redeemable, $.01 par value, 2,300,000 shares authorized and 2,000,000 issued and outstanding $50,000 liquidation preference		48,017			48,017
Series M preferred stock, cumulative, redeemable, $.01 par value, 2,300,000 shares authorized and 2,300,000 issued and outstanding $57,500 liquidation preference		55,187			55,187
Series O preferred stock, cumulative, redeemable, $.01 par value, 3,000,000 shares authorized and 3,000,000 issued and outstanding $75,000 liquidation preference		72,344			—
Common stock $.01 par value, 500,000,000 shares authorized, 85,814,905 and 83,248,640 issued and outstanding, respectively		857			832
Additional paid-in capital		1,641,186			1,568,095
Retained earnings		101,124			—
Accumulated other comprehensive loss		(2,416	)		(991	)

Total stockholders’ equity		1,916,299			1,671,140

Total liabilities and stockholders’ equity	$	6,802,739		$	6,386,943

The accompanying notes are an integral part of these consolidated financial statements.

F-3

AMB PROPERTY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years ended December 31, 2005, 2004 and 2003


	2005			2004			2003
	(Dollars in thousands, except per share amounts)
REVENUES
Rental revenues	$	632,207		$	579,534		$	503,665
Private capital income		43,942			12,895			13,337

Total revenues		676,149			592,429			517,002

COSTS AND EXPENSES
Property operating expenses		(88,169	)		(82,958	)		(73,197	)
Real estate taxes		(75,039	)		(65,300	)		(59,616	)
Depreciation and amortization		(165,438	)		(141,120	)		(116,067	)
Impairment losses		—			—			(5,251	)
General and administrative		(77,409	)		(58,843	)		(46,418	)
Fund costs		(1,482	)		(1,741	)		(825	)

Total costs and expenses		(407,537	)		(349,962	)		(301,374	)

OTHER INCOME AND EXPENSES
Equity in earnings of unconsolidated joint ventures, net		10,770			3,781			5,445
Interest and other income		6,499			3,758			3,976
Gains from dispositions of real estate interests		19,099			5,219			7,429
Development profits, net of taxes		54,811			8,528			14,441
Interest expense, including amortization		(149,844	)		(144,882	)		(131,878	)

Total other income and expenses, net		(58,665	)		(123,596	)		(100,587	)

Income before minority interests and discontinued operations		209,947			118,871			115,041

Minority interests’ share of income:
Joint venture partners’ share of operating income		(36,398	)		(29,544	)		(21,015	)
Joint venture partners’ share of development profits		(13,492	)		(958	)		(8,442	)
Preferred unitholders		(21,473	)		(20,161	)		(24,607	)
Limited partnership unitholders		(3,663	)		(2,615	)		(2,378	)

Total minority interests’ share of income		(75,026	)		(53,278	)		(56,442	)

Income from continuing operations		134,921			65,593			58,599

Discontinued operations:
Income attributable to discontinued operations, net of minority interests		9,333			17,873			27,633
Gains from dispositions of real estate, net of minority interests		113,553			42,005			42,896

Total discontinued operations		122,886			59,878			70,529

Net income		257,807			125,471			129,128
Preferred stock dividends		(7,388	)		(7,131	)		(6,999	)
Preferred stock and unit redemption discount/(issuance costs or premium)		—			—			(5,413	)

Net income available to common stockholders	$	250,419		$	118,340		$	116,716

Basic income per common share
Income from continuing operations (includes preferred stock dividends and preferred stock and unit redemption discount/(issuance costs or premium))	$	1.52		$	0.71		$	0.57
Discontinued operations		1.46			0.73			0.87

Net income available to common stockholders	$	2.98		$	1.44		$	1.44

Diluted income per common share
Income from continuing operations (includes preferred stock dividends and preferred stock and unit redemption discount/(issuance costs or premium))	$	1.45		$	0.69		$	0.56
Discontinued operations		1.40			0.70			0.85

Net income available to common stockholders	$	2.85		$	1.39		$	1.41

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic		84,048,936			82,133,627			81,096,062

Diluted		87,873,399			85,368,626			82,852,528

The accompanying notes are an integral part of these consolidated financial statements.

F-4

AMB PROPERTY CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Years ended December 31, 2005, 2004 and 2003
(dollars in thousands)


																Accumulated
				Common Stock						Additional						Other
	Preferred			Number						Paid-in			Retained			Comprehensive
	Stock			of Shares			Amount			Capital			Earnings			Income (Loss)			Total
Balance as of December 31, 2002	$	95,994			82,029,449		$	820		$	1,579,234		$	—		$	31		$	1,676,079
Net income		6,999			—			—			—			116,716			—
Unrealized gain on securities		—			—			—			—			—			812
Currency translation adjustment		—			—			—			—			—			662
Total comprehensive income																				125,189
Issuance of preferred stock, net		103,373			—			—			—			—			—			103,373
Issuance of restricted stock, net		—			256,611			3			6,960			—			—			6,963
Issuance of stock options, net		—			—			—			4,510			—			—			4,510
Exercise of stock options		—			317,753			3			6,944			—			—			6,947
Conversion of partnership units		—			2,000			—			58			—			—			58
Retirement of common and preferred stock		(95,994	)		(812,900	)		(8	)		(21,231	)		—			—			(117,233	)
Stock-based deferred compensation		—			—			—			(11,470	)		—			—			(11,470	)
Stock-based compensation amortization		—			—			—			8,076			—			—			8,076
Reallocation of partnership interest		—			—			—			(1,102	)		—			—			(1,102	)
Dividends		(6,999	)		—			—			(20,538	)		(116,716	)		—			(144,253	)

Balance as of December 31, 2003		103,373			81,792,913			818			1,551,441			—			1,505			1,657,137
Net income		7,131			—			—			—			118,340			—
Unrealized loss on securities and derivatives		—			—			—			—			—			(2,058	)
Currency translation adjustment		—			—			—			—			—			(438	)
Total comprehensive income																				122,975
Issuance of restricted stock, net		—			204,556			2			7,938			—			—			7,940
Issuance of stock options, net		—			—			—			4,996			—			—			4,996
Exercise of stock options		—			1,233,485			12			27,709			—			—			27,721
Conversion of partnership units		—			17,686			—			618			—			—			618
Forfeiture of restricted stock		—			—			—			(646	)		—			—			(646	)
Stock-based deferred compensation		—			—			—			(12,936	)		—			—			(12,936	)
Stock-based compensation amortization		—			—			—			10,444			—			—			10,444
Reallocation of partnership interest		—			—			—			1,038			—			—			1,038
Offering costs		(169	)		—			—			—			—			—			(169	)
Dividends		(7,131	)		—			—			(22,507	)		(118,340	)		—			(147,978	)

Balance as of December 31, 2004		103,204			83,248,640			832			1,568,095			—			(991	)		1,671,140
Net income		7,388			—			—			—			250,419			—
Unrealized gain on securities and derivatives		—			—			—			—			—			421
Currency translation adjustment		—			—			—			—			—			(1,846	)
Total comprehensive income																				256,382
Issuance of preferred stock, net		72,344			—			—			—			—			—			72,344
Issuance of restricted stock, net		—			183,216			2			8,993			—			—			8,995
Issuance of stock options, net		—			—			—			3,967			—			—			3,967
Exercise of stock options		—			2,033,470			20			48,452			—			—			48,472
Conversion of partnership units		—			349,579			3			15,105			—			—			15,108
Forfeiture of restricted stock		—			—			—			(1,869	)		—			—			(1,869	)
Stock-based deferred compensation		—			—			—			(12,962	)		—			—			(12,962	)
Stock-based compensation amortization		—			—			—			12,296			—			—			12,296
Reallocation of partnership interest		—			—			—			(891	)		—			—			(891	)
Dividends		(7,388	)		—			—			—			(149,295	)		—			(156,683	)

Balance as of December 31, 2005	$	175,548			85,814,905		$	857		$	1,641,186		$	101,124		$	(2,416	)	$	1,916,299

The accompanying notes are an integral part of these consolidated financial statements.

F-5

AMB PROPERTY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years ended December 31, 2005, 2004 and 2003


	2005			2004			2003
	(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	257,807		$	125,471		$	129,128
Adjustments to net income:
Straight-line rents and amortization of lease intangibles		(19,523	)		(16,281	)		(10,662	)
Depreciation and amortization		165,438			141,120			116,067
Impairment losses		—			—			5,251
Stock-based compensation amortization		12,296			10,444			8,075
Equity in earnings of unconsolidated joint ventures		(10,770	)		(3,781	)		(5,445	)
Operating distributions received from unconsolidated joint ventures		2,752			2,971			5,345
Gains from dispositions of real estate interest		(19,099	)		(5,219	)		(7,429	)
Development profits, net of taxes		(54,811	)		(8,528	)		(14,441	)
Debt premiums, discounts and finance cost amortization, net		4,172			310			2,049
Total minority interests’ share of net income		75,026			53,278			56,442
Discontinued operations:
Depreciation and amortization		14,866			26,230			26,270
Joint venture partners’ share of net income		8,009			12,523			14,602
Limited partnership unitholders’ share of net income		511			1,026			1,612
Gains from dispositions of real estate, net of minority interests		(113,553	)		(42,005	)		(42,896	)
Changes in assets and liabilities:								0
Accounts receivable and other assets		(42,379	)		(1,154	)		(7,771	)
Accounts payable and other liabilities		15,073			944			(6,389	)

Net cash provided by operating activities		295,815			297,349			269,808
CASH FLOWS FROM INVESTING ACTIVITIES
Change in restricted cash		1,973			(9,749	)		1,103
Cash paid for property acquisitions		(424,087	)		(415,034	)		(470,188	)
Additions to land, buildings, development costs, building improvements and lease costs		(662,561	)		(581,168	)		(283,878	)
Net proceeds from divestiture of real estate		1,088,737			213,296			423,996
Additions to interests in unconsolidated joint ventures		(74,069	)		(16,003	)		(20,147	)
Capital distributions received from unconsolidated joint ventures		17,483			47,849			32,851
Repayment/(issuance) of mortgage receivable		(7,883	)		29,407			(30,012	)

Net cash used in investing activities		(60,407	)		(731,402	)		(346,275	)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock, proceeds from stock option exercises		48,472			27,721			6,947
Repurchase and retirement of common and preferred stock		—			—			(121,239	)
Borrowings on secured debt		386,592			420,565			192,750
Payments on secured debt		(327,038	)		(98,178	)		(157,310	)
Payments on unsecured debt		(649	)		(600	)		—
Borrowings on unsecured credit facilities		873,627			795,128			603,550
Payments on unsecured credit facilities		(697,464	)		(747,432	)		(431,000	)
Borrowings on Alliance Fund II credit facility		—			—			8,000
Payments on Alliance Fund II credit facility		—			—			(53,500	)
Payment of financing fees		(10,185	)		(13,230	)		(3,187	)
Net proceeds from issuances of senior debt securities		—			99,067			124,566
Payments on senior debt securities		(28,940	)		(21,060	)		—
Net proceeds from issuances of preferred stock or units		72,344			—			103,373
Issuance costs on preferred stock or units		—			(169	)		—
Repurchase of preferred units		—			—			(71,883	)
Cash transferred to unconsolidated joint venture					(2,897	)		—
Contributions from co-investment partners		160,544			192,956			171,042
Dividends paid to common and preferred stockholders		(154,070	)		(145,951	)		(152,239	)
Distributions to minority interests, including preferred units		(425,089	)		(96,215	)		(107,848	)

Net cash (used in)/provided by financing activities		(101,856	)		409,705			112,022
Net effect of exchange rate changes on cash		(10,063	)		6,062			2,791
Net increase (decrease) in cash and cash equivalents		123,489			(18,286	)		38,346
Cash and cash equivalents at beginning of period		109,392			127,678			89,332

Cash and cash equivalents at end of period	$	232,881		$	109,392		$	127,678

Supplemental Disclosures of Cash Flow Information
Cash paid for interest, net of capitalized interest	$	174,246		$	171,298		$	153,300
Non-cash transactions:
Acquisition of properties	$	519,106		$	695,169		$	533,864
Assumption of secured debt		(74,173	)		(210,233	)		(42,246	)
Assumption of other assets and liabilities		(5,994	)		(59,970	)		(7,073	)
Acquisition capital		(13,979	)		(8,097	)		(9,870	)
Minority interests’ contributions, including units issued		(873	)		(1,835	)		(4,487	)

Net cash paid for acquisitions	$	424,087		$	415,034		$	470,188

Contribution of properties to unconsolidated joint ventures, net	$	27,282		$	—		$	—

The accompanying notes are an integral part of these consolidated financial statements.

F-6

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005 and 2004

1. Organization and Formation of the Company

AMB Property Corporation, a Maryland corporation (the “Company”), commenced operations as a fully integrated real estate company effective with the completion of its initial public offering on November 26, 1997. The Company elected to be taxed as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986 (the “Code”), commencing with its taxable year ended December 31, 1997, and believes its current organization and method of operation will enable it to maintain its status as a REIT. The Company, through its controlling interest in its subsidiary, AMB Property, L.P., a Delaware limited partnership (the “Operating Partnership”), is engaged in the acquisition, development and operation of industrial properties in key distribution markets throughout North America, Europe and Asia. The Company uses the terms “industrial properties” or “industrial buildings” to describe various types of industrial properties in its portfolio and uses these terms interchangeably with the following: logistics facilities, centers or warehouses; distribution facilities, centers or warehouses; High Throughput Distribution^® (“HTD^®”) facilities; or any combination of these terms.

Unless the context otherwise requires, the “Company” means AMB Property Corporation, the Operating Partnership and their other controlled subsidiaries.

As of December 31, 2005, the Company owned an approximate 95.1% general partnership interest in the Operating Partnership, excluding preferred units. The remaining approximate 4.9% common limited partnership interests are owned by non-affiliated investors and certain current and former directors and officers of the Company. Certain properties are owned through limited partnerships, limited liability companies and other entities. The ownership of such properties through such entities does not materially affect the Company’s overall ownership interests in the properties. As the sole general partner of the Operating Partnership, the Company has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Operating Partnership. Net operating results of the Operating Partnership are allocated after preferred unit distributions based on the respective partners’ ownership interests.

Through the Operating Partnership, the Company enters into co-investment joint ventures with institutional investors. These co-investment joint ventures provide the Company with an additional source of capital and income. As of December 31, 2005, the Company had investments in seven consolidated and two unconsolidated co-investment joint ventures.

AMB Capital Partners, LLC, a Delaware limited liability company (“AMB Capital Partners”), provides real estate investment services to clients on a fee basis. Headlands Realty Corporation, a Maryland corporation, conducts a variety of businesses that include development projects available for sale or contribution to third parties and incremental income programs. IMD Holding Corporation, a Delaware corporation, also conducts a variety of businesses that include development projects available for sale or contribution to third parties. AMB Capital Partners, Headlands Realty Corporation and IMD Holding Corporation are wholly-owned direct or indirect subsidiaries of the Company and the Operating Partnership.

Any references to the number of buildings, square footage, customers and occupancy stated in the financial statement footnotes are unaudited.

As of December 31, 2005, we owned or had investments in, on a consolidated basis or through unconsolidated joint ventures, or managed buildings, properties and development projects expected to total approximately 115.0 million rentable square feet (10.7 million square meters) and 1,057 buildings in 42 markets within eleven countries. The Company’s strategy is to become a leading provider of distribution properties in supply-constrained submarkets located near key international passenger and cargo airports, highway systems and seaports in major metropolitan areas of North America, Europe and Asia. These submarkets are generally tied to global trade.

Of the approximately 115.0 million rentable square feet as of December 31, 2005:

F-7

	•		on a consolidated basis, the Company owned or partially owned 876 industrial buildings, principally warehouse distribution buildings, encompassing approximately 87.8 million rentable square feet that were 95.8% leased, and other buildings encompassing approximately 0.3 million rentable square feet that were 98.7% leased;

	•		the Company managed, but did not have an ownership interest in, industrial and other properties, totaling approximately 1.7 million rentable square feet;

	•		through unconsolidated joint ventures, the Company had investments in 86 industrial operating properties, totaling approximately 12.8 million rentable square feet, and in two industrial development projects, expected to total approximately 0.3 million rentable square feet;

	•		on a consolidated basis, the Company had investments in 45 industrial development projects which are expected to total approximately 11.5 million rentable square feet; and

	•		on a consolidated basis, the Company owned one development project, totaling $32.8 million and approximately 0.6 million rentable square feet, that was available for sale or contribution.

2. Summary of Significant Accounting Policies

Basis of Presentation. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying consolidated financial statements include the financial position, results of operations and cash flows of the Company, its wholly-owned qualified REIT and taxable REIT subsidiaries, the Operating Partnership and joint ventures, in which the Company has a controlling interest. Third-party equity interests in the Operating Partnership and joint ventures are reflected as minority interests in the consolidated financial statements. The Company also has non-controlling partnership interests in unconsolidated real estate joint ventures, which are accounted for under the equity method. All significant intercompany amounts have been eliminated.

Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications. Certain items in the consolidated financial statements for prior periods have been reclassified to conform to current classifications.

Investments in Real Estate. Investments in real estate and leasehold interests are stated at cost unless circumstances indicate that cost cannot be recovered, in which case, the carrying value of the property is reduced to estimated fair value. The Company also regularly reviews the impact of above or below-market leases, in-place leases and lease origination costs for all new acquisitions, and records an intangible asset or liability accordingly. Carrying values for financial reporting purposes are reviewed for impairment on a property-by-property basis quarterly and whenever events or changes in circumstances indicate that the carrying value of a property may not be fully recoverable. Impairment is recognized when estimated expected future cash flows (undiscounted and without interest charges) are less than the carrying value of the property. The estimation of expected future net cash flows is inherently uncertain and relies on assumptions regarding current and future economics and market conditions and the availability of capital. If impairment analysis assumptions change, then an adjustment to the carrying value of the Company’s long-lived assets could occur in the future period in which the assumptions change. To the extent that a property is impaired, the excess of the carrying amount of the property over its estimated fair value is charged to earnings. As a result of leasing activity and the economic environment, the Company re-evaluated the carrying value of its investments and recorded an impairment charge of $5.3 million in 2003 on certain of its investments. Also during the year ended December 31, 2003, the Company recorded a reduction of depreciation expense of $2.1 million to reflect the recovery, through the settlement of a lawsuit, of capital expenditures paid in prior years. The Company believes that there are no impairments of the carrying values of its investments in real estate as of December 31, 2005.

Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the real estate investments. Investments which are located on-tarmac, which is land owned by federal, state or local airport authorities, and subject to ground leases are depreciated over the lesser of 40 years or the contractual term of the underlying ground lease. The estimated lives and components of depreciation and amortization expense for the years ended December 31 are as follows (dollars in thousands):

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Depreciation and Amortization Expense	Estimated Lives	2005			2004			2003
Building costs	5-40 years	$	85,192		$	68,329		$	74,820
Building costs on ground leases	5-40 years		16,631			31,268			11,581
Buildings and improvements:
Roof/HVAC/parking lots	5-40 years		6,928			6,072			5,280
Plumbing/signage	7-25 years		2,111			1,704			1,319
Painting and other	5-40 years		15,035			13,516			10,696
Tenant improvements	Over initial lease term		21,635			20,246			16,026
Lease commissions	Over initial lease term		21,095			19,655			20,306

Total real estate depreciation and amortization			168,627			160,790			140,028
Other depreciation and amortization	Various		11,677			6,560			2,309
Discontinued operations’ depreciation	Various		(14,866	)		(26,230	)		(26,270	)

Total depreciation and amortization from continuing operations		$	165,438		$	141,120		$	116,067

The cost of buildings and improvements includes the purchase price of the property or interest in property, including legal fees and acquisition costs. Project costs directly associated with the development and construction of a real estate project, which include interest and property taxes, are capitalized as construction in progress. Capitalized interest related to construction projects for the years ended December 31, 2005, 2004 and 2003 was $29.5 million, $18.7 million and $8.5 million, respectively.

Expenditures for maintenance and repairs are charged to operations as incurred. Maintenance expenditures include painting and repair costs. The Company expenses costs as incurred and does not accrue in advance of planned major maintenance activities. Significant renovations or betterments that extend the economic useful life of assets are capitalized and include parking lot, HVAC and roof replacement costs.

Investments in Consolidated and Unconsolidated Joint Ventures. Minority interests represent the limited partnership interests in the Operating Partnership and interests held by certain third parties in several real estate joint ventures, which own properties aggregating approximately 41.7 million square feet, which are consolidated for financial reporting purposes. Such investments are consolidated because the Company exercises significant control over major operating decisions such as approval of budgets, selection of property managers, asset management, investment activity and changes in financing.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (“SFAS 150”). This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). SFAS 150 was effective beginning in the third quarter of 2003, however, the FASB deferred the implementation of SFAS 150 as it applied to certain minority interests in finite-lived entities indefinitely. The disclosure requirements for certain minority interests in finite-lived entities still apply. The Company adopted the requirements of SFAS 150 in the third quarter of 2003, and, considering the aforementioned deferral, there was no impact on the Company’s financial position, results of operations or cash flows. However, the minority interests associated with certain of the Company’s consolidated joint ventures, that have finite lives under the terms of the partnership agreements represent mandatorily redeemable interests as defined in SFAS 150. As of December 31, 2005 and 2004, the aggregate book value of these minority interests in the accompanying consolidated balance sheet was $853.6 million and $828.6 million, respectively, and the Company believes that the aggregate settlement value of these interests was approximately $1.2 billion and $1.0 billion, respectively. This amount is based on the estimated liquidation values of the assets and liabilities and the resulting proceeds that the Company would distribute to its joint venture partners upon dissolution, as required under the terms of the respective partnership agreements. Subsequent changes to the estimated fair values of the assets and liabilities of the consolidated joint ventures will affect the Company’s estimate of the aggregate settlement value. The partnership agreements do not limit the amount that the minority partners would be entitled to in the event of liquidation of the assets and liabilities and dissolution of the respective partnerships.

The Company holds interests in both consolidated and unconsolidated joint ventures. The Company has three joint venture investments that meet the variable interest entity criteria under FASB Interpretation No. 46R, Consolidation of Variable Interest Entities “FIN 46”. Therefore, the Company determines consolidation based on standards set forth in EITF 96-16, Investor’s Accounting for an Investee When the Investor Has a Majority of the Voting Interest but the Minority Shareholder or Shareholders Have Certain Approval or Veto Rights, and Statement of Position 78-9, Accounting for Investments in Real Estate Ventures and FIN 46. Based on the guidance set forth in these pronouncements, the Company consolidates certain joint venture investments because it exercises significant control over major operating decisions, such as approval of budgets, selection of property managers, asset

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management, investment activity and changes in financing. For joint ventures where the Company does not exercise significant control over major operating and management decisions, but where it has significant influence, or the Company is not the primary beneficiary of a variable interest entity it uses the equity method of accounting and does not consolidate the joint venture for financial reporting purposes.

In June 2005, the Emerging Issues Task Force (“EITF”) issued EITF 04-5, Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights. Under this consensus, a sole general partner is presumed to control a limited partnership (or similar entity) and should consolidate that entity unless the limited partners possess kick-out rights or other substantive participating rights as described in EITF 96-16, Investor’s Accounting for an Investee When the Investor has a Majority of the Voting Interest but the Minority Shareholder or Shareholders Have Certain Approval or Veto rights. As of June 29, 2005, this consensus was effective immediately for all new or modified agreements, and effective beginning in the first reporting period that ends after December 15, 2005 for all existing agreements. The Company adopted the consolidation requirements of this consensus in the third quarter 2005 for all new or modified agreements and will adopt the consensus for existing agreements in the first quarter of 2006. There was not a material impact on the Company’s financial position, results of operations or cash flows upon the adoption of the consolidation requirements of this consensus for all new or modified agreements. The Company does not believe that there will be a material impact on the Company’s financial position, results of operations or cash flows, upon adopting the consensus for existing agreements.

Cash and Cash Equivalents. Cash and cash equivalents include cash held in financial institutions and other highly liquid short-term investments with original maturities of three months or less.

Restricted Cash. Restricted cash includes cash held in escrow in connection with property purchases, Section 1031 exchange accounts and debt or real estate tax payments.

Mortgages and Loans Receivable. Through a wholly-owned subsidiary, the Company holds a mortgage loan receivable of $12.8 million on AMB Pier One, LLC, an unconsolidated joint venture. The Company also holds a loan receivable of $8.8 million on G. Accion, an unconsolidated investment. At December 31, 2004, the Company also held a short–term mortgage on a prior year property sale totaling $0.8 million, which was repaid during 2005. The book value of the mortgages approximates fair value.

Accounts Receivable. Accounts receivable includes all current accounts receivable, net of allowances, other accruals and deferred rent receivable of $66.7 million and $63.2 million as of December 31, 2005 and 2004, respectively. The Company regularly reviews the credit worthiness of its customers and adjusts its allowance for doubtful accounts, straight-line rent receivable balance and tenant improvement and leasing costs amortization accordingly.

Concentration of Credit Risk. Other real estate companies compete with the Company in its real estate markets. This results in competition for customers to occupy space. The existence of competing properties could have a material impact on the Company’s ability to lease space and on the amount of rent received. As of December 31, 2005, the Company does not have any material concentration of credit risk due to the diversification of its tenants.

Deferred Financing Costs. Costs incurred in connection with financings are capitalized and amortized to interest expense using the effective-interest method over the term of the related loan. As of December 31, 2005 and 2004, deferred financing costs were $25.0 million and $28.3 million, respectively, net of accumulated amortization.

Financial Instruments. SFAS No. 133, Accounting for Derivative Instruments and for Hedging Activities, provides comprehensive guidelines for the recognition and measurement of derivatives and hedging activities and, specifically, requires all derivatives to be recorded on the balance sheet at fair value as an asset or liability, with an offset to accumulated other comprehensive income or loss. For revenues or expenses denominated in nonfunctional currencies, the Company may use derivative financial instruments to manage foreign currency exchange rate risk. The Company’s derivative financial instruments in effect at December 31, 2005 were two interest rate swaps hedging cash flows of our variable rate borrowings based on Euribor (Europe) and Japanese TIBOR (Japan) and three put options hedging against adverse foreign fluctuations of the Mexican Peso and the Euro against the U.S. dollar. Adjustments to the fair value of these instruments for the year ended December 31, 2005 were immaterial. The Company also held two interest rate swaps hedging cash flows of our variable rate borrowings based on Euribor (Europe) and Japanese TIBOR (Japan). Adjustments to the fair value of these instruments for the year ended December 31, 2005 resulted in a gain of $0.3 million. This gain is included in accounts payable and other liabilities in the consolidated balance sheet and accumulated other comprehensive loss in the consolidated statements of stockholders’ equity.

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Debt. The Company’s debt includes both fixed and variable rate secured debt, unsecured fixed rate debt, unsecured variable rate debt and credit facilities. Based on borrowing rates available to the Company at December 31, 2005, the book value and the estimated fair value of the total debt (both secured and unsecured) was $3.4 billion. The carrying value of the variable rate debt approximates fair value.

Debt Premiums. Debt premiums represent the excess of the fair value of debt over the principal value of debt assumed in connection with the Company’s initial public offering and subsequent property acquisitions. The debt premiums are being amortized as an offset to interest expense over the term of the related debt instrument using the effective-interest method. As of December 31, 2005 and 2004, the net unamortized debt premium was $12.0 million and $10.8 million, respectively, and are included as a component of secured debt on the accompanying consolidated balance sheets.

Rental Revenues and Allowance for Doubtful Accounts. The Company, as a lessor, retains substantially all of the benefits and risks of ownership of the properties and accounts for its leases as operating leases. Rental income is recognized on a straight-line basis over the term of the leases. Reimbursements from customers for real estate taxes and other recoverable operating expenses are recognized as revenue in the period the applicable expenses are incurred. The Company also records lease termination fees when a customer terminates its lease by executing a definitive termination agreement with the Company, vacates the premises and the payment of the termination fee is not subject to any conditions that must be met before the fee is due to the Company. In addition, the Company nets its allowance for doubtful accounts against rental income for financial reporting purposes. Such amounts totaled $3.2 million, $1.8 million and $5.6 million for the years ended December 31, 2005, 2004 and 2003, respectively.

Private Capital Income. Private capital income consists primarily of acquisition and development fees, asset management fees and priority distributions earned by AMB Capital Partners from joint ventures and clients. Private capital income also includes promoted interests and incentive distributions from the Operating Partnership’s co-investment joint ventures.

Stock-Based Compensation Expense. In 2002, the Company adopted the expense recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation. The Company values stock options using the Black-Scholes option-pricing model and recognizes this value as an expense over the vesting periods. Under this standard, recognition of expense for stock options is applied to all options granted after the beginning of the year of adoption. Under SFAS No. 123, related stock option expense was $4.8 million, $4.0 million and $2.4 million in 2005, 2004 and 2003, respectively. Additionally, the Company awards restricted stock and recognizes this value as an expense over the vesting periods. Related restricted stock compensation expense was $7.5 million, $6.4 million and $5.7 million for 2005, 2004 and 2003, respectively. The expense is included in general and administrative expenses in the accompanying consolidated statements of operations. The Company adopted SFAS No. 123 prospectively and the 2003 expense relates only to stock options granted in 2002 and subsequent periods.

Had compensation cost for the Company’s stock-based compensation plans been determined based on the fair value at the grant dates for awards prior to 2002 consistent with the method of SFAS No. 123, the Company’s pro forma net income available to common stockholders would have been (dollars in thousands):


	2005		2004		2003
Reduction to net income	$	243	$	1,100	$	1,613
Adjusted earnings per common share:
Basic	$	2.98	$	1.43	$	1.42
Diluted	$	2.85	$	1.37	$	1.39

Share-Based Payment. In December 2004, the FASB issued SFAS No. 123R, Share-Based Payment (“SFAS 123R”). This Statement is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. This Statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. This Statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS 123R is effective for public companies for interim and annual periods beginning after June 15, 2005. In April 2005, the Securities and Exchange Commission (“SEC”) issued a release that amends the compliance dates for SFAS 123R. Under the SEC’s new rule, the Company is required to apply SFAS 123R as of January 1, 2006. The Company adopted SFAS 123R on January 1, 2006, using the modified-prospective method. The adoption of SFAS 123R required the unamortized portion of any options issued prior to 2002 to be amortized over the

F-11

remaining life of those options. The adoption of SFAS 123R did not have a material impact on the Company’s financial position, results of operations or cash flows because all options issued prior to 2002 had been fully amortized as of December 31, 2005.

Interest and Other Income. Interest and other income consists primarily of interest income from mortgages receivable and on cash and cash equivalents.

Gains from Dispositions of Real Estate Interests. When the Company disposes of its real estate entities’ interests, gains reported from the sale of these interests represent either: (i) the sale of partial interests in consolidated co-investment joint ventures to third-party investors for cash or (ii) the sale of partial interests in properties to unconsolidated co-investment joint ventures with third-party investors for cash.

Gains from Dispositions of Real Estate. Gains and losses are recognized using the full accrual method. Gains related to transactions which do not meet the requirements of the full accrual method of accounting are deferred and recognized when the full accrual method of accounting criteria are met.

Discontinued Operations. The Company reported real estate dispositions as discontinued operations separately as prescribed under the provisions of SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. The Company separately reports as discontinued operations the historical operating results attributable to operating properties sold and held for disposition and the applicable gain or loss on the disposition of the properties. The consolidated statements of operations for prior periods are also adjusted to conform with this classification. There is no impact on the Company’s previously reported consolidated financial position, net income or cash flows.

International Operations. The U.S. dollar is the functional currency for the Company’s subsidiaries operating in the United States and Mexico. The functional currency for the Company’s subsidiaries operating outside North America is generally the local currency of the country in which the entity is located, mitigating the effect of currency exchange gains and losses. The Company’s subsidiaries whose functional currency is not the U.S. dollar translate their financial statements into U.S. dollars. Assets and liabilities are translated at the exchange rate in effect as of the financial statement date. The Company translates income statement accounts using the average exchange rate for the period and significant nonrecurring transactions using the rate on the transaction date. For the years ended December 31, 2005, 2004 and 2003, gains (losses) resulting from the translation were ($1.8) million, ($0.4) million and $0.7 million, respectively. These gains (losses) are included in accumulated other comprehensive income (loss) as a separate component of stockholders’ equity.

The Company’s international subsidiaries may have transactions denominated in currencies other than their functional currency. In these instances, non-monetary assets and liabilities are reflected at the historical exchange rate, monetary assets and liabilities are remeasured at the exchange rate in effect at the end of the period and income statement accounts are remeasured at the average exchange rate for the period. Gains (losses) from remeasurement were $0.6 million, $0.5 million and ($0.1) million for the years ended 2005, 2004 and 2003, respectively. These gains (losses) are included in the consolidated statements of operations.

The Company also records gains or losses in the income statement when a transaction with a third party, denominated in a currency other than the entity’s functional currency, is settled and the functional currency cash flows realized are more or less than expected based upon the exchange rate in effect when the transaction was initiated. These gains and losses have been immaterial over the past three years.

New Accounting Pronouncements. In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets—an amendment of APB Opinion No. 29 (“SFAS 153”). SFAS 153 amends APB No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS 153 is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company does not believe that the adoption of SFAS 153 will have a material impact on the Company’s financial position, results of operations or cash flows.

In March 2005, the FASB issued Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations—an interpretation of FASB Statement No. 143 (“FIN 47”). FIN 47 clarifies that the term conditional asset retirement obligation as used in FASB Statement No. 143, Accounting for Asset Retirement Obligations, refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may not be within the control

F-12

of the entity. The obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and (or) method of settlement. Thus, the timing and (or) method of settlement may be conditional on a future event. Accordingly, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. FIN 47 is effective for the fiscal year ending December 31, 2005. The adoption of FIN 47 did not have a material impact on the Company’s financial position, results of operations or cash flows.

3. Real Estate Acquisition and Development Activity

During the year ended December 31, 2005, the Company acquired 39 industrial buildings, aggregating approximately 6.4 million square feet for a total expected investment of $522.3 million. The Company also acquired two industrial buildings, aggregating approximately 0.5 million square feet for a total expected investment of $32.7 million, through two of its unconsolidated co-investment joint ventures. During 2004, the Company acquired 64 industrial buildings, aggregating approximately 7.6 million square feet for a total expected investment of $695.2 million.

During the year ended December 31, 2005, the Company initiated 30 new industrial development projects in North America, Europe and Asia with a total expected investment of $522.4 million, aggregating approximately 7.0 million square feet. During 2004, the Company initiated 18 new industrial development projects in North America and Asia with a total expected investment of $604.2 million, aggregating approximately 5.8 million square feet.

During the year ended December 31, 2005, the Company completed and placed in operations eleven industrial buildings with a total investment of $137.9 million, aggregating approximately 2.5 million square feet. During 2004, the Company completed and placed in operations seven industrial buildings with a total investment of $88.9 million, aggregating approximately 2.1 million square feet.

As of December 31, 2005, the Company had in its development pipeline 47 industrial projects, which will total approximately 11.9 million square feet and will have an aggregate estimated investment of $1.1 billion upon completion, of which two industrial projects with a total of 0.3 million square feet and an aggregate estimated investment of $24.5 million upon completion are held in unconsolidated joint ventures. In addition, one development project is available for sale or contribution, which totals approximately 0.6 million square feet and has an aggregate estimated investment of $32.8 million upon completion. As of December 31, 2005, the Company and its Development Alliance Partners had funded an aggregate of $681.4 million and needed to fund an estimated additional $405.2 million in order to complete current and planned projects. The Company’s development pipeline currently includes projects expected to be completed through the first quarter of 2008. Significant land acquisitions for the year ended December 31, 2005 included the purchase of 341 acres of land for industrial warehouse developments in various North American, Europe and Asia markets for $193.9 million.

4. Gains from Dispositions of Real Estate Interests, Development Sales and Discontinued Operations

Gains from Dispositions of Real Estate Interests. On June 30, 2005, the Company formed AMB Japan Fund I, L.P. a joint venture with 13 institutional investors, in which the Company retained an approximate 20% interest. The 13 institutional investors have committed 49.5 billion Yen ($420.4 million U.S. dollars, using the exchange rate at December 31, 2005) for an approximate 80% equity interest. The Company contributed $106.9 million (using exchange rate in effect at contribution) in operating properties, consisting of six industrial buildings, aggregating approximately 0.9 million square feet, to this fund. The Company recognized a gain of $17.8 million on the contribution, representing the portion of its interest in the contributed properties acquired by the third-party investors for cash.

On February 19, 2003, the Company contributed $94.0 million in operating properties, consisting of 24 industrial buildings, aggregating approximately 2.4 million square feet, to its newly formed unconsolidated joint venture, Industrial Fund I, LLC. The Company recognized a gain of $7.4 million on the contribution, representing the partial sale of the Company’s interests in the contributed properties acquired by the third-party investors for cash.

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Development Sales and Contributions. During 2005, the Company sold five land parcels and five development projects, aggregating approximately 0.9 million square feet for an aggregate price of $155.2 million, resulting in an after-tax gain of $45.1 million. In addition, during 2005, the Company received final proceeds of $7.8 million from a land sale that occurred in 2004. During 2005, The Company also contributed one completed development project into an unconsolidated joint venture, AMB-SGP Mexico, LLC, and recognized an after-tax gain of $1.9 million representing the partial sale of the Company’s interests in the contributed properties acquired by the third-party co-investors for cash.

During 2004, the Company sold seven land parcels and six development projects as part of our development-for-sale program, aggregating approximately 0.3 million square feet, for an aggregate price of $40.4 million, resulting in an after-tax gain of $6.5 million. During 2004, the Company also contributed one completed development project into a newly-formed unconsolidated joint venture, AMB-SGP Mexico, LLC, and recognized an after-tax gain of $2.0 million representing the partial sale of its interest in the contributed property acquired by the third-party co-investor for cash.

During 2003, the Company sold seven development-for-sale projects, aggregating approximately 0.5 million square feet, for an aggregate price of $74.8 million, resulting in an after-tax gain of $14.4 million.

Discontinued Operations. The Company reported its property divestitures as discontinued operations separately as prescribed under the provisions of SFAS No. 144. Beginning in 2002, SFAS No. 144 requires the Company to separately report as discontinued operations the historical operating results attributable to operating properties sold and held for disposition and the applicable gain or loss on the disposition of the properties. Although the application of SFAS No. 144 may affect the presentation of the Company’s results of operations for the periods that it has already reported in filings with the SEC, there will be no effect on its previously reported financial position, net income or cash flows.

During 2005, the Company divested itself of 142 industrial buildings and one retail center, aggregating approximately 9.3 million square feet, for an aggregate price of $926.6 million, with a resulting net gain of $113.6 million. Included in these divestitures is the sale of the assets of AMB Alliance Fund I for $618.5 million. The multi-investor fund owned 100 buildings totaling approximately 5.8 million square feet. The Company received cash and a distribution of an on-tarmac property, AMB DFW Air Cargo Center I, in exchange for its 21% interest in the fund. The Company also received a net incentive distribution of approximately $26.4 million in cash which is classified under private capital income on the consolidated statement of operations.

During 2004, the Company divested itself of 21 industrial buildings, two retail centers and one office building, aggregating approximately 3.1 million square feet, for an aggregate price of $200.3 million, with a resulting net gain of $42.0 million.

During 2003, the Company divested itself of 24 industrial buildings and two retail centers, aggregating approximately 2.8 million square feet, for an aggregate price of $272.3 million, with a resulting net gain of $42.9 million.

Properties Held for Contribution. As of December 31, 2005, the Company held for contribution to a co-investment joint venture one industrial building with an aggregate net book value of $32.8 million, which, when contributed to the joint venture, will reduce the Company’s current ownership interest from approximately 98% to an expected range of 20-50%. This asset is not being held for divestiture under SFAS No. 144.

Properties Held for Divestiture. As of December 31, 2005, the Company had decided to divest itself of five industrial buildings and one undeveloped land parcel with a net book value of $17.9 million. The properties either are not in the Company’s core markets or do not meet its current strategic objectives. The divestitures of the properties are subject to negotiation of acceptable terms and other customary conditions. Properties held for divestiture are stated at the lower of cost or estimated fair value less costs to sell. Depreciation on properties held for divestiture is discontinued at the time the asset is held for divestiture.

The following summarizes the condensed results of operations of the properties held for divestiture and sold under SFAS No. 144 for the years ended December 31 (dollars in thousands):

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	2005			2004			2003
Rental revenues	$	63,771		$	99,411		$	115,711
Straight-line rents and amortization of lease intangibles		2,365			1,803			1,932
Property operating expenses		(10,940	)		(16,113	)		(17,470	)
Real estate taxes		(7,602	)		(12,401	)		(13,322	)
Depreciation and amortization		(14,866	)		(26,230	)		(26,270	)
General and administrative		(67	)		(113	)		(11	)
Other income and expenses, net		48			250			197
Interest, including amortization		(14,856	)		(15,185	)		(16,920	)
Joint venture partners’ share of income		(8,009	)		(12,523	)		(14,602	)
Limited partnership unitholders’ share of income		(511	)		(1,026	)		(1,612	)

Income attributable to discontinued operations	$	9,333		$	17,873		$	27,633

As of December 31, 2005 and 2004, assets and liabilities attributable to properties held for divestiture under the provisions of SFAS No. 144 consisted of the following (dollars in thousands):


	2005		2004
Accounts receivable, net	$	1,127	$	207
Other assets	$	60	$	39
Accounts payable and other liabilities	$	1,301	$	156

5. Mortgage and Loan Receivables

Through a wholly-owned subsidiary, the Company holds a mortgage loan receivable on AMB Pier One, LLC, an unconsolidated joint venture. The Company also holds a loan receivable from G. Accion, an unconsolidated investment. The Company also had a short-term mortgage on a prior year property sale which was repaid during 2005. The Company’s mortgage and loan receivables at December 31, 2005 and 2004 consisted of the following:


Mortgage and Loan Receivables	Market	Maturity	2005		2004		Rate
1. Pier 1	SF Bay Area	May 2026	$	12,821	$	12,938	13.0%
2. G.Accion	Mexico, Various	November 2006		8,800		—	10.0%
3. Platinum Distribution Center	No. New Jersey	N/A		—		800	12.0%

Total Mortgage and Loan Receivables			$	21,621	$	13,738

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6. Debt

As of December 31, 2005 and 2004, debt consisted of the following (dollars in thousands):


	2005		2004
Wholly-owned secured debt, varying interest rates from 0.6% to 10.4%, due January 2006 to December 2022 (weighted average interest rate of 4.1% and 5.3% at December 31, 2005 and 2004, respectively)	$	522,459	$	484,929
Consolidated joint venture secured debt, varying interest rates from 3.5% to 9.4%, due March 2006 to January 2025 (weighted average interest rates of 6.3% and 6.4% at December 31, 2005 and 2004, respectively)		1,378,083		1,396,829
Unsecured senior debt securities, varying interest rates from 3.5% to 8.0%, due January 2006 to June 2018 (weighted average interest rates of 6.2% and 6.6% at December 31, 2005 and 2004, respectively, net of $12.5 million unamortized discount)		975,000		1,003,940
Unsecured debt, due August 2006 to November 2015, interest rate of 8.2%		23,963		9,028
Unsecured credit facilities, variable interest rate, due June 2007 to May 2008 (weighted average interest rates of 2.2% and 1.9% at December 31, 2005 and 2004, respectively)		490,072		351,699

Total debt before unamortized premiums		3,389,577		3,246,425
Unamortized premiums		11,984		10,766

Total consolidated debt	$	3,401,561	$	3,257,191

Secured debt generally requires monthly principal and interest payments. The secured debt is secured by deeds of trust or mortgages on certain properties, some of which are cross-collateralized by multiple properties, and is generally non-recourse. As of December 31, 2005 and 2004, the total gross investment book value of those properties securing the debt was $3.6 billion and $3.3 billion, respectively, including $2.5 billion and $2.4 billion, respectively, in consolidated joint ventures. As of December 31, 2005, $1.6 billion of the secured debt obligations bear interest at fixed rates with a weighted average interest rate of 6.3% while the remaining $291.7 million bear interest at variable rates (with a weighted average interest rate of 2.1%).

As of December 31, 2005, the Operating Partnership had outstanding an aggregate of $975.0 million in unsecured senior debt securities, which bore a weighted average interest rate of 6.2% and had an average term of 5.2 years. These unsecured senior debt securities include $300.0 million in notes issued in June 1998, $250.0 million of medium-term notes, which were issued under the Operating Partnership’s 2000 medium-term note program, $325.0 million of medium-term notes, which were issued under the Operating Partnership’s 2002 medium-term note program, and approximately $112.5 million of 5.094% Notes Due 2015, which were issued to Teachers Insurance and Annuity Association of America on July 11, 2005 in a private placement, in exchange for the cancellation of $100 million of notes that were issued in June 1998, resulting in a discount of approximately $12.5 million. The unsecured senior debt securities are subject to various covenants. Management believes that the Company and the Operating Partnership were in compliance with their financial covenants as of December 31, 2005.

On June 1, 2004, the Operating Partnership completed the early renewal of its senior unsecured revolving line of credit in the amount of $500.0 million. The Company remains a guarantor of the Operating Partnership’s obligations under the credit facility. The three-year credit facility includes a multi-currency component under which up to $250.0 million can be drawn in Yen, Euros or British Pounds Sterling. The line, which matures in June 2007 and carries a one-year extension option, can be increased up to $700.0 million upon certain conditions, and replaces the Operating Partnership’s previous $500.0 million credit facility that was to mature in December 2005. The rate on the borrowings is generally LIBOR plus a margin, based on the Operating Partnership’s long-term debt rating, which is 60 basis points with an annual facility fee of 20 basis points, based on the current credit rating of the Operating Partnership’s long-term debt. The Operating Partnership uses its unsecured credit facility principally for acquisitions, funding development activity and general working capital requirements. The total amount available under the credit facility fluctuates based upon the borrowing base, as defined in the agreement governing the credit facility, which is generally based upon the value of the Company’s unencumbered properties. As of December 31, 2005, the outstanding balance on the credit facility was $216.8 million and the remaining amount available was $244.8 million, net of outstanding letters of credit of $38.4 million (excluding the additional $200.0 million of potential additional capacity). The outstanding balance included borrowings denominated in Euros and Yen, which, using the exchange rate in effect on December 31, 2005, equaled approximately $173.1 million and $43.7 million in U.S. dollars, respectively. The revolving credit facility contains affirmative covenants, including compliance with financial reporting requirements and maintenance of specified financial ratios and negative covenants, including limitations on the incurrence of liens and limitations

F-16

on mergers or consolidations. Management believes that the Company and the Operating Partnership were in compliance with their financial covenants under this revolving line of credit agreement at December 31, 2005.

On June 29, 2004, AMB Japan Finance Y.K., a subsidiary of the Operating Partnership, entered into an unsecured revolving credit agreement providing for loans or letters of credit. On December 8, 2005, the unsecured revolving credit agreement was amended to increase the maximum principal amount outstanding at any time up to 35.0 billion Yen, which using the exchange rate in effect on December 31, 2005, equaled approximately $297.2 million U.S. dollars and can be increased up to 40.0 billion Yen upon certain conditions. The Company, along with the Operating Partnership, guarantees the obligations of AMB Japan Finance Y.K. under the revolving credit facility, as well as the obligations of any other entity in which the Operating Partnership directly or indirectly owns an ownership interest, and which is selected from time to time to be a borrower under and pursuant to the revolving credit agreement. The borrowers intend to use the proceeds from the facility to fund the acquisition and development of properties and for other real estate purposes in Japan. Generally, borrowers under the revolving credit facility have the option to secure all or a portion of the borrowings under the revolving credit facility with certain real estate assets or equity in entities holding such real estate assets. The revolving credit facility matures in June 2007 and has a one-year extension option, which is subject to the satisfaction of certain conditions and the payment of an extension fee equal to 0.25% of the outstanding commitments under the facility at that time. The rate on the borrowings is generally TIBOR plus a margin, which is based on the current credit rating of the Operating Partnership’s long-term debt and is currently 60 basis points. In addition, there is an annual facility fee, payable in quarterly amounts, which is based on the credit rating of the Operating Partnership’s long-term debt, and is currently 20 basis points of the outstanding commitments under the facility. As of December 31, 2005, the outstanding balance on this credit facility, using the exchange rate in effect on December 31, 2005, was $205.8 million in U.S. dollars. The revolving credit facility contains affirmative covenants, including financial reporting requirements and maintenance of specified financial ratios, and negative covenants, including limitations on the incurrence of liens and limitations on mergers or consolidations. Management believes that the Company and the Operating Partnership were in compliance with their financial covenants under this revolving credit agreement at December 31, 2005.

On November 24, 2004, AMB Tokai TMK, a Japanese subsidiary of the Operating Partnership, entered into a secured multi-advance project financing, providing for loans in a maximum principal amount outstanding at any time of up to 20.0 billion Yen, which, using the exchange rate in effect on December 31, 2005, equaled approximately $169.9 million U.S. dollars. The financing agreement is among AMB Tokai TMK, the Company, the Operating Partnership, Sumitomo Mitsui Banking Corporation (“Sumitomo”) and a syndicate of banks. The Company and the Operating Partnership jointly and severally guarantee AMB Tokai TMK’s obligations under the financing agreement, pursuant to a guaranty of payment executed in connection with the project financing. The financing is secured by a mortgage on certain real property located in Tokai, Tokyo, Japan, and matures on October 31, 2006 with a one-year extension option. The rate on the borrowings is generally TIBOR plus a margin, which is based on the credit rating of the Operating Partnership’s long-term debt and is currently 60 basis points per annum, except that AMB Tokai TMK has purchased from Sumitomo an interest rate swap, which has fixed the interest rate payable on a principal amount equal to 13.0 billion Yen at 1.32% per annum plus the applicable margin. In addition, there is an annual commitment fee based on unused commitments, payable quarterly, which is based on the credit rating of the Operating Partnership’s long-term debt, and is currently 20 basis points of the amount of unused commitments. The financing agreement contains affirmative covenants, including financial reporting requirements and maintenance of specified financial ratios, and negative covenants, including limitations on the incurrence of liens and limitations on mergers or consolidations. Management believes the Company and the Operating Partnership were in compliance with their financial covenants under this financing agreement as of December 31, 2005. In addition, Sumitomo, AMB Tokai TMK and the Operating Partnership signed a commitment letter on November 24, 2004, pursuant to which Sumitomo committed to purchase bonds that may be issued by AMB Tokai TMK in an amount between 10.0 billion Yen and 15.0 billion Yen (such amount to be determined by AMB Tokai TMK). The bonds would be secured by the AMB Ohta Distribution Center and would generally accrue interest at a rate of TIBOR plus 1.10% per annum; because the swap purchased by AMB Tokai TMK from Sumitomo is coterminous with the maturity date of the proposed bonds, AMB Tokai TMK will have fixed the interest rate payable on, in general, a principal amount equal to 13.0 billion Yen at 2.42% per annum. The bonds, if issued, would mature on October 31, 2012. As of December 31, 2005, the outstanding balance on this financing agreement was 19.5 billion Yen, which, using the exchange rate in effect on December 31, 2005, equaled approximately $165.6 million U.S. dollars and is accounted for as wholly-owned secured debt.

On February 16, 2006, the Operating Partnership and certain of its consolidated subsidiaries entered into a third amended and restated credit agreement for a $250 million unsecured multi-currency revolving credit facility with a maturity date of February 2010, that replaced the then-existing $100 million unsecured multi-currency revolving credit facility that was to mature in June 2008. As of December 31, 2005, we had an additional outstanding balance of $67.5 million under the then-existing facility.

As of December 31, 2005, the scheduled maturities of the Company’s total debt, excluding unamortized debt premiums, were as follows (dollars in thousands):

F-17


	Wholly-		Consolidated		Unsecured
	owned		Joint Venture		Senior
	Secured		Secured		Debt		Unsecured		Credit
	Debt		Debt		Securities		Debt		Facilities		Total
2006	$	65,369	$	79,262	$	75,000	$	16,280	$	—	$	235,911
2007		12,680		58,124		75,000		752		422,602		569,158
2008		40,705		178,795		175,000		810		67,470		462,780
2009		5,264		120,551		100,000		873		—		226,688
2010		71,078		116,927		250,000		941		—		438,946
2011		21,573		357,207		75,000		1,014		—		454,794
2012		254,996		171,442		—		1,093		—		427,531
2013		14,773		196,894		—		920		—		212,587
2014		15,066		4,684		—		616		—		20,366
2015		1,951		61,653		100,000		664		—		164,268
Thereafter		19,004		32,544		125,000		—		—		176,548

Total	$	522,459	$	1,378,083	$	975,000	$	23,963	$	490,072	$	3,389,577

7. Leasing Activity

Future minimum base rental income due under non-cancelable leases with customers in effect as of December 31, 2005 was as follows (dollars in thousands):


2006	$	508,747
2007		434,700
2008		350,062
2009		274,763
2010		204,020
Thereafter		468,330

Total	$	2,240,622

The schedule does not reflect future rental revenues from the renewal or replacement of existing leases and excludes property operating expense reimbursements. In addition to minimum rental payments, certain customers pay reimbursements for their pro rata share of specified operating expenses, which amounted to $144.0 million, $134.1 million and $103.6 million for the years ended December 31, 2005, 2004 and 2003, respectively. These amounts are included as rental revenue and operating expenses in the accompanying consolidated statements of operations. Some leases contain options to renew.

8. Income Taxes

The Company elected to be taxed as a REIT under the Code, commencing with its taxable year ended December 31, 1997. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its taxable income to its stockholders. It is management’s current intention to adhere to these requirements and maintain the Company’s REIT status. As a REIT, the Company generally will not be subject to corporate level federal income tax on net income it distributes currently to its stockholders. As such, no provision for federal income taxes has been included in the accompanying consolidated financial statements. If the Company fails to qualify as a REIT in any taxable year, it will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may be ineligible to qualify as a REIT for four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state, local taxes on its income and excise taxes on its undistributed taxable income. The Company is required to pay federal and state income tax on its net taxable income, if any, from the activities conducted by the Company’s taxable REIT subsidiaries. Where the Company operates in foreign countries that do not recognize REITs under their respective tax laws, the Company recognizes income taxes, as necessary.

The following is a reconciliation of net income available to common stockholders to taxable income available to common stockholders for the years ended December 31 (dollars in thousands):

F-18


	2005			2004			2003
Net income available to common stockholders	$	250,419		$	118,340		$	116,716
Book depreciation and amortization		165,438			141,120			116,067
Book depreciation discontinued operations		14,866			26,230			26,270
Impairment losses		—			—			5,251
Tax depreciation and amortization		(152,084	)		(141,368	)		(129,608	)
Book/tax difference on gain on divestitures of real estate		(23,104	)		(7,409	)		13,783
Book/tax difference in stock option expense		(35,513	)		(15,069	)		1,069
Other book/tax differences, net⁽¹⁾		(35,348	)		(14,786	)		(6,576	)

Taxable income available to common stockholders	$	184,674		$	107,058		$	142,972


(1)		Primarily due to straight-line rent, prepaid rent, joint venture accounting and debt premium amortization timing differences.

For income tax purposes, distributions paid to common stockholders consist of ordinary income, capital gains, non-taxable return of capital or a combination thereof. For the years ended December 31, 2005, 2004 and 2003, the Company elected to distribute all of its taxable capital gain. The taxability of the Company’s distributions to common stockholders is summarized below:


	2005				2004				2003
Ordinary income	$	0.50	23.0	%	$	0.78	46.1	%	$	1.07	64.5	%
Capital gains		1.34	61.1	%		0.37	21.9	%		0.47	28.3	%
Unrecaptured Section 1250 gain		0.35	15.9	%		0.15	8.9	%		0.12	7.2	%
Dividends taxed in subsequent year		—	—			—	—			—	—

Dividends paid or payable		2.19	100.0	%		1.30	76.9	%		1.66	100.0	%

Return of capital		—	0.0	%		0.39	23.1	%		—	—

Total distributions	$	2.19	100.0	%	$	1.69	100.0	%	$	1.66	100.0	%

9. Minority Interests in Consolidated Joint Ventures and Preferred Units

Minority interests in the Company represent the limited partnership interests in the Operating Partnership, limited partnership interests in AMB Property II, L.P. and interests held by certain third parties in several real estate joint ventures, aggregating approximately 41.7 million square feet, which are consolidated for financial reporting purposes. Such investments are consolidated because the Company exercises significant rights over major operating decisions such as approval of budgets, selection of property managers, asset management, investment activity and changes in financing. These joint venture investments do not meet the variable interest entity criteria under FASB Interpretation No. 46R, Consolidation of Variable Interest Entities.

Through the Operating Partnership, the Company enters into co-investment joint ventures with institutional investors. The Company’s co-investment joint ventures are engaged in the acquisition, ownership, operation, management and, in some cases, the renovation, expansion and development of industrial buildings in target markets in North America.

The Company’s consolidated co-investment joint ventures’ total investment and property debt in properties at December 31, 2005 and 2004 (dollars in thousands) were:

F-19


		Company’s			Total Investment
		Ownership			in Real Estate ⁽⁷⁾				Property Debt ⁽⁸⁾
Co-investment Joint Venture	Joint Venture Partner	Percentage			2005		2004		2005		2004
AMB/Erie, L.P.	Erie Insurance Company and affiliates		50	%	$	99,722	$	149,244	$	40,710	$	50,338
AMB Institutional Alliance Fund I, L.P.	AMB Institutional Alliance REIT I, Inc.⁽¹⁾		21	%		—		415,191		—		223,704
AMB Partners II, L.P.	City and County of San Francisco		20	%		592,115		516,200		291,684		264,315
	Employees’ Retirement System
AMB-SGP, L.P.	Industrial JV Pte Ltd⁽²⁾		50	%		436,713		418,129		239,944		245,454
AMB Institutional Alliance Fund II, L.P.	AMB Institutional Alliance REIT II, Inc.⁽³⁾		20	%		507,493		492,687		245,056		237,798
AMB-AMS, L.P. ⁽⁴⁾	PMT, SPW and TNO⁽⁵⁾		39	%		146,007		100,043		63,143		44,406
AMB Institutional Alliance Fund III, L.P.	AMB Institutional Alliance REIT III, Inc. ⁽⁶⁾		20	%		749,634		523,037		421,290		258,164

					$	2,531,684	$	2,614,531	$	1,301,827	$	1,324,179


(1)		Comprised of 16 institutional investors as stockholders as of December 31, 2005.

(2)		A subsidiary of the real estate investment subsidiary of the Government of Singapore Investment Corporation.

(3)		Comprised of 14 institutional investors as stockholders and one third-party limited partner as of December 31, 2005.

(4)		AMB-AMS, L.P. is a co-investment partnership with three Dutch pension funds advised by Mn Services NV.

(5)		PMT is Stichting Pensioenfonds Metaal en Techniek, SPW is Stichting Pensioenfonds voor de Woningcorporaties and TNO is Stichting Pensioenfonds TNO.

(6)		AMB Institutional Fund III, L.P. is an open-ended co-investment partnership formed in 2004 with institutional investors.

(7)		The Company also had other consolidated joint ventures with total investments in real estate of $378.7 million as of December 31, 2005.

(8)		The Company also had other consolidated joint ventures with secured debt of $85.7 million as of December 31, 2005.

The following table details the minority interest liability as of December 31, 2005 and 2004 (dollars in thousands):


	2005		2004
Joint venture partners	$	853,643	$	828,622
Limited Partners in the Operating Partnership		86,164		86,587
Series J preferred units (liquidation preference of $40,000)		38,883		38,883
Series K preferred units (liquidation preference of $40,000)		38,932		38,932
Held through AMB Property II, L.P.:
Class B Limited Partners		2,950		2,739
Series D preferred units (liquidation preference of $79,767)		77,684		77,684
Series E preferred units (liquidation preference of $11,022)		10,788		10,788
Series F preferred units (liquidation preference of $10,057)		9,900		9,900
Series H preferred units (liquidation preference of $42,000)		40,912		40,912
Series I preferred units (liquidation preference of $25,500)		24,800		24,800
Series N preferred units (liquidation preference of $36,479)⁽¹⁾		36,479		36,479

Total minority interests	$	1,221,135	$	1,196,326


(1)		The holder of the series N preferred units exercised its put option in January 2006 and sold all of its series N preferred units to the Operating Partnership at a price equal to $50 per unit, plus all accrued and unpaid distributions.

F-20

The following table details the minority interests’ share of income, including minority interests’ share of development profits, but excluding minority interests’ share of discontinued operations for the years ending December 31, 2005, 2004 and 2003 (dollars in thousands):


	2005		2004		2003
Joint venture partners	$	36,398	$	29,544	$	21,015
Joint venture partners’ share of development profits		13,492		958		8,442
Common limited partners in the Operating Partnership		3,548		2,513		2,354
Series B preferred units (repurchased in November 2003)		—		—		4,828
Series J preferred units (liquidation preference of $40,000)		3,180		3,180		3,180
Series K preferred units (liquidation preference of $40,000)		3,180		3,180		3,180
Held through AMB Property II, L.P.:
Class B common limited partnership units		115		102		24
Series D preferred units (liquidation preference of $79,767)		6,182		6,182		6,182
Series E preferred units (liquidation preference of $11,022)		854		854		854
Series F preferred units (liquidation preference of $10,057)		800		800		931
Series H preferred units (liquidation preference of $42,000)		3,413		3,413		3,412
Series I preferred units (liquidation preference of $25,500)		2,040		2,040		2,040
Series N preferred units (liquidation preference of $36,479)⁽¹⁾		1,824		512		—

Total minority interests’ share of net income	$	75,026	$	53,278	$	56,442


(1)		The holder of the series N preferred units exercised its put option in January 2006 and sold all of its series N preferred units to the Operating Partnership at a price equal to $50 per unit, plus all accrued and unpaid distributions.

10. Investments in Unconsolidated Joint Ventures

The Company’s investment in unconsolidated joint ventures at December 31, 2005 and 2004 totaled $118.7 million and $55.2 million, respectively. The Company’s exposure to losses associated with its unconsolidated joint ventures is limited to its carrying value in these investments and a guarantee of $2.3 million on an outstanding loan on one if its unconsolidated joint ventures.

The Company’s unconsolidated joint ventures’ net equity investments at December 31, 2005 and 2004 (dollars in thousands) were:



								Company’s
		Square						Ownership
Unconsolidated Joint Ventures	Market	Feet		2005		2004		Percentage
Co-Investment Joint Ventures
AMB-SGP Mexico, LLC ⁽¹⁾	Various, Mexico		1,892,407	$	16,218	$	9,467	20%
AMB Japan Fund I, L.P. ⁽²⁾	Various, Japan		1,201,698		10,112		—	20%
Other Industrial Operating Joint Ventures			9,295,507		41,520		41,371	52%
Other Industrial Development Joint Ventures			719,267		6,176		4,328	50%
Other Investment — G.Accion	Various		N/A		44,627		—	39%

Total Unconsolidated Joint Ventures			13,108,879	$	118,653	$	55,166


(1)		AMB-SGP Mexico is a co-investment partnership formed in 2004 with GIC Real Estate Pte Ltd, the real estate investment subsidiary of the Government of Singapore Investment Corporation. Includes $7.3 million of shareholder loans outstanding at December 31, 2005 between the Company and the co-investment partnership.

(2)		AMB Japan Fund I is a co-investment partnership formed in 2005 with institutional investors.

F-21

On December 31, 2004, the Company formed AMB-SGP Mexico, LLC, a joint venture with Industrial (Mexico) JV Pte Ltd, a real estate investment subsidiary of the Government of Singapore Investment Corporation, in which the Company retained a 20% interest. During 2005, the Company recognized a gain of $1.3 million from disposition of real estate interests, representing the additional value received from the contribution of properties to AMB-SGP Mexico, LLC. During 2005, the Company recognized development profits of $1.7 million from the contribution to AMB-SGP Mexico, LLC of one industrial building for $23.6 million aggregating approximately 0.4 million square feet.

On June 30, 2005, the Company formed AMB Japan Fund I, L.P. a joint venture with 13 institutional investors, in which the Company retained an approximate 20% interest. The 13 institutional investors have committed 49.5 billion Yen ($420.4 million U.S. dollars, using the exchange rate at December 31, 2005) for an approximate 80% equity interest. The Company contributed $106.9 million (using exchange rate in effect at contribution) in operating properties, consisting of six industrial buildings, aggregating approximately 0.9 million square feet, to this fund. The Company recognized a gain of $17.8 million on the contribution, representing the portion of its interest in the contributed properties acquired by the third-party investors for cash.

Under the agreements governing the joint ventures, the Company and the other parties to the joint venture may be required to make additional capital contributions and, subject to certain limitations, the joint ventures may incur additional debt.

The Company also has a 0.1% unconsolidated equity interest (with an approximate 33% economic interest) in AMB Pier One, LLC, a joint venture related to the 2000 redevelopment of the pier which houses the Company’s office space in San Francisco. The investment is not consolidated because the Company does not exercise control over major operating decisions such as approval of budgets, selection of property managers, investment activity and changes in financing. The Company has an option to purchase the remaining equity interest beginning January 1, 2007 and expiring December 31, 2009, based on the fair market value as stipulated in the operating agreement. As of December 31, 2005, the Company also had an approximate 39.0% unconsolidated equity interest in G.Accion S.A. de C.V. (“G.Accion”), a Mexican real estate company. G.Accion provides management and development services for industrial, retail, residential and office properties in Mexico.

11. Stockholders’ Equity

Holders of common limited partnership units of the Operating Partnership and class B common limited partnership units of AMB Property II, L.P. have the right, commencing generally on or after the first anniversary of the holder becoming a limited partner of the Operating Partnership or AMB Property II, L.P., as applicable (or such other date agreed to by the Operating Partnership or AMB Property II, L.P. and the applicable unit holders), to require the Operating Partnership or AMB Property II, L.P., as applicable, to redeem part or all of their common units or class B common limited partnership units, as applicable, for cash (based upon the fair market value, as defined in the applicable partnership agreement, of an equivalent number of shares of common stock of the Company at the time of redemption) or the Operating Partnership or AMB Property II, L.P. may, in its respective sole and absolute discretion (subject to the limits on ownership and transfer of common stock set forth in the Company’s charter), elect to have the Company exchange those common units or class B common limited partnership units, as applicable, for shares of the Company’s common stock on a one-for-one basis, subject to adjustment in the event of stock splits, stock dividends, issuance of certain rights, certain extraordinary distributions and similar events. With each redemption or exchange of the Operating Partnership’s common units, the Company’s percentage ownership in the Operating Partnership will increase. Common limited partners and class B common limited partners may exercise this redemption right from time to time, in whole or in part, subject to certain limitations. During 2005, the Operating Partnership redeemed 349,579 of its common limited partnership units for an equivalent number of shares of the Company’s common stock.

On December 13, 2005, we issued and sold 3,000,000 shares of 7.00% Series O Cumulative Redeemable Preferred Stock at $25.00 per share. Dividends are cumulative from the date of issuance and payable quarterly in arrears at a rate per share equal to $1.75 per annum. The series O preferred stock is redeemable by us on or after December 13, 2010, subject to certain conditions, for cash at a redemption price equal to $25.00 per share, plus accumulated and unpaid dividends thereon, if any, to the redemption date. We contributed the net proceeds of $72.3 million to the operating partnership, and in exchange, the operating partnership issued to us 3,000,000 7.00% Series O Cumulative Redeemable Preferred Units.

On June 23, 2003, the Company issued and sold 2,000,000 shares of 6.5% Series L Cumulative Redeemable Preferred Stock for $25.00 per share. Dividends are cumulative from the date of issuance and payable quarterly in arrears at a rate per share equal to $1.625 per annum. The series L preferred stock is redeemable by the Company on or after June 23, 2008, subject to certain conditions, for cash at a redemption price equal to $25.00 per share, plus accumulated and unpaid dividends thereon, if any, to the redemption date. The Company contributed the net proceeds of $48.0 million to the Operating Partnership, and in exchange, the Operating

F-22

Partnership issued to the Company 2,000,000 6.5% Series L Cumulative Redeemable Preferred Units. The Operating Partnership used the proceeds, in addition to proceeds previously contributed to the Operating Partnership from other equity issuances, to redeem all 3,995,800 shares of its 8.5% Series A Cumulative Redeemable Preferred Units from the Company on July 28, 2003. The Company, in turn, used those proceeds to redeem all 3,995,800 shares of its 8.5% Series A Cumulative Redeemable Preferred Stock for $100.2 million, including accumulated and unpaid dividends through the redemption date.

On November 25, 2003, the Company issued and sold 2,300,000 shares of 6.75% Series M Cumulative Redeemable Preferred Stock for $25.00 per share. Dividends are cumulative from the date of issuance and payable quarterly in arrears at a rate per share equal to $1.6875 per annum. The series M preferred stock is redeemable by the Company on or after November 25, 2008, subject to certain conditions, for cash at a redemption price equal to $25.00 per share, plus accumulated and unpaid dividends thereon, if any, to the redemption date. The Company contributed the net proceeds of $55.4 million to the Operating Partnership, and in exchange, the Operating Partnership issued to the Company 2,300,000 6.75% Series M Cumulative Redeemable Preferred Units.

On September 24, 2004, AMB Property II, L.P., a partnership in which Texas AMB I, LLC, a Delaware limited liability company and the Company’s indirect subsidiary, owns an approximate 1.0% general partnership interest and the Operating Partnership owns an approximate 99% common limited partnership interest, issued 729,582 5.0% Series N Cumulative Redeemable Preferred Limited Partnership Units at a price of $50.00 per unit. The series N preferred units were issued to Robert Pattillo Properties, Inc. in exchange for the contribution of certain parcels of land that are located in multiple markets to AMB Property II, L.P. Effective January 27, 2006, Robert Pattillo Properties, Inc. exercised its rights under its Put Agreement, dated September 24, 2004, with the Operating Partnership, and sold all of its series N preferred units to the Operating Partnership at a price equal to $50.00 per unit, plus all accrued and unpaid distributions to the date of such sale. Also on January 27, 2006, AMB Property II, L.P. repurchased all of the series N preferred units from the Operating Partnership at a price equal to $50.00 per unit, plus all accrued and unpaid distributions to the date of such sale and cancelled all of the outstanding series N preferred units as of such date.

The Company has authorized 100,000,000 shares of preferred stock for issuance, of which the following series were designated as of December 31, 2005: 1,595,337 shares of series D cumulative redeemable preferred; 220,440 shares of series E cumulative redeemable preferred; 267,439 shares of series F cumulative redeemable preferred, of which 201,139 are outstanding; 840,000 shares of series H cumulative redeemable preferred; 510,000 shares of series I cumulative redeemable preferred; 800,000 shares of series J cumulative redeemable preferred; 800,000 shares of series K cumulative redeemable preferred; 2,300,000 shares of series L cumulative redeemable preferred, of which 2,000,000 are outstanding; 2,300,000 shares of series M cumulative redeemable preferred, all of which are outstanding; and 3,000,000 shares of series O cumulative redeemable preferred, all of which are outstanding.

The following table sets forth the dividends and distributions paid per share or unit:


Paying Entity	Security	2005		2004		2003
AMB Property Corporation	Common stock	$	1.76	$	1.70	$	1.66
AMB Property Corporation	Series A preferred stock		n/a		n/a	$	1.15
AMB Property Corporation	Series L preferred stock	$	1.63	$	1.63	$	0.85
AMB Property Corporation	Series M preferred stock	$	1.69	$	1.69	$	0.17
AMB Property Corporation	Series O preferred stock	$	0.09		n/a		n/a

Operating Partnership	Common limited partnership units	$	1.76	$	1.70	$	1.66
Operating Partnership	Series B preferred units		n/a		n/a	$	3.71
Operating Partnership	Series J preferred units	$	3.98	$	3.98	$	3.98
Operating Partnership	Series K preferred units	$	3.98	$	3.98	$	3.98

AMB Property II, L.P.	Class B common limited partnership units	$	1.76	$	1.70	$	0.22
AMB Property II, L.P.	Series D preferred units	$	3.88	$	3.88	$	3.88
AMB Property II, L.P.	Series E preferred units	$	3.88	$	3.88	$	3.88
AMB Property II, L.P.	Series F preferred units	$	3.98	$	3.98	$	3.98
AMB Property II, L.P.	Series H preferred units	$	4.06	$	4.06	$	4.06
AMB Property II, L.P.	Series I preferred units	$	4.00	$	4.00	$	4.00
AMB Property II, L.P.	Series N preferred units ⁽¹⁾	$	2.50	$	0.70		n/a

F-23


(1)		The holder of the series N preferred units exercised its put option in January 2006 and sold all of its series N preferred units to the operating partnership at a price equal to $50 per unit, plus all accrued and unpaid distributions.

12. Stock Incentive Plan, 401(k) Plan and Deferred Compensation Plan

Stock Incentive Plan. The Company has Stock Option and Incentive Plans (“Stock Incentive Plans”) for the purpose of attracting and retaining eligible officers, directors and employees. The Company has reserved for issuance 18,950,000 shares of common stock under its Stock Incentive Plans. As of December 31, 2005, the Company had 9,148,437 non-qualified options outstanding granted to certain directors, officers and employees. Each option is exchangeable for one share of the Company’s common stock. Each option’s exercise price is equal to the Company’s market price on the date of grant. The options have an original ten-year term and generally vest pro rata in annual installments over a three to five-year period from the date of grant.

In 2002, the Company adopted the expense recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation. The Company values stock options using the Black-Scholes option-pricing model and recognizes this value as an expense over the vesting periods. Under this standard, recognition of expense for stock options is applied to all options granted after the beginning of the year of adoption. In accordance with SFAS No. 123, the Company will recognize the associated expense over the three to five-year vesting periods. Under SFAS No. 123, related stock option expense was $4.8 million, $4.0 million and $2.4 million for the years ended December 31, 2005, 2004 and 2003, respectively. Additionally, the Company awards restricted stock and recognizes this value as an expense over the vesting periods. Related restricted stock compensation expense was $7.5 million, $6.4 million and $5.7 million for 2005, 2004 and 2003, respectively. The expense is included in general and administrative expenses in the accompanying consolidated statements of operations. The adoption of SFAS No. 123 is prospective and the 2003 expense relates only to stock options granted in 2002 and subsequent periods. Prior to January 1, 2002, the Company applied APB Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations in accounting for its Stock Incentive Plan. Opinion 25 measures compensation cost using the intrinsic value based method of accounting. Under this method, compensation cost is the excess, if any, of the quoted market price of the stock at the date of grant over the amount an employee must pay to acquire the stock. Accordingly, no compensation cost had been recognized for the Company’s Stock Incentive Plan as of December 31, 2001.

As permitted by SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure — An Amendment of FASB Statement No. 123, the Company has changed its method of accounting for stock options beginning January 1, 2002. The Company has not retroactively changed its method of accounting for stock options but has provided additional required disclosures. Had compensation cost for the Company’s stock-based compensation plans been determined based on the fair value at the grant dates for awards prior to 2002 consistent with the method of SFAS No. 123, the Company’s pro forma net income available to common stockholders would have been reduced by $0.2 million, $1.1 million and $1.6 million and pro forma basic and diluted earnings per share would have been reduced to $2.98 and $2.85; $1.43 and $1.37; and $1.42 and $1.39, respectively, for the years ended December 31, 2005, 2004 and 2003.

The fair value of each option grant was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions used for grants in 2005, 2004 and 2003, respectively: dividend yields of 4.5%, 4.8% and 6.1%; expected volatility of 17.5%, 18.6% and 17.7%; risk-free interest rates of 3.8%, 3.6% and 3.4%; and expected lives of seven years for each year. Following is a summary of the option activity for the years ended December 31 (options in thousands):

F-24


	Shares			Weighted		Options
	Under			Average		Exercisable
	Option			Exercise Price		at Year End
Outstanding as of December 31, 2002		8,765		$	23.16		5,526

Granted		1,854			27.18
Exercised		(318	)		21.94
Forfeited		(15	)		25.67

Outstanding as of December 31, 2003		10,286			23.92		7,210

Granted		1,253			34.88
Exercised		(1,233	)		22.45
Forfeited		(85	)		29.43

Outstanding as of December 31, 2004		10,221			25.40		7,841

Granted		1,086			38.94
Exercised		(2,033	)		24.24
Forfeited		(126	)		35.32

Outstanding as of December 31, 2005		9,148		$	27.14		7,237

Remaining average contractual life	5.8 years

Fair value of options granted during the year	$	4.48

The following table summarizes additional information concerning outstanding and exercisable stock options at December 31, 2005 (options in thousands):


					Weighted
					Average		Currently Exercisable
			Weighted		Remaining				Weighted
Range of	Number		Average		Contractual		Number		Average
Exercise Price	of Options		Exercise Price		Life in Years		of Options		Exercise Price
$19.81 - $21.00		1,848	$	20.71		2.7		1,848	$	20.71
$21.19 - $24.69		2,214		23.48		4.4		2,214		23.48
$25.06 - $27.12		2,714		26.74		6.7		2,325		26.69
$27.14 - $38.56		2,226		35.66		8.4		850		33.32
$39.09 - $44.65		146		41.30		9.4		—		—

		9,148						7,237

In 2005, 2004 and 2003, the Company issued 129,935, 227,609 and 272,609 restricted shares, respectively, to certain officers of the Company as part of the performance pay program and in connection with employment with the Company. As of December 31, 2005, 154,616 shares of restricted stock have been forfeited. The 547,524 outstanding restricted shares are subject to repurchase rights, which generally lapse over a period from three to five years.

401(k) Plan. In November 1997, the Company established a Section 401(k) Savings/Retirement Plan (the “401(k) Plan”), which is a continuation of the 401(k) Plan of the predecessor, to cover eligible employees of the Company and any designated affiliates. During 2005 and 2004, the 401(k) Plan permitted eligible employees of the Company to defer up to 20% of their annual compensation, subject to certain limitations imposed by the Code. The employees’ elective deferrals are immediately vested and non-forfeitable upon contribution to the 401(k) Plan. During 2004, the Company matched employee contributions to the 401(k) Plan in an amount equal to 50% of the first 5.5% of annual compensation deferred by each employee. During 2005, the Company matched employee contributions to the 401(k) Plan in an amount equal to 50% of the first 6.0% of annual compensation deferred by each employee. The Company may also make discretionary contributions to the 401(k) Plan. In 2005 and 2004, the Company paid $0.65 million and $0.5 million, respectively, for its 401(k) match. No discretionary contributions were made by the Company to the 401(k) Plan in 2005, 2004 and 2003.

Deferred Compensation Plan. The Company has established a non-qualified deferred compensation plan for officers and directors of the Company and certain of its affiliates, which enables participants to defer income up to 100% of annual base pay, up to 100% of annual bonuses, up to 100% of their meeting fees and/or committee chairmanship fees, and up to 100% of certain equity-based compensation, as applicable, subject to restrictions, on a pre-tax basis. This deferred compensation is our unsecured obligation. The Company may make discretionary matching contributions to participant accounts at any time. The Company made no such

F-25

discretionary matching contributions in 2005, 2004 or 2003. The participant’s elective deferrals and any matching contributions are immediately 100% vested. As of December 31, 2005 and 2004, the total fair value of compensation deferred was $20.9 million and $15.4 million, respectively.

13. Income Per Share

The Company’s only dilutive securities outstanding for the years ended December 31, 2005, 2004 and 2003 were stock options and restricted stock granted under its stock incentive plans. The effect on income per share was to increase weighted average shares outstanding. Such dilution was computed using the treasury stock method. The computation of basic and diluted EPS is presented below (dollars in thousands, except share and per share amounts):


	2005			2004			2003
Numerator
Income from continuing operations	$	134,921		$	65,593		$	58,599
Preferred stock dividends		(7,388	)		(7,131	)		(6,999	)
Preferred stock and unit redemption discount/(issuance costs or premium)		—			—			(5,413	)


Income from continuing operations (after preferred stock dividends)		127,533			58,462			46,187
Income attributable to discontinued operations, net of minority interests		9,333			17,873			27,633
Gains from dispositions of real estate, net of minority interests		113,553			42,005			42,896

Net income available to common stockholders	$	250,419		$	118,340		$	116,716


Denominator
Basic		84,048,936			82,133,627			81,096,062
Stock options and restricted stock dilution		3,824,463			3,234,999			1,756,466

Diluted weighted average common shares		87,873,399			85,368,626			82,852,528


Basic income per common share
Income from continuing operations (after preferred stock dividends)	$	1.52		$	0.71		$	0.57
Discontinued operations		1.46			0.73			0.87

Net income available to common stockholders	$	2.98		$	1.44		$	1.44


Diluted income per common share
Income from continuing operations (after preferred stock dividends)	$	1.45		$	0.69		$	0.56
Discontinued operations		1.40			0.70			0.85

Net income available to common stockholders	$	2.85		$	1.39		$	1.41

14. Commitments and Contingencies

Commitments

Lease Commitments. The Company holds operating ground leases on land parcels at its on-tarmac facilities, leases on office spaces for corporate use, and a leasehold interest that it holds for investment purposes. The remaining lease terms are from one to 57 years. Operating lease payments are being amortized ratably over the terms of the related leases. Future minimum rental payments required under non-cancelable operating leases in effect as of December 31, 2005 were as follows (dollars in thousands):

F-26


2006	$	20,894
2007		21,036
2007		20,617
2009		20,327
2010		19,997
Thereafter		278,759

Total	$	381,630

Standby Letters of Credit. As of December 31, 2005, the Company had provided approximately $48.7 million in letters of credit, of which $38.4 million was provided under the Operating Partnership’s $500.0 million unsecured credit facility. The letters of credit were required to be issued under certain ground lease provisions, bank guarantees and other commitments.

Guarantees. As of December 31, 2005, the Company had outstanding guarantees in the aggregate amount of $128.2 million in connection with certain acquisitions. As of December 31, 2005, the Company guaranteed $23.4 million and $2.3 million on outstanding loans on two of its consolidated joint ventures and one of its unconsolidated joint ventures, respectively.

Performance and Surety Bonds. As of December 31, 2005, the Company had outstanding performance and surety bonds in an aggregate amount of $0.9 million. These bonds were issued in connection with certain of its development projects and were posted to guarantee certain tax obligations and the construction of certain real property improvements and infrastructure, such as grading, sewers and streets. Performance and surety bonds are commonly required by public agencies from real estate developers. Performance and surety bonds are renewable and expire upon the payment of the taxes due or the completion of the improvements and infrastructure.

Promoted Interests and Other Contractual Obligations. Upon the achievement of certain return thresholds and the occurrence of certain events, the Company may be obligated to make payments to certain of joint venture partners pursuant to the terms and provisions of their contractual agreements with the Operating Partnership. From time to time in the normal course of the Company’s business, the Company enters into various contracts with third parties that may obligate it to make payments or perform other obligations upon the occurrence of certain events.

Contingencies

Litigation. In the normal course of business, from time to time, the Company may be involved in legal actions relating to the ownership and operations of its properties. Management does not expect that the liabilities, if any, that may ultimately result from such legal actions will have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.

Environmental Matters. The Company monitors its properties for the presence of hazardous or toxic substances. The Company is not aware of any environmental liability with respect to the properties that would have a material adverse effect on the Company’s business, assets or results of operations. However, there can be no assurance that such a material environmental liability does not exist. The existence of any such material environmental liability would have an adverse effect on the Company’s results of operations and cash flow. The Company carries environmental insurance and believes that the policy terms, conditions, limits and deductibles are adequate and appropriate under the circumstances, given the relative risk of loss, the cost of such coverage and current industry practice.

General Uninsured Losses. The Company carries property and rental loss, liability, flood and terrorism insurance. The Company believes that the policy terms, conditions, limits and deductibles are adequate and appropriate under the circumstances, given the relative risk of loss, the cost of such coverage and current industry practice. In addition, certain of the Company’s properties are located in areas that are subject to earthquake activity; therefore, the Company has obtained limited earthquake insurance on those properties. There are, however, certain types of extraordinary losses, such as those due to acts of war that may be either uninsurable or not economically insurable. Although the Company has obtained coverage for certain acts of terrorism, with policy specifications and insured limits that it believes are commercially reasonable, there can be no assurance that the Company will be able to collect under such policies. Should an uninsured loss occur, the Company could lose its investment in, and anticipated profits and cash flows from, a property.

F-27

Various properties that the Company owns or leases in New Orleans, Louisiana and South Florida suffered damage in 2005 as a result of Hurricanes Katrina and Wilma. Although the Company expects that its insurance will cover losses arising from this damage in excess of the industry standard deductibles paid by the Company, there can be no assurance the Company will be reimbursed for all losses incurred. Management is not aware of circumstances associated with these losses that would have a material adverse effect on the Company’s business, assets, or results from operations.

Captive Insurance Company. In December 2001, the Company formed a wholly-owned captive insurance company, Arcata National Insurance Ltd. (“Arcata”), which provides insurance coverage for all or a portion of losses below the deductible under the Company’s third-party policies. The Company capitalized Arcata in accordance with the applicable regulatory requirements. Arcata established annual premiums based on projections derived from the past loss experience at the Company’s properties. Annually, the Company engages an independent third party to perform an actuarial estimate of future projected claims, related deductibles and projected expenses necessary to fund associated risk management programs. Premiums paid to Arcata may be adjusted based on this estimate. Premiums paid to Arcata have a retrospective component, so that if expenses, including losses, deductibles and reserves, are less than premiums collected, the excess may be returned to the property owners (and, in turn, as appropriate, to the customers) and conversely, subject to certain limitations, if expenses, including losses, deductibles and reserves, are greater than premiums collected, an additional premium will be charged. As with all recoverable expenses, differences between estimated and actual insurance premiums will be recognized in the subsequent year. Through this structure, the Company believes that it has more comprehensive insurance coverage at an overall lower cost than would otherwise be available in the market.

F-28

15. Quarterly Financial Data (Unaudited)

Selected quarterly financial results for 2005 and 2004 were as follows (dollars in thousands, except share and per share amounts):

2005


	Quarter (unaudited)⁽¹⁾
	March 31			June 30			September 30			December 31			Year
Total revenues	$	156,721		$	158,421		$	160,659		$	200,348		$	676,149
Income before minority interests and discontinued operations		41,343			48,059			27,602			92,943			209,947
Total minority interests’ share of income		(24,812	)		(15,235	)		(14,755	)		(20,224	)		(75,026	)
Income from continuing operations		16,531			32,824			12,847			72,719			134,921
Total discontinued operations		30,236			7,965			16,221			68,464			122,886

Net income		46,767			40,789			29,068			141,183			257,807
Preferred stock dividends		(1,783	)		(1,783	)		(1,783	)		(2,039	)		(7,388	)

Net income available to common stockholders	$	44,984		$	39,006		$	27,285		$	139,144		$	250,419


Basic income per common share⁽²⁾
Income from continuing operations	$	0.18		$	0.37		$	0.13		$	0.83		$	1.52
Discontinued operations		0.36			0.10			0.19			0.81			1.46

Net income available to common stockholders	$	0.54		$	0.47		$	0.32		$	1.64		$	2.98


Diluted income per common share⁽²⁾
Income from continuing operations	$	0.17		$	0.36		$	0.13		$	0.79		$	1.45
Discontinued operations		0.35			0.09			0.18			0.77			1.40

Net income available to common stockholders	$	0.52		$	0.45		$	0.31		$	1.56		$	2.85


WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic		83,133,730			83,521,538			84,437,568			85,010,258			84,048,936

Diluted		86,516,695			87,076,011			88,373,479			88,981,657			87,873,399


(1)		Certain reclassifications have been made to the quarterly data to conform with the annual presentation with no net effect to net income or net income available to common stockholders.

(2)		The sum of quarterly financial data may vary from the annual data due to rounding.

F-29


2004


	Quarter (unaudited)⁽¹⁾
	March 31			June 30			September 30			December 31			Year
Total revenues	$	141,201		$	141,353		$	153,522		$	156,353		$	592,429
Income before minority interests and discontinued operations		24,114			25,394			31,146			38,217			118,871
Total minority interests’ share of income		(12,011	)		(13,311	)		(13,924	)		(14,032	)		(53,278	)
Income from continuing operations		12,103			12,083			17,222			24,185			65,593
Total discontinued operations		4,479			6,823			14,827			33,749			59,878

Net income		16,582			18,906			32,049			57,934			125,471
Preferred stock dividends		(1,783	)		(1,783	)		(1,783	)		(1,782	)		(7,131	)

Net income available to common stockholders	$	14,799		$	17,123		$	30,266		$	56,152		$	118,340


Basic income per common share⁽²⁾
Income from continuing operations	$	0.13		$	0.13		$	0.19		$	0.27		$	0.71
Discontinued operations		0.05			0.08			0.18			0.41			0.73

Net income available to common stockholders	$	0.18		$	0.21		$	0.37		$	0.68		$	1.44


Diluted income per common share⁽²⁾
Income from continuing operations	$	0.12		$	0.12		$	0.18		$	0.26		$	0.69
Discontinued operations		0.05			0.08			0.17			0.39			0.70

Net income available to common stockholders	$	0.17		$	0.20		$	0.35		$	0.65		$	1.39


WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic		81,691,434			82,071,604			82,193,473			82,537,232			82,133,627

Diluted		84,861,965			84,535,762			85,395,787			86,263,305			85,368,626


(1)		Certain reclassifications have been made to the quarterly data to conform with the annual presentation with no net effect to net income or per share amounts.

(2)		The sum of quarterly financial data may vary from the annual data due to rounding.

16. Segment Information

The Company mainly operates industrial properties and manages its business by markets. Such industrial properties represent more than 99.7% of the Company’s portfolio by rentable square feet and consist primarily of warehouse distribution facilities suitable for single or multiple customers, and are typically comprised of multiple buildings that are leased to customers engaged in various types of businesses. The Company’s geographic markets for industrial properties are managed separately because each market requires different operating, pricing and leasing strategies. The remaining 0.3% of the Company’s portfolio is comprised of retail and other properties located in Southeast Florida and Georgia. The accounting policies of the segments are the same as those described in the summary of significant accounting policies (See footnote 2). The Company evaluates performance based upon property net operating income of the combined properties in each segment.

The other domestic target markets category includes Austin, Baltimore/Washington D.C., Boston and Minneapolis. The other domestic non-target markets category captures all of the Company’s other U.S. markets, except for those markets listed individually in the table. The international target markets category includes France, Germany, Japan, Mexico and the Netherlands.

Summary information for the reportable segments is as follows (dollars in thousands):

F-30


	Rental Revenues									Property NOI⁽¹⁾
Segments	2005			2004			2003			2005			2004			2003
Industrial domestic hub and gateway markets:
Atlanta	$	21,752		$	30,411		$	29,080		$	16,963		$	23,765		$	23,048
Chicago		55,088			44,991			43,835			38,116			31,378			29,933
Dallas/Fort Worth		16,791			16,551			16,136			11,491			11,218			10,879
Los Angeles		106,104			103,438			93,823			84,330			80,960			74,431
Northern New Jersey/New York		85,331			64,662			52,709			61,278			45,022			34,735
San Francisco Bay Area		86,627			98,885			109,819			69,003			79,429			90,008
Miami		34,899			33,821			32,897			23,713			23,027			23,304
Seattle		44,368			41,675			31,813			34,394			32,539			24,863
On-Tarmac		56,912			54,425			49,152			33,198			30,596			26,580

Total industrial domestic hub markets		507,872			488,859			459,264			372,486			357,934			337,781
Other domestic target markets		104,301			109,560			103,051			74,150			80,170			74,159
Other domestic non-target markets		33,126			34,004			29,588			24,643			25,351			21,611
International target markets		30,762			25,641			6,101			23,942			20,694			5,697
Straight-line rents and amortization of lease intangibles		19,523			16,281			10,662			19,523			16,281			10,662
Total other markets		2,759			6,403			12,642			1,849			3,546			7,793
Discontinued operations		(66,136	)		(101,214	)		(117,643	)		(47,594	)		(72,700	)		(86,851	)

Total	$	632,207		$	579,534		$	503,665		$	468,999		$	431,276		$	370,852


(1)		Property net operating income (“NOI”) is defined as rental revenue, including reimbursements, less property operating expenses, which excludes depreciation, amortization, general and administrative expenses and interest expense. For a reconciliation of NOI to net income, see the table below.

The Company considers NOI to be an appropriate supplemental performance measure because NOI reflects the operating performance of the Company’s real estate portfolio on a segment basis, and the Company uses NOI to make decisions about resource allocations and to assess regional property level performance. However, NOI should not be viewed as an alternative measure of the Company’s financial performance since it does not reflect general and administrative expenses, interest expense, depreciation and amortization costs, capital expenditures and leasing costs, or trends in development and construction activities that could materially impact the Company’s results from operations. Further, the Company’s NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating NOI. The following table is a reconciliation from NOI to reported net income, a financial measure under GAAP:


	2005			2004			2003
Property NOI	$	468,999		$	431,276		$	370,852
Private capital income		43,942			12,895			13,337
Depreciation and amortization		(165,438	)		(141,120	)		(116,067	)
Impairment losses		—			—			(5,251	)
General and administrative		(77,409	)		(58,843	)		(46,418	)
Fund costs		(1,482	)		(1,741	)		(825	)
Equity in earnings of unconsolidated joint ventures		10,770			3,781			5,445
Interest and other income		6,499			3,758			3,976
Gains from dispositions of real estate		19,099			5,219			7,429
Development profits, net of taxes		54,811			8,528			14,441
Interest, including amortization		(149,844	)		(144,882	)		(131,878	)
Total minority interests’ share of income		(75,026	)		(53,278	)		(56,442	)
Total discontinued operations		122,886			59,878			70,529

Net income	$	257,807		$	125,471		$	129,128

The Company’s total assets by market were:

F-31


	Total Assets as of
	December 31, 2005		December 31, 2004
Industrial domestic hub and gateway markets:
Atlanta	$	208,751	$	204,554
Chicago		504,581		479,919
Dallas/Fort Worth		137,112		143,953
Los Angeles		930,917		922,401
Northern New Jersey/New York		756,719		775,784
San Francisco Bay Area		789,129		788,120
Miami		372,728		363,694
Seattle		371,029		377,142
On-Tarmac		245,046		239,377

Total industrial domestic hub markets		4,316,012		4,294,944
Other domestic target markets		693,287		825,930
Other non-target markets and other		264,954		308,428
International target markets		975,960		684,184
Total other markets		10,277		15,915
Investments in unconsolidated joint ventures		118,653		55,166
Non-segment assets⁽¹⁾		423,596		202,376

Total assets	$	6,802,739	$	6,386,943


(1)		Non-segment assets consist of corporate assets including cash and mortgages receivable.

17. Subsequent Events

Effective January 27, 2006, Robert Pattillo Properties, Inc. exercised its rights under its Put Agreement, dated September 24, 2004, with the Operating Partnership, and sold all of its series N preferred units to the Operating Partnership at a price equal to $50.00 per unit, plus all accrued and unpaid distributions to the date of such sale. Also on January 27, 2006, AMB Property II, L.P. repurchased all of the series N preferred units from the Operating Partnership at a price equal to $50.00 per unit, plus all accrued and unpaid distributions to the date of such sale and cancelled all of the outstanding series N preferred units as of such date.

On February 16, 2006, the Operating Partnership and certain of its consolidated subsidiaries entered into a third amended and restated credit agreement for a $250 million unsecured revolving credit facility that replaced the then-existing $100 million unsecured revolving credit facility that was to mature in June 2008. The Company, along with the Operating Partnership, guarantees the obligations for such subsidiaries and other entities controlled by the Company or the Operating Partnership that are selected to be borrowers by the Operating Partnership from time to time under and pursuant to the credit facility. The four-year credit facility includes a multi-currency component under which up to $250 million can be drawn in U.S. dollars, Hong Kong dollars, Singapore dollars, Canadian dollars and Euros. The line, which matures in February 2010 and carries a one-year extension option, can be increased up to $350 million upon certain conditions and the payment of an extension fee equal to 0.15% of the outstanding commitments. The rate on the borrowings is generally LIBOR plus a margin, based on the current credit rating of the Operating Partnership’s senior unsecured long-term debt, which is currently 60 basis points, with an annual facility fee based on the current credit rating of the Operating Partnership’s senior unsecured long-term debt. The credit agreement contains affirmative covenants, including financial reporting requirements and maintenance of specified financial ratios by the Operating Partnership, and negative covenants, including limitations on the incurrence of liens and limitations on mergers or consolidations. The borrowers intend to use the proceeds from the facility to fund the acquisition and development of properties and general working capital requirements.

Subsequent to the filing of the Company’s annual report on Form 10-K on March 10, 2006, the Company and the Operating Partnership plan to file a registration statement on Form S-3 with the Securities and Exchange Commission (SEC) on June 21, 2006 with respect to the offer, from time to time, of up to $500,000,000 of one or more series of medium-term notes that may be issued by AMB Property, L.P. and guaranteed by the Company. In connection with the filing of this registration statement on Form S-3 and for the sole purpose of meeting post-annual report SEC reporting requirements with respect to such registration statement, the Company restated its audited consolidated financial statements for the year ended December 31, 2005 due to certain provisions of Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” that require the Company to report the results of operations of a property if it has either been disposed or is classified as held for sale in discontinued

F-32

AMB PROPERTY CORPORATION
SCHEDULE III
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
As of December 31, 2005
(in thousands, except number of buildings)


							Initial Cost to Company						Gross Amount Carried at 12/31/05
											Costs Capitalized										Year of
	No of								Building &		Subsequent to				Building &		Total Costs		Accumulated		Construction/		Depreciable
Property	Bldgs		Location	Type	Encumbrances (3)		Land		Improvements		Acquisition		Land		Improvements		(1) (2)		Depreciation (4)		Acquisition		Life (Years)
Atlanta
Airport Plaza		3	GA	IND	$	4,334	$	1,811	$	5,093	$	735	$	1,811	$	5,828	$	7,639	$	486		2003		5-40
Airport South Business Park		8	GA	IND		16,440		9,200		16,437		13,715		9,200		30,152		39,352		4,002		2001		5-40
AMB Airlogistics Center		3	GA	IND		17,225		7,757		19,084		26		7,757		19,110		26,867		367		2005		5-40
Amwiler-Gwinnett Ind. Park		6	GA	IND		5,264		3,488		10,487		3,315		3,488		13,802		17,290		4,061		1995		5-40
Atlanta South Business Park		9	GA	IND		—		8,047		24,179		2,852		8,047		27,031		35,078		6,702		1997		5-40
South Ridge at Hartsfield		1	GA	IND		3,912		2,096		4,008		615		2,096		4,623		6,719		523		2001		5-40
Southfield/KRDC Industrial SG		13	GA	IND		32,859		13,578		35,730		7,368		13,578		43,098		56,676		6,198		1997		5-40
Southside Distribution Center		1	GA	IND		1,064		766		2,480		105		766		2,585		3,351		312		2001		5-40
Sylvan Industrial		1	GA	IND		—		1,946		5,905		631		1,946		6,536		8,482		1,167		1999		5-40
Chicago
Addison Business Center		1	IL	IND		—		1,060		3,228		387		1,060		3,615		4,675		613		2000		5-40
Alsip Industrial		1	IL	IND		—		1,200		3,744		694		1,200		4,438		5,638		874		1998		5-40
AMB District Industrial		1	IL	IND		—		703		1,339		172		703		1,511		2,214		103		2004		5-40
AMB Glendale Lakes Dist.		2	IL	IND		—		2,801		7,646		6		2,801		7,652		10,453		20		2005		5-40
AMB Golf Distribution		1	IL	IND		14,141		7,740		16,749		115		7,740		16,864		24,604		523		2005		5-40
AMB High Grove Distribution		1	IL	IND		4,275		2,158		3,792		14		2,158		3,806		5,964		69		2005		5-40
AMB Nicholas Warehouse		1	IL	IND		—		4,681		5,810		1,826		4,681		7,636		12,317		385		2005		5-40
AMB O’Hare		14	IL	IND		9,170		2,924		8,995		2,593		2,924		11,588		14,512		2,000		1999		5.40
AMB Port O’Hare		2	IL	IND		5,861		4,913		5,761		1,182		4,913		6,943		11,856		1,209		2001		5-40
AMB Sivert Distribution		1	IL	IND		—		857		1,377		573		857		1,950		2,807		122		2004		5-40
AMB Turnberry Distribution		5	IL	IND		61,620		19,112		78,360		452		19,112		78,812		97,924		2,860		2004		5-40
Belden Avenue SGP		3	IL	IND		9,676		5,393		13,655		849		5,487		14,410		19,897		2,706		1997		5-40
Bensenville Ind Park		13	IL	IND		—		20,799		62,438		17,427		20,799		79,865		100,664		21,482		1997		5-40
Bridgeview Industrial		1	IL	IND		—		1,332		3,996		560		1,332		4,556		5,888		943		1997		5-40
Chancellory Warehouse		1	IL	IND		2,486		1,566		2,006		839		1,566		2,845		4,411		363		2002		5-40
Chicago Industrial Portfolio		1	IL	IND		—		762		2,285		744		762		3,029		3,791		642		1997		5-40
Chicago Ridge Freight Terminal		1	IL	IND		—		3,705		3,576		141		3,705		3,717		7,422		476		2001		5-40
Elk Grove Village SG		10	IL	IND		16,267		7,059		21,739		4,771		7,059		26,510		33,569		4,655		1997		5-40
Executive Drive		1	IL	IND		—		1,399		4,236		1,331		1,399		5,567		6,966		1,495		1997		5-40
Hamilton Parkway		1	IL	IND		—		1,554		4,408		575		1,554		4,983		6,537		1,107		1997		5-40
Hintz Building		1	IL	IND		—		420		1,259		402		420		1,661		2,081		372		1998		5-40
Itasca Industrial Portfolio		6	IL	IND		—		6,416		19,290		4,288		6,416		23,578		29,994		6,626		1997		5-40
Melrose Park Distribution Ctr.		1	IL	IND		—		2,936		9,190		2,147		2,936		11,337		14,273		3,393		1997		5-40
NDP — Chicago		3	IL	IND		—		1,496		4,487		1,098		1,496		5,585		7,081		1,532		1998		5-40
O’Hare Industrial Portfolio		12	IL	IND		—		5,497		15,955		5,259		5,497		21,214		26,711		5,148		1997		5-40
Poplar Gateway Truck Terminal		1	IL	IND		—		4,551		3,152		58		4,551		3,210		7,761		238		2002		5-40
Stone Distribution Center		1	IL	IND		2,859		2,242		3,266		867		2,242		4,133		6,375		281		2003		5-40
Thorndale Distribution		1	IL	IND		5,355		4,130		4,215		426		4,130		4,641		8,771		542		2002		5-40
Touhy Cargo Terminal		1	IL	IND		5,183		2,800		110		4,572		2,800		4,682		7,482		308		2002		5-40
Windsor Court		1	IL	IND		—		766		2,338		165		766		2,503		3,269		539		1997		5-40
Wood Dale Industrial SG		5	IL	IND		8,411		2,868		9,166		1,238		2,868		10,404		13,272		1,527		1999		5-40
Yohan Industrial		3	IL	IND		4,476		5,904		7,323		1,416		5,904		8,739		14,643		904		2003		5-40
Dallas/Ft. Worth
Addison Technology Center		1	TX	IND		—		899		2,695		1,267		899		3,962		4,861		1,044		1998		5-40
Dallas Industrial		12	TX	IND		—		5,938		17,836		5,758		5,938		23,594		29,532		6,798		1997		5-40
Greater Dallas Industrial Port		4	TX	IND		—		4,295		14,286		3,130		4,295		17,416		21,711		4,868		1997		5-40

S-1

AMB PROPERTY CORPORATION
SCHEDULE III
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
As of December 31, 2005
(in thousands, except number of buildings)


							Initial Cost to Company						Gross Amount Carried at 12/31/05
											Costs Capitalized										Year of
	No of								Building &		Subsequent to				Building &		Total Costs		Accumulated		Construction/		Depreciable
Property	Bldgs		Location	Type	Encumbrances (3)		Land		Improvements		Acquisition		Land		Improvements		(1) (2)		Depreciation (4)		Acquisition		Life (Years)
Lincoln Industrial Center		1	TX	IND		—		671		2,052		321		671		2,373		3,044		644		1997		5-40
Lonestar Portfolio		6	TX	IND		15,414		6,009		19,773		4,277		6,451		23,608		30,059		2,903		1997		5-40
Northfield Dist. Center		6	TX	IND		21,867		7,728		24,492		1,468		7,729		25,959		33,688		2,400		2002		5-40
Richardson Tech Center SGP		2	TX	IND		4,913		1,522		5,887		2,419		1,522		8,306		9,828		836		1997		5-40
Valwood Industrial		2	TX	IND		—		1,983		5,989		2,341		1,983		8,330		10,313		2,390		1997		5-40
West North Carrier Parkway		1	TX	IND		—		1,375		4,165		1,274		1,375		5,439		6,814		1,393		1997		5-40
Los Angeles
AMB Forest Distribution Center		1	CA	IND		—		2,990		3,486		306		2,990		3,792		6,782		53		2005		5-40
AMB Line Haul Distribution Ctr		2	CA	IND		—		3,474		4,913		—		3,474		4,913		8,387		—		2005		5-40
AMB Starboard Distribution Ctr		1	CA	IND		—		19,683		17,386		756		19,683		18,142		37,825		420		2005		5-40
AMB Triton Distribution Center		1	CA	IND		—		6,856		7,135		65		6,856		7,200		14,056		35		2005		5-40
Anaheim Industrial Property		1	CA	IND		—		1,457		4,340		857		1,457		5,197		6,654		1,262		1997		5-40
Artesia Industrial		24	CA	IND		44,947		22,238		66,692		12,133		22,238		78,825		101,063		19,570		1997		5-40
Aviation Logistics Center A-L		8	CA	IND		31,950		22,141		19,178		2,965		22,141		22,143		44,284		1,527		2003		5-40
Bell Ranch Distribution		5	CA	IND		—		6,904		12,915		1,039		6,904		13,954		20,858		1,794		2001		5-40
Cabrillo Distribution Center		1	CA	IND		12,122		7,563		11,178		35		7,563		11,213		18,776		848		2002		5-40
Carson Industrial		12	CA	IND		—		4,231		10,419		5,270		4,231		15,689		19,920		3,061		1999		5-40
Carson Town Center		2	CA	IND		—		6,565		3,210		14,944		6,565		18,154		24,719		2,282		2000		5-40
Chartwell Distribution Center		1	CA	IND		—		2,711		8,192		979		2,711		9,171		11,882		1,272		2000		5-40
Del Amo Industrial Center		1	CA	IND		—		2,529		7,651		74		2,529		7,725		10,254		1,012		2000		5-40
Eaves Distribution Center		3	CA	IND		14,620		11,893		12,708		2,651		11,893		15,359		27,252		2,480		2001		5-40
Ford Distribution Cntr		7	CA	IND		—		24,557		22,045		3,986		24,557		26,031		50,588		3,618		2001		5-40
Fordyce Distribution Center		1	CA	IND		7,208		4,340		8,335		4,608		5,835		11,448		17,283		959		2001		5-40
Harris Bus Ctr Alliance II		9	CA	IND		31,770		20,772		31,050		3,599		20,863		34,558		55,421		5,679		2000		5-40
Hawthorne LAX Cargo AMBPTNII		1	CA	IND		8,114		2,775		8,377		514		2,775		8,891		11,666		1,169		2000		5-40
International Multifoods		1	CA	IND		—		1,613		4,879		1,602		1,613		6,481		8,094		1,600		1997		5-40
LA Co Industrial Port SGP		6	CA	IND		22,029		9,430		29,242		4,503		9,432		33,743		43,175		4,500		1997		5-40
LAX Gateway		1	CA	IND		16,124		—		26,774		310		—		27,084		27,084		1,949		2004		5-40
LAX Logistics Center 1		2	CA	IND		31,236		29,622		25,913		1,588		29,622		27,501		57,123		1,903		2003		5-40
Los Nietos Business Center SG		4	CA	IND		7,672		2,488		7,751		973		2,488		8,724		11,212		1,273		1999		5-40
NDP — Los Angeles		6	CA	IND		—		5,948		17,844		3,493		5,948		21,337		27,285		4,736		1998		5-40
Normandie Industrial		1	CA	IND		—		2,398		7,490		1,756		2,398		9,246		11,644		1,807		2000		5-40
Northpointe Commerce		2	CA	IND		—		1,773		5,358		653		1,773		6,011		7,784		1,441		1997		5-40
Park One at LAX, LLC		—	CA	IND		—		75,000		431		386		75,000		817		75,817		44		2002		5-40
Pioneer-Alburtis		5	CA	IND		7,978		2,422		7,166		1,154		2,422		8,320		10,742		1,301		1999		5-40
Slauson Dist. Ctr. AMBPTNII		8	CA	IND		25,238		7,806		23,552		5,610		7,806		29,162		36,968		4,195		2000		5-40
Sunset Dist. Center		3	CA	IND		11,607		13,360		2,764		9,970		13,360		12,734		26,094		857		2002		5-40
Systematics		1	CA	IND		—		911		2,773		638		911		3,411		4,322		983		1997		5-40
Torrance Commerce Center		6	CA	IND		—		2,045		6,136		1,276		2,045		7,412		9,457		1,946		1998		5-40
Van Nuys Airport Industrial		4	CA	IND		—		9,393		8,641		15,215		9,393		23,856		33,249		4,518		2000		5-40
Walnut Drive		1	CA	IND		—		964		2,918		763		964		3,681		4,645		908		1997		5-40
Watson Industrial Center AFdII		1	CA	IND		4,362		1,713		5,320		1,325		1,713		6,645		8,358		951		2001		5-40
Wilmington Avenue Warehouse		2	CA	IND		—		3,849		11,605		3,668		3,849		15,273		19,122		3,633		1999		5-40
Miami
Beacon Centre		18	FL	IND		65,798		31,704		96,681		21,024		31,704		117,705		149,409		20,619		2000		5-40
Beacon Industrial Park		8	FL	IND		—		10,105		31,437		6,340		10,105		37,777		47,882		8,639		1997		5-40
Beacon Lakes 109		1	FL	IND		18,450		1,689		8,133		923		1,689		9,056		10,745		401		2005		5-40
Blue Lagoon Business Park		2	FL	IND		—		4,945		14,875		1,533		4,945		16,408		21,353		3,889		1997		5-40
Cobia Distribution Center		2	FL	IND		—		1,792		5,950		1,532		1,792		7,482		9,274		191		2004		5-40
Dolphin Distribution Center		1	FL	IND		2,385		1,581		3,602		154		1,581		3,756		5,337		96		2003		5-40

S-2

AMB PROPERTY CORPORATION
SCHEDULE III
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
As of December 31, 2005
(in thousands, except number of buildings)


							Initial Cost to Company						Gross Amount Carried at 12/31/05
											Costs Capitalized											Year of
	No of								Building &		Subsequent to				Building &		Total Costs		Accumulated			Construction/		Depreciable
Property	Bldgs		Location	Type	Encumbrances (3)		Land		Improvements		Acquisition		Land		Improvements		(1) (2)		Depreciation (4)			Acquisition		Life (Years)
AMB MIA Logistics Ctr 6905		1	FL	IND		—		2,793		6,912		142		2,793		7,054		9,847		148			2005		5-40
AMB Seaboard Industrial Park		3	FL	IND		—		700		2,413		87		700		2,500		3,200		4			2005		5-40
Gratigny Distribution Center		1	FL	IND		3,800		1,551		2,380		897		1,551		3,277		4,828		339			2003		5-40
Marlin Distribution Center		1	FL	IND		—		1,076		2,169		619		1,076		2,788		3,864		286			2003		5-40
Miami Airport Business Center		6	FL	IND		—		6,400		19,634		2,946		6,400		22,580		28,980		4,235			1999		5-40
Panther Distribution Center		1	FL	IND		3,900		1,840		3,252		1,024		1,840		4,276		6,116		228			2003		5-40
Sunrise Industrial		3	FL	IND		7,415		4,573		17,088		506		4,573		17,594		22,167		2,669			1998		5-40
Tarpon Distribution Center		1	FL	IND		2,544		884		3,914		215		884		4,129		5,013		302			2004		5-40
No. New Jersey/New York City
AMB JFK Airgate Center		4	NY	IND		13,055		5,980		26,393		1,808		5,980		28,201		34,181		866			2005		5-40
AMB Meadowlands Park		8	NJ	IND		—		5,449		14,458		4,225		5,449		18,683		24,132		3,466			2000		5-40
AMB Pointview Dist. Ctr.		1	NJ	IND		12,547		4,693		12,354		473		4,693		12,827		17,520		143			2005		5-40
AMB Tri-Port Distribution Ctr		1	NJ	IND		—		25,672		19,853		226		25,672		20,079		45,751		866			2004		5-40
Dellamor		8	NJ	IND		13,928		12,061		11,577		2,059		12,061		13,636		25,697		1,467			2002		5-40
Docks Corner SG (Phase II)		1	NJ	IND		34,465		13,672		22,516		20,360		13,672		42,876		56,548		6,355			1997		5-40
Fairfalls Portfolio		28	NJ	IND		33,836		20,381		45,038		2,497		20,381		47,535		67,916		2,983			2004		5-40
Fairmeadows Portfolio (19-21)		3	NJ	IND		6,976		4,317		8,836		76		4,317		8,912		13,229		473			2004		5-40
Fairmeadows Portfolio 1-18, except 14)		17	NJ	IND		23,831		18,615		27,901		3,968		18,615		31,869		50,484		2,317			2003		5-40
Jamesburg Road Corporate Park		3	NJ	IND		21,146		11,700		35,102		6,030		11,700		41,132		52,832		8,945			1998		5-40
JFK Air Cargo		15	NY	IND		—		16,944		45,694		6,331		16,944		52,025		68,969		9,710			2000		5-40
JFK Airport Park		1	NY	IND		—		2,350		7,250		1,039		2,349		8,290		10,639		1,477			2000		5-40
JFK Logistics Center Bldgs A-D		4	NY	IND		100,836		57,487		96,593		162		57,487		96,755		154,242		4,530			2004		5-40
Linden Industrial		1	NJ	IND		—		900		2,753		1,493		900		4,246		5,146		778			1999		5-40
Mahwah Corporate Center		4	NJ	IND		—		7,068		22,087		3,042		7,069		25,128		32,197		4,419			1998		5-40
Meadow Lane		1	NJ	IND		—		838		2,594		304		838		2,898		3,736		591			1999		5-40
Meadowlands ALFII		4	NJ	IND		11,760		6,666		13,093		2,234		6,666		15,327		21,993		2,527			2001		5-40
Meadowlands Cross Dock		1	NJ	IND		—		1,110		3,485		1,040		1,110		4,525		5,635		1,017			2000		5-40
Moonachie Industrial		2	NJ	IND		5,256		2,731		5,228		399		2,731		5,627		8,358		812			2001		5-40
Mooncreek Distribution Center		1	NJ	IND		—		2,958		7,924		46		2,958		7,970		10,928		441			2004		5-40
Murray Hill Parkway		2	NJ	IND		—		1,670		2,568		5,278		1,670		7,846		9,516		2,697			1999		5-40
Newark Airport I & II		2	NJ	IND		3,444		1,755		5,400		569		1,755		5,969		7,724		1,161			2000		5-40
Orchard Hill		1	NJ	IND		1,273		1,212		1,411		624		1,212		2,035		3,247		129			2002		5-40
Porete Avenue Warehouse		1	NJ	IND		—		4,067		12,202		5,215		4,067		17,417		21,484		3,710			1998		5-40
Skyland Crossdock		1	NJ	IND		—		—		7,250		266		—		7,516		7,516		731			2002		5-40
Teterboro Meadowlands 15		1	NJ	IND		9,389		4,961		9,618		1,397		4,961		11,015		15,976		2,358			2001		5-40
Two South Middlesex		1	NJ	IND		—		2,247		6,781		2,239		2,247		9,020		11,267		2,297			1997		5-40
On-Tarmac
AMB BWI Cargo Center E		1	MD	IND		—		—		6,367		114		—		6,481		6,481		1,797			2000		5-19
AMB DAY Cargo Center		5	OH	IND		6,395		—		7,163		450		—		7,613		7,613		1,919			2000		5-23
AMB DFW Cargo Center 1		1	TX	IND		—		—		34,198		157		—		34,355		34,355		(1	)		2000		5-32
AMB DFW Cargo Center 2		1	TX	IND		—		—		4,286		14,536		—		18,822		18,822		3,181			1999		5-39
AMB DFW Cargo Center East		3	TX	IND		5,812		—		20,632		1,103		—		21,735		21,735		4,260			2000		5-26
AMB IAD Cargo Center 5		1	VA	IND		—		—		38,840		348		—		39,188		39,188		9,102			2000		5-15
AMB JAX Cargo Center		1	FL	IND		—		—		3,029		100		—		3,129		3,129		714			2000		5-22
AMB JFK Cargo Center 75_77		2	NJ	IND		—		—		30,965		4,510		—		35,475		35,475		9,763			2002		5-13
AMB LAS Cargo Center 1_4		4	NV	IND		—		—		19,721		1,276		—		20,997		20,997		2,161			2003		5-33
AMB LAX Cargo Center		3	CA	IND		6,772		—		13,445		283		—		13,728		13,728		3,259			2000		5-22
AMB MCI Cargo Center 1		1	MO	IND		4,520		—		5,793		253		—		6,046		6,046		1,745			2000		5-18
AMB MCI Cargo Center 2		1	MO	IND		8,705		—		8,134		90		—		8,224		8,224		1,533			2000		5-27
AMB MIA Cargo Ctr 712		1	FL	IND		—		—		18,260		583		—		18,843		18,843		797			2005		5-32
AMB PDX Cargo Center Airtrans		2	OR	IND		—		—		26		11,076		—		11,102		11,102		1,712			2002		5-28
AMB PHL Cargo Center C2		1	PA	IND		—		—		9,716		2,127		—		11,843		11,843		3,168			2000		5-27

S-3

AMB PROPERTY CORPORATION
SCHEDULE III
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
As of December 31, 2005
(in thousands, except number of buildings)


							Initial Cost to Company						Gross Amount Carried at 12/31/05
											Costs Capitalized										Year of
	No of								Building &		Subsequent to				Building &		Total Costs		Accumulated		Construction/		Depreciable
Property	Bldgs		Location	Type	Encumbrances (3)		Land		Improvements		Acquisition		Land		Improvements		(1) (2)		Depreciation (4)		Acquisition		Life (Years)
AMB RNO Cargo Center 10_11		2	NV	IND		—		—		6,014		232		—		6,246		6,246		823		2003		5-23
AMB SEA Air Cargo Center 314		1	WA	IND		2,424		—		2,939		992		—		3,931		3,931		1,065		2003		5-15
AMB SEA Cargo Center North		2	WA	IND		4,077		—		15,594		365		—		15,959		15,959		3,120		2000		5-27
AMB SEA Cargo Center South		1	WA	IND		—		—		3,056		283		—		3,339		3,339		1,259		2000		5-14
San Francisco Bay Area
Acer Distribution Center		1	CA	IND		—		3,146		9,480		2,990		3,147		12,469		15,616		3,435		1997		5-40
Albrae Business Center		1	CA	IND		7,473		6,299		6,227		1,060		6,299		7,287		13,586		934		2001		5-40
Alvarado Business Center SG		5	CA	IND		23,012		6,328		26,671		10,077		6,328		36,748		43,076		5,296		1997		5-40
AMB Spruce Avenue		1	CA	IND		31,352		32,702		33,091		2		32,701		33,094		65,795		360		2005		5-40
Brennan Distribution		1	CA	IND		3,997		3,683		3,022		2,193		3,683		5,215		8,898		1,211		2001		5-40
Central Bay		2	CA	IND		6,706		3,896		7,399		1,850		3,895		9,250		13,145		1,625		2001		5-40
Component Drive Ind Port		3	CA	IND		—		12,688		6,974		1,467		12,688		8,441		21,129		1,306		2001		5-40
Dado Distribution		1	CA	IND		—		7,221		3,739		2,312		7,221		6,051		13,272		880		2001		5-40
Doolittle Distribution Center		1	CA	IND		—		2,644		8,014		1,257		2,644		9,271		11,915		1,653		2000		5-40
Dowe Industrial Center		2	CA	IND		—		2,665		8,033		2,130		2,664		10,164		12,828		2,608		1997		5-40
Dublin Industrial Portfolio		1	CA	IND		—		2,980		9,042		2,059		2,980		11,101		14,081		1,830		2000		5-40
East Bay Doolittle		1	CA	IND		—		7,128		11,023		2,551		7,128		13,574		20,702		2,179		2001		5-40
East Bay Whipple		1	CA	IND		6,639		5,333		8,126		1,678		5,333		9,804		15,137		1,373		2001		5-40
East Grand Airfreight		2	CA	IND		3,945		5,093		4,190		37		5,093		4,227		9,320		344		2003		5-40
Edgewater Industrial Center		1	CA	IND		—		4,038		15,113		5,015		4,038		20,128		24,166		3,864		2000		5-40
Fairway Drive Ind SGP		4	CA	IND		11,777		4,204		13,949		3,058		4,204		17,007		21,211		2,397		1997		5-40
Hayward Industrial — Hathaway		2	CA	IND		—		4,473		13,545		865		4,472		14,411		18,883		1,926		2000		5-40
Junction Industrial Park		4	CA	IND		—		7,875		23,975		3,754		7,875		27,729		35,604		5,578		1999		5-40
Laurelwood Drive		2	CA	IND		—		2,750		8,538		665		2,750		9,203		11,953		1,959		1997		5-40
Lawrence SSF		1	CA	IND		—		2,870		5,521		1,164		2,870		6,685		9,555		1,221		2001		5-40
Marina Business Park		2	CA	IND		4,145		3,280		4,317		424		3,281		4,740		8,021		424		2002		5-40
Martin/Scott Ind Port		2	CA	IND		—		9,052		5,309		446		9,052		5,755		14,807		750		2001		5-40
MBC Industrial		4	CA	IND		—		5,892		17,716		3,439		5,892		21,155		27,047		5,392		1997		5-40
Milmont Page SGP		3	CA	IND		10,996		3,420		10,600		3,274		3,420		13,874		17,294		1,915		1997		5-40
Moffett Distribution		7	CA	IND		18,359		26,916		11,276		2,772		26,915		14,049		40,964		2,041		2001		5-40
Moffett Park / Bordeaux R&D		14	CA	IND		—		14,805		44,462		13,615		14,805		58,077		72,882		17,964		1997		5-40
Pacific Business Center		2	CA	IND		—		5,417		16,291		3,776		5,417		20,067		25,484		5,077		1997		5-40
Pardee Drive SG		1	CA	IND		1,475		619		1,880		283		618		2,164		2,782		288		1999		5-40
Silicon Valley R&D		5	CA	IND		—		6,700		20,186		11,247		6,700		31,433		38,133		8,636		1997		5-40
South Bay Industrial		8	CA	IND		42		14,992		45,016		7,223		14,992		52,239		67,231		13,196		1997		5-40
Utah Airfreight		1	CA	IND		16,627		18,753		8,381		1,733		18,753		10,114		28,867		1,085		2003		5-40
Wiegman Road		1	CA	IND		—		1,563		4,688		1,584		1,563		6,272		7,835		1,689		1997		5-40
Williams & Burroughs AMB PrtII		4	CA	IND		7,618		2,262		6,981		3,389		2,262		10,370		12,632		2,408		1999		5-40
Willow Park Industrial		21	CA	IND		—		25,590		76,772		18,074		25,591		94,845		120,436		22,193		1998		5-40
Yosemite Drive		1	CA	IND		—		2,350		7,052		1,045		2,351		8,096		10,447		1,816		1997		5-40
Zanker/Charcot Industrial		5	CA	IND		—		5,282		15,887		3,509		5,282		19,396		24,678		4,881		1997		5-40
Seattle
Black River		1	WA	IND		3,275		1,845		3,558		427		1,844		3,986		5,830		634		2001		5-40
Earlington Business Park		1	WA	IND		4,059		2,766		3,234		882		2,766		4,116		6,882		514		2002		5-40
East Valley Warehouse		1	WA	IND		—		6,813		20,511		5,887		6,813		26,398		33,211		6,579		1999		5-40
Harvest Business Park		3	WA	IND		—		2,371		7,153		1,578		2,371		8,731		11,102		2,402		1997		5-40

S-4

AMB PROPERTY CORPORATION
SCHEDULE III
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
As of December 31, 2005
(in thousands, except number of buildings)


							Initial Cost to Company						Gross Amount Carried at 12/31/05
											Costs Capitalized										Year of
	No of								Building &		Subsequent to				Building &		Total Costs		Accumulated		Construction/		Depreciable
Property	Bldgs		Location	Type	Encumbrances (3)		Land		Improvements		Acquisition		Land		Improvements		(1) (2)		Depreciation (4)		Acquisition		Life (Years)
AMB Portside Distribution Cent		1	WA	IND		—		9,964		14,421		2,686		9,964		17,107		27,071		241		2005		5-40
AMB Sumner Landing		1	WA	IND		—		6,937		17,577		2,016		6,937		19,593		26,530		435		2005		5-40
Kent Centre Corporate Park		4	WA	IND		—		3,042		9,165		1,918		3,042		11,083		14,125		2,867		1997		5-40
Kingsport Industrial Park		7	WA	IND		—		8,101		23,812		5,842		7,919		29,836		37,755		7,620		1997		5-40
NDP — Seattle		4	WA	IND		11,437		3,992		11,774		1,275		3,993		13,048		17,041		1,387		1998		5-40
Northwest Distribution Center		3	WA	IND		—		3,533		10,751		1,309		3,533		12,060		15,593		3,092		1997		5-40
Puget Sound Airfreight		1	WA	IND		—		1,329		1,830		383		1,329		2,213		3,542		322		2002		5-40
Renton Northwest Corp. Park		6	WA	IND		23,438		25,959		14,792		1,161		25,959		15,953		41,912		1,610		2002		5-40
SEA Logistics Center 1		3	WA	IND		17,345		9,218		18,967		1,146		9,217		20,114		29,331		1,424		2003		5-40
SEA Logistics Center 2		3	WA	IND		14,197		11,535		24,601		1,502		12,874		24,764		37,638		1,517		2003		5-40
Trans-Pacific Industrial Park		11	WA	IND		48,600		31,675		42,210		6,091		31,675		48,301		79,976		3,366		2003		5-40
Other Industrial Markets
Activity Distribution Center		4	CA	IND		—		3,736		11,248		2,775		3,736		14,023		17,759		3,501		1997		5-40
AMB Broadmoor Distribution		1	MA	IND		—		2,459		5,720		—		2,460		5,719		8,179		79		2005		5-40
AMB Capronilaan		1	The Netherlands	IND		14,737		8,525		14,633		—		8,525		14,633		23,158		775		2004		5-40
AMB CDG Cargo Center SAS		1	France	IND		19,468		—		37,002		—		—		37,002		37,002		1,356		2004		5-37
AMB Cedar Hill Distribution		1	MA	IND		—		1,274		3,329		—		1,274		3,329		4,603		43		2005		5-40
AMB Energy Park Distribution		1	MN	IND		8,970		3,700		9,374		138		3,701		9,511		13,212		179		2005		5-40
AMB Industrial Park Bus. Ctr		1	MN	IND		3,240		1,648		4,188		8		1,649		4,195		5,844		160		2004		5-40
AMB Jiuting DC		1	Shanghai	IND		—		—		8,290		—		—		8,290		8,290		—		2005		5-40
AMB L’Isle D’Abeau		1	Lyon	IND		—		3,710		14,174		—		3,710		14,174		17,884		267		2005		5-40
AMB Lunar Pointe Distribution		1	MN	IND		—		2,309		5,601		—		2,309		5,601		7,910		—		2005		5-40
AMB Northpoint Indust. Center		3	MN	IND		6,300		2,769		8,087		32		2,769		8,119		10,888		388		2004		5-40
AMB Pinewood Distribution		1	MA	IND		16,000		7,835		15,130		—		7,835		15,130		22,965		87		2005		5-40
AMB Schiphol Dist Center		1	The Netherlands	IND		8,896		5,618		8,595		—		5,618		8,595		14,213		321		2004		5-40
AMB Shady Oak Indust. Center		1	MN	IND		1,760		897		1,794		247		896		2,042		2,938		115		2004		5-40
B.W.I.P.		2	MD	IND		—		2,258		5,149		1,185		2,258		6,334		8,592		646		2002		5-40
Beltway Distribution		1	VA	IND		—		4,800		15,159		6,036		4,800		21,195		25,995		5,104		1999		5-40
Boston Industrial		17	MA	IND		7,775		16,125		49,811		18,597		16,125		68,408		84,533		18,476		1998		5-40
Boston Marine Industrial Park		1	MA	IND		49,559		—		69,135		2,073		—		71,208		71,208		4,396		2004		5-40
Bourget Industrial		1	France	IND		20,433		9,753		23,172		—		9,752		23,173		32,925		1,226		2003		5-40
Braemar Business Center		2	MN	IND		—		1,566		4,613		1,362		1,566		5,975		7,541		1,616		1998		5-40
Burnsville Business Center		1	MN	IND		—		932		2,796		1,356		932		4,152		5,084		1,401		1998		5-40
Cabot BP Land (KYDJ)		1	MA	IND		—		510		1,103		9,085		864		9,834		10,698		3,243		1998		5-40
Cabot Business Park		12	MA	IND		—		14,353		43,609		8,834		15,398		51,398		66,796		12,343		1998		5-40
Cabot Business Park SGP		3	MA	IND		15,846		5,800		16,968		3,385		6,252		19,901		26,153		1,915		2002		5-40
Chancellor		1	FL	IND		—		1,587		3,760		3,524		1,588		7,283		8,871		1,080		1996		5-40
Chancellor Square		3	FL	IND		14,326		2,009		6,106		4,467		2,009		10,573		12,582		3,176		1998		5-40
Chemway Industrial Portfolio		5	NC	IND		—		2,875		8,625		1,964		2,875		10,589		13,464		2,563		1998		5-40
CLT Logistics Center 1		11	NC	IND		20,539		5,443		22,818		1,819		5,569		24,511		30,080		1,558		2003		5-40
Columbia Business Center		9	MD	IND		3,222		3,856		11,736		3,706		3,856		15,442		19,298		3,808		1999		5-40
Corporate Park/Hickory Hill		7	TN	IND		11,572		6,789		23,796		524		6,788		24,321		31,109		5,534		1998		5-40
Corporate Square Industrial		6	MN	IND		—		4,024		12,113		3,329		4,024		15,442		19,466		4,526		1997		5-40
Corridor Industrial		1	MD	IND		2,300		996		3,019		328		996		3,347		4,343		657		1999		5-40
Crysen Industrial		1	MD	IND		—		1,425		4,275		1,191		1,425		5,466		6,891		1,440		1998		5-40
Dulles Commerce Center		1	MD	IND		—		849		3,038		279		849		3,317		4,166		140		2005		5-40

S-5

AMB PROPERTY CORPORATION
SCHEDULE III
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
As of December 31, 2005
(in thousands, except number of buildings)


							Initial Cost to Company						Gross Amount Carried at 12/31/05
											Costs Capitalized										Year of
	No of								Building &		Subsequent to				Building &		Total Costs		Accumulated		Construction/		Depreciable
Property	Bldgs		Location	Type	Encumbrances (3)		Land		Improvements		Acquisition		Land		Improvements		(1) (2)		Depreciation (4)		Acquisition		Life (Years)
Elmwood Distribution		5	LA	IND		—		4,163		12,488		3,825		4,163		16,313		20,476		2,752		1998		5-40
Frankfurt Logistic Center		1	Germany	IND		12,193		—		18,867		—		—		18,867		18,867		982		2003		5-40
Gateway Commerce Center		5	MD	IND		—		4,083		12,336		1,987		4,083		14,323		18,406		3,117		1999		5-40
Greenwood Industrial		3	MD	IND		—		4,729		14,188		3,044		4,729		17,232		21,961		3,955		1998		5-40
IAH Logistics Center		1	TX	IND		17,172		6,582		21,252		10		6,583		21,261		27,844		1,020		2004		5-40
Janitrol		1	OH	IND		—		1,797		5,390		474		1,797		5,864		7,661		1,298		1997		5-40
Koolhovenlaan 1&2		2	The Netherlands	IND		7,174		4,085		6,931		—		4,085		6,931		11,016		151		2005		5-40
Meadowridge Industrial		3	MD	IND		—		3,716		11,146		686		3,715		11,833		15,548		2,422		1998		5-40
Mendota Heights Gateway Common		1	MN	IND		—		1,367		4,565		2,647		1,367		7,212		8,579		2,885		1998		5-40
MET PHASE 1 95, LTD		5	TX	IND		—		10,968		32,944		4,540		10,968		37,484		48,452		8,010		1997		5-40
Minneapolis Distribution Port		3	MN	IND		—		4,052		13,374		3,977		4,051		17,352		21,403		4,224		1997		5-40
Minneapolis Industrial Port IV		4	MN	IND		7,068		4,938		14,853		2,753		4,937		17,607		22,544		4,904		1997		5-40
Oakland Ridge Ind Ctr I, II, and V		6	MD	IND		4,108		3,297		11,906		3,180		3,297		15,086		18,383		4,933		1999		5-40
Paris Nord Distribution I		1	France	IND		—		2,864		4,723		1,564		3,361		5,790		9,151		469		2002		5-40
Paris Nord Distribution II		1	France	IND		—		1,697		5,127		2,924		1,967		7,781		9,748		765		2002		5-40
Patriot Dist. Center		1	MA	IND		10,016		4,164		22,156		—		4,164		22,156		26,320		765		2005		5-40
Patuxent Range Road		2	MD	IND		—		1,696		5,127		1,098		1,696		6,225		7,921		1,543		1997		5-40
Penn James Warehouse		2	MN	IND		—		1,991		6,013		1,715		1,991		7,728		9,719		2,022		1996		5-40
Port of Hamburg		3	Hamburg	IND		17,746		—		34,218		2,173		—		36,391		36,391		—		2005		5-40
Port of Rotterdam		1	The Netherlands	IND		—		—		5,450		—		—		5,450		5,450		47		2005		5-40
Presidents Drive		6	FL	IND		—		5,770		17,656		3,879		5,771		21,534		27,305		5,264		1998		5-40
Preston Court		1	MD	IND		—		2,313		7,192		623		2,313		7,815		10,128		1,818		1997		5-40
Round Lake Business Center		1	MN	IND		—		875		2,625		761		875		3,386		4,261		930		1998		5-40
Sand Lake Service Center		6	FL	IND		—		3,483		10,585		4,557		3,483		15,142		18,625		4,103		1998		5-40
Scripps Sorrento		1	CA	IND		—		1,110		3,330		121		1,110		3,451		4,561		694		1998		5-40
Somerville Distribution Center		1	MA	IND		—		5,221		13,207		1,249		5,221		14,456		19,677		333		2005		5-40
South Point Business Park		5	NC	IND		7,992		3,130		10,452		2,199		3,130		12,651		15,781		2,905		1998		5-40
TechRidge Bldg 4.2 (Phase IVA)		1	TX	IND		7,500		3,465		10,735		126		3,464		10,862		14,326		16		2005		5-40
TechRidge Phase II		1	TX	IND		10,834		7,261		13,484		234		7,261		13,718		20,979		1,632		2001		5-40
TechRidge Phase IIIA Bldg. 4.1		1	TX	IND		9,200		3,143		12,215		—		3,143		12,215		15,358		830		2004		5-40
Twin Cities		2	MN	IND		—		4,873		14,638		7,587		4,873		22,225		27,098		6,341		1997		5-40
Willow Lake Business Park		10	TN	IND		1,671		12,415		35,987		15,486		12,409		51,479		63,888		15,489		1998		5-40
Other Retail Markets
AMB Garden City Industrial		1	GA	RET		—		441		2,604		134		462		2,717		3,179		111		2004		5-40
Beacon Centre — Headlands		1	FL	RET		—		2,523		7,669		1,094		2,523		8,763		11,286		1,305		2000		5-40

Total		875				$ 1,598,919	$	1,521,035		$ 3,604,054		$ 675,699	$	1,527,072		$ 4,273,716	$	5,800,788		$ 693,324

S-6


			2005			2004			2003
(1	)	Reconciliation of total cost to consolidated balance sheet caption as of December 31, 2005:
		Total per Schedule III⁽⁵⁾	$	5,800,788		$	5,814,767		$	5,292,079
		Construction in process		997,506			711,377			199,628

		Total investments in properties	$	6,798,294		$	6,526,144		$	5,491,707


(2	)	Aggregate cost for federal income tax purposes of investments in real estate	$	6,468,360		$	6,263,171		$	5,201,590


(3	)	Reconciliation of total debt to consolidated balance sheet caption as of December 31, 2005:
		Total per Schedule III	$	1,598,919		$	1,828,864		$	1,353,101
		Debt on properties held for divestiture		—			27,481			—
		Debt on development properties		301,623			25,413			—
		Unamortized premiums		11,984			10,766			10,789

		Total debt	$	1,912,526		$	1,892,524		$	1,363,890


(4	)	Reconciliation of accumulated depreciation to consolidated balance sheet caption as of December 31, 2005:
		Total per Schedule III	$	693,324		$	614,084		$	485,559
		Accumulated depreciation on properties under renovation		4,064			1,562			—

		Total accumulated depreciation	$	697,388		$	615,646		$	485,559


(5	)	A summary of activity for real estate and accumulated depreciation for the year ended December 31, 2005 is as follows:
		Investments in Properties:
		Balance at beginning of year	$	6,526,144		$	5,491,707		$	4,922,782
		Acquisition of properties		505,127			687,072			523,994
		Improvements, including development properties		496,623			618,188			264,272
		Transfer basis adjustment		—			—			23,388
		Asset impairment		—			—			(5,251	)
		Divestiture of properties		(770,869	)		(185,564	)		(339,605	)
		Adjustment for properties held for divestiture		41,269			(85,259	)		102,127

		Balance at end of year	$	6,798,294		$	6,526,144		$	5,491,707


		Accumulated Depreciation:
		Balance at beginning of year	$	615,646		$	485,559		$	368,205
		Depreciation expense, including discontinued operations		168,869			163,316			139,284
		Properties divested		(95,371	)		(23,559	)		(27,937	)
		Adjustment for properties held for divestiture		8,244			(9,670	)		6,007

		Balance at end of year	$	697,388		$	615,646		$	485,559

S-7


	Page
Report of Independent Registered Public Accounting Firm		F-1
Consolidated Balance Sheets as of December 31, 2005 and 2004		F-3
Consolidated Statements of Operations for the years ended December 31, 2005, 2004 and 2003		F-4
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2005, 2004 and 2003		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2004 and 2003		F-6
Notes to Consolidated Financial Statements		F-7
Schedule III — Consolidated Real Estate and Accumulated Depreciation		S-1