SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): AUGUST 4, 1999
AMB PROPERTY CORPORATION
-----------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
MARYLAND 001-13545 94-3281941
---------------- ------------ ---------------
(STATE OR OTHER JURISDICTION OF (COMMISSION (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) FILE NO.) IDENTIFICATION NO.)
505 MONTGOMERY STREET, SAN FRANCISCO, CA 94111
--------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(415) 394-9000
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
FORWARD-LOOKING STATEMENTS
Some of the information included in this report contains forward-looking
statements, such as statements pertaining to our intended use of proceeds.
Forward-looking statements involve numerous risks and uncertainties and you
should not rely on them as predictions of future events. The events or
circumstances reflected in forward-looking statements might not occur. You can
identify forward-looking statements by the use of forward-looking terminology
such as "believes," "expects," "may," "will," "should," "seeks,"
"approximately," "intends," "plans," "pro forma," "estimates" or "anticipates"
or the negative of these words and phrases or similar words or phrases. You can
also identify forward-looking statements by discussions of strategy, plans or
intentions. Forward-looking statements are necessarily dependent on assumptions,
data or methods that may be incorrect or imprecise and we may not be able to
realize them. The failure of the remaining transaction with BPP Retail, LLC to
close with respect to some or all of the properties under contract or a
significant delay with respect to the remaining transaction could cause actual
results and future events to differ materially from those set forth or
contemplated in the forward-looking statements. We caution you not to place
undue reliance on forward-looking statements, which reflect our analysis only
and speak only as of the date of this report or the dates indicated in the
statements.
ITEM 2. DISPOSITION OF ASSETS
On April 8, 1999, we filed a current report on Form 8-K reporting that AMB
Property, L.P., a Delaware limited partnership in which we are the sole general
partner, signed four definitive agreements for the disposition of (1) up to 28
of our retail properties to BPP Retail, LLC and (2) six additional retail
properties to Burnham Pacific Operating Partnership, L.P. The current report
also provided unaudited pro forma financial information. On June 9, 1999, we
filed an amendment no. 1 to the current report to reflect that one of our joint
venture partners who holds an interest in three of the properties indicated that
it will not consent to the disposition of these properties at this time and to
update the pro forma financial information. On June 15, 1999, we filed a current
report on Form 8-K reporting the closing of the first transaction with BPP
Retail, LLC, with respect to nine of our retail properties, totaling
approximately 1.4 million square feet, for an aggregate price of $207.4 million.
On July 1, 1999, we filed a current report on Form 8-K reporting the termination
of the agreement with Burnham Pacific Operating Partnership, L.P.
We are filing this current report on Form 8-K to (1) report that on August
4, 1999, we closed the second transaction with BPP Retail, LLC, with respect to
twelve retail properties, totaling approximately 2.1 million square feet, for an
aggregate price of $245.8 million and (2) to file updated pro forma financial
information, which reflects the closing of the second transaction with BPP
Retail, LLC and supersedes the pro forma financial information filed with the
July 1, 1999 Form 8-K.
We used the net proceeds from the first transaction for the following purposes:
$35.1 million to repay secured debt (including prepayment penalties of $3.3
million) related to the properties divested, $96.4 million to partially pay
down the Operating Partnership's unsecured debt facility, $72.2 million for
property acquisitions and for general corporate purposes. We used the net
proceeds from the second transaction for the following purposes: $23.6 million
to repay secured debt (including prepayment penalties of $1.3 million)
related to the properties divested, $111.7 million to partially pay down the
Operating Partnership's unsecured debt facility, $107.2 million for potential
property acquisitions and/or like-kind exchanges and for general corporate
purposes.
If the third transaction with BPP Retail, LLC with respect to the 4 retail
properties, totalling approximately 0.9 million square feet, for an aggregate
price of $107.1 million is fully consummated, we intend to use the proceeds to
partially repay amounts outstanding under the Operating Partnership's unsecured
credit facility, to pay transaction expenses, for potential acquisitions and
for general corporate purposes.
The description of the disposition of the properties of BPP Retail, LLC
contained in this report is qualified in its entirety by reference to the
purchase agreements related thereto, which are filed as exhibits to this report.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following pro forma financial information supersedes the pro forma
financial information filed with the July 1, 1999 Form 8-K:
(b) Pro Forma Financial Information for AMB Property Corporation
(Unaudited)
Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1999
Notes and adjustments to Pro Forma Condensed Consolidated Balance Sheet as
of June 30, 1999
Pro Forma Condensed Consolidated Statement of Operations for the six months
ended June 30, 1999
Notes and adjustments to Pro Forma Condensed Consolidated Statement of
Operations for the six months ended June 30, 1999
Pro Forma Condensed Consolidated Statement of Operations for the year ended
December 31, 1998
Notes and adjustments to Pro Forma Condensed Consolidated Statement of
Operations for the year ended December 31, 1998
(c) Exhibits
Exhibit Description
Number
2.1 Agreement for Purchase and Exchange, entered into as of March 9, 1999, by
and among AMB Property, L.P., AMB Property II, L.P., Long Gate, L.L.C.,
regarding the transaction which closed on June 15, 1999 (incorporated by
reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999).
2.2 Agreement for Purchase and Exchange, entered into as of March 9, 1999, by
and among AMB Property, L.P., AMB Property II, L.P., Long Gate, L.L.C.,
regarding the transaction which closed on August 4, 1999 (incorporated by
reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999).
2.3 Agreement for Purchase and Exchange, entered into as of March 9, 1999, by
and among AMB Property, L.P., AMB Property II, L.P., Long Gate, L.L.C.,
regarding the transaction which is currently expected to close on or about
December 1, 1999 (incorporated by reference to Exhibit 10.3 to our Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999).
2
AMB PROPERTY CORPORATION
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
BACKGROUND
The accompanying unaudited pro forma condensed consolidated balance sheet as of
June 30, 1999 has been prepared to reflect AMB Property, L.P. (the "Operating
Partnership") entering into three definitive agreements whereby, if fully
consummated, the Operating Partnership will divest up to 25 retail shopping
centers for an aggregate price of $560.3 million (the "Divestiture") as if the
Divestiture had occurred on June 30, 1999. The closing dates for the Divestiture
are as follows:
SQUARE FOOTAGE PRICE
CLOSING DATE CENTERS (000's) (MILLIONS)
- ------------ ------- -------------- ----------
June 15, 1999 9 1,409 $207.4
August 4, 1999 12 2,036 245.8
December 1, 1999 4 868 107.1
TOTAL 25 4,313 $560.3
The accompanying unaudited pro forma condensed consolidated statement of
operations for the six months ended June 30, 1999 has been prepared to reflect:
(i) the Divestiture and (ii) the sale of 7.75% Series D Cumulative Redeemable
Preferred Units (the "Series D Preferred Units") of AMB Property II, L.P. and
the application of the resulting net proceeds as if such transactions and
adjustments had occurred on January 1, 1998 and were carried forward through
June 30, 1999. The accompanying unaudited pro forma condensed consolidated
statement of operations for the year ended December 31, 1998 has been prepared
to reflect: (i) the incremental effect of the acquisition of properties during
1998, (ii) pro forma debt and other adjustments resulting from the sale of the
Operating Partnership's senior debt securities, the sale of 8.5% Series A
Cumulative Redeemable Preferred Stock (the "Series A Preferred Stock") of AMB
Property Corporation (the "Company"), the sale of 8.625% Series B Cumulative
Redeemable Preferred Units (the "Series B Preferred Units") of the Operating
Partnership, the sale of 8.75% Series C Cumulative Redeemable Preferred Units
(the "Series C Preferred Units") of AMB Property II, L.P. and the sale of the
Series D Preferred Units and the application of the resulting net proceeds and
(iii) the Divestiture as if such transactions and adjustments had occurred on
January 1, 1998 and were carried forward through December 31, 1998.
These unaudited pro forma condensed consolidated statements should be read in
connection with the historical consolidated financial statements and notes
thereto included in the Company's December 31, 1998 Form 10-K and June 30, 1999
Form 10-Q. In the opinion of management, the pro forma condensed consolidated
financial information provides for all adjustments necessary to reflect the
effects of the sale of the senior debt securities, the sale of the Series A
Preferred Stock, the sale of the Series B Preferred Units, the sale of the
Series C Preferred Units, the sale of the Series D Preferred Units and the
application of the resulting net proceeds therefrom, the 1998 property
acquisitions and the Divestiture.
The pro forma information is unaudited and is not necessarily indicative of the
consolidated results that would have occurred if the transactions and
adjustments reflected therein had been consummated in the period or on the date
presented, or on any particular date in the future, nor does it purport to
represent the financial position, results of operations or changes in cash
flows for future periods.
3
AMB PROPERTY CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1999
(UNAUDITED, IN THOUSANDS)
COMPANY(1) DIVESTITURE(2) PRO FORMA
---------- ------------- ----------
ASSETS
Investments in real estate, net............... $2,960,296 $ -- $2,960,296
Properties held for divestiture, net.......... 675,892 (313,623) 362,269
Divestiture receivable........................ -- 104,294 104,294
Cash and cash equivalents..................... 40,130 2,253 42,383
Cash held in escrow........................... -- 107,213 107,213
Other assets.................................. 56,226 -- 56,226
---------- ---------- ----------
Total assets............................ $3,732,544 $ (99,863) $3,632,681
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Secured debt.................................. $ 763,587 $ (24,318) $ 739,269
Unsecured credit facility..................... 255,000 (111,656) 143,344
Unsecured senior debt securities.............. 400,000 -- 400,000
Other liabilities............................. 120,686 -- 120,686
---------- ---------- ----------
Total liabilities....................... 1,539,273 (135,974) 1,403,299
---------- ---------- ----------
Minority interests............................ 409,662 1,806 411,468
---------- ---------- ----------
Stockholders' Equity
Series A Preferred Stock.................... 96,100 -- 96,100
Common Shares.............................. 865 -- 865
Additional paid-in capital.................. 1,679,954 -- 1,679,954
Retained earnings........................... 6,690 34,305 40,995
---------- ---------- ----------
Total equity............................ 1,783,609 34,305 1,817,914
---------- ---------- ----------
Total liabilities and stockholders'
equity............................... $3,732,544 $ (99,863) $3,632,681
========== ========== ==========
4
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1999
(UNAUDITED, DOLLARS IN THOUSANDS)
(1.) Reflects the historical consolidated balance sheet of AMB Property
Corporation as of June 30, 1999. See the historical consolidated financial
statements and notes thereto included in AMB Property Corporation's June 30,
1999 Form 10-Q.
(2.) On March 9, 1999, AMB Property, L.P., a Delaware limited partnership (the
"Operating Partnership"), in which AMB Property Corporation (the "Company") is
the sole general partner, signed three definitive agreements with BPP Retail,
LLC ("BPP Retail"), a co-investment entity between Burnham Pacific Properties
("BPP") and the California Public Employees' Retirement System ("CalPERS"),
pursuant to which, if fully consummated, BPP Retail would have acquired up to 28
retail shopping centers from the Operating Partnership, totaling 5.1 million
square feet, for an aggregate price of $663,400. The disposition of five of the
properties is subject to the consent of the Company's joint venture partners.
The Company's joint venture partner who holds an interest in three of the
properties has indicated that it will not consent to the disposition of the
properties at this time. As a result, the price with respect to the 25 remaining
properties, totaling approximately 4.3 million square feet is approximately
$560,300. The Company intends to dispose of these three properties or its
interests in the joint ventures through which it holds the three properties and
has therefore continued to reflect the properties as properties held for
divestiture in the accompanying pro forma balance sheet.
Pursuant to the agreements, BPP Retail will acquire the 25 centers in separate
transactions. Under the agreements, the Operating Partnership has the right to
extend the closing dates for a period of up to either 20 or 50 days. The
Operating Partnership has exercised this right with respect to the first and
second closings, which occurred on June 15, 1999 and August 4, 1999,
respectively. Pursuant to the closing of the first transaction, BPP Retail
acquired nine retail shopping centers, totaling approximately 1.4 million square
feet, for an aggregate price of approximately $207,400. The Operating
Partnership used the net proceeds from the first transaction to repay secured
debt of $35,100 (including prepayment penalties of $3,300) related to the
properties divested, to partially pay down $96,400 under the Operating
Partnership's unsecured credit facility, $72,200 for property acquisitions and
for general corporate purposes. The first transaction resulted in an approximate
gain of $11,800 and an approximate extraordinary loss of $1,500, consisting of
prepayment penalties with an off-set for debt premium write-off related to the
indebtedness extinguished. On August 4, 1999, the second transaction with BPP
Retail closed. Pursuant to the closing of the second transaction, BPP Retail
acquired 12 of the Operating Partnership's retail shopping centers, totaling
approximately 2.1 million square feet, for an aggregate price of $245,800. The
Operating Partnership used the proceeds from the second transaction to repay
secured debt of $23,600 (including prepayment penalties of $1,200) related to
the properties divested, to partially pay down $111,700 under the Operating
Partnership's unsecured credit facility, to pay $1,000 in transaction expenses,
$107,200 for potential property acquisitions and/or like-kind exchanges and for
general corporate purposes.
The Operating Partnership currently expects the third transaction to close
on or about December 1, 1999. The Operating Partnership intends to use the
proceeds of approximately $107,100 from the divestiture of the remaining four
retail centers to BPP Retail in the third transaction to partially repay amounts
outstanding under the Operating Partnership's unsecured credit facility, to pay
transaction expenses, for potential acquisitions and for general corporate
purposes.
In addition, the Operating Partnership entered into a definitive agreement,
subject to a financing condition, with BPP, pursuant to which, if fully
consummated, BPP would have acquired up to six additional retail centers,
totaling approximately 1.5 million square feet, for approximately $284,400. On
June 30, 1999, this agreement was terminated pursuant to its terms as a result
of BPP's decision not to waive the financing condition. The Operating
Partnership currently intends to dispose of the six retail properties, either on
an individual or portfolio basis, or its interests in the joint ventures through
which it holds the properties and has therefore continued to reflect the
properties as properties held for divestiture in the accompanying pro forma
balance sheet.
In connection with the BPP Retail transactions, the Company has granted
CalPERS an option to purchase up to 2,000,000 shares of the Company's common
stock for an exercise price of $25.00 per share that CalPERS may exercise on or
before March 31, 2000. The Company has registered the 2,000,000 shares of common
stock issuable upon exercise of the option.
Although the remaining transaction with BPP Retail has a discretionary due
diligence period, it is subject to certain customary closing conditions, which
are generally applied on a property-by-property basis. BPP has announced that
it has received and is reviewing a merger proposal. The Operating Partnership
does not believe that the contractual obligations of BPP Retail with respect
to the purchase of the retail centers will be affected by any resulting merger.
BPP Retail has posted a deposit of $8,375 on the remaining transaction. BPP
Retail's liability in the event of its default under a definitive agreement is
limited to its deposit. Although the Operating Partnership believes that the
remaining transaction with BPP Retail is probable, the transaction might not
close as scheduled or close at all, and it is possible that the transaction may
close with respect to just a portion of the properties currently subject to the
agreement.
The adjustments reflect the elimination of the real estate assets being
divested in connection with the second and third transactions of the
Divestiture. The adjustments also reflect the use of the net proceeds from the
second transaction to repay secured indebtedness of approximately $23,600,
including prepayment penalties of $1,200, to pay down the unsecured credit
facility by approximately $117,700, to use $107,200 for the purchase or the
like-kind exchange of properties and for general corporate purposes. The
adjustments also include a Divestiture receivable for the estimated net
proceeds of approximately $104,300 from the third transaction. The repayment of
the secured indebtedness related to the second transaction will result in an
extraordinary gain of approximately $700. The extraordinary gain consists of
prepayment penalties of approximately $1,200 offset by the write-off of
approximately $1,900 in debt premiums related to the indebtedness extinguished.
The Divestiture related to the second and third transactions will result in an
estimated gain of approximately $36,100 which includes the $700 extraordinary
gain on the extinguishment of the secured debt. The gain has been allocated to
the Company and the limited partners based on their respective ownership of the
Operating Partnership as of June 30, 1999.
5
AMB PROPERTY CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
DIVESTITURE
AND SERIES D
PREFERRED UNIT
COMPANY(1) OFFERING(2) PRO FORMA
---------- -------------- ----------
REVENUES
Rental revenues................................. $ 221,187 $(32,551) $ 188,636
Equity in earnings of unconsolidated
joint venture................................. 2,328 -- 2,328
Investment management and other income.......... 1,434 (148) 1,286
---------- -------- ----------
Total revenues........................ 224,949 (32,699) 192,250
---------- -------- ----------
OPERATING EXPENSES
Property operating expenses..................... 30,616 (4,308) 26,308
Real estate taxes............................... 29,802 (4,762) 25,040
General, administrative and other............... 8,350 -- 8,350
Depreciation and amortization................... 33,602 (3,571) 30,031
Interest expense................................ 46,558 (9,512) 37,046
---------- -------- ----------
Total operating expenses.............. 148,928 (22,153) 126,775
---------- -------- ----------
Income from operations before
minority interests............................ 76,021 (10,546) 65,475
Minority interests' share of net income......... (14,706) (1,212) (15,918)
Net income before gain from divestiture and ---------- -------- ----------
extraordinary items........................... 61,315 (11,758) 49,557
Preferred stock dividends....................... (4,250) -- (4,250)
---------- -------- ----------
Net income available to common
stockholders before gain from divestiture
and extraordinary items....................... $ 57,065 $(11,758) $ 45,307
========== ======== ==========
Net income per common share
Basic......................................... $ .66 $ .53
========== ==========
Diluted....................................... $ .66 $ .53
========== ==========
Weighted average common shares outstanding
Basic......................................... 86,143,859 86,143,859
========== ==========
Diluted....................................... 86,244,750 86,244,750
========== ==========
6
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE AND UNIT DATA)
(1) Reflects the historical consolidated operations of AMB Property
Corporation for the six months ended June 30, 1999. See the historical
consolidated financial statements and notes thereto included in AMB
Property Corporation's June 30, 1999 Form 10-Q.
(2) Reflects the elimination of the historical revenues and expenses for the
period from January 1, 1999 to June 30, 1999 related to the real estate
assets divested in connection with the first transaction of the Divestiture
and the elimination of the historical revenues and expenses for the six
months ended June 30, 1999 for the real estate assets to be divested in
connection with the second and third transactions of the Divestiture. The
adjustments also reflect a reduction of interest expense of approximately
$7,600 related to the partial pay down of the unsecured credit facility
with proceeds from the first and second transactions and the sale of 7.75%
Series D Cumulative Redeemable Preferred Units of AMB Property II, L.P. The
adjustments also reflect $2,100 related to Series D Preferred Unit
distributions at a rate of 7.75%.
In May 1999, AMB Property II, L.P. issued and sold 1,595,337 units of 7.75%
Series D Cumulative Redeemable Preferred Units at a price of $50.00 per
unit (the "Series D Preferred Units") in a private placement. Distributions
are cumulative from the date of original issuance and are payable quarterly
in arrears at a rate per unit equal to $3.875 per annum. The Series D
Preferred Units are redeemable by AMB Property II, L.P. on or after May 5,
2004, subject to certain conditions, for cash at a redemption price equal
to $50.00 per unit, plus accumulated and unpaid distributions thereon, if
any, to the redemption date. The Series D Preferred Units are exchangeable,
at specified times and subject to certain conditions, on a one-for-one
basis, for shares of the Company's Series D Preferred Stock. AMB Property
II, L.P. used the net proceeds of approximately $77,800 to make a loan to
the Operating Partnership in the amount of approximately $20,100 and to
purchase an unconsolidated joint venture interest for a price of
approximately $57,700 from the Operating Partnership. The loan bears
interest at a rate of 7.0% per annum and payable upon demand. The
Operating Partnership used the funds to repay borrowings under the credit
facility.
7
AMB PROPERTY CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
DEBT AND
1998 PROPERTY PREFERRED
COMPANY(1) ACQUISITIONS(2) OFFERINGS Divestiture(4) Pro Forma(5)
--------- --------------- --------- -------------- ------------
REVENUES
Rental revenues........................ $ 354,658 $52,457 $ -- $(66,205) $ 340,910
Interest and other income.............. 4,229 2,988 -- (543) 6,674
----------- ------- -------- -------- -----------
Total revenues................... 358,887 55,445 -- (66,748) 347,584
----------- ------- -------- -------- -----------
OPERATING EXPENSES
Real estate taxes and property
operating expenses................... 96,074 11,863 -- (18,379) 89,558
Interest expense....................... 69,670 -- 14,073 (10,165) 73,578
Depreciation and amortization.......... 57,464 7,732 -- (12,759) 52,437
General, administrative and other...... 11,929 -- -- -- 11,929
----------- ------- -------- -------- -----------
Total operating expenses......... 235,137 19,595 14,073 (41,303) 227,502
----------- ------- -------- -------- -----------
Income from operations before
minority interests................... 123,750 35,850 (14,073) (25,445) 120,082
Minority interests' share of net
income............................... (11,157) (2,384) (19,618) 1,247 (31,912)
----------- ------- -------- -------- -----------
Net income....................... 112,593 33,466 (33,691) (24,198) 88,170
Preferred stock dividends.............. (3,639) -- (4,861) -- (8,500)
----------- ------- -------- -------- -----------
Net income available to common
stockholders......................... $ 108,954 $33,466 $(38,552) $(24,198) $ 79,670
=========== ======= ======== ======== ===========
Net income per common share
Basic................................ $ 1.27 $ 0.93
=========== ===========
Diluted.............................. $ 1.26 $ 0.92
=========== ===========
Weighted average common shares
outstanding
Basic................................ 85,876,393 85,876,393
=========== ===========
Diluted.............................. 86,235,176 86,235,176
=========== ===========
8
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE AND UNIT DATA)
(1) Reflects the historical consolidated operations of AMB Property Corporation
for the year ended December 31, 1998. See the historical consolidated
financial statements and notes thereto included in AMB Property Corporation's
December 31, 1998 Form 10-K.
(2) The following reflects the incremental effects of properties acquired
during the year ended December 31, 1998 based on the historical operations of
such properties for the periods prior to acquisition by the Company:
REAL ESTATE TAXES REVENUES IN
AND PROPERTY EXCESS OF
OPERATING CERTAIN
RENTAL REVENUES EXPENSES EXPENSES
--------------- ----------------- -----------
Cascade ................................... $ 44 $ (11) $ 33
Wilsonville................................ 167 (41) 126
Atlanta South Phase II..................... 116 (30) 86
Boston Industrial Portfolio................ 2,853 (108) 3,745
Mansfield Industrial Portfolio............. 71 (2) 69
Orlando Central Park....................... 604 (260) 544
Jamesburg Property......................... 1,466 (543) 923
Corporate Park Industrial.................. 757 (130) 627
Minneapolis Industrial Portfolio........... 592 (230) 362
Houston Service Center..................... 706 (249) 457
Meadowridge Business Park.................. 1,058 (238) 920
Northwest Business Center.................. 323 (75) 248
Forbes..................................... -- -- --
Southfield................................. -- -- --
Crysen Corridor Warehouse.................. 247 (63) 184
Garland Industrial Portfolio............... 1,966 (412) 1,554
Suffolk.................................... 165 (42) 123
Minnetonka Industrial Portfolio............ 2,022 (768) 1,254
Alsip Industrial........................... 374 (106) 268
Suffolk Industrial......................... 444 (112) 332
Chamway Industrial......................... 688 (140) 548
Amberjack Portfolio........................ 5,924 (2,151) 3,773
Willow Lake Portfolio...................... 4,801 (1,026) 3,475
Willow Park Portfolio...................... 9,610 (1,977) 7,633
Porete Avenue Warehouse.................... 1,352 (270) 1,082
Movah Portfolio............................ 3,379 (282) 3,097
National Distribution Portfolio............ 8,100 (1,731) 6,449
South Point Business Park.................. 2,087 (201) 1,886
Northridge................................. 108 (43) 65
Totan Lake Malls........................... 758 (277) 481
Around Lenox............................... 1,685 (365) 1,350
------- -------- -------
$32,457 $(11,863) $40,594
======= ======== =======
9
Five of the property acquisitions, Jamesburg Property, Corporate Park
Industrial, Garland Industrial Portfolio, Minnetonka Industrial Portfolio and
South Point Business Park, represent a joint venture with a client of AMB
Investment Management in which the Company owns a controlling 50.0005%
interest. The joint venture acquisitions are accounted for on a consolidated
basis and, accordingly, minority interests of $2,384 has been reflected
relative to these acquisitions.
Two of the property acquisitions, Forbes and Southfield, represent the purchase
of vacant buildings which are in the process of being leased. As such, no
property operations have been reflected in the accompanying pro forma statement
of operations relative to these acquisitions.
Also reflects the acquisition of a non-controlling unconsolidated limited
partnership interest in an existing real estate joint venture which owns the
DuPage Elk Grove Property. As such, the Company's incremental share of equity
in earnings of this joint venture of $2,988 is included in interest and other
income in the accompanying pro forma statement of operations.
Also reflects the estimated incremental depreciation and amortization of the
1998 property acquisitions based on estimated useful lives of 40 years.
(3.) Reflects an adjustment to derive pro forma interest expense as follows:
Secured debt..................................................... $ 9,868
Unsecured Senior Debt Securities................................. 14,820
Credit Facility.................................................. (10,615)
-------
$14,073
=======
The increase in pro forma interest expense is the result of borrowings on the
Credit Facility related to property acquisitions, the issuance of unsecured
senior debt securities, the assumption of secured debt in connection with
property acquisitions which is offset by the repayment of borrowings on the
Credit Facility of approximately $395,000 with the net proceeds from the sale
of the Unsecured Senior Debt Securities and approximately $341,800 from the
sale of Series A Preferred Shares, Series B Preferred Units, Series C Preferred
Units and Series D Preferred Units.
In June 1998, the Operating Partnership issued $400,000 aggregate principal
amount of unsecured notes ("Unsecured Senior Debt Securities") in an
underwritten public offering, of which the net proceeds of approximately
$394,466 were contributed to the Operating Partnership and used to repay
amounts outstanding under the Credit Facility. The Unsecured Senior Debt
Securities mature in June 2008, June 2015 and June 2018 and bear interest at a
weighted average rate of 7.18%.
In July, 1998, the Company sold 4,000,000 shares of 8.5% Series A Cumulative
Redeemable Preferred Stock at $25.00 per share for $100,000 in an underwritten
public offering. These shares are redeemable solely at the option of the
Company on or after July 27, 2003. The net proceeds of $96,100 from the
offering were contributed to the Operating Partnership in exchange for
4,000,000 Series A preferred units with the terms identical to the Series A
Preferred Stock. The Operating Partnership used these proceeds to repay
borrowings under the Credit Facility.
In November 1998, the Operating Partnership issued and sold 1,300,000 8.625%
Series B Cumulative Redeemable Preferred Units at a price of $50.00 per unit in
a private placement. Distributions are cumulative from the date of original
issuance and are payable quarterly in arrears at a rate per unit equal to
$4.3125 per annum. The Series B Preferred Units are redeemable by the Operating
Partnership on or after November 12, 2003, subject to certain conditions, for
cash at a redemption price equal to $50.00 per unit, plus accumulated and
unpaid distributions thereon, if any, to the redemption date. The Series B
Preferred Units are exchangeable, at specified times and subject to certain
conditions, on a one-for-one basis, for shares of the Company's Series B
Preferred Stock. The Operating Partnership used the net proceeds of $62,259 to
repay borrowings under the Credit Facility.
In November 1998, AMB Property II, L.P. issued and sold 2,200,000 units of 8.75%
Series C Cumulative Redeemable Preferred Units at a price of $50.00 per unit in
a private placement. Distributions are cumulative from the date of original
issuance and are payable quarterly in arrears at a rate per unit equal to $4.375
per annum. The Series C Preferred Units are redeemable by AMB Property II, L.P.
on or after November 24, 2003, subject to certain conditions, for cash at a
redemption price equal to $50.00 per unit, plus accumulated and unpaid
distributions thereon, if any, to the redemption date. The Series C Preferred
Units are exchangeable, at specified times and subject to certain conditions, on
a one-for-one basis, for shares of the Company's Series C Preferred Stock. AMB
Property II, L.P. used the net proceeds of $105,734 to make a loan to the
Operating Partnership, which used the funds to repay borrowings under the Credit
Facility.
Also reflects the payment of pro forma Series A Preferred Stock dividends at a
dividend rate of 8.6%, Series B Preferred Unit distributions at a distribution
rate of 8.625%, Series C Preferred Unit distributions at a distribution rate
of 8.75% and Series D Preferred Unit distributions at a distribution rate of
7.75%.
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(4.) Reflects the elimination of the historical revenues and expenses for the
year ended December 31, 1998 related to the real estate assets divested
in connection with the Divestiture. The adjustments also reflect a reduction of
interest expense of approximately $5,200 related to the partial pay down of the
unsecured credit facility with proceeds from the first and second
transaction.
(5.) The pro forma taxable income of the Company for the year ended December
31, 1998 is approximately $81,000, which is based upon pro forma net income of
approximately $88,200, plus book depreciation and amortization of approximately
$52,700 less other book/tax differences of approximately $7,800 and less tax
depreciation and amortization of approximately $52,100.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMB PROPERTY CORPORATION
(Registrant)
Date: August 19, 1999 By: /s/ MICHAEL A. COKE
-----------------------------
Michael A. Coke
Chief Financial Officer and
Senior Vice President
(Principal Financial and
Accounting Officer)
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