AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 24, 1999



                                                      REGISTRATION NO. 333-75951

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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
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                                AMENDMENT NO. 1


                                    FORM S-3
                             REGISTRATION STATEMENT
                                     UNDER

                           THE SECURITIES ACT OF 1933

                            AMB PROPERTY CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                                 <C>
                     MARYLAND                                           94-3281941
         (STATE OR OTHER JURISDICTION OF                             (I.R.S. EMPLOYER
          INCORPORATION OR ORGANIZATION)                          IDENTIFICATION NUMBER)
</TABLE>

                             505 MONTGOMERY STREET
                        SAN FRANCISCO, CALIFORNIA 94111
                                 (415) 394-9000
  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                   REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

                                DAVID S. FRIES,
      CHIEF ADMINISTRATIVE OFFICER, MANAGING DIRECTOR AND GENERAL COUNSEL
                            AMB PROPERTY CORPORATION
                             505 MONTGOMERY STREET
                        SAN FRANCISCO, CALIFORNIA 94111
                                 (415) 394-9000
 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
                             OF AGENT FOR SERVICE)

                                   COPIES TO:
                             JEFFREY T. PERO, ESQ.
                             LAURA L. GABRIEL, ESQ.
                                LATHAM & WATKINS
                       505 MONTGOMERY STREET, SUITE 1900
                        SAN FRANCISCO, CALIFORNIA 94111
                                 (415) 391-0600

     APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

     If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.  [ ]

     If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.  [X]

     If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement of the same offering.  [ ]

     If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]

     If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  [ ]


    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.


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          THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
          THE SELLING STOCKHOLDERS MAY NOT RESELL THESE SECURITIES UNTIL THE
          REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
          COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
          SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
          IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.


                 SUBJECT TO COMPLETION, DATED NOVEMBER 24, 1999


PROSPECTUS

                            AMB PROPERTY CORPORATION


                         678,584 SHARES OF COMMON STOCK

                           $0.01 PAR VALUE PER SHARE

                            ------------------------


     This prospectus relates to up to 678,584 shares of common stock that may be
offered for sale from time to time by the selling stockholders named in this
prospectus. We are registering the shares of common stock to provide the holders
with freely tradeable securities, but this registration does not necessarily
mean that the selling stockholders will offer or sell the shares.



     We are filing the registration statement of which this prospectus is a part
pursuant to a contractual obligation. We will not receive any proceeds from the
sale of the shares but we have agreed to pay certain registration expenses.



     To facilitate maintenance of our qualification as a real estate investment
trust for federal income tax purposes, subject to certain exceptions, we
prohibit the ownership, actually or constructively, by any single person of more
than 9.8% of the issued and outstanding shares of our common stock and more than
9.8% of the issued and outstanding shares of our Series A Preferred Stock. We
will also prohibit, subject to certain exceptions, the ownership, actually or
constructively, of any shares of our Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock by any
single person so that no such person, taking into account all of our stock so
owned by such person, may own in excess of 9.8% of our issued and outstanding
capital stock.



     Our common stock is listed on the New York Stock Exchange under the symbol
"AMB." On November 23, 1999, the last reported sales price of our common stock
on the New York Stock Exchange was $20 per share.



     INVESTING IN OUR COMMON STOCK INVOLVES CERTAIN RISKS. SEE PAGE 3 OF THIS
PROSPECTUS AND "BUSINESS RISKS" UNDER ITEM 5 OF OUR QUARTERLY REPORT ON FORM
10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999, WHICH IS INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS.


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     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OF THESE SECURITIES OR DETERMINED THAT THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.


                The date of this Prospectus is November   , 1999


     Neither AMB Property Corporation nor the selling stockholders have
authorized any person to give any information or to make any representation not
contained or incorporated by reference in this prospectus. You must not rely
upon any information or representation not contained or incorporated by
reference in this prospectus as if we had authorized it. This prospectus is not
an offer to sell or the solicitation of an offer to buy any securities other
than the registered securities to which it relates and this prospectus is not an
offer to sell or the solicitation of an offer to buy securities in any
jurisdiction where, or to any person to whom, it is unlawful to make such offer
or solicitation. You should not assume that the information contained in this
prospectus is correct on any date after the date of this prospectus, even though
this prospectus is delivered or shares are sold pursuant to this prospectus on a
later date.

                            ------------------------

                               TABLE OF CONTENTS


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                                                              PAGE
                                                              ----
<S>                                                           <C>
WHERE YOU CAN FIND MORE INFORMATION.........................    1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.............    1
FORWARD LOOKING STATEMENTS..................................    2
RISK FACTORS................................................    3
THE COMPANY.................................................    4
DESCRIPTION OF CAPITAL STOCK................................    7
DESCRIPTION OF CERTAIN PROVISIONS OF THE PARTNERSHIP
  AGREEMENT OF THE OPERATING PARTNERSHIP....................   24
CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND
  BYLAWS....................................................   35
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS...................   38
ERISA CONSIDERATIONS........................................   52
SELLING STOCKHOLDERS........................................   55
PLAN OF DISTRIBUTION........................................   56
LEGAL MATTERS...............................................   56
EXPERTS.....................................................   56
</TABLE>



     AMB and its logo are registered service marks of AMB Property Corporation.
Strategic Alliance Programs(TM), Development Alliance Program(TM), UPREIT
Alliance Program(TM), Institutional Alliance Program(TM), Customer Alliance
Program(TM) and Management Alliance Program(TM) are registered trademarks of AMB
Property Corporation.


                                        i

                      WHERE YOU CAN FIND MORE INFORMATION


     We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file with the SEC at the SEC's public reference rooms at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC's regional offices at Seven World Trade Center, 13th Floor, New York,
New York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. The SEC also maintains a web site
that contains reports, proxy and information statements, and other information
regarding registrants that file electronically with the SEC
(http://www.sec.gov). You can inspect reports and other information we file at
the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.



     We have filed a registration statement of which this prospectus is a part
and related exhibits with the SEC under the Securities Act of 1933, as amended.
The registration statement contains additional information about us. You may
inspect the registration statement and exhibits without charge at the office of
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and you may obtain
copies from the SEC at prescribed rates.


                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     The SEC allows us to "incorporate by reference" the information we file
with the SEC, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is an
important part of this prospectus. Any statement contained in a document which
is incorporated by reference in this prospectus is automatically updated and
superseded if information contained in this prospectus, or information that we
later file with the SEC, modifies or replaces this information. We incorporate
by reference the following documents we filed with the SEC:

     - Annual Report on Form 10-K for the year ended December 31, 1998;


     - Quarterly Reports on Form 10-Q for the quarterly periods ended March 31,
       1999, June 30, 1999 and September 30, 1999;



     - the reports and financial statements for the Amberjack Portfolio, the
       Willow Lake Portfolio, the Willow Park Portfolio, National Distribution
       Portfolio and the Mahwah Portfolio from our Form 8-K filed on December 2,
       1998;


     - Current Report on Form 8-K filed on January 7, 1999;

     - Current Report on Form 8-K filed on April 8, 1999;


     - Amendment to Current Report on Form 8-K/A filed on June 9, 1999;



     - Current Report on Form 8-K filed on June 15, 1999;



     - Current Report on Form 8-K filed on July 1, 1999;



     - Current Report on Form 8-K filed on August 19, 1999;



     - Current Report on Form 8-K filed on September 14, 1999;



     - Current Report on Form 8-K filed on October 15, 1999;



     - Amendment to Current Report on Form 8-K/A filed on November 16, 1999;



     - the reports and financial statements for the AMB Contributed Properties,
       the Boston Industrial Portfolio, the Jamesburg Property, Orlando Central
       Park, Totem Lake Malls, Dallas Warehouse Portfolio (Garland Industrial
       Portfolio), Twin Cities Office/Showroom Portfolio (Minnetonka Industrial
       Portfolio), Crysen Corridor Warehouse, Cabot Industrial Portfolio, Cabot
       Business Park, Manhattan Village Shopping Center, Weslayan Plaza and
       Silicon Valley R&D Portfolio and the pro forma financial statements from
       our Registration Statement on Form S-11 (No. 333-58107);


                                        1


     - the description of our common stock contained in our Registration
       Statement on Form 8-A filed on October 28, 1997; and



     - all documents filed by us with the SEC pursuant to Sections 13(a), 13(c),
       14 or 15(d) of the Securities Exchange Act of 1934, as amended after the
       date of this prospectus and prior to the termination of the offering.


     To receive a free copy of any of the documents incorporated by reference in
this prospectus (other than exhibits, unless they are specifically incorporated
by reference in the documents), call or write AMB Property Corporation, 505
Montgomery Street, San Francisco, CA, Attention: Secretary (415/394-9000).


     Unless otherwise indicated or unless the context requires otherwise, all
references in this prospectus to "we," "us," or "our" mean AMB Property
Corporation and its subsidiaries, including AMB Property, L.P. and its
subsidiaries and, with respect to the period prior to AMB Property Corporation's
initial public offering, AMB Property Corporation's predecessor, AMB
Institutional Realty Advisors, Inc., and certain real estate investment funds,
trusts, corporations and partnerships that prior to AMB Property Corporation's
initial public offering owned properties that they contributed to AMB Property,
L.P. We refer to AMB Property, L.P. as the "Operating Partnership". When we
refer to our "Charter" we mean AMB Property Corporation's Articles of
Incorporation, as amended and supplemented from time to time.


                           FORWARD-LOOKING STATEMENTS


     Some of the information included and incorporated by reference in this
prospectus contains forward-looking statements, such as those pertaining to our
(including certain of our subsidiaries') capital resources, portfolio
performance and results of operations. Likewise, the pro forma financial
statements and other pro forma information incorporated by reference in this
prospectus also contain forward-looking statements. In addition, all statements
regarding anticipated growth in our funds from operations and anticipated market
conditions, demographics and results of operations are forward-looking
statements. Forward-looking statements involve numerous risks and uncertainties
and you should not rely on them as predictions of future events. There is no
assurance that the events or circumstances reflected in forward-looking
statements will be achieved or will 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 involve numerous risks and uncertainties and you
should not rely upon them as predictions of future events. There is no assurance
that the events or circumstances reflected in forward-looking statements will be
achieved or occur. 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 following factors, among others, could cause actual
results and future events to differ materially from those set forth or
contemplated in the forward-looking statements: defaults on or non-renewal of
leases by tenants, increased interest rates and operating costs, our failure to
obtain necessary outside financing, difficulties in identifying properties to
acquire and in effecting acquisitions, our failure to successfully integrate
acquired properties and operations, our failure to divest of properties we have
contracted to sell or to timely reinvest proceeds from any such divestitures,
risks and uncertainties affecting property development and construction
(including construction delays, cost overruns, our inability to obtain necessary
permits and public opposition to these activities), our failure to qualify and
maintain our status as a REIT under the Internal Revenue Code of 1986, as
amended, environmental uncertainties, risks related to natural disasters,
financial market fluctuations, changes in real estate and zoning laws and
increases in real property tax rates. Our success also depends upon economic
trends generally, including interest rates, income tax laws, governmental
regulation, legislation, population changes and certain other matters discussed
below under "Business Risks" under Item 5 of our Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1999, which is incorporated by
reference into this prospectus, as updated by our subsequent Exchange Act
filings, and other similar statements


                                        2


contained in this prospectus. We caution you not to place undue reliance on
forward-looking statements, which reflect our analysis only.



                                  RISK FACTORS



     Before you invest in our common stock, you should be aware that purchasing
or owning our common stock involves various risks, including those described
under "Business Risks" under Item 5 of our Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1999, which is incorporated by reference
into this prospectus, as updated by our subsequent Exchange Act filings. You
should consider carefully these risk factors together with all of the other
information included and incorporated by reference in this prospectus before you
decide to purchase shares of our common stock.


                                        3

                                  THE COMPANY

GENERAL


     We are one of the largest publicly-traded real estate companies in the
United States. As of September 30, 1999, we owned and operated industrial
buildings and retail centers totaling 67.4 million square feet located in 26
markets nationwide. As of September 30, 1999, we owned 692 industrial buildings,
principally warehouse distribution buildings, aggregating 63.8 million rentable
square feet, which were 96.7% leased, and 17 retail centers, principally
grocer-anchored community shopping centers, aggregating 3.6 million rentable
square feet, which were 92.0% leased. In addition, as of the same date we had an
interest in one consolidated, joint venture that owns 36 industrial buildings
aggregating 4.0 million square feet and we operated properties aggregating 3.7
million, 0.4 million, and 0.1 million square feet of industrial, retail, and
other properties, respectively, on behalf of investment management clients. We
currently expect that the substantial majority of our acquisition activities
going forward will be in industrial properties. We own substantially all of our
assets, and conduct substantially all of our business, through the Operating
Partnership and its subsidiaries.



     AMB Property Corporation was organized in November 1997 and commenced
operations upon the completion of the initial public offering on November 26,
1997. We operate as a self-administered and self-managed real estate company and
believe that we have qualified and that we will continue to qualify as a REIT
for federal income tax purposes beginning with the year ended December 31, 1997.
As a self-administered and self-managed REIT, our own employees perform our
administrative and management functions, rather than our relying on an outside
manager for these services.


STRATEGIC ALLIANCE PROGRAMS

     We believe that our strategy of forming strategic alliances with local and
regional real estate experts improves our operating efficiency and flexibility,
strengthens customer satisfaction and retention and, most importantly, provides
us with growth opportunities. Additionally, our strategic alliances with
institutional investors enhance our access to private capital and our ability to
finance transactions.

     Our six Strategic Alliance Programs can be grouped into two categories:

     - Operating Alliances, which allow us to form relationships with local or
       regional real estate experts, thereby becoming their ally rather than
       their competitor; and

     - Investment Alliances, which allow us to establish relationships with a
       variety of capital sources.

     OPERATING ALLIANCES


     - BROKER ALLIANCE PROGRAM: Through our Broker Alliance Program, we work
       closely with top local leasing companies in each of our markets, which
       brokers provide us with access to high quality tenants and local market
       knowledge.



     - CUSTOMER ALLIANCE PROGRAM: Through our Customer Alliance Program, we seek
       to build long-term working relationships with major tenants. We are
       committed to working with our tenants, particularly our larger tenants
       with multi-site requirements, to make their property searches as
       efficient as possible. During the quarter ended September 30, 1999, we
       acquired one industrial building aggregating 0.7 million square feet,
       sourced through our Customer Alliance Program.



     - DEVELOPMENT ALLIANCE PROGRAM: Our strategy for our Development Alliance
       Program is to form alliances with development firms with a strong local
       presence and expertise. As of September 30, 1999, over 84% of our
       development projects were being developed by our Development Alliance
       Partners.



     - MANAGEMENT ALLIANCE PROGRAM: Our strategy for our Management Alliance
       Program is to develop close relationships with, and outsource property
       management to, local property managers that we believe are among the best
       in their respective markets. Our alliances with local property managers

                                        4


       increase our flexibility, reduce our overhead expenses and improve our
       customer service. In addition, these alliances provide us with local
       market information related to tenant activity and acquisition
       opportunities. During the quarter ended September 30, 1999, we acquired
       nine industrial buildings, aggregating 0.4 million square feet, sourced
       through our Management Alliance Program.



     INVESTMENT ALLIANCES



     - INSTITUTIONAL ALLIANCE PROGRAM: Our strategy for our Institutional
       Alliance Program is to form alliances with institutional investors. Our
       alliances with institutional investors provide us with access to private
       capital, including during those times when the public markets are less
       attractive, as well as providing us with a source of incremental fee
       income and investment returns.



     - UPREIT ALLIANCE PROGRAM: Through our UPREIT Alliance Program, we issue
       limited partnership units in the Operating Partnership to certain
       property owners in exchange for properties, thus providing additional
       growth for our portfolio.



AMB INVESTMENT MANAGEMENT, INC. AND HEADLANDS REALTY CORPORATION



     AMB Investment Management provides real estate investment management
services on a fee basis to certain of its clients which did not participate in
our formation transactions. We presently intend to co-invest with clients of AMB
Investment Management, to the extent such clients commit new investment capital,
through partnerships, limited liability companies and joint ventures. We
generally use a co-investment formula with each client whereby we will own at
least a 20% interest in all ventures. As of September 30, 1999, we had
consummated five co-investment transactions through one partnership. Headlands
Realty Corporation invests in properties and entities that engage in the
management, leasing and development of properties and similar activities. As of
September 30, 1999, Headlands Realty Corporation had participated in three
property acquisition transactions and had acquired a fifty percent (50%)
interest in an entity that engages in the management, leasing and development of
properties and similar activities.


RECENT DEVELOPMENTS


     Sale of Series D Preferred Units by AMB Property II, L.P. On May 5, 1999,
AMB Property II, L.P. completed a private placement of 1,595,337 7.75% Series D
Cumulative Redeemable Preferred Units at a price of $50.00 per unit. See
"Description of Capital Stock -- Preferred Stock -- Series D Preferred Stock."
AMB Property II, L.P. used the net proceeds of approximately $77.8 million to
make a loan to the operating partnership in the amount of approximately $20.1
million and to purchase an unconsolidated joint venture interest for a price of
approximately $57.7 million from the operating partnership. The loan bears
interest at a rate of 7.0% per annum and is payable upon demand. The operating
partnership used the funds to repay borrowings under the credit facility and for
general corporate purposes.



     Sale of Series E Preferred Units by AMB Property II, L.P. On August 31,
1999, AMB Property II, L.P. completed a private placement of 220,440 7.75%
Series E Cumulative Redeemable Preferred Units at a price of $50.00 per unit.
See "Description of Capital Stock -- Preferred Stock -- Series E Preferred
Stock." AMB Property II, L.P. used the gross proceeds of approximately $11.0
million to pay placement fees, transaction expenses and to repay approximately
$10.8 million in loans made to it by the operating partnership. The operating
partnership used the funds to pay approximately $10.0 million in partial
repayment of amounts outstanding under our unsecured credit facility and for
general corporate purposes.



     BPP Retail, LLC Transactions. On March 9, 1999, we signed three separate
definitive agreements with BPP Retail, LLC, a co-investment entity between
Burnham Pacific Properties and the California Public Employees' Retirement
System, pursuant to which, if fully consummated, BPP Retail, LLC would have
acquired up to 28 of our retail shopping centers, totaling approximately 5.1
million square feet for an aggregate price of $663.4 million. The sale of three
of the properties was subject to the consent of one of our joint venture
partners, which did not consent to the sale of these properties. As a result,
the price with respect to the


                                        5


25 remaining properties, totaling approximately 4.3 million square feet, is
approximately $560.3 million. We intend to dispose of the remaining three
properties or our interests in the joint ventures through which we hold the
properties.



     Pursuant to the agreements, BPP Retail, LLC will acquire the 25 centers in
separate transactions. Under the agreements, we have the right to extend the
closing dates for a period of up to either 20 or 50 days. We have exercised this
right with respect to the first and second transactions, which closed on June
15, 1999 and August 4, 1999, respectively. Pursuant to the closings of the first
and second transactions, BPP Retail acquired 21 retail shopping centers,
totaling approximately 3.5 million square feet, for an aggregate price of
approximately $453.2 million. We used the proceeds from the first and second
transactions to repay secured debt related to the properties divested of
approximately $55.5 million, to pay approximately $210.0 million in partial
repayment of amounts outstanding under our unsecured credit facility, to pay
transaction expenses, for potential acquisitions and for general corporate
purposes. The divestitures resulted in an aggregate gain of approximately $33.1
million and an extraordinary loss of approximately $2.9 million, consisting of
prepayment penalties with an offset for the write-off of debt premiums related
to the indebtedness extinguished. We currently expect the third transaction to
close on or about December 1, 1999.



     Although the remaining transaction with BPP Retail, LLC does not have a
discretionary due diligence period, it is subject to certain customary closing
conditions, which are generally applied on a property-by-property basis. Burnham
Pacific Properties has announced that it has received and is reviewing a merger
proposal. We do not believe that the remaining contractual obligations of BPP
Retail, LLC with respect to the purchase of the retail centers will be affected
by any resulting merger. BPP Retail, LLC has posted a deposit of $8.4 million on
the remaining transaction. BPP Retail, LLC's liability in the event of its
default under a definitive agreement is limited to its deposit. Although we
believe that the remaining transaction with BPP Retail, LLC 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.



     We intend to use the proceeds of approximately $107.1 million from the
divestiture of the remaining four retail centers to BPP Retail, LLC in the third
transaction to partially repay amounts outstanding under our unsecured credit
facility, to pay transaction expenses, for potential acquisitions and for
general corporate purposes.



     In addition, we entered into a definitive agreement, subject to a financing
condition, with Burnham Pacific Properties, pursuant to which, if fully
consummated, Burnham Pacific Properties would have acquired up to six additional
retail centers, totaling approximately 1.5 million square feet, for
approximately $284.4 million. On June 30, 1999, this agreement was terminated
pursuant to its terms as a result of Burnham Pacific's decision not to waive the
financing condition. We currently intend to dispose of five of these retail
properties, either on an individual or portfolio basis, or out interest in the
joint venture which holds one of the five properties.



     In connection with the BPP Retail, LLC transactions, we have granted the
California Public Employee's Retirement System an option to purchase up to
2,000,000 shares of our common stock for an exercise price of $25.00 per share
that the California Public Employees' Retirement system may exercise on or
before March 31, 2000. We have registered the 2,000,000 shares of common stock
issuable upon exercise of the option.



     AMB Institutional Alliance REIT I, Inc. On September 24, 1999, AMB
Institutional Alliance REIT I, Inc. issued and sold shares of its capital stock
to several third party investors. AMB Institutional Alliance REIT I, Inc.
acquired a limited partnership interest in AMB Institutional Alliance Fund I,
L.P., which is engaged in the acquisition, ownership, operation, management,
renovation, expansion and development of primarily industrial buildings in
target markets nationwide. The Operating Partnership is the managing general
partner of AMB Institutional Alliance Fund I, L.P. and, together with one of our
affiliates, owns approximately 30.1% of the partnership interests of AMB
Institutional Alliance Fund I, L.P.


                                        6

                          DESCRIPTION OF CAPITAL STOCK


     We have summarized certain terms and provisions of our capital stock in
this section. This summary is not complete. For more detail you should refer to
the Maryland General Corporation Law, our Charter and our Bylaws, which we have
filed as exhibits to the registration statement of which this prospectus is a
part. See "Where You Can Find More Information."


COMMON STOCK


     Our Charter provides that we are authorized to issue 500,000,000 shares of
common stock, $.01 par value per share. As of November 1, 1999, we had
86,576,641 shares of common stock issued and outstanding. Each outstanding share
of common stock entitles the holder to one vote on all matters presented to
stockholders generally for a vote, including the election of directors. Except
as otherwise required by law and except as provided in any resolution adopted by
the Board of Directors establishing any other class or series of stock, the
holders of common stock possess the exclusive voting power, subject to the
provisions of the Charter regarding the ownership of shares of common stock in
excess of the ownership limit or any other limit specified in the Charter, or
otherwise permitted by the Board of Directors. Holders of shares of common stock
do not have any conversion, exchange, sinking fund, redemption or appraisal
rights or any preemptive rights to subscribe for any of our securities or
cumulative voting rights in the election of directors. All shares of common
stock that are issued and outstanding are duly authorized, fully paid and
nonassessable. Subject to the preferential rights of any other shares or series
or classes of stock, including the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and
the Series E Preferred Stock (see "-- Preferred Stock"), and to the provisions
of the Charter regarding ownership of shares of common stock in excess of the
ownership limit, or such other limit specified in the Charter or as otherwise
permitted by the Board of Directors, we may pay distributions to the holders of
shares of common stock if and when authorized and declared by the Board of
Directors out of funds legally available for distribution. We intend to continue
to make quarterly distributions on outstanding shares of common stock.



     Under the Maryland General Corporation Law, stockholders are generally not
liable for our debts or obligations. If we liquidate, subject to the right of
any holders of preferred stock, including the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred
Stock and the Series E Preferred Stock (see "-- Preferred Stock") to receive
preferential distributions, each outstanding share of common stock will be
entitled to participate pro rata in the assets remaining after payment of, or
adequate provision for, all of our known debts and liabilities, including debts
and liabilities arising out of our status as general partner of the Operating
Partnership.


     Subject to the provisions of our Charter regarding the ownership of shares
of common stock in excess of the ownership limit, or such other limit specified
in the Charter, or as otherwise permitted by the Board of Directors as described
below, all shares of common stock have equal distribution, liquidation and
voting rights, and have no preference or exchange rights.


     Under the Maryland General Corporation Law, a Maryland corporation
generally cannot dissolve, amend its charter, merge, sell all or substantially
all of its assets, engage in a share exchange or engage in similar transactions
outside the ordinary course of business unless approved by the affirmative vote
of at least two-thirds of the votes entitled to be cast on the matter unless a
lesser percentage (but not less than a majority of all of the votes entitled to
be cast on the matter) is set forth in the corporation's charter. Under the
Maryland General Corporation Law, the term "substantially all of the Company's
assets" is not defined and is, therefore, subject to Maryland common law and to
judicial interpretation and review in the context of the unique facts and
circumstances of any particular transaction. Our Charter does not provide for a
lesser percentage in any of the above situations.


     Our Charter authorizes the Board of Directors to reclassify any unissued
shares of common stock into other classes or series of classes of stock and to
establish the number of shares in each class or series and to set the
preferences, conversion and other rights, voting powers, restrictions,
limitations and restrictions on

                                        7

ownership, limitations as to dividends or other distributions, qualifications
and terms or conditions of redemption for each class or series.

PREFERRED STOCK


     Our Charter provides that we are authorized to issue 100,000,000 shares of
preferred stock, $.01 par value per share, of which 4,600,000 shares are of a
separate class designated as Series A Preferred Stock, 1,300,000 shares are of a
separate class designated as Series B Preferred Stock, 2,200,000 shares are of a
separate class designated as Series C Preferred Stock, 1,595,337 shares are of a
separate class designated as Series D Preferred Stock and 220,440 shares are of
a separate class designated as Series E Preferred Stock. The Series B Preferred
Stock is issuable in exchange, on a one for one basis, subject to adjustment,
for the Series B Preferred Units. The Series C Preferred Stock is issuable in
exchange, on a one for one basis, subject to adjustment, for the AMB Property II
Series C Preferred Units. The Series D Preferred Stock is issuable in exchange,
on a one for one basis, subject to adjustment, for the AMB Property II Series D
Preferred Units. The Series E Preferred Stock is issuable in exchange, on a one
for one basis, subject to adjustments, for the AMB Property II Series E
Preferred Units. We have 4,000,000 shares of Series A Preferred Stock issued and
outstanding. We have 1,300,000 shares of Series B Preferred Stock, 2,200,000
shares of Series C Preferred Stock, 1,595,337 shares of Series D Preferred Stock
and 220,440 shares of Series E Preferred Stock reserved for issuance but not
issued or outstanding. We may issue additional shares of preferred stock from
time to time, in one or more classes, as authorized by the Board of Directors.
Prior to the issuance of shares of each class of preferred stock, the Board of
Directors is required by the Maryland General Corporation Law and the Charter to
fix for each class the terms, preferences, conversion or other rights, voting
powers, restrictions, limitations as to distributions, qualifications and terms
or conditions of redemption, as permitted by Maryland law. Because the Board of
Directors has the power to establish the preferences, powers and rights of each
class of preferred stock, it may afford the holders of any class of preferred
stock preferences, powers and rights, voting or otherwise, senior to the rights
of holders of shares of common stock. The issuance of preferred stock could have
the effect of delaying or preventing a change of control that might involve a
premium price for holders of shares of common stock or otherwise be in their
best interest.


     Series A Preferred Stock. The Series A Preferred Stock ranks, with respect
to dividends and in the event we voluntarily or involuntarily liquidate,
dissolve or wind up:

     - senior to all classes or series of common stock and to all of our equity
       securities that provide that they rank junior to the Series A Preferred
       Stock;

     - junior to all equity securities issued by us which rank senior to the
       Series A Preferred Stock; and


     - on a parity with all equity securities issued by us (including any Series
       B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
       Series E Preferred Stock) other than those referred to in the bullet
       points above. The term "equity securities" does not include convertible
       debt securities.



     Holders of the Series A Preferred Stock are entitled to receive, when and
as authorized by the Board of Directors out of funds legally available for
dividends, cumulative preferential cash dividends at the rate of 8 1/2% of the
liquidation preference per annum (equivalent to $2.125 per annum per share of
Series A Preferred Stock). Dividends on the Series A Preferred Stock accumulate
on a daily basis and are payable quarterly in arrears on the 15th day of each
January, April, July and October. Except as provided below, unless full
cumulative dividends on the Series A Preferred Stock have been or at the same
time are declared and paid or declared and a sum sufficient for payment set
apart for payment for all past dividend periods and the then current dividend
period, no dividends (other than in common stock or other equity securities
ranking junior to the Series A Preferred Stock, nor may any common stock or any
other equity securities ranking junior to or on a parity with the Series A
Preferred Stock be redeemed, purchased or otherwise acquired for any
consideration (or any monies be paid to or made available for a sinking fund for
the redemption of any such securities) by us (except by conversion into or
exchange for other equity securities ranking junior to the Series A Preferred
Stock and pursuant to the provisions of our Charter providing for limitations on
ownership and transfer in

                                        8


order to ensure that we remain qualified as a REIT). When dividends are not paid
in full (or a sum sufficient for such full payment is not so set apart) upon the
Series A Preferred Stock and any other equity securities ranking on a parity
with the Series A Preferred Stock, all dividends declared upon the Series A
Preferred Stock and any other equity securities ranking on a parity with the
Series A Preferred Stock will be declared pro rata so that the amount of
dividends declared per share of Series A Preferred Stock and each such other
equity securities shall bear to each other the same ratio that accumulated
dividends per share of Series A Preferred Stock and such other equity securities
(which shall not include any accumulation in respect of unpaid dividends for
prior dividend periods if such other equity securities do not have a cumulative
dividend) bear to each other. Dividends on the Series A Preferred Stock will
accumulate whether or not we have funds legally available for the payment of
dividends and whether or not we declare dividends. If we designate any portion
of a dividend as a "capital gain dividend," a holder's share of the capital gain
dividend will be an amount that bears the same ratio to the total amount of
dividends (as determined for federal income tax purposes) paid to the holder for
the year as the aggregate amount designated as a capital gain dividend bears to
the aggregate amount of all dividends (as determined for federal income tax
purposes) paid on all classes of shares for the year.


     In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up, the holders of the Series A Preferred Stock are entitled to receive out
of our assets legally available for distribution to our stockholders remaining
after payment or provision for payment of all of our debts and liabilities, a
liquidation preference, in cash, of $25.00 per share, plus an amount equal to
any accumulated and unpaid dividends to the date of such payment, before any
distribution of assets is made to holders of common stock or any other equity
securities that rank junior to the Series A Preferred Stock. After payment of
the full amount of the liquidating distributions to which they are entitled, the
holders of the Series A Preferred Stock will have no right or claim to any of
our remaining assets. Our consolidation or merger with or into any other entity,
a merger of another entity with or into us, a statutory share exchange or the
sale, lease, transfer or conveyance of all or substantially all of our property
or business do not constitute a liquidation, dissolution or winding up for
purposes of triggering the liquidation preference.

     If we voluntarily or involuntarily liquidate, dissolve or wind up and our
assets are insufficient to make full payment to holders of the Series A
Preferred Stock and the corresponding amounts payable on all shares of other
classes or series of equity securities ranking on a parity with the Series A
Preferred Stock, then the holders of the Series A Preferred Stock and all other
such classes or series of equity securities will share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be entitled.

     The Series A Preferred Stock has no stated maturity and is not subject to
mandatory redemption or any sinking fund. We cannot redeem the Series A
Preferred Stock prior to July 27, 2003. On and after July 27, 2003, we can
redeem the Series A Preferred Stock for cash at our option, in whole or from
time to time in part, at a redemption price of $25.00 per share, plus
accumulated and unpaid dividends, if any, to the redemption date. We must pay
the redemption price (other than the portion of the redemption price consisting
of accumulated and unpaid dividends) solely out of the sale proceeds of other
equity securities, which may include other classes or series of preferred stock.
In certain circumstances related to our maintenance of our ability to qualify as
a REIT for federal income tax purposes, we may redeem shares of Series A
Preferred Stock. See "-- Restrictions on Ownership and Transfer of Capital
Stock."

     Holders of Series A Preferred Stock have no voting rights, except as
described below. If we do not pay dividends on the Series A Preferred Stock for
six or more quarterly periods (whether or not consecutive), holders of the
Series A Preferred Stock (voting separately as a class with all other classes or
series of equity securities upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors to serve on our Board of Directors until we have eliminated all
dividend arrearages with respect to the Series A Preferred Stock. So long as any
shares of Series A Preferred Stock remain outstanding, we may not, without the
affirmative vote or consent of at least two-thirds of the votes

                                        9

entitled to be cast by the holders of outstanding shares of Series A Preferred
Stock (the Series A Preferred Stock voting separately as a class):

     - authorize or create, or increase the authorized or issued amount of, any
       class or series of stock ranking senior to the Series A Preferred Stock;

     - reclassify any of our authorized stock into any class or series of stock
       ranking senior to the Series A Preferred Stock;

     - create, authorize or issue any obligation or security convertible into,
       exchangeable or exercisable for, or evidencing the right to purchase, any
       class or series of stock ranking senior to the Series A Preferred Stock;
       or

     - amend, alter or repeal the provisions of our Charter, whether by merger
       or consolidation or otherwise, so as to materially and adversely affect
       any right, preference, privilege or voting power of the Series A
       Preferred Stock.

     With respect to the occurrence of any of the events set forth in the fourth
bullet point above, so long as shares of Series A Preferred Stock (or shares
issued by a surviving entity in substitution for shares of the Series A
Preferred Stock) remain outstanding with the terms materially unchanged, taking
into account that upon the occurrence of such an event, we may not be the
surviving entity, the occurrence of any such event will not be considered to
materially and adversely affect rights, preferences, privileges or voting powers
of holders of Series A Preferred Stock. Any increase in the amount of the
authorized preferred stock, the creation or issuance of any other class or
series of preferred stock or any increase in the amount of authorized Series A
Preferred Stock or any other class or series of preferred stock, in each case
ranking on a parity with or junior to the Series A Preferred Stock will not be
considered to materially and adversely affect such rights, preferences,
privileges or voting powers.

     In accordance with the terms of the Partnership Agreement, we contributed
the net proceeds of the sale of the Series A Preferred Shares to the Operating
Partnership and the Operating Partnership issued to us Series A Preferred Units
that mirror the rights, preferences and other terms of the Series A Preferred
Stock. The Operating Partnership is required to make all required distributions
on the Series A Preferred Units prior to any distribution of cash or assets to
the holders of any other Units or any other equity interests in the Operating
Partnership, except for any other series of preferred Units ranking on a parity
with the Series A Preferred Units as to dividends or voluntary or involuntary
liquidation, dissolution or winding up of the Operating Partnership. The
Operating Partnership has no preferred Units, other than the Series A Preferred
Units and the Series B Preferred Units, outstanding or any other equity
interests ranking prior to any other Units or any other equity interests in the
Operating Partnership.

     Series B Preferred Stock. We currently have no shares of Series B Preferred
Stock issued or outstanding. The Series B Preferred Stock is issuable upon
exchange of the Series B Preferred Units, as described under "Description of
Certain Provisions of the Partnership Agreement of the Operating
Partnership -- Series B Preferred Units -- Exchange Rights." The Series B
Preferred Stock ranks, with respect to dividends and in the event we voluntarily
or involuntarily liquidate, dissolve or wind up:

     - senior to all classes or series of common stock and to all of our equity
       securities that provide that they rank junior to the Series B Preferred
       Stock;

     - junior to all equity securities issued by us which rank senior to the
       Series B Preferred Stock; and


     - on a parity with all equity securities issued by us (including the Series
       A Preferred Stock and any Series C Preferred Stock, Series D Preferred
       Stock and Series E Preferred Stock) other than those referred to in the
       bullet points above. The term "equity securities" does not include
       convertible debt securities.


                                       10


     If ever issued, the Series B Preferred Stock will entitle the holders to
receive, when and as authorized by the Board of Directors out of funds legally
available for dividends, cumulative preferential cash dividends at the rate of
8 5/8% of the liquidation preference per annum (equivalent to $4.3125 per annum
per share of Series B Preferred Stock). Dividends on the Series B Preferred
Stock accumulate on a daily basis and are payable quarterly in arrears on the
15th day of each January, April, July and October. Except as provided below,
unless full cumulative dividends on the Series B Preferred Stock have been or at
the same time are declared and paid or declared and a sum sufficient for payment
set apart for payment for all past dividend periods and the then current
dividend period, no distributions (other than in common stock or other equity
securities ranking junior to the Series B Preferred Stock) may be declared or
paid or set aside for payment or other dividend be declared or made upon the
common stock or any other equity securities ranking junior to or on a parity
with the Series B Preferred Stock, nor may any common stock or any other equity
securities ranking junior to or on a parity with the Series B Preferred Stock be
redeemed, purchased or otherwise acquired for any consideration (or any monies
be paid to or made available for a sinking fund for the redemption of any such
securities) by us (except by conversion into or exchange for other equity
securities ranking junior to the Series B Preferred Stock and pursuant to the
provisions of our Charter providing for limitations on ownership and transfer in
order to ensure that we remain qualified as a REIT). When dividends are not paid
in full (or a sum sufficient for such full payment is not so set apart) upon the
Series B Preferred Stock and any other equity securities ranking on a parity
with the Series B Preferred Stock, all dividends declared upon the Series B
Preferred Stock and any other equity securities ranking on a parity with the
Series B Preferred Stock will be declared pro rata so that the amount of
dividends declared per share of Series B Preferred Stock and each such other
equity securities shall bear to each other the same ratio that accumulated
dividends per share of Series B Preferred Stock and such other equity securities
(which shall not include any accumulation in respect of unpaid dividends for
prior dividend periods if such other equity securities do not have a cumulative
dividend) bear to each other. Dividends on the Series B Preferred Stock will
accumulate whether or not we have funds legally available for the payment of
dividends and whether or not we declare dividends. If we designate any portion
of a dividend as a "capital gain dividend," a holder's share of the capital gain
dividend will be an amount that bears the same ratio to the total amount of
dividends (as determined for federal income tax purposes) paid to the holder for
the year as the aggregate amount designated as a capital gain dividend bears to
the aggregate amount of all dividends (as determined for federal income tax
purposes) paid on all classes of shares for the year.


     In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up following the issuance of the Series B Preferred Stock, the holders of
the Series B Preferred Stock will be entitled to receive out of our assets
legally available for distribution to our stockholders remaining after payment
or provision for payment of all of our debts and liabilities, a liquidation
preference, in cash, of $50.00 per share, plus an amount equal to any
accumulated and unpaid dividends to the date of such payment, before any
distribution of assets is made to holders of common stock or any other equity
securities that rank junior to the Series B Preferred Stock. After payment of
the full amount of the liquidating distributions to which they are entitled, the
holders of the Series B Preferred Stock will have no right or claim to any of
our remaining assets. Our consolidation or merger with or into any other entity,
a merger of another entity with or into us, a statutory share exchange or the
sale, lease, transfer or conveyance of all or substantially all of our property
or business do not constitute a liquidation, dissolution or winding up for
purposes of triggering the liquidation preference.


     If we voluntarily or involuntarily liquidate, dissolve or wind up following
the issuance of Series B Preferred Stock and our assets are insufficient to make
full payment to the holders of the Series B Preferred Stock and the
corresponding amounts payable on all shares of other classes or series of equity
securities ranking on a parity with the Series B Preferred Stock as to
liquidation rights then the holders of the Series B Preferred Stock and all
other such classes or series of equity securities will share ratably in any such
distribution of assets in proportion to the full liquidating distributions to
which they would otherwise be entitled.


                                       11

     The Series B Preferred Stock has no stated maturity and is not subject to
mandatory redemption or any sinking fund. If issued, we cannot redeem the Series
B Preferred Stock prior to November 12, 2003. On and after November 12, 2003, we
can redeem the Series B Preferred Stock for cash at our option, in whole or from
time to time in part, at a redemption price of $50.00 per share, plus
accumulated and unpaid dividends, if any, to the redemption date. We must pay
the redemption price (other than the portion of the redemption price consisting
of accumulated and unpaid dividends) solely out of the sale proceeds of other
equity securities, which may include other classes or series of preferred stock.
In certain circumstances related to our maintenance of our ability to qualify as
a REIT for federal income tax purposes, we may redeem shares of Series B
Preferred Stock. See "-- Restrictions on Ownership and Transfer of Capital
Stock."

     Holders of Series B Preferred Stock will have no voting rights, except as
described below. If we do not pay dividends on the Series B Preferred Stock for
six or more quarterly periods (whether or not consecutive), holders of the
Series B Preferred Stock (voting separately as a class with all other classes or
series of equity securities upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors to serve on our Board of Directors until we have eliminated all
dividend arrearages with respect to the Series B Preferred Stock. So long as any
shares of Series B Preferred Stock remain outstanding, we may not, without the
affirmative vote or consent of at least two-thirds of the votes entitled to be
cast by the holders of the outstanding shares of Series B Preferred Stock (the
Series B Preferred Stock voting separately as a class):

     - authorize or create, or increase the authorized or issued amount of, any
       class or series of stock ranking senior to the Series B Preferred Stock;

     - reclassify any of our authorized stock into any class or series of stock
       ranking senior to the Series B Preferred Stock;

     - designate or create, or increase the authorized or issued amount of, or
       reclassify, any authorized shares into, any preferred stock ranking on a
       parity with the Series B Preferred Stock or create, authorize or issue
       any obligations or securities convertible into any such shares, but only
       to the extent such stock is issued to one of our affiliates; or

     - either consolidate, merge into or with, or convey, transfer or lease our
       assets substantially as an entirety, to any corporation or other entity,
       or amend, alter or repeal the provisions of our Charter, whether by
       merger or consolidation or otherwise, in each case so as to materially
       and adversely affect the powers, special rights, preferences, privileges
       or voting power of the Series B Preferred Stock.

     With respect to the occurrence of any of the events set forth in the fourth
bullet point above, so long as we are either the surviving entity and shares of
Series B Preferred Stock remain outstanding with the terms materially unchanged
or the resulting, surviving or transferee entity is a corporation organized
under the laws of any state and substitutes for the Series B Preferred Stock
other preferred stock having substantially the same terms and rights as the
Series B Preferred Stock, the occurrence of any such event will not be
considered to materially and adversely affect rights, preferences, privileges or
voting powers of holders of Series B Preferred Stock. Any increase in the amount
of authorized preferred stock, the creation or issuance of any other class or
series of preferred stock or any increase in an amount of authorized shares of
each class or series, in each case ranking on a parity with or junior to the
Series B Preferred Stock will not be considered to materially and adversely
affect such rights, preferences, privileges or voting powers.

     We have granted certain registration rights with respect to any shares of
Series B Preferred Stock that we may issue upon exchange of the Series B
Preferred Units. See "Description of Certain Provisions of the Partnership
Agreement of the Operating Partnership -- Series B Preferred
Units -- Registration Rights."

     Series C Preferred Stock. We currently have no shares of Series C Preferred
Stock issued or outstanding. The Series C Preferred Stock is issuable upon
exchange of the AMB Property II Series C Preferred Units. The AMB Property II
Series C Preferred Units are exchangeable in whole at any time on or after
November 24, 2008, at the option of 51% of the holders of all outstanding AMB
Property II Series C
                                       12

Preferred Units, on a one for one basis, subject to adjustment, for shares of
our Series C Preferred Stock. In addition, the AMB Property II Series C
Preferred Units are exchangeable in whole at any time at the option of 51% of
the holders of all outstanding AMB Property II Series C Preferred Units if:

     - any AMB Property II Series C Preferred Unit shall not have received full
       distributions with respect to six prior quarterly distribution periods
       (whether or not consecutive); or


     - AMB Property Holding Corporation, the general partner of AMB Property II,
       or one of its subsidiaries takes the position, and a holder or holders of
       AMB Property II Series C Preferred Units receive an opinion of
       independent counsel that AMB Property II is, or upon the happening of a
       certain event likely will be, a "publicly traded partnership" within the
       meaning of the Internal Revenue Code.



     The AMB Property II Series C Preferred Units are exchangeable in whole for
shares of Series C Preferred Stock at any time after November 24, 2001 and prior
to November 24, 2008 at the option of 51% of the holders of all outstanding AMB
Property II Series C Preferred Units if those holders deliver to AMB Property
Holding Corporation a private letter ruling or an opinion of independent counsel
to the effect that an exchange of the AMB Property II Series C Preferred Units
at that time would not cause the AMB Property II Series C Preferred Units to be
considered "stock and securities" within the meaning of the Code for purposes of
determining whether the holder of AMB Property II Series C Preferred Units is an
"investment company" under the Internal Revenue Code.


     The AMB Property II Series C Preferred Units are also exchangeable in whole
at any time for shares of Series C Preferred Stock, if initial purchasers of the
AMB Property II Series C Preferred Units holding 51% of all outstanding AMB
Property II Series C Preferred Units determine, (regardless of whether held by
the initial purchasers) if:


     - AMB Property II reasonably determines that the assets and income of AMB
       Property II for a taxable year after 1998 would not satisfy the income
       and assets tests of the Internal Revenue Code for such taxable year if
       AMB Property II were a REIT; or



     - any holder of AMB Property II Series C Preferred Units delivers to AMB
       Property II and AMB Property Holding Corporation an opinion of
       independent counsel to the effect that (based on the assets and income of
       AMB Property II for a taxable year after 1998) AMB Property II would not
       satisfy the income and assets tests of the Internal Revenue Code for such
       taxable year if AMB Property II were a REIT and that such failure would
       create a meaningful risk that a holder of AMB Property II Series C
       Preferred Units would fail to maintain qualification as a REIT.


     In lieu of an exchange for Series C Preferred Stock, AMB Property II may
redeem AMB Property II Series C Preferred Units for cash in an amount equal to
the original capital account balance of the holder of AMB Property II Series C
Preferred Units. A holder of AMB Property II Series C Preferred Units will not
be entitled to exchange the units for Series C Preferred Stock if the exchange
would result in a violation of the ownership limit. See "Description of Capital
Stock -- Restrictions on Ownership and Transfer of Capital Stock."

     The Series C Preferred Stock ranks, with respect to dividends and in the
event we voluntarily or involuntarily liquidate, dissolve or wind up:

     - senior to all classes or series of common stock and to all of our equity
       securities that provide that they rank junior to the Series C Preferred
       Stock;

     - junior to all equity securities issued by us which rank senior to the
       Series C Preferred Stock; and


     - on a parity with all equity securities issued by us (including the Series
       A Preferred Stock and any Series B Preferred Stock, Series D Preferred
       Stock and Series E Preferred Stock) other than those referred to in the
       bullet points above. The term "equity securities" does not include
       convertible debt securities until converted into equity securities.


                                       13


     If ever issued, the Series C Preferred Stock will entitle the holders to
receive, when and as authorized by the Board of Directors out of funds legally
available for dividends, cumulative preferential cash dividends at the rate of
8.75% of the liquidation preference per annum (equivalent to $4.375 per annum
per share of Series C Preferred Stock). Dividends on the Series C Preferred
Stock accumulate on a daily basis and are payable quarterly in arrears on the
15th day of each January, April, July and October. Except as provided below,
unless full cumulative dividends on the Series C Preferred Stock have been or at
the same time are declared and paid or declared and a sum sufficient for payment
set apart for payment for all past dividend periods and the then current
dividend period, no distributions (other than in common stock or other equity
securities ranking junior to the Series C Preferred Stock) may be declared or
paid or set aside for payment or other dividend be declared or made upon the
common stock or any other equity securities ranking junior to or on a parity
with the Series C Preferred Stock, nor may any common stock or any other equity
securities ranking junior to or on a parity with the Series C Preferred Stock,
be redeemed, purchased or otherwise acquired for any consideration (or any
monies be paid to or made available for a sinking fund for the redemption of any
such securities) by us (except by conversion into or exchange for other equity
securities ranking junior to the Series C Preferred Stock and pursuant to the
provisions of our Charter providing for limitations on ownership and transfer in
order to ensure that we remain qualified as a REIT). When dividends are not paid
in full (or a sum sufficient for such full payment is not so set apart) upon the
Series C Preferred Stock and any other equity securities ranking on a parity
with the Series C Preferred Stock, all dividends declared upon the Series C
Preferred Stock and any other equity securities ranking on a parity with the
Series C Preferred Stock will be declared pro rata so that the amount of
dividends declared per share of Series C Preferred Stock and each such other
equity securities shall bear to each other the same ratio that accumulated
dividends per share of Series C Preferred Stock and such other equity securities
(which shall not include any accumulation in respect of unpaid dividends for
prior dividend periods if such other equity securities do not have a cumulative
dividend) bear to each other. Dividends on the Series C Preferred Stock will
accumulate whether or not we have funds legally available for the payment of
dividends and whether or not we declare dividends. If we designate any portion
of a dividend as a "capital gain dividend," a holder's share of the capital gain
dividend will be an amount that bears the same ratio to the total amount of
dividends (as determined for federal income tax purposes) paid to the holder for
the year as the aggregate amount designated as a capital gain dividend bears to
the aggregate amount of all dividends (as determined for federal income tax
purposes) paid on all classes of shares for the year.


     In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up following the issuance of Series C Preferred Stock, the holders of the
Series C Preferred Stock will be entitled to receive out of our assets legally
available for distribution to our stockholders remaining after payment or
provision for payment of all of our debts and liabilities, a liquidation
preference, in cash, of $50.00 per share, plus an amount equal to any
accumulated or accrued and unpaid dividends to the date of such payment, before
any distribution of assets is made to holders of common stock or any other
equity securities that rank junior to the Series C Preferred Stock. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of the Series C Preferred Stock will have no right or
claim to any of our remaining assets. Our consolidation or merger with or into
any other entity, a merger of another entity with or into us, a statutory share
exchange or the sale, lease, transfer or conveyance of all or substantially all
of our property or business do not constitute a liquidation, dissolution or
winding up for purposes of triggering the liquidation preference.


     If we voluntarily or involuntarily liquidate, dissolve or wind up following
the issuance of Series C Preferred Stock and our assets are insufficient to make
full payment to holders of the Series C Preferred Stock and the corresponding
amounts payable on all shares of other classes or series of equity securities
ranking on a parity with the Series C Preferred Stock as to liquidation rights,
then the holders of the Series C Preferred Stock and all other such classes or
series of equity securities will share ratably in any such distribution of
assets in proportion to the full liquidating distributions to which they would
otherwise be entitled.


     The Series C Preferred Stock has no stated maturity and is not subject to
mandatory redemption or any sinking fund. If issued, we cannot redeem the Series
C Preferred Stock prior to November 24, 2003. On and

                                       14

after November 24, 2003, we can redeem the Series C Preferred Stock for cash at
our option, in whole or from time to time in part, at a redemption price of
$50.00 per share, plus accumulated and unpaid dividends, if any, to the
redemption date. We must pay the redemption price (other than the portion of the
redemption price consisting of accumulated and unpaid dividends) solely out of
the sale proceeds of other equity securities, which may include other classes or
series of preferred stock. In certain circumstances related to our maintenance
of our ability to qualify as a REIT for federal income tax purposes, we may
redeem shares of Series C Preferred Stock. See "-- Restrictions on Ownership and
Transfer of Capital Stock."

     Holders of Series C Preferred Stock will have no voting rights, except as
described below. If we do not pay dividends on the Series C Preferred Stock for
six or more quarterly periods (whether or not consecutive), holders of the
Series C Preferred Stock (voting separately as a class with all other classes or
series of equity securities upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors to serve on our Board of Directors until we have eliminated all
dividend arrearages with respect to the Series C Preferred Stock. So long as any
shares of Series C Preferred Stock remain outstanding, we may not, without the
affirmative vote or consent of at least two-thirds of the votes entitled to be
cast by the holders of the outstanding shares of Series C Preferred Stock (the
Series C Preferred Stock voting separately as a class):

     - authorize or create, or increase the authorized or issued amount of, any
       class or series of stock ranking senior to the Series C Preferred Stock;

     - reclassify any of our authorized stock into any class or series of stock
       ranking senior to the Series C Preferred Stock;

     - designate or create, or increase the authorized or issued amount of, or
       reclassify, any authorized shares into, any preferred stock ranking on a
       parity with the Series C Preferred Stock or create, authorize or issue
       any obligations or securities convertible into any such shares, but only
       to the extent such stock is issued to one of our affiliates; or

     - either consolidate, merge into or with, or convey, transfer or lease our
       assets substantially, as an entirety, to any corporation or other entity,
       or amend, alter or repeal the provisions of our Charter, whether by
       merger or consolidation or otherwise, in each case so as to materially
       and adversely affect the powers, special rights, preferences, privileges
       or voting power of the Series C Preferred Stock.

     With respect to the occurrence of any of the events set forth in the fourth
bullet point above, so long as we are either the surviving entity and shares of
Series C Preferred Stock remain outstanding with the terms materially unchanged
or the resulting, surviving or transferee entity is a corporation, business
trust or like entity organized under the laws of any state and substitutes for
the Series C Preferred Stock other preferred stock or preferred shares having
substantially the same terms and rights as the Series C Preferred Stock, the
occurrence of any such event will not be considered to materially and adversely
affect rights, preferences, privileges or voting powers of holders of Series C
Preferred Stock. Any increase in the amount of authorized preferred stock, the
creation or issuance of any other class or series of preferred stock or any
increase in an amount of authorized shares of each class or series, in each case
ranking on a parity with or junior to the Series C Preferred Stock will not be
considered to materially and adversely affect such rights, preferences,
privileges or voting powers.

     We have agreed to file a registration statement registering the resale of
the shares of Series C Preferred Stock issuable to the holders of AMB Property
II Series C Preferred Units as soon as practicable but not later than 60 days
after the date the AMB Property II Series C Preferred Units are exchanged for
shares of Series C Preferred Stock. We have also agreed to use our best efforts
to cause the registration statement to be declared effective within 120 days
after the date of the exchange.


     Series D Preferred Stock. We currently have no shares of Series D Preferred
Stock issued or outstanding. The Series D Preferred Stock is issuable upon
exchange of the AMB Property II Series D Preferred Units. The AMB Property II
Series D Preferred Units are exchangeable in whole at any time on or

                                       15


after May 5, 2009, at the option of 51% of the holders of all outstanding AMB
Property II Series D Preferred Units, on a one for one basis, subject to
adjustment, for shares of our Series D Preferred Stock. In addition, the AMB
Property II Series D Preferred Units are exchangeable in whole at any time at
the option of 51% of the holders of all outstanding AMB Property II Series D
Preferred Units if:



     - any AMB Property II Series D Preferred Unit shall not have received full
       distributions with respect to six prior quarterly distribution periods
       (whether or not consecutive); or



     - AMB Property Holding Corporation, the general partner of AMB Property II,
       or one of its subsidiaries takes the position, and a holder or holders of
       AMB Property II Series D Preferred Units receive an opinion of
       independent counsel that AMB Property II is, or upon the happening of a
       certain event likely will be, a "publicly traded partnership" within the
       meaning of the Internal Revenue Code.



     The AMB Property II Series D Preferred Units are exchangeable in whole for
shares of Series D Preferred Stock at any time after May 5, 2002 and prior to
May 5, 2009 at the option of 51% of the holders of all outstanding AMB Property
II Series D Preferred Units if those holders deliver to AMB Property Holding
Corporation a private letter ruling or an opinion of independent counsel to the
effect that an exchange of the AMB Property II Series D Preferred Units at that
time would not cause the AMB Property II Series D Preferred Units to be
considered "stock and securities" within the meaning of the Internal Revenue
Code for purposes of determining whether the holder of AMB Property II Series D
Preferred Units is an "investment company" under the Internal Revenue Code.



     In lieu of an exchange for Series D Preferred Stock, AMB Property II may
redeem AMB Property II Series D Preferred Units for cash in an amount equal to
the original capital account balance of the holder of AMB Property II Series D
Preferred Units. A holder of AMB Property II Series D Preferred Units will not
be entitled to exchange the units for Series D Preferred Stock if the exchange
would result in a violation of the ownership limit. See "Description of Capital
Stock -- Restrictions on Ownership and Transfer of Capital Stock."



     The Series D Preferred Stock ranks, with respect to dividends and in the
event we voluntarily or involuntarily liquidate, dissolve or wind up:



     - senior to all classes or series of common stock and to all of our equity
       securities that provide that they rank junior to the Series D Preferred
       Stock;



     - junior to all equity securities issued by us which rank senior to the
       Series D Preferred Stock; and



     - on a parity with all equity securities issued by us (including the Series
       A Preferred Stock and any Series B Preferred Stock, Series C Preferred
       Stock and Series E Preferred Stock) other than those referred to in the
       bullet points above. The term "equity securities" does not include
       convertible debt securities until converted into equity securities.



     If ever issued, the Series D Preferred Stock will entitle the holders to
receive, when and as authorized by the Board of Directors out of funds legally
available for dividends, cumulative preferential cash dividends at the rate of
7.75% of the liquidation preference per annum (equivalent to $3.875 per annum
per share of Series D Preferred Stock). Dividends on the Series D Preferred
Stock accumulate on a daily basis and are payable quarterly in arrears on the
15th day of each January, April, July and October. Except as provided below,
unless full cumulative dividends on the Series D Preferred Stock have been or at
the same time are declared and paid or declared and a sum sufficient for payment
set apart for payment for all past dividend periods and the then current
dividend period, no distributions (other than in common stock or other equity
securities ranking junior to the Series D Preferred Stock) may be declared or
paid or set aside for payment or other dividend be declared or made upon the
common stock or any other equity securities ranking junior to or on a parity
with the Series D Preferred Stock, nor may any common stock or any other equity
securities ranking junior to or on a parity with the Series D Preferred Stock be
redeemed, purchased or otherwise acquired for any consideration (or any monies
be paid to or made available for a sinking fund for the redemption of any such
securities) by us (except by conversion into or exchange for other equity
securities


                                       16


ranking junior to the Series D Preferred Stock and pursuant to the provisions of
our Charter providing for limitations on ownership and transfer in order to
ensure that we remain qualified as a REIT). When dividends are not paid in full
(or a sum sufficient for such full payment is not so set apart) upon the Series
D Preferred Stock and any other equity securities ranking on a parity with the
Series D Preferred Stock, all dividends declared upon the Series D Preferred
Stock and any other equity securities ranking on a parity with the Series D
Preferred Stock will be declared pro rata so that the amount of dividends
declared per share of Series D Preferred Stock and each such other equity
securities shall bear to each other the same ratio that accumulated dividends
per share of Series D Preferred Stock and such other equity securities (which
shall not include any accumulation in respect of unpaid dividends for prior
dividend periods if such other equity securities do not have a cumulative
dividend) bear to each other. Dividends on the Series D Preferred Stock will
accumulate whether or not we have funds legally available for the payment of
dividends and whether or not we declare dividends. If we designate any portion
of a dividend as a "capital gain dividend," a holder's share of the capital gain
dividend will be an amount that bears the same ratio to the total amount of
dividends (as determined for federal income tax purposes) paid to the holder for
the year as the aggregate amount designated as a capital gain dividend bears to
the aggregate amount of all dividends (as determined for federal income tax
purposes) paid on all classes of shares for the year.



     In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up following the issuance of Series D Preferred Stock, the holders of the
Series D Preferred Stock will be entitled to receive out of our assets legally
available for distribution to our stockholders remaining after payment or
provision for payment of all of our debts and liabilities, a liquidation
preference, in cash, of $50.00 per share, plus an amount equal to any
accumulated or accrued and unpaid dividends to the date of such payment, before
any distribution of assets is made to holders of common stock or any other
equity securities that rank junior to the Series D Preferred Stock. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of the Series D Preferred Stock will have no right or
claim to any of our remaining assets. Our consolidation or merger with or into
any other entity, a merger of another entity with or into us, a statutory share
exchange or the sale, lease, transfer or conveyance of all or substantially all
of our property or business do not constitute a liquidation, dissolution or
winding up for purposes of triggering the liquidation preference.



     If we voluntarily or involuntarily liquidate, dissolve or wind up following
the issuance of Series D Preferred Stock and our assets are insufficient to make
full payment to holders of the Series D Preferred Stock and the corresponding
amounts payable on all shares of other classes or series of equity securities
ranking on a parity with the Series D Preferred Stock as to liquidation rights
then the holders of the Series D Preferred Stock and all other such classes or
series of equity securities will share ratably in any such distribution of
assets in proportion to the full liquidating distributions to which they would
otherwise be entitled.



     The Series D Preferred Stock has no stated maturity and is not subject to
mandatory redemption or any sinking fund. If issued, we cannot redeem the Series
D Preferred Stock prior to May 5, 2004. On and after May 5, 2004, we can redeem
the Series D Preferred Stock for cash at our option, in whole or from time to
time in part, at a redemption price of $50.00 per share, plus accumulated and
unpaid dividends, if any, to the redemption date. We must pay the redemption
price (other than the portion of the redemption price consisting of accumulated
and unpaid dividends) solely out of the sale proceeds of other equity
securities, which may include other classes or series of preferred stock. In
certain circumstances related to our maintenance of our ability to qualify as a
REIT for federal income tax purposes, we may redeem shares of Series D Preferred
Stock. See "-- Restrictions on Ownership and Transfer of Capital Stock."



     Holders of Series D Preferred Stock will have no voting rights, except as
described below. If we do not pay dividends on the Series D Preferred Stock for
six or more quarterly periods (whether or not consecutive), holders of the
Series D Preferred Stock (voting separately as a class with all other classes or
series of equity securities upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors to serve on our Board of Directors until we have eliminated all
dividend arrearages with respect to the Series D Preferred Stock. So long as any
shares of Series D Preferred Stock remain outstanding, we may not, without the
affirmative vote or consent of at least two-thirds of the votes

                                       17


entitled to be cast by the holders of the outstanding shares of Series D
Preferred Stock (the Series D Preferred Stock voting separately as a class):



     - authorize or create, or increase the authorized or issued amount of, any
       class or series of stock ranking senior to the Series D Preferred Stock;



     - reclassify any of our authorized stock into any class or series of stock
       ranking senior to the Series D Preferred Stock;



     - designate or create, or increase the authorized or issued amount of, or
       reclassify, any authorized shares into, any preferred stock ranking on a
       parity with the Series D Preferred Stock or create, authorize or issue
       any obligations or securities convertible into any such shares, but only
       to the extent such stock is issued to one of our affiliates; or



     - either consolidate, merge into or with, or convey, transfer or lease our
       assets substantially, as an entirety, to any corporation or other entity,
       or amend, alter or repeal the provisions of our Charter, whether by
       merger or consolidation or otherwise, in each case so as to materially
       and adversely affect the powers, special rights, preferences, privileges
       or voting power of the Series D Preferred Stock.



     With respect to the occurrence of any of the events set forth in the fourth
bullet point above, so long as we are either the surviving entity and shares of
Series D Preferred Stock remain outstanding with the terms materially unchanged
or the resulting, surviving or transferee entity is a corporation, business
trust or like entity organized under the laws of any state and substitutes for
the Series D Preferred Stock other preferred stock or preferred shares having
substantially the same terms and rights as the Series D Preferred Stock, the
occurrence of any such event will not be considered to materially and adversely
affect rights, preferences, privileges or voting powers of holders of Series D
Preferred Stock. Any increase in the amount of authorized preferred stock, the
creation or issuance of any other class or series of preferred stock or any
increase in an amount of authorized shares of each class or series, in each case
ranking on a parity with or junior to the Series D Preferred Stock will not be
considered to materially and adversely affect such rights, preferences,
privileges or voting powers.



     We have agreed to file a registration statement registering the resale of
the shares of Series D Preferred Stock issuable to the holders of AMB Property
II Series D Preferred Units as soon as practicable but not later than 60 days
after the date the AMB Property II Series D Preferred Units are exchanged for
shares of Series D Preferred Stock. We have also agreed to use our best efforts
to cause the registration statement to be declared effective within 120 days
after the date of the exchange.



     Series E Preferred Stock. We currently have no shares of Series E Preferred
Stock issued or outstanding. The Series E Preferred Stock is issuable upon
exchange of the AMB Property II Series E Preferred Units. The AMB Property II
Series E Preferred Units are exchangeable in whole at any time on or after
August 31, 2009, at the option of 51% of the holders of all outstanding AMB
Property II Series E Preferred Units, on a one for one basis, subject to
adjustment, for shares of our Series E Preferred Stock. In addition, the AMB
Property II Series E Preferred Units are exchangeable in whole at any time at
the option of 51% of the holders of all outstanding AMB Property II Series E
Preferred Units if:



     - any AMB Property II Series E Preferred Unit shall not have received full
       distributions with respect to six prior quarterly distribution periods
       (whether or not consecutive); or



     - AMB Property Holding Corporation, the general partner of AMB Property II,
       or one of its subsidiaries takes the position, and a holder or holders of
       AMB Property II Series E Preferred Units receive an opinion of
       independent counsel that AMB Property II is, or upon the happening of a
       certain event likely will be, a "publicly traded partnership" within the
       meaning of the Code.



     The AMB Property II Series E Preferred Units are exchangeable in whole for
shares of Series E Preferred Stock at any time after August 31, 2002 and prior
to August 31, 2009 at the option of 51% of the holders of all outstanding AMB
Property II Series E Preferred Units if those holders deliver to AMB Property
Holding Corporation a private letter ruling or an opinion of independent counsel
to the effect that an exchange


                                       18


of the AMB Property II Series E Preferred Units at that time would not cause the
AMB Property II Series E Preferred Units to be considered "stock and securities"
within the meaning of the Code for purposes of determining whether the holder of
AMB Property II Series E Preferred Units is an "investment company" under the
Code.



     In lieu of an exchange for Series E Preferred Stock, AMB Property II may
redeem AMB Property II Series E Preferred Units for cash in an amount equal to
the original capital account balance of the holder of AMB Property II Series E
Preferred Units. A holder of AMB Property II Series E Preferred Units will not
be entitled to exchange the units for Series E Preferred Stock if the exchange
would result in a violation of the ownership limit. See "Description of Capital
Stock -- Restrictions on Ownership and Transfer of Capital Stock."



     The Series E Preferred Stock ranks, with respect to dividends and in the
event we voluntarily or involuntarily liquidate, dissolve or wind up:



     - senior to all classes or series of common stock and to all of our equity
       securities that provide that they rank junior to the Series E Preferred
       Stock;



     - junior to all equity securities issued by us which rank senior to the
       Series E Preferred Stock; and



     - on a parity with all equity securities issued by us (including the Series
       A Preferred Stock and any Series B Preferred Stock, Series C Preferred
       Stock and Series D Preferred Stock) other than those referred to in the
       bullet points above. The term "equity securities" does not include
       convertible debt securities until converted into equity securities.



     If ever issued, the Series E Preferred Stock will entitle the holders to
receive, when and as authorized by the Board of Directors out of funds legally
available for dividends, cumulative preferential cash dividends at the rate of
7.75% of the liquidation preference per annum (equivalent to $3.875 per annum
per share of Series E Preferred Stock). Dividends on the Series E Preferred
Stock accumulate on a daily basis and are payable quarterly in arrears on the
15th day of each January, April, July and October. Except as provided below,
unless full cumulative dividends on the Series E Preferred Stock have been or at
the same time are declared and paid or declared and a sum sufficient for payment
set apart for payment for all past dividend periods and the then current
dividend period, no distributions (other than in common stock or other equity
securities ranking junior to the Series E Preferred Stock) may be declared or
paid or set aside for payment or other dividend be declared or made upon the
common stock or any other equity securities ranking junior to or on a parity
with the Series E Preferred Stock, nor may any common stock or any other equity
securities ranking junior to or on a parity with the Series E Preferred Stock be
redeemed, purchased or otherwise acquired for any consideration (or any monies
be paid to or made available for a sinking fund for the redemption of any such
securities) by us (except by conversion into or exchange for other equity
securities ranking junior to the Series E Preferred Stock and pursuant to the
provisions of our Charter providing for limitations on ownership and transfer in
order to ensure that we remain qualified as a REIT). When dividends are not paid
in full (or a sum sufficient for such full payment is not so set apart) upon the
Series E Preferred Stock and any other equity securities ranking on a parity
with the Series E Preferred Stock, all dividends declared upon the Series E
Preferred Stock and any other equity securities ranking on a parity with the
Series E Preferred Stock will be declared pro rata so that the amount of
dividends declared per share of Series E Preferred Stock and each such other
equity securities shall bear to each other the same ratio that accumulated
dividends per share of Series E Preferred Stock and such other equity securities
(which shall not include any accumulation in respect of unpaid dividends for
prior dividend periods if such other equity securities do not have a cumulative
dividend) bear to each other. Dividends on the Series E Preferred Stock will
accumulate whether or not we have funds legally available for the payment of
dividends and whether or not we declare dividends. If we designate any portion
of a dividend as a "capital gain dividend," a holder's share of the capital gain
dividend will be an amount that bears the same ratio to the total amount of
dividends (as determined for federal income tax purposes) paid to the holder for
the year as the aggregate amount


                                       19


designated as a capital gain dividend bears to the aggregate amount of all
dividends (as determined for federal income tax purposes) paid on all classes of
shares for the year.



     In the event that we voluntarily or involuntarily liquidate, dissolve or
wind up following the issuance of Series E Preferred Stock, the holders of the
Series E Preferred Stock will be entitled to receive out of our assets legally
available for distribution to our stockholders remaining after payment or
provision for payment of all of our debts and liabilities, a liquidation
preference, in cash, of $50.00 per share, plus an amount equal to any
accumulated or accrued and unpaid dividends to the date of such payment, before
any distribution of assets is made to holders of common stock or any other
equity securities that rank junior to the Series E Preferred Stock. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of the Series E Preferred Stock will have no right or
claim to any of our remaining assets. Our consolidation or merger with or into
any other entity, a merger of another entity with or into us, a statutory share
exchange or the sale, lease, transfer or conveyance of all or substantially all
of our property or business do not constitute a liquidation, dissolution or
winding up for purposes of triggering the liquidation preference.



     If we voluntarily or involuntarily liquidate, dissolve or wind up following
the issuance of Series E Preferred Stock and our assets are insufficient to make
full payment to holders of the Series E Preferred Stock and the corresponding
amounts payable on all shares of other classes or series of equity securities
ranking on a parity with the Series E Preferred Stock as to liquidation rights,
then the holders of the Series E Preferred Stock and all other such classes or
series of equity securities will share ratably in any such distribution of
assets in proportion to the full liquidating distributions to which they would
otherwise be entitled.



     The Series E Preferred Stock has no stated maturity and is not subject to
mandatory redemption or any sinking fund. If issued, we cannot redeem the Series
E Preferred Stock prior to August 31, 2004. On and after August 31, 2004, we can
redeem the Series E Preferred Stock for cash at our option, in whole or from
time to time in part, at a redemption price of $50.00 per share, plus
accumulated and unpaid dividends, if any, to the redemption date. We must pay
the redemption price (other than the portion of the redemption price consisting
of accumulated and unpaid dividends) solely out of the sale proceeds of other
equity securities, which may include other classes or series of preferred stock.
In certain circumstances related to our maintenance of our ability to qualify as
a REIT for federal income tax purposes, we may redeem shares of Series E
Preferred Stock. See "-- Restrictions on Ownership and Transfer of Capital
Stock."



     Holders of Series E Preferred Stock will have no voting rights, except as
described below. If we do not pay dividends on the Series E Preferred Stock for
six or more quarterly periods (whether or not consecutive), holders of the
Series E Preferred Stock (voting separately as a class with all other classes or
series of equity securities upon which like voting rights have been conferred
and are exercisable) will be entitled to vote for the election of two additional
directors to serve on our Board of Directors until we have eliminated all
dividend arrearages with respect to the Series E Preferred Stock. So long as any
shares of Series E Preferred Stock remain outstanding, we may not, without the
affirmative vote or consent of at least two-thirds of the votes entitled to be
cast by the holders of the outstanding shares of Series E Preferred Stock (the
Series E Preferred Stock voting separately as a class):



     - authorize or create, or increase the authorized or issued amount of, any
       class or series of stock ranking senior to the Series E Preferred Stock;



     - reclassify any of our authorized stock into any class or series of stock
       ranking senior to the Series E Preferred Stock;



     - designate or create, or increase the authorized or issued amount of, or
       reclassify, any authorized shares into, any preferred stock ranking on a
       parity with the Series E Preferred Stock or create, authorize or issue
       any obligations or securities convertible into any such shares, but only
       to the extent such stock is issued to one of our affiliates; or



     - either consolidate, merge into or with, or convey, transfer or lease our
       assets substantially, as an entirety, to any corporation or other entity,
       or amend, alter or repeal the provisions of our Charter,


                                       20


       whether by merger or consolidation or otherwise, in each case so as to
       materially and adversely affect the powers, special rights, preferences,
       privileges or voting power of the Series E Preferred Stock.



     With respect to the occurrence of any of the events set forth in the fourth
bullet point above, so long as we are either the surviving entity and shares of
Series E Preferred Stock remain outstanding with the terms materially unchanged
or the resulting, surviving or transferee entity is a corporation, business
trust or like entity organized under the laws of any state and substitutes for
the Series E Preferred Stock other preferred stock or preferred shares having
substantially the same terms and rights as the Series E Preferred Stock, the
occurrence of any such event will not be considered to materially and adversely
affect rights, preferences, privileges or voting powers of holders of Series E
Preferred Stock. Any increase in the amount of authorized preferred stock, the
creation or issuance of any other class or series of preferred stock or any
increase in an amount of authorized shares of each class or series, in each case
ranking on a parity with or junior to the Series E Preferred Stock will not be
considered to materially and adversely affect such rights, preferences,
privileges or voting powers.



     We have agreed to file a registration statement registering the resale of
the shares of Series E Preferred Stock issuable to the holders of AMB Property
II Series E Preferred Units as soon as practicable but not later than 60 days
after the date the AMB Property II Series E Preferred Units are exchanged for
shares of Series E Preferred Stock. We have also agreed to use our best efforts
to cause the registration statement to be declared effective within 120 days
after the date of the exchange.


RESTRICTIONS ON OWNERSHIP AND TRANSFER OF CAPITAL STOCK


     In order for us to qualify as a REIT under the Internal Revenue Code, no
more than 50% in value of all classes of our outstanding shares of capital stock
may be owned, actually or constructively, by five or fewer individuals (as
defined in the Internal Revenue Code to include certain entities) during the
last half of a taxable year (other than the first year for which we have made an
election to be treated as a REIT). In addition, if we, or an owner of 10% or
more of our capital stock, actually or constructively own 10% or more of one of
our tenants (or a tenant of any partnership or limited liability company in
which we are a partner or member), the rent received by us (either directly or
through the partnership or limited liability company) from the tenant will not
be qualifying income for purposes of the gross income tests for REITs contained
in the Internal Revenue Code. A REIT's stock also must be beneficially owned by
100 or more persons during at least 335 days of a taxable year of 12 months or
during a proportionate part of a shorter taxable year (other than the first year
for which an election to be treated as a REIT has been made).



     Because our Board of Directors believes it is desirable for us to qualify
as a REIT, our Charter, subject to certain exceptions as discussed below,
provides that no person may own, or be deemed to own by virtue of the
attribution provisions of the Internal Revenue Code, more than 9.8% (by value or
number of shares, whichever is more restrictive) of either our issued and
outstanding common stock or our issued and outstanding Series A Preferred Stock.
We will also prohibit the ownership, actually or constructively, of any shares
of our Series B Preferred Stock, Series D Preferred Stock and Series E Preferred
Stock by any single person so that no such person, taking into account all of
our stock so owned by such person, may own in excess of 9.8% of our issued and
outstanding capital stock. The constructive ownership rules under the Internal
Revenue Code are complex and may cause stock owned actually or constructively by
a group of related individuals and/or entities to be owned constructively by one
individual or entity. As a result, the acquisition of less than 9.8% of our
common stock, Series A Preferred Stock or capital stock (or the acquisition of
an interest in an entity that owns, actually or constructively, common stock,
Series A Preferred Stock or capital stock) by an individual or entity, could,
nevertheless cause that individual or entity, or another individual or entity,
to own constructively in excess of 9.8% of our outstanding common stock, Series
A Preferred Stock or capital stock, as the case may be, and thereby subject the
common stock, Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock or Series E Preferred Stock to the
applicable ownership limit. The Board of Directors may, but in no event will be
required to, waive the applicable ownership limit with respect to a particular
stockholder if it determines that such ownership will not jeopardize our status
as a REIT and the

                                       21

Board of Directors otherwise decides such action would be in our best interest.
As a condition of such waiver, the Board of Directors may require an opinion of
counsel satisfactory to it and/or undertakings or representations from the
applicant with respect to preserving our REIT status. The Board of Directors has
waived the ownership limit applicable to our common stock with respect to
Ameritech Pension Trust, allowing it to own up to 14.9% of our common stock and,
under some circumstances, allowing it to own up to 19.6%. However, we
conditioned this waiver upon the receipt of undertakings and representations
from Ameritech Pension Trust which we believed were reasonably necessary in
order for us to conclude that the waiver would not cause us to fail to qualify
as a REIT.

     Our Charter also provides that:


     - no person may actually or constructively own common stock, Series A
       Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
       Series D Preferred Stock or Series E Preferred Stock that would result in
       us being "closely held" under Section 856(h) of the Internal Revenue Code
       or otherwise cause us to fail to qualify as a REIT;



     - no person may transfer common stock, Series A Preferred Stock, Series B
       Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or
       Series E Preferred Stock if a transfer would result in shares of our
       capital stock being owned by fewer than 100 persons; and



     - any person who acquires or attempts or intends to acquire actual or
       constructive ownership of common stock, Series A Preferred Stock, Series
       B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or
       Series E Preferred Stock that will or may violate any of the foregoing
       restrictions on transferability and ownership is required to notify us
       immediately and provide us with such other information as we may request
       in order to determine the effect of the transfer on our status as a REIT.
       The foregoing restrictions on transferability and ownership will not
       apply if our Board of Directors determines that it is no longer in our
       best interest to attempt to qualify, or to continue to qualify, as a
       REIT. Except as otherwise described above, any change in the applicable
       ownership limit would require an amendment to our Charter, which requires
       the affirmative vote of holders owning at least two-thirds of the shares
       of our outstanding capital stock entitled to vote on the amendment.



     Under our Charter, if any attempted transfer of shares of stock or any
other event would otherwise result in any person violating an ownership limit,
any other limit imposed by our Board of Directors or the other restrictions in
the Charter, then any such attempted transfer will be void and of no force or
effect with respect to the purported transferee (the "prohibited transferee") as
to that number of shares that exceeds the applicable ownership limit or such
other limit (referred to as "excess shares"). Under those circumstances, the
prohibited transferee will acquire no right or interest (or, in the case of any
event other than an attempted transfer, the person or entity holding record
title to any shares in excess of the applicable ownership limit (the "prohibited
owner") will cease to own any right or interest) in the excess shares. Any
excess shares described above will be transferred automatically, by operation of
law, to a trust, the beneficiary of which will be a qualified charitable
organization selected by us (the "beneficiary"). This automatic transfer will be
considered to be effective as of the close of business on the business day prior
to the date of the violating transfer or event. Within 20 days of receiving
notice from us of the transfer of shares to the trust, the trustee of the trust
will be required to sell the excess shares to a person or entity who could own
the shares without violating the applicable ownership limit, or any other limit
imposed by our Board of Directors, and distribute to the prohibited transferee
an amount equal to the lesser of the price paid by the prohibited transferee for
the excess shares or the sales proceeds received by the trust for the excess
shares. In the case of any excess shares resulting from any event other than a
transfer, or from a transfer for no consideration (such as a gift), the trustee
will be required to sell excess shares to a qualified person or entity and
distribute to the prohibited owner an amount equal to the lesser of the
applicable market price of the excess shares as of the date of the event or the
sales proceeds received by the trust for the excess shares. In either case, any
proceeds in excess of the amount distributable to the prohibited transferee or
prohibited owner will be distributed to the beneficiary. Prior to a sale of any
excess shares by the trust, the trustee will be entitled to receive, in trust
for the beneficiary, all dividends and other distributions paid by us with
respect to the excess shares, and also will be entitled to exercise all voting
rights with respect to the excess shares.


                                       22


Subject to Maryland law, effective as of the date that the shares have been
transferred to the trust, the trustee will have the authority (at the trustee's
sole discretion) to rescind as void any vote cast by a prohibited transferee or
prohibited owner prior to the time that we discover that the shares have been
automatically transferred to the trust and to recast the vote in accordance with
the desires of the trustee acting for the benefit of the beneficiary. However,
if we have already taken irreversible corporate action, then the trustee will
not have the authority to rescind and recast the vote. If we pay the prohibited
transferee or prohibited owner any dividend or other distribution before we
discover that the shares were transferred to the trust, the prohibited
transferee or prohibited owner will be required to repay the trustee upon demand
for distribution to the beneficiary. If the transfer to the trust is not
automatically effective (for any reason), to prevent violation of the applicable
ownership limit or any other limit provided in our Charter or imposed by the
Board of Directors, then our Charter provides that the transfer of the excess
shares will be void ab initio.



     In addition, shares of stock held in the trust will be considered to have
been offered for sale to us, or our designee, at a price per share equal to the
lesser of (1) the price per share in the transaction that resulted in the
transfer to the trust (or, in the case of a devise or gift, the market price at
the time of such devise or gift) and (2) the applicable market price on the date
that we, or our designee, accept the offer. We have the right to accept the
offer until the trustee has sold the shares held in the trust. Upon that sale to
us, the interest of the Beneficiary in the shares sold will terminate and the
trustee will distribute the net proceeds of the sale to the prohibited
transferee or prohibited owner.


     If any attempted transfer of shares would cause us to be beneficially owned
by fewer than 100 persons, our Charter provides that the transfer will be null
and void in its entirety and the intended transferee will acquire no rights to
the stock.

     All certificates representing shares will bear a legend referring to the
restrictions described above. The ownership limitations described above could
delay, defer or prevent a transaction or a change in control that might involve
a premium price for the shares or otherwise be in the best interest of
stockholders.


     Under our Charter, owners of outstanding shares must, upon our demand,
provide us with a completed questionnaire containing information regarding
ownership of the shares, as set forth in the treasury regulations. In addition,
each stockholder must upon demand disclose to us in writing such information
that we may request in order to determine the effect, if any, of the
stockholder's actual and constructive ownership of shares of common stock,
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and/or Series E Preferred Stock on our status as a REIT
and to ensure compliance with each ownership limit, or any other limit specified
in the Charter or required by the Board of Directors.


TRANSFER AGENT, REGISTRAR, CONVERSION AGENT AND DIVIDEND DISBURSING AGENT


     The transfer agent, registrar and dividend disbursing agent for our common
stock, Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock and Series E Preferred Stock is BankBoston,
N.A., an affiliate of First National Bank of Boston.


                                       23

                    DESCRIPTION OF CERTAIN PROVISIONS OF THE
               PARTNERSHIP AGREEMENT OF THE OPERATING PARTNERSHIP


     Substantially all of our assets are held, and all of our operations are
conducted, by or through the Operating Partnership. We are the sole general
partner of the Operating Partnership and owned, as of September 30, 1999, an
approximate 95% interest in the Operating Partnership. As the sole general
partner, we have the exclusive right and power to manage the Operating
Partnership. Our interest in the Operating Partnership is designated as a
general partner interest. Except with respect to distributions of cash and
allocations of income and loss, and except as otherwise noted in this
prospectus, the description in this section of common limited partnership Units
is also applicable to Performance Units, and holders of Performance Units will
be treated as limited partners. We have summarized certain terms and provisions
of the Partnership Agreement. This summary is not complete and is qualified by
the provisions of the Partnership Agreement. For more detail, you should refer
to the Partnership Agreement itself, which we have filed as an exhibit to the
registration statement of which this prospectus is a part. See "Where You Can
Find More Information."


GENERAL


     Holders of limited partnership Units hold limited partnership interests in
the Operating Partnership, and all holders of partnership interests (including
us in our capacity as general partner) are entitled to share in cash
distributions from, and in the profits and losses of, the Operating Partnership.
The number of general partnership Units (the "GP Units") held by us is
approximately equal to the total number of outstanding shares of our common
stock and preferred stock. Accordingly, the distributions that we pay per share
of common stock are expected to be equal to the distributions per unit that the
Operating Partnership pays on the common Units, and the distributions that we
pay per share of Series A Preferred Stock, any Series B Preferred Stock, any
Series C Preferred Stock, any Series D Preferred Stock and any Series E
Preferred Stock are expected to be equal to the distributions per unit that the
Operating Partnership pays on the Series A Preferred Units, the Series B
Preferred Units and any Series C Preferred Units, Series D Preferred Units and
Series E Preferred Units, respectively. The Units have not been registered
pursuant to federal or state securities laws, and they will not be listed on the
New York Stock Exchange or any other exchange or quoted on any national market
system. However, the shares of common stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock that we
may issue upon exchange of the common Units, Series B Preferred Units, AMB
Property II Series C Preferred Units, AMB Property II Series D Preferred Units
and AMB Property II Series E Preferred Units may be sold in registered
transactions or transactions exempt from registration under the Securities Act.
The limited partners of the Operating Partnership have the rights to which
limited partners are entitled under the Partnership Agreement and the Delaware
Uniform Limited Partnership Act (the "Partnership Act"). The Partnership
Agreement imposes certain restrictions on the transfer of Units, as described
below.


PURPOSE, BUSINESS AND MANAGEMENT

     The Operating Partnership is organized as a Delaware limited partnership
pursuant to the terms of the Partnership Agreement. We are the sole general
partner of the Operating Partnership and conduct substantially all of our
business through the Operating Partnership, except for investment advisory
services (which we conduct through AMB Investment Management) and certain other
activities that we conduct through Headlands Realty Corporation.


     The primary purpose of the Operating Partnership is, in general, to
acquire, purchase, own, operate, manage, develop, redevelop, invest in, finance,
refinance, sell, lease and otherwise deal with industrial and retail properties
and assets related to those properties, and interests in those properties and
assets. The Operating Partnership is authorized to conduct any business that a
limited partnership formed under the Partnership Act may lawfully conduct,
except that the Partnership Agreement requires of the Operating Partnership to
conduct its business in such a manner that will permit us to be classified as a
REIT under Section 856 of the Internal Revenue Code, unless we cease to qualify
as a REIT for reasons other than the

                                       24

conduct of the business of the Operating Partnership. Subject to the foregoing
limitation, the Operating Partnership may enter into partnerships, joint
ventures or similar arrangements and may own interests directly or indirectly in
any other entity.

     As the general partner of the Operating Partnership we have the exclusive
power and authority to conduct the business of the Operating Partnership,
subject to the consent of the limited partners in certain limited circumstances
(as discussed below) and except as expressly limited in the Partnership
Agreement.


     We have the right to make all decisions and take all actions with respect
to the Operating Partnership's acquisition and operation of our properties and
all other assets and businesses of or related to the Operating Partnership. No
limited partner may take part in the conduct or control of the business or
affairs of the Operating Partnership by virtue of being a holder of Units. In
particular, each limited partner expressly acknowledged in the Partnership
Agreement that as general partner, we are acting on behalf of the Operating
Partnership's limited partners and our stockholders, collectively, and are under
no obligation to consider the tax consequences to limited partners when making
decisions for the benefit of the Operating Partnership. We intend to make
decisions in our capacity as general partner of the Operating Partnership so as
to maximize our profitability and the profitability of the Operating Partnership
as a whole, independent of the tax effects on the limited partners. AMB Property
Corporation and the Operating Partnership have no liability to a limited partner
as a result of any liabilities or damages incurred or suffered by, or benefits
not derived by, a limited partner as a result of our action or inaction as
general partner of the Operating Partnership as long as we acted in good faith.
Limited partners have no right or authority to act for or to bind the Operating
Partnership.


     Limited partners of the Operating Partnership have no authority to transact
business for, or participate in the management activities or decisions of, the
Operating Partnership, except as provided in the Partnership Agreement or as
required by applicable law.

ENGAGING IN OTHER BUSINESSES; CONFLICTS OF INTEREST


     We may not conduct any business other than in connection with the
ownership, acquisition and disposition of Operating Partnership interests as a
general partner and the management of the business of the Operating Partnership,
its operation as a public reporting company with a class (or classes) of
securities registered under the Exchange Act its operation as a REIT and
activities that are incidental to these activities (including ownership of any
interest in AMB Property Holding Corporation, AMB Property Holding II
Corporation, AMB Investment Management, Inc. and Headlands Realty Corporation or
a title holding, management or finance subsidiary organized as a partnership,
limited liability company or corporation) without the consent of the holders of
a majority of the limited partnership interests. Unless they otherwise agree in
writing, each limited partner, and its affiliates, is free to engage in any
business or activity, even if the business or activity competes with or is
enhanced by the business of the Operating Partnership. The Partnership Agreement
does not prevent another person or entity that acquires control of us in the
future from conducting other businesses or owning other assets, even if it would
be in the best interests of the limited partners for the Operating Partnership
to own those businesses or assets. In the exercise of our power and authority
under the Partnership Agreement, we may contract and otherwise deal with or
otherwise obligate the Operating Partnership to entities in which we or any one
or more of our officers, directors or stockholders may have an ownership or
other financial interest, whether direct or indirect.


OUR REIMBURSEMENT; TRANSACTIONS WITH US AND OUR AFFILIATES

     We do not receive any compensation for our services as general partner of
the Operating Partnership. However, as a partner in the Operating Partnership,
we have rights to allocations and distributions as a partner of the Operating
Partnership. In addition, the Operating Partnership reimburses us for all
expenses we incur relating to our activities as general partner, our continued
existence and qualification as a REIT and all other liabilities that we incur in
connection with the pursuit of our business and affairs. We may retain persons
or entities that we select (including ourselves, any entity in which we have an
interest, or any entity with which

                                       25

we are affiliated) to provide services to or on behalf of the Operating
Partnership. The Operating Partnership will reimburse us for all expenses
incurred relating to the ongoing operation of the Operating Partnership and any
issuance of additional partnership interests in the Operating Partnership. These
expenses include those incurred in connection with the administration and
activities of the Operating Partnership, such as the maintenance of the
Operating Partnership's books and records, management of the Operating
Partnership's property and assets, and preparation of information regarding the
Operating Partnership provided to the partners in the preparation of their
individual tax returns. Except as expressly permitted by the Partnership
Agreement, however, our affiliates will not engage in any transactions with the
Operating Partnership except on terms that are fair and reasonable to the
Operating Partnership and no less favorable to the Operating Partnership than it
would obtain from an unaffiliated third party.

OUR EXCULPATION AND INDEMNIFICATION

     The Partnership Agreement generally provides that we, as general partner of
the Operating Partnership, will incur no liability to the Operating Partnership
or any limited partner for losses sustained, liabilities incurred, or benefits
not derived as a result of errors in judgment or for any mistakes of fact or law
or for anything that we may do or not do in connection with the business and
affairs of the Operating Partnership if we carry out our duties in good faith.
Our liability in any event is limited to our interest in the Operating
Partnership. We have no liability for the loss of any limited partner's capital.
In addition, we are not responsible for any misconduct, negligent act or
omission of any of our consultants, contractors or agents, or any of the
Operating Partnership's consultants, contractors or agents, and we have no
obligation other than to use good faith in the selection of all contractors,
consultants and agents. We may consult with counsel, accountants, appraisers,
management consultants, investment bankers, and other consultants and advisors
that we select. An opinion by a consultant on a matter that we believe is within
the consultant's professional or expert competence is considered to be complete
protection as to any action that we take or fail to take based on the opinion
and in good faith.

     The Partnership Agreement also requires the Operating Partnership to
indemnify us, our directors and officers, and other persons that we may from
time to time designate against any loss or damage, including reasonable legal
fees and court costs incurred by the person by reason of anything the person may
do or not do for or on behalf of the Operating Partnership or in connection with
its business or affairs unless it is established that:

     - the act or omission of the indemnified person was material to the matter
       giving rise to the proceeding and either the indemnified person committed
       the act or omission in bad faith or as the result of active and
       deliberate dishonesty;

     - the indemnified person actually received an improper personal benefit in
       money, property or services; or

     - in the case of any criminal proceeding, the indemnified person had
       reasonable cause to believe that the act or omission was unlawful. Any
       indemnification claims must be satisfied solely out of the assets of the
       Operating Partnership.

SALES OF ASSETS; LIQUIDATION

     Under the Partnership Agreement, as general partner we generally have the
exclusive authority to determine whether, when and on what terms, the Operating
Partnership will sell its assets (including our properties, which we own through
the Operating Partnership). However, we have agreed, in connection with the
contribution of properties from taxable investors in our formation transactions
and certain property acquisitions for Units, not to dispose of certain assets in
a taxable sale or exchange for a mutually agreed upon period and, thereafter, to
use commercially reasonable or best efforts to minimize the adverse tax
consequences of any sale. We may enter into similar or other agreements in
connection with other acquisitions of properties for Units.

                                       26

     A merger of the Operating Partnership with another entity generally
requires an affirmative vote of the partners (other than the preferred limited
partners) holding a majority of the outstanding percentage interest (including
the interest held directly or indirectly by us) of all partners other than
preferred limited partners, subject to certain consent rights of holders of
Units as described below under "Amendment of the Partnership Agreement." A
dissolution or liquidation of the Operating Partnership, including a sale or
disposition of all or substantially all of the Operating Partnership's assets
and properties, generally requires an affirmative vote of the limited partners
(other than the preferred limited partners) holding a majority of the
outstanding percentage interest of all limited partners other than preferred
limited partners.

CAPITAL CONTRIBUTION

     The Partnership Agreement provides that if the Operating Partnership
requires additional funds at any time or from time to time in excess of funds
available to the Operating Partnership from borrowings or capital contributions,
we may borrow funds from a financial institution or other lender or through
public or private debt offerings and lend the funds to the Operating Partnership
on the same terms and conditions as are applicable to our borrowing of the
funds. As an alternative to borrowing funds required by the Operating
Partnership, we may contribute the amount of the required funds as an additional
capital contribution to the Operating Partnership. If we contribute additional
capital to the Operating Partnership, our partnership interest in the Operating
Partnership will be increased on a proportionate basis. Conversely, the
partnership interests of the limited partners will be decreased on a
proportionate basis if we make additional capital contributions.

DISTRIBUTIONS; ALLOCATIONS OF INCOME AND LOSS

     The Partnership Agreement generally provides that the Operating Partnership
will make quarterly distributions of Available Cash (as defined below), as
determined in the manner provided in the Partnership Agreement, to the partners
of the Operating Partnership in proportion to their percentage interests in the
Operating Partnership (which for any partner is determined by the number of
Units it owns relative to the total number of Units outstanding). If any
preferred Units are outstanding, the Operating Partnership will pay
distributions to holders of preferred Units in accordance with the rights of
each class of preferred Units (and, within each such class, pro rata in
proportion to the respective percentage interest of each holder), with any
remaining Available Cash distributed in accordance with the previous sentence.
"Available Cash" is generally defined as net cash flow from operations, plus any
reduction in reserves, and minus interest and principal payments on debt,
capital expenditures, any additions to reserves and other adjustments. Other
than as described below, neither we nor the limited partners are currently
entitled to any preferential or disproportionate distributions of Available Cash
with respect to the Units.

SERIES A PREFERRED UNITS

     In connection with the sale of the Series A Preferred Shares, we received
Series A Preferred Units in the Operating Partnership that mirror the rights,
preferences and other terms of the Series A Preferred Stock. The Series A
Preferred Units rank, with respect to distribution rights and rights upon
liquidation, winding up or dissolution of the Operating Partnership:

     - senior to the common Units and to all Units that provide that they rank
       junior to the Series A Preferred Units;

     - junior to all Units which rank senior to the Series A Preferred Units;
       and


     - on a parity with the Series B Preferred Units, any Series C Preferred
       Units, Series D Preferred Units or Series E Preferred Units that the
       Operating Partnership may issue to us (see "-- Series C Preferred Units;"
       "-- Series D Preferred Units" and "-- Series E Preferred Units") and all
       other Units expressly designated by the Operating Partnership to rank on
       a parity with the Series A Preferred Units.


                                       27


     We receive preferred distributions of cash and preferred allocations of
income on the Series A Preferred Units in an amount equal to the dividends
payable by us on the Series A Preferred Stock. If we acquire any Series B
Preferred Units from the holders pursuant to the exercise of their exchange
rights, or if the Operating Partnership issues any Series C Preferred Units,
Series D Preferred Units or Series E Preferred Units to us, we will receive
preferred distributions of cash and preferred allocations of income on the
Series B Preferred Units, Series C Preferred Units, Series D Preferred Units or
Series E Preferred Units in an amount equal to the dividends payable by us on
the Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock
or Series E Preferred Stock. See "-- Series C Preferred Units;" "-- Series D
Preferred Units" and "-- Series E Preferred Units."



     As a consequence, we will receive distributions from the Operating
Partnership sufficient to pay dividends on the Series A Preferred Stock, any
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
Series E Preferred Stock before any other partner in the Operating Partnership
(other than holders of parity preferred units) receives a distribution. In
addition, if necessary, income will be specially allocated to us and losses will
be allocated to the other partners of the Operating Partnership in amounts
necessary to ensure that, to the extent possible, the balance in our capital
account will at all times be equal to or in excess of the amount payable by us
on the Series A Preferred Stock and any Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and Series E Preferred Stock upon
liquidation or redemption. See "Certain Federal Income Tax Considerations -- Tax
Aspects of the Operating Partnership and the Joint Ventures -- Allocations of
Operating Partnership Income, Gain, Loss and Deduction."


SERIES B PREFERRED UNITS

     General. The Series B Preferred Units rank, with respect to distribution
rights and rights upon liquidation, winding up or dissolution of the Operating
Partnership:

     - senior to the common Units and to all Units that provide that they rank
       junior to the Series B Preferred Units;

     - junior to all Units which rank senior to the Series B Preferred Units;
       and


     - on a parity with the Series A Preferred Units, any Series C Preferred
       Units, any Series D Preferred Units, any Series E Preferred Units and all
       other Units expressly designated by the Operating Partnership to rank on
       a parity with the Series B Preferred Units.



     Subject to the rights of holders of parity preferred Units, Series D
Preferred Units and Series E Preferred Units, holders of the Series B Preferred
Units are entitled to receive, when, as and if declared by the Operating
Partnership, acting through us as general partner, cumulative preferential cash
distributions in an amount equal to 8 5/8% per annum on an amount equal to
$50.00 per Series B Preferred Unit then outstanding (equivalent to $4.3125 per
annum). These distributions are payable on the 15th day of January, April, July
and October of each year.


     Exchange Rights. The Series B Preferred Units are exchangeable in whole at
any time on or after November 12, 2008, at the option of 51% of the holders of
all outstanding Series B Preferred Units, on a one for one basis, subject to
adjustment, for shares of our Series B Preferred Stock. In addition, the Series
B Preferred Units are exchangeable in whole at any time at the option of 51% of
the holders of all outstanding Series B Preferred Units if:

     - any Series B Preferred Unit shall not have received full distributions
       with respect to six prior quarterly distribution periods (whether or not
       consecutive); or


     - we or one of our subsidiaries take the position, and a holder or holders
       of Series B Preferred Units receive an opinion of independent counsel
       that the Operating Partnership is, or upon the happening of a certain
       event likely will be, a "publicly traded partnership" within the meaning
       of the Internal Revenue Code.


                                       28


     The Series B Preferred Units are exchangeable in whole for shares of Series
B Preferred Stock at any time after November 12, 2001 and prior to November 12,
2008 at the option of 51% of the holders of all outstanding Series B Preferred
Units if those holders deliver to us as general partner a private letter ruling
or an opinion of independent counsel to the effect that an exchange of the
Series B Preferred Units at that time would not cause the Series B Preferred
Units to be considered "stock and securities" within the meaning of the Internal
Revenue Code for purposes of determining whether the holder of Series B
Preferred Units is an "investment company" under the Internal Revenue Code.


     With certain limitations, the Series B Preferred Units are also
exchangeable in whole at any time for shares of Series B Preferred Stock
(regardless of whether held by the initial purchaser) if:

     - the initial purchaser of the Series B Preferred Units reasonably
       concludes that there exists an imminent and substantial risk that the
       initial purchaser's interest in the Operating Partnership represents or
       will represent more than 19.5% of the total profits or capital interests
       in the Operating Partnership for a taxable year;

     - the initial purchaser of the Series B Preferred Units delivers to us an
       opinion to the effect that there is a substantial risk that the initial
       purchaser's interest in the Operating Partnership represents or will
       represent more than 19.5% of the total profits or capital interests in
       the Operating Partnership for a taxable year; and

     - we, as the general partner, agree with the conclusions in the bullet
       points above; provided, that we may not unreasonably withhold our
       agreement.

     In lieu of an exchange for Series B Preferred Stock, we may elect to cause
the Operating Partnership to redeem Series B Preferred Units for cash in an
amount equal to the original capital account balance of the Series B Preferred
Units plus all accrued and unpaid distributions to the date of redemption. A
holder of Series B Preferred Units will not be entitled to exchange the Units
for Series B Preferred Stock if the exchange would result in a violation of the
ownership limit. See "Description of Capital Stock -- Restrictions on Ownership
and Transfer of Capital Stock."

     Redemption. On or after November 12, 2003, the Operating Partnership has
the right to redeem the Series B Preferred Units, in whole or in part from time
to time, at a redemption price payable in cash equal to the capital account
balance of the holder, provided that the amount shall not be less than $50.00
per Series B Preferred Unit. The Operating Partnership must pay the redemption
price solely out of the sale proceeds of our capital stock or interests in the
Operating Partnership and from no other source. The Operating Partnership may
not redeem fewer than all of the Series B Preferred Units unless the Operating
Partnership has paid all accumulated and unpaid distributions on all Series B
Preferred Units for all quarterly distribution periods terminating on or prior
to the date of redemption.

     Limited Approval Rights. For so long as any Series B Preferred Units are
outstanding, without the affirmative vote of the holders of at least two-thirds
of the Series B Preferred Units outstanding at the time, the Operating
Partnership may not:

     - authorize, create or increase the authorized or issued amount of, or
       reclassify, any class or series of partnership interests, or create,
       authorize or issue any obligations or security convertible into or
       evidencing the right to purchase any partnership interests, ranking prior
       to the Series B Preferred Units;

     - authorize, create or increase the authorized or issued amount of, or
       reclassify, any class or series of partnership interests, or create,
       authorize or issue any obligations or security convertible into or
       evidencing a right to purchase any partnership interests, ranking equal
       to the Series B Preferred Units, but only to the extent that such
       securities are issued to an affiliate of the Operating Partnership, other
       than us to the extent that the issuance is to allow us to issue
       corresponding shares of Series B Preferred Stock to persons who are not
       affiliates of the Operating Partnership; or

                                       29

     - either consolidate, merge into or with, or convey, transfer or lease its
       assets substantially as an entirety to, any corporation or other entity
       or amend, alter or repeal the provisions of the Partnership Agreement, in
       a manner that would materially and adversely affect the powers, special
       rights, preferences, privileges or voting power of the Series B Preferred
       Units. So long as the Operating Partnership is the surviving entity and
       the Series B Preferred Units remain outstanding on the same terms, or the
       resulting, surviving or transferee entity is a partnership, limited
       liability company or other pass-through entity and substitutes the Series
       B Preferred Units for other interests in such entity, with substantially
       the same terms and rights, then the occurrence of any of the events
       listed above in this bullet point will not be considered to materially
       and adversely affect such rights, privileges or voting powers.

     Other than as discussed above or elsewhere in this prospectus, the holders
of Series B Preferred Units have no voting rights other than with respect to
certain matters that would adversely affect them or as otherwise provided by
applicable law.


     Liquidation Preference. The distribution and income allocation provisions
of the Partnership Agreement have the effect of providing each Series B
Preferred Unit with a liquidation preference to each holder of such Units equal
to the holder's capital contributions, plus any accrued but unpaid
distributions, in preference to any other class or series of partnership
interest of the Operating Partnership, other than any Series A Preferred Units,
Series C Preferred Units, Series D Preferred Units and Series E Preferred Units.


     Registration Rights. We have agreed to file a registration statement
registering the resale of the shares of Series B Preferred Stock issuable to the
holders of Series B Preferred Units as soon as practicable but not later than 60
days after the date the Series B Preferred Units are exchanged for shares of
Series B Preferred Stock. We have also agreed to use our best efforts to cause
the registration statement to be declared effective within 120 days after the
date of the exchange.

SERIES C PREFERRED UNITS

     As described under "Description of Capital Stock -- Preferred
Stock -- Series C Preferred Stock," holders of AMB Property II Series C
Preferred Units may exchange their units for shares of our Series C Preferred
Stock. If we issue Series C Preferred Stock, we will:

     - contribute 99% of the AMB Property II Series C Preferred Units to the
       Operating Partnership in exchange for Series C Preferred Units in the
       Operating Partnership that mirror the rights, preferences and other terms
       of the Series C Preferred Stock; and

     - contribute 1% of the AMB Property II Series C Preferred Units to AMB
       Property Holding Corporation.


     Any Series C Preferred Units will rank on a parity with the Series A
Preferred Units and Series B Preferred Units. As a consequence, we would receive
distributions from the Operating Partnership that we would use to pay dividends
on any Series C Preferred Stock and the Series A Preferred Stock before any
other partner in the Operating Partnership (other than holders of parity
preferred units).



SERIES D PREFERRED UNITS



     As described under "Description of Capital Stock -- Preferred
Stock -- Series D Preferred Stock," holders of AMB Property II Series D
Preferred Units may exchange their units for shares of our Series D Preferred
Stock. If we issue Series D Preferred Stock, we will:



     - contribute 99% of the AMB Property II Series D Preferred Units to the
       Operating Partnership in exchange for Series D Preferred Units in the
       Operating Partnership that mirror the rights, preferences and other terms
       of the Series D Preferred Stock; and


                                       30


     - contribute 1% of the AMB Property II Series D Preferred Units to AMB
       Property Holding Corporation.



     Any Series D Preferred Units will rank on a parity with the Series A
Preferred Units and Series B Preferred Units. As a consequence, we would receive
distributions from the Operating Partnership that we would use to pay dividends
on any Series D Preferred Stock and the Series A Preferred Stock before any
other partner in the Operating Partnership (other than holders of parity
preferred units).



SERIES E PREFERRED UNITS



     As described under "Description of Capital Stock -- Preferred
Stock -- Series E Preferred Stock," holders of AMB Property II Series E
Preferred Units may exchange their units for shares of our Series E Preferred
Stock. If we issue Series E Preferred Stock, we will:



     - contribute 99% of the AMB Property II Series E Preferred Units to the
       Operating Partnership in exchange for Series E Preferred Units in the
       Operating Partnership that mirror the rights, preferences and other terms
       of the Series E Preferred Stock; and



     - contribute 1% of the AMB Property II Series E Preferred Units to AMB
       Property Holding Corporation.



     Any Series E Preferred Units will rank on a parity with the Series A
Preferred Units and Series B Preferred Units. As a consequence, we would receive
distributions from the Operating Partnership that we would use to pay dividends
on any Series E Preferred Stock and the Series A Preferred Stock before any
other partner in the Operating Partnership (other than holders of parity
preferred units).


COMMON LIMITED PARTNERSHIP UNITS

  Redemption/Exchange Rights

     Holders of common Units have the right, commencing generally on or before
the first anniversary of the holder becoming a limited partner of the Operating
Partnership (or such other date agreed to by the Operating Partnership and the
applicable Unit holders), to require the Operating Partnership to redeem part or
all of their common Units for cash (based upon the fair market value of an
equivalent number of shares of common stock at the time of redemption) or we
may, in our sole and absolute discretion (subject to the limits on ownership and
transfer of common stock set forth in our Charter) elect to exchange those
common Units for shares of 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). We presently
anticipate that we will elect to issue shares of common stock in exchange for
common Units in connection with each redemption request, rather than having the
Operating Partnership pay cash. With each redemption or exchange, our percentage
ownership interest in the Operating Partnership will increase. Common limited
partners may exercise this redemption/exchange right from time to time, in whole
or in part, subject to the limitations that limited partners may not exercise
the right if exercise would result in any person actually or constructively
owning shares of common stock in excess of the ownership limit or any other
amount specified by the Board of Directors, assuming common stock was issued in
the exchange. Holders of Performance Units also have limited redemption/exchange
rights, as discussed under the caption "-- Performance Units" below.

  Registration Rights


     We have granted to common limited partners certain registration rights with
respect to the shares of stock issuable upon exchange of common Units or
otherwise. We have agreed to file and generally keep continuously effective
generally beginning on or as soon as practicable after one year after issuance
of common Units a registration statement covering the issuance of shares of
common stock upon exchange of the Units and the resale of the shares. We will
bear expenses incident to our registration obligations upon exercise of
registration rights, including the payment of federal securities law and state
Blue Sky registration fees, except


                                       31

that we will not bear any underwriting discounts or commissions or transfer
taxes relating to registration of the shares.

PERFORMANCE UNITS


     Notwithstanding the foregoing discussion of distributions and allocations
of income or loss of the Operating Partnership, depending on the trading price
of our common stock after November 26, 1998 (the first anniversary of our
initial public offering), certain of our officers, in their capacity as limited
partners of the Operating Partnership, may receive performance units
("Performance Units") as of each of February 26, May 26, August 26 and November
26, 1999. The Performance Units are similar to common Units in many respects,
including the right to share in operating distributions, and allocations of
operating income and loss, of the Operating Partnership on a pro rata basis with
common Units, and certain redemption and exchange rights, including limited
rights to cause the Operating Partnership to redeem the Performance Units for
cash or, at our option, to exchange the Performance Units for shares of common
stock. Any redemption rights with respect to Performance Units, however, will be
dependent upon an increase in the value of the assets of the Operating
Partnership (in some cases measured by reference to the trading price of the
shares of common stock) after the issuance of the Performance Units. If there is
no increase, the holders of Performance Units will not be entitled to receive
any proceeds upon the liquidation of the Operating Partnership or the redemption
of their Performance Units.



     Immediately prior to our initial public offering, certain investors owned
assets that were subject to advisory agreements with AMB Institutional Realty
Advisors, Inc. containing an incentive fee provision or a "catch up adjustment."
We refer to these investors as "Performance Investors." If officers receive
Performance Units, an equal number of GP Units allocable to us and Units
allocable to Performance Investors who are limited partners in the Operating
Partnership will be transferred to the Operating Partnership. If any of our GP
Units are transferred to the Operating Partnership as a result of the issuance
of Performance Units, an equal number of shares of common stock (the
"Performance Shares") will be transferred to us by the applicable Performance
Investors. Accordingly, no AMB Property Corporation stockholder or limited
partner in the Operating Partnership (other than Performance Investors, to the
extent of their obligations to transfer Performance Shares to us or the
Operating Partnership, as applicable) will be diluted as a result of the
issuance of Performance Units.


REMOVAL OF THE GENERAL PARTNER; TRANSFERABILITY OF OUR INTERESTS; TREATMENT OF
LIMITED PARTNERSHIP UNITS IN SIGNIFICANT TRANSACTIONS

     The limited partners may not remove us as general partner, with or without
cause, other than with our consent. The Partnership Agreement provides that we
may not withdraw from the Operating Partnership (whether by sale, statutory
merger, consolidation, liquidation or otherwise) without the consent of a
majority in interest of the limited partners other than the preferred limited
partners. However, except as set forth below, we may transfer or assign our
general partner interest in connection with a merger, consolidation or sale of
substantially all of our assets without limited partner consent.


     Neither AMB Property Corporation nor the Operating Partnership may engage
in any merger, consolidation or other combination with or into another person,
or effect any reclassification, recapitalization or change of its outstanding
equity interests, and AMB Property Corporation may not sell all or substantially
all of its assets (each a "termination transaction") unless in connection with
the termination transaction all holders of limited partnership Units other than
preferred Units either will receive, or will have the right to elect to receive,
for each Unit an amount of cash, securities or other property equal to the
product of the number of shares of common stock into which each Unit is then
exchangeable and the greatest amount of cash, securities or other property paid
to the holder of one share in consideration of one share pursuant to the
termination transaction. If, in connection with the termination transaction, a
purchase, tender or exchange offer shall have been made to and accepted by the
holders of the outstanding shares of common stock, each holder of limited
partnership Units other than preferred Units will receive, or will have the
right to elect to

                                       32

receive, the greatest amount of cash, securities or other property that the
holder would have received had it exercised its right to redemption and received
shares of common stock in exchange for its Units immediately prior to the
expiration of the purchase, tender or exchange offer and had accepted the
purchase, tender or exchange offer. Any Performance Units issued will also have
the benefit of these provisions, irrespective of the capital account then
applicable to the Performance Units.


     A termination transaction may also occur if the following conditions are
met:


     - substantially all of the assets directly or indirectly owned by the
       surviving entity are held directly or indirectly by the Operating
       Partnership or another limited partnership or limited liability company
       which is the survivor of a merger, consolidation or combination of assets
       with the Operating Partnership;

     - the holders of common Units, including the holders of any Performance
       Units issued, own a percentage interest of the surviving partnership
       based on the relative fair market value of the net assets of the
       Operating Partnership and the other net assets of the surviving
       partnership immediately prior to the consummation of the transaction;

     - the rights, preferences and privileges of the holders in the surviving
       partnership, including the holders of Performance Units issued or to be
       issued, are at least as favorable as those in effect immediately prior to
       the consummation of such transaction and as those applicable to any other
       limited partners or non-managing members of the surviving partnership
       (except, as to Performance Units, for such differences with Units
       regarding liquidation, redemption or exchange as are described in this
       prospectus); and

     - such rights of the common limited partners, including the holders of
       Performance Units issued or to be issued, include at least one of the
       following:

        - the right to redeem their interests in the surviving partnership for
          the consideration available to them pursuant to the preceding
          paragraph; or

        - the right to redeem their Units for cash on terms equivalent to those
          in effect immediately prior to the consummation of the transaction,
          or, if the ultimate controlling person of the surviving partnership
          has publicly traded common equity securities, the common equity
          securities, with an exchange ratio based on the relative fair market
          value of the securities and the common stock.


     Our Board of Directors will reasonably determine fair market values and
rights, preferences and privileges of the common limited partners as of the time
of the termination transaction and, to the extent applicable, the values will be
no less favorable to the holders of common Units than the relative values
reflected in the terms of the termination transaction.



     In addition, in the event of a termination transaction, the arrangements
with respect to Performance Units and Performance Shares (as defined under
"-- Performance Units") will be equitably adjusted to reflect the terms of the
transaction, including, to the extent that the shares are exchanged for
consideration other than publicly traded common equity, the transfer or release
of remaining Performance Shares, and resulting issuance of any Performance
Units, as of the consummation of the termination transaction.


DUTIES AND CONFLICTS


     Except as otherwise provided by our conflicts of interest policies with
respect to directors and officers and as provided in non-competition agreements
that most of our executive officers have entered into with us, any limited
partner of the Operating Partnership may engage in other business activities
outside the Operating Partnership, including business activities that directly
compete with the Operating Partnership.


                                       33

MEETINGS; VOTING

     As general partner, we may call meetings of the limited partners of the
Operating Partnership, on our own motion, or upon written request of limited
partners owning at least 25% of the then outstanding Units. Limited partners may
vote either in person or by proxy at meetings. Limited partners may take any
action that they are required or permitted to take either at a meeting of the
limited partners or without a meeting if consents in writing setting forth the
action taken are signed by limited partners owning not less than the minimum
number of Units that would be necessary to authorize or take the action at a
meeting of the limited partners at which all limited partners entitled to vote
on the action were present. On matters for which limited partners are entitled
to vote, each limited partner has a vote equal to the number of Units the
limited partner holds. A transferee of Units who has not been admitted as a
substituted limited partner with respect to the Units will have no voting rights
with respect to the Units, even if the transferee holds other Units as to which
it has been admitted as a limited partner. The Partnership Agreement does not
provide for, and we do not anticipate calling, annual meetings of the limited
partners.

AMENDMENT OF THE PARTNERSHIP AGREEMENT

     Amendments to the Partnership Agreement may be proposed by the Company or
by limited partners owning at least 25% of the then outstanding Units entitled
to vote. Generally, the Partnership Agreement may be amended with our approval,
as general partner, and partners (including us but not including the preferred
limited partners) holding a majority of the percentage interest of all partners
other than preferred limited partners. Certain provisions regarding, among other
things, our rights and duties as general partner (e.g., restrictions on our
power to conduct businesses other than as denoted herein) or the dissolution of
the Operating Partnership, may not be amended without the approval of limited
partners (other than preferred limited partners) holding a majority of the
percentage interests of the limited partners other than preferred limited
partners. As general partner, we have the power, without the consent of the
limited partners, to amend the Partnership Agreement as may be required to,
among other things:

     - add to our obligations as general partner or surrender any right or power
       granted to us as general partner;

     - reflect the admission, substitution, termination or withdrawal of
       partners in accordance with the terms of the Partnership Agreement;

     - establish the rights, powers, duties and preferences of any additional
       partnership interests issued in accordance with the terms of the
       Partnership Agreement;

     - reflect a change of an inconsequential nature that does not materially
       adversely affect any limited partner, or cure any ambiguity, correct or
       supplement any provisions of the Partnership Agreement not inconsistent
       with law or with other provisions of the Partnership Agreement, or make
       other changes concerning matters under the Partnership Agreement that are
       not otherwise inconsistent with the Partnership Agreement or applicable
       law; or

     - satisfy any requirements of federal, state or local law.

     We must approve, and each limited partner that would be adversely affected
must approve, certain amendments to the Partnership Agreement, including
amendments effected directly or indirectly through a merger or sale of assets of
the Operating Partnership or otherwise, that would, among other things,

     - convert a limited partner's interest into a general partner's interest;

     - modify the limited liability of a limited partner;

     - alter the interest of a partner in profits or losses, or the rights to
       receive any distributions (except as permitted under the Partnership
       Agreement with respect to the admission of new partners or the

                                       34

       issuance of additional Units, either of which actions will have the
       effect of changing the percentage interests of the partners and thereby
       altering their interests in profits, losses and distributions); or

     - alter the limited partner's redemption right.

     These protections apply to both holders of common Units and holders of
Performance Units. In addition, no amendment may be effected, directly or
indirectly, through a merger or sale of assets of the Operating Partnership or
otherwise, which would adversely affect the rights of former stockholders of AMB
Institutional Realty Advisors to receive Performance Units.

BOOKS AND REPORTS

     The Operating Partnership's books and records are maintained at the
principal office of the Operating Partnership, which is located at 505
Montgomery Street, San Francisco, California 94111. All elections and options
available to the Operating Partnership for federal or state income tax purposes
may be taken or rejected by the Operating Partnership in our sole discretion as
general partner. The limited partners have the right, subject to certain
limitations, to receive copies of the most recent SEC filings by us and the
Operating Partnership, the Operating Partnership's federal, state and local
income tax returns, a list of limited partners, the Partnership Agreement, the
partnership certificate and all amendments and certain information about the
capital contributions of the partners. We may keep confidential from the limited
partners any information that we believe to be in the nature of trade secrets or
other information the disclosure of which the we in good faith believe is not in
the best interests of the Operating Partnership or which the Operating
Partnership is required by law or by agreements with unaffiliated third parties
to keep confidential.

     We will use reasonable efforts to furnish to each limited partner, within
90 days after the close of each taxable year, the tax information reasonably
required by the limited partners for federal and state income tax reporting
purposes.

TERM

     The Operating Partnership will continue in full force and effect for
approximately 99 years or until sooner dissolved pursuant to the terms of the
Partnership Agreement.

                   CERTAIN PROVISIONS OF MARYLAND LAW AND OF
                             OUR CHARTER AND BYLAWS


     We have summarized certain terms and provisions of the Maryland General
Corporation Law and our Charter and Bylaws. This summary is not complete and is
qualified by the provisions of our Charter and Bylaws, and the Maryland General
Corporation Law. For more detail, you should refer to our Charter and Bylaws,
which we have filed as exhibits to the registration statement of which this
prospectus is a part. See "Where You Can Find More Information."


BOARD OF DIRECTORS


     The Charter provides that the number of our directors shall be established
by the Bylaws, but cannot be less than the minimum number required by the
Maryland General Corporation Law, which in our case is three. Our Bylaws
currently provide that the Board of Directors consists of not fewer than five
nor more than 13 members who are elected to a one-year term at each annual
meeting of our stockholders. A majority of the entire Board of Directors may
fill any vacancy (except for a vacancy caused by removal). Our Bylaws provide
that a majority of the Board of Directors must be "Independent Directors." An
"Independent Director" is a director who is not:


     - an employee, officer or affiliate of us or one of our subsidiaries or
       divisions;

     - a relative of a principal executive officer; or

     - an individual member of an organization acting as advisor, consultant or
       legal counsel, receiving compensation on a continuing basis from us in
       addition to director's fees.

                                       35


     Although the Board of Directors has no present intention of doing so, under
the Maryland General Corporation Law, the Board of Directors has the power to
elect without stockholder vote to divide the Board of Directors into three
classes of directors having staggered terms of office. The staggered terms of
directors may reduce the possibility of a tender offer or change of control,
even though that may be in the best interests of the stockholders.


REMOVAL OF DIRECTORS


     While our Charter and the Maryland General Corporation Law empower our
stockholders to fill vacancies in the Board of Directors that are caused by the
removal of a director, our Charter precludes stockholders from removing
incumbent directors except upon a substantial affirmative vote. Specifically,
our Charter provides that stockholders may remove a director only for cause and
only by the affirmative vote of at least two-thirds of the votes entitled to be
cast in the election of directors, subject to the rights of the holders of
shares of our preferred stock to elect and remove directors elected by such
holders under certain circumstances. The Maryland General Corporation Law does
not define the term "cause." As a result, removal for "cause" is subject to
Maryland common law and to judicial interpretation and review in the context of
the unique facts and circumstances of any particular situation. This provision,
when coupled with the provision in our Bylaws authorizing the Board of Directors
to fill vacant directorships, precludes stockholders from removing incumbent
directors except upon a substantial affirmative vote and filling the vacancies
created by removal with their own nominees.


OPT OUT OF BUSINESS COMBINATIONS AND CONTROL SHARE ACQUISITION STATUTES


     We have elected in our Bylaws not to be governed by the "control share
acquisition" provisions of the Maryland General Corporation Law (Sections 3-701
through 3-709), and the Board of Directors has determined, by irrevocable
resolution, that we will not be governed by the "business combination" provision
of the Maryland General Corporation Law (Section 3-602), each of which could
have the effect of delaying or preventing a change of control. Our Bylaws
provide that we cannot at a future date determine to be governed by either
provision without the approval of a majority of the outstanding shares entitled
to vote. In addition, the irrevocable resolution adopted by the Board of
Directors may only be changed by the approval of a majority of the outstanding
shares entitled to vote.


AMENDMENT TO OUR CHARTER AND BYLAWS

     Our Charter may not be amended without the amendment being declared
advisable by the Board of Directors and approved by the stockholders by the
affirmative vote of at least two-thirds of all votes entitled to be cast on the
matter. Our Bylaws may be amended by the vote of a majority of the Board of
Directors or by the affirmative vote of a majority of the shares of our capital
stock entitled to vote on the amendment, except with respect to the following
Bylaw provisions (each of which may not be amended without the approval of a
majority of the shares of capital stock entitled to vote on the amendment):

     - provisions opting out of the control share acquisition statute and the
       business combination statute;

     - the requirement in our Bylaws that our independent directors approve
       certain transactions involving our executive officers or directors or any
       limited partners of the Operating Partnership and their affiliates;

     - provisions governing amendment of our Bylaws.

MEETINGS OF STOCKHOLDERS

     Our Bylaws provide for annual meetings of stockholders to elect the Board
of Directors and transact other business as may properly be brought before the
meeting. The President, the Board of Directors and the Chairman of the Board may
call a special meeting of stockholders. The holders of 50% or more of our
outstanding stock entitled to vote may also make a written request to call a
special meeting of stockholders.


     The Maryland General Corporation Law provides that stockholders may act by
unanimous written consent without a meeting with respect to any action that they
are required or permitted to take at a meeting, if each stockholder entitled to
vote on the matter signs the consent setting forth the action and each


                                       36

stockholder entitled to notice of the meeting but not entitled to vote at the
meeting signs a written waiver of any right to dissent.

ADVANCE NOTICE OF DIRECTOR NOMINATIONS AND NEW BUSINESS

     Our Bylaws provide that with respect to an annual meeting of stockholders,
nominations of persons for election to the Board of Directors and the proposal
of business to be considered by stockholders may be made only:

     - pursuant to the notice of the meeting;

     - by or at the direction of the Board of Directors; or

     - by a stockholder who is entitled to vote at the meeting and has complied
       with the advance notice procedures set forth in our Bylaws.

     Our Bylaws also provide that with respect to special meetings of
stockholders, only the business specified in the notice of meeting may be
brought before the meeting.

     The provisions in our Charter regarding amendments to the Charter and the
advance notice provisions of our Bylaws could have the effect of discouraging a
takeover or other transaction in which holders of some, or a majority, of the
shares of common stock might receive a premium for their shares over the then
prevailing market price or which holders might believe to be otherwise in their
best interests.

DISSOLUTION OF THE COMPANY


     Under the Maryland General Corporation Law, our dissolution must be advised
by a majority of the entire Board of Directors and approved by the stockholders
by the affirmative vote of at least two-thirds of all the votes entitled to be
cast on the matter.


LIMITATION OF DIRECTORS' AND OFFICERS' LIABILITY


     Our officers and directors are indemnified under the Maryland General
Corporation Law, our Charter and the Partnership Agreement against certain
liabilities. Our Charter and Bylaws require us to indemnify our directors and
officers to the fullest extent permitted from time to time by the Maryland
General Corporation Law.



     The Maryland General Corporation Law permits a corporation to indemnify its
directors and officers and certain other parties against judgments, penalties,
fines, settlements and reasonable expenses actually incurred by them in
connection with any proceeding to which they may be made a party by reason of
their service in those or other capacities unless:


     - the act or omission of the director or officer was material to the matter
       giving rise to the proceeding and was committed in bad faith or was the
       result of active and deliberate dishonesty;

     - the director or officer actually received an improper personal benefit in
       money, property or services; or

     - in the case of any criminal proceeding, the director or officer had
       reasonable cause to believe that the act or omission was unlawful.

     A corporation may indemnify a director or officer against judgments,
penalties, fines, settlements and reasonable expenses that the director or
officer actually incurs in connection with the proceeding unless the proceeding
is one by or in the right of the corporation and the director or officer has
been adjudged to be liable to the corporation. In addition, a corporation may
not indemnify a director or officer with respect to any proceeding charging
improper personal benefit to the director or officer in which the director or
officer was adjudged to be liable on the basis that personal benefit was
received. The termination of any proceeding by conviction, or upon a plea of
nolo contendere or its equivalent, or an entry of any order of probation prior
to

                                       37

judgment, creates a rebuttable presumption that the director or officer did not
meet the requisite standard of conduct required for indemnification to be
permitted.


     The Maryland General Corporation Law permits the charter of a Maryland
corporation to include a provision limiting the liability of its directors and
officers to the corporation and its stockholders for money damages, subject to
specified restrictions. Our Charter contains this provision. The Maryland
General Corporation Law does not, however, permit the liability of directors and
officers to the corporation or its stockholders to be limited to the extent
that:


     - it is proved that the person actually received an improper personal
       benefit in money, property or services;

     - a judgment or other final adjudication is entered in a proceeding based
       on a finding that the person's action, or failure to act, was committed
       in bad faith or was the result of active and deliberate dishonesty and
       was material to the cause of action adjudicated in the proceeding; or

     - in the case of any criminal proceeding, the director had reasonable cause
       to believe that the act or failure to act was unlawful.

     This provision does not limit our ability or our stockholders to obtain
other relief, such as an injunction or rescission. The Partnership Agreement
also provides for our indemnification, as general partner, and our officers and
directors to the same extent indemnification is provided to our officers and
directors in our Charter, and limits our liability and the liability of our
officers and directors to the Operating Partnership and the partners of the
Operating Partnership to the same extent liability of our officers and directors
to us and our stockholders is limited under our Charter. See "Description of
Certain Provisions of the Partnership Agreement of the Operating
Partnership -- Our Exculpation and Indemnification."

     Insofar as the foregoing provisions permit indemnification for liability
arising under the Securities Act of directors, officers or persons controlling
us, we have been informed that, in the opinion of the SEC, this indemnification
is against public policy as expressed in the Securities Act and is therefore
unenforceable.

                   CERTAIN FEDERAL INCOME TAX CONSIDERATIONS


     The following summary of certain federal income tax considerations
regarding AMB Property Corporation and the common stock we are registering is
based on current law, is for general information only and is not tax advice. The
information set forth below, to the extent that it constitutes matters of law,
summaries of legal matters or legal conclusions, is the opinion of Latham &
Watkins. The tax treatment to holders of common stock will vary depending on a
holder's particular situation and this discussion does not purport to deal with
all aspects of taxation that may be relevant to a holder of common stock in
light of his or her personal investments or tax circumstances, or to certain
types of stockholders, subject to special treatment under the federal income tax
laws except to the extent discussed under the headings "-- Taxation of
Tax-Exempt Stockholders" and "-- Taxation of Non-U.S. Stockholders."
Stockholders subject to special treatment include, without limitation, insurance
companies, financial institutions or broker-dealers, tax-exempt organizations,
stockholders holding securities as part of a conversion transaction, or a hedge
or hedging transaction or as a position in a straddle for tax purposes, foreign
corporations or partnerships and persons who are not citizens or residents of
the United States. In addition, the summary below does not consider the effect
of any foreign, state, local or other tax laws that may be applicable to holders
of our common stock.



     The information in this section is based on the Internal Revenue Code,
current, temporary and proposed Treasury Regulations promulgated under the
Internal Revenue Code, the legislative history of the Internal Revenue Code,
current administrative interpretations and practices of the Internal Revenue
Service (including its practices and policies as expressed in certain private
letter rulings which are not binding on the IRS except with respect to the
particular taxpayers who requested and received such rulings), and court
decisions, all as of the date of this prospectus. Future legislation, treasury
regulations, administrative interpretations and


                                       38


practices and/or court decisions may adversely affect, perhaps retroactively,
the tax considerations described herein. The statements in this prospectus are
not binding on the IRS or a court. Thus, we can provide no assurance that these
statements will not be challenged by the IRS or sustained by a court if
challenged by the IRS.


     YOU ARE ADVISED TO CONSULT YOUR TAX ADVISOR REGARDING THE SPECIFIC TAX
CONSEQUENCES TO YOU OF THE ACQUISITION, OWNERSHIP AND SALE OF OUR COMMON STOCK,
INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH
DISPOSITION, ACQUISITION, OWNERSHIP AND SALE AND OF POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.

TAXATION OF THE COMPANY


     General. We elected to be taxed as a REIT under Sections 856 through 860 of
the Internal Revenue Code, commencing with our taxable year ended December 31,
1997. We believe we have been organized and have operated in a manner which
allows us to qualify for taxation as a REIT under the Internal Revenue Code
commencing with our taxable year ended December 31, 1997. We intend to continue
to operate in this manner. However, our qualification and taxation as a REIT
depends upon our ability to meet (through actual annual operating results, asset
diversification, distribution levels and diversity of stock ownership) the
various qualification tests imposed under the Internal Revenue Code.
Accordingly, there is no assurance that we have operated or will continue to
operate in a manner so as to qualify or remain qualified as a REIT. See
"-- Failure to Qualify."



     The sections of the Internal Revenue Code that relate to the qualification
and operation as a REIT are highly technical and complex. The following sets
forth the material aspects of the sections of the Internal Revenue Code that
govern the federal income tax treatment of a REIT and its stockholders. This
summary is qualified in its entirety by the applicable Internal Revenue Code
provisions, relevant rules and regulations promulgated under the Internal
Revenue Code, and administrative and judicial interpretations of the Internal
Revenue Code.



     If we qualify for taxation as a REIT, we generally will not be subject to
federal corporate income taxes on our net income that is currently distributed
to our stockholders. This treatment substantially eliminates the "double
taxation" (once at the corporate level when earned and once again at the
stockholder level when distributed) that generally results from investment in a
corporation. However, we will be subject to federal income tax as follows:


     First, we will be taxed at regular corporate rates on any undistributed
REIT taxable income, including undistributed net capital gains.

     Second, we may be subject to the "alternative minimum tax" on our items of
tax preference under certain circumstances.

     Third, if we have (a) net income from the sale or other disposition of
"foreclosure property" (defined generally as property we acquired through
foreclosure or after a default on a loan secured by the property or a lease of
the property) which is held primarily for sale to customers in the ordinary
course of business or (b) other nonqualifying income from foreclosure property,
we will be subject to tax at the highest corporate rate on this income.

     Fourth, we will be subject to a 100% tax on any net income from prohibited
transactions (which are, in general, certain sales or other dispositions of
property held primarily for sale to customers in the ordinary course of business
other than foreclosure property).

     Fifth, we will be subject to a 100% tax on an amount equal to (a) the gross
income attributable to the greater of the amount by which we fail the 75% or 95%
gross income test multiplied by (b) a fraction intended to reflect our
profitability, if we fail to satisfy the 75% gross income test or the 95% gross
income test (as

                                       39

discussed below), but have maintained our qualification as a REIT because we
satisfied certain other requirements.

     Sixth, we would be subject to a 4% excise tax on the excess of the required
distribution over the amounts actually distributed if we fail to distribute
during each calendar year at least the sum of (i) 85% of our REIT ordinary
income for the year, (ii) 95% of our REIT capital gain net income for the year,
and (iii) any undistributed taxable income from prior periods.


     Seventh, if we acquire any asset (a "built-in gain asset") from a
corporation which is or has been a C corporation (i.e., generally a corporation
subject to full corporate-level tax) in a transaction in which the basis of the
built-in gain asset in our hands is determined by reference to the basis of the
asset in the hands of the C corporation, and we subsequently recognize gain on
the disposition of the asset during the ten-year period (the "recognition
period") beginning on the date on which we acquired the asset, then we will be
subject to tax at the highest regular corporate tax rate on this gain to the
extent of the Built-In Gain (i.e., the excess of (a) the fair market value of
the asset over (b) our adjusted basis in the asset, in each case determined as
of the beginning of the recognition period). The results described in this
paragraph with respect to the recognition of Built-In Gain assume that we will
make an election pursuant to IRS Notice 88-19 and the availability or nature of
such election is not modified as proposed in President Clinton's Year 2000
Federal Budget Proposal.



     Requirements for Qualification as a REIT. The Internal Revenue Code defines
a REIT as a corporation, trust or association:


          (1) that is managed by one or more trustees or directors;

          (2) that issues transferable shares or transferable certificates to
     evidence its beneficial ownership;


          (3) that would be taxable as a domestic corporation, but for Sections
     856 through 859 of the Internal Revenue Code;



          (4) that is not a financial institution or an insurance company within
     the meaning of certain provisions of the Internal Revenue Code;


          (5) that is beneficially owned by 100 or more persons;


          (6) not more than 50% in value of the outstanding stock of which is
     owned, actually or constructively, by five or fewer individuals (as defined
     in the Internal Revenue Code to include certain entities) during the last
     half of each taxable year; and


          (7) that meets certain other tests, described below, regarding the
     nature of its income and assets and the amount of its distributions.


     The Internal Revenue Code provides that conditions (1) to (4), inclusive,
must be met during the entire taxable year and that condition (5) must be met
during at least 335 days of a taxable year of twelve months, or during a
proportionate part of a taxable year of less than twelve months. Conditions (5)
and (6) do not apply until after the first taxable year for which an election is
made to be taxed as a REIT. For purposes of condition (6), pension funds and
certain other tax-exempt entities are treated as individuals, subject to a
"look-through" exception with respect to pension funds.


     We believe that we have satisfied each of the above conditions. In
addition, our charter provides for restrictions regarding ownership and transfer
of shares. These restrictions are intended to assist us in continuing to satisfy
the share ownership requirements described in (5) and (6) above. These ownership
and transfer restrictions are described in "Description of Capital
Stock -- Restrictions on Ownership and Transfer of Capital Stock." These
restrictions, however, may not ensure that we will, in all cases, be able to
satisfy the share ownership requirements described in (5) and (6) above. If we
fail to satisfy these share ownership requirements, our status as a REIT will
terminate. However, if we comply with the rules contained in applicable Treasury
Regulations that require us to ascertain the actual ownership of our shares and
we do not
                                       40

know, or would not have known through the exercise of reasonable diligence, that
we failed to meet the requirement described in condition (6) above, we will be
treated as having met this requirement. See "-- Failure to Qualify."

     In addition, a corporation may not elect to become a REIT unless its
taxable year is the calendar year. We have and will continue to have a calendar
taxable year.


     Termination of S Status. Prior to its merger into us in connection with our
formation transactions, AMB Institutional Realty Advisors, Inc. believed that it
validly elected to be taxed as an S corporation and that such election had not
been revoked or otherwise terminated (except as provided below). In order to
allow us to become a REIT, AMB Institutional Realty Advisors, Inc. revoked its S
election shortly before its merger into us. If AMB Institutional Realty
Advisors, Inc. was not an S corporation in 1997 (the calendar year in which our
formation transactions occurred), we likely would not qualify as a REIT for our
taxable year ended December 31, 1997 and perhaps subsequent years. See
"-- Failure to Qualify." In connection with our initial public offering, Latham
& Watkins rendered an opinion regarding AMB Institutional Realty Advisors,
Inc.'s federal income tax status as an S corporation, which opinion was based
upon certain representations made by AMB Institutional Realty Advisors, Inc. as
to factual matters and upon the opinion of counsel for certain shareholders of
AMB Institutional Realty Advisors, Inc., with respect to matters relating to the
tax status of such shareholders.



     Ownership of Interests in Partnerships and Qualified REIT Subsidiaries. In
the case of a REIT which is a partner in a partnership, IRS regulations provide
that the REIT will be deemed to own its proportionate share of the assets of the
partnership. Also, the REIT will be deemed to be entitled to the income of the
partnership attributable to its proportionate share. The character of the assets
and gross income of the partnership retains the same character in the hands of
the REIT for purposes of Section 856 of the Internal Revenue Code, including
satisfying the gross income tests and the asset tests. Thus, our proportionate
share of the assets and items of income of the Operating Partnership (including
the Operating Partnership's share of these items for any partnership in which it
owns an interest) are treated as our assets and items of income for purposes of
applying the requirements described in this prospectus (including the income and
asset tests described below). We have included a brief summary of the rules
governing the federal income taxation of partnerships and their partners below
in "-- Tax Aspects of the Operating Partnerships and the Joint Ventures." We
have direct control of the Operating Partnership and will continue to operate it
consistent with the requirements for qualification as a REIT. However, we are a
limited partner or non-managing member in certain of our joint ventures. If a
joint venture takes or expects to take actions which could jeopardize our status
as a REIT or subject us to tax, we may be forced to dispose of our interest in
such joint venture. In addition, it is possible that a joint venture could take
an action which could cause us to fail a REIT income or asset test, and that we
would not become aware of such action in a time frame which would allow us to
dispose of our interest in the joint venture or take other corrective action on
a timely basis. In such a case, we could fail to qualify as a REIT. We own 100%
of the stock of two subsidiaries that are qualified REIT subsidiaries and may
acquire stock of one or more new subsidiaries. A corporation will qualify as a
qualified REIT subsidiary if 100% of its stock is held by the us. A qualified
REIT subsidiary will not be treated as a separate corporation, and all assets,
liabilities and items of income, deduction and credit of a qualified REIT
subsidiary will be treated as assets, liabilities and such items (as the case
may be) of ours for all purposes of the Internal Revenue Code, including the
REIT qualification tests. For this reason, references under "Certain Federal
Income Tax Considerations" to our income and assets shall include the income and
assets of any qualified REIT subsidiary. A qualified REIT subsidiary will not be
subject to federal income tax, and our ownership of the voting stock of a
qualified REIT subsidiary will not violate the restrictions against ownership of
securities of any one issuer which constitute more than 10% of such issuer's
voting securities or more than 5% of the value of our total assets, as described
below under "-- Asset Tests."


     Income Tests. We must satisfy two gross income requirements annually to
maintain our qualification as a REIT. First, in each taxable year we must derive
directly or indirectly at least 75% of our gross income (excluding gross income
from prohibited transactions) from investments relating to real property or
mortgages
                                       41

on real property (including "rents from real property" and, in certain
circumstances, interest) or from certain types of temporary investments. Second,
each taxable year we must derive at least 95% of our gross income (excluding
gross income from prohibited transactions) from these real property investments,
dividends, interest and gain from the sale or disposition of stock or securities
(or from any combination of the foregoing). The term "interest" generally does
not include any amount received or accrued (directly or indirectly) if the
determination of the amount depends in whole or in part on the income or profits
of any person. However, an amount received or accrued generally will not be
excluded from the term "interest" solely by reason of being based on a fixed
percentage or percentages of receipts or sales.

     Rents we receive will qualify as "rents from real property" in satisfying
the gross income requirements for a REIT described above only if the following
conditions are met:

     - the amount of rent must not be based in whole or in part on the income or
       profits of any person. However, an amount received or accrued generally
       will not be excluded from the term "rents from real property" solely by
       reason of being based on a fixed percentage or percentages of receipts or
       sales;


     - the REIT, or an actual or constructive owner of 10% or more of the REIT,
       must not actually or constructively own 10% or more of the interests in
       such tenant (a "related party tenant");



     - rent attributable to personal property, leased in connection with a lease
       of real property, must not be greater than 15% of the total rent received
       under the lease. If this condition is not met, the portion of rent
       attributable to personal property will not qualify as "rents from real
       property"; and



     - the REIT generally must not operate or manage the property or furnish or
       render services to the tenants of the property (subject to a 1% de
       minimis exception), other than through an independent contractor from
       whom the REIT derives no revenue. The REIT may, however, directly perform
       certain services that are "usually or customarily rendered" in connection
       with the rental of space for occupancy only and are not otherwise
       considered "rendered to the occupant" of the property.



     We generally do not, and do not intend to, receive rent which fails to
satisfy any of the conditions set forth above.



     Notwithstanding the foregoing, we may have taken and may continue to take
actions which fail to satisfy one or more of the conditions set forth above to
the extent these actions will not, based on the advice of our tax counsel,
jeopardize our status as a REIT.



     AMB Investment Management is the sole general partner of, and conducts its
operations through, AMB Investment Management Limited Partnership. AMB
Investment Management Limited Partnership conducts the asset management business
and receives fees (including incentive fees) in exchange for the provision of
certain services to asset management clients. In addition, Headlands Realty
Corporation may provide certain services in exchange for a fee or derive other
income which would not qualify under the REIT gross income tests. Such fees and
other income do not accrue to us, but we derive our allocable share of dividend
income from the AMB Investment Management, Inc. and Headlands Realty Corporation
through our interest in the Operating Partnership. Such dividend income
qualifies under the 95%, but not the 75%, REIT gross income test. The Operating
Partnership may provide certain management or administrative services to AMB
Investment Management Limited Partnership and Headlands Realty Corporation. The
fees derived by the Operating Partnership as a result of the provision of such
services will be nonqualifying income to us under both the 95% and 75% REIT
income tests. The amount of such dividend and fee income will depend on a number
of factors which cannot be determined with certainty, including the level of
services provided by AMB Investment Limited Management Partnership, Headlands
Realty Corporation and the Operating Partnership. We will monitor the amount of
the dividend income from AMB Investment Management, Inc. and Headlands Realty
Corporation and the fee income described above, and will take actions intended
to keep this income (and any other nonqualifying income) within the limitations
of the REIT income tests. However, there can be no assurance that such actions
will in all cases prevent us from violating a REIT income test.


                                       42


     If we fail to satisfy one or both of the 75% or 95% gross income tests for
any taxable year, we may nevertheless qualify as a REIT for the year if we are
entitled to relief under certain provisions of the Internal Revenue Code.
Generally, we may avail ourselves of the relief provisions if:


     - our failure to meet these tests was due to reasonable cause and not due
       to willful neglect;

     - we attach a schedule of the sources of our income to our federal income
       tax return; and

     - any incorrect information on the schedule was not due to fraud with
       intent to evade tax.

     It is not possible, however, to state whether in all circumstances we would
be entitled to the benefit of these relief provisions. For example, if we fail
to satisfy the gross income tests because nonqualifying income that we
intentionally incur exceeds the limits on nonqualifying income, the IRS could
conclude that our failure to satisfy the tests was not due to reasonable cause.
If these relief provisions do not apply to a particular set of circumstances, we
will not qualify as a REIT. As discussed above in "-- Taxation of the Company --
General," even if these relief provisions apply, and we retain our status as a
REIT, a tax would be imposed with respect to our excess net income. We may not
always be able to maintain compliance with the gross income tests for REIT
qualification despite our periodic monitoring of our income.

     Asset Tests. At the close of each quarter of our taxable year, we also must
satisfy three tests relating to the nature and diversification of our assets.
First, at least 75% of the value of our total assets must be represented by real
estate assets, cash, cash items and government securities. For purposes of this
test, real estate assets include stock or debt instruments that are purchased
with the proceeds of a stock offering or a long-term (at least five years)
public debt offering, but only for the one-year period beginning on the date we
receive such proceeds. Second, not more than 25% of our total assets may be
represented by securities, other than those securities includable in the 75%
asset test. Third, of the investments included in the 25% asset class, the value
of any one issuer's securities may not exceed 5% of the value of our total
assets and we may not own more than 10% of any one issuer's outstanding voting
securities.


     The Operating Partnership owns 100% of the non-voting preferred stock of
each of the AMB Investment Management, Inc. and Headlands Realty Corporation and
by virtue of its ownership of interests in the Operating Partnership, AMB
Property Corporation is considered to own its pro rata share of such stock. See
"Structure of the Company." The stock of each of AMB Investment Management, Inc.
and Headlands Realty Corporation held by us is not a qualifying real estate
asset. The Operating Partnership does not and will not own any of the voting
securities of AMB Investment Management, Inc. or Headlands Realty Corporation,
and therefore we will not be considered to own more than 10% of the voting
securities of either AMB Investment Management, Inc. or Headlands Realty
Corporation. In addition, we believe that the value of our pro rata share of the
securities of each of AMB Investment Management, Inc. and Headlands Realty
Corporation held by the Operating Partnership does not, in either case, exceed
5% of the total value of our assets, and will not exceed such amount in the
future. No independent appraisals have been obtained to support this conclusion.
There can be no assurance that the IRS will not contend that the value of the
securities of one or both of AMB Investment Management, Inc. and Headlands
Realty Corporation held by us exceeds the 5% value limitation. The 5% value test
must be satisfied not only on the date that we (directly or through the
Operating Partnership) acquire securities in the applicable corporation, but
also each time we increase our ownership of securities of the corporation,
including as a result of increasing our interest in the Operating Partnership.
For example, our indirect ownership of securities of AMB Investment Management,
Inc. and Headlands Realty Corporation will increase as a result of our capital
contributions to the Operating Partnership or as limited partners exercise their
redemption/exchange rights. Although we believe that we presently satisfy the 5%
value test and plan to take steps to ensure that we satisfy such test for any
quarter with respect to which retesting is to occur, there can be no assurance
that such steps will always be successful, or will not require a reduction in
the Operating Partnership's overall interest in either or both of AMB Investment
Management, Inc. and Headlands Realty Corporation.


                                       43


     After initially meeting the asset tests at the close of any quarter, we
will not lose our status as a REIT for failure to satisfy the asset tests at the
end of a later quarter solely by reason of changes in asset values. If we fail
to satisfy the asset tests because we acquire securities or other property
during a quarter (including an increase in our interests in the Operating
Partnership), we can cure this failure by disposing of sufficient nonqualifying
assets within 30 days after the close of that quarter. We believe we have
maintained and intend to continue to maintain adequate records of the value of
our assets to ensure compliance with the asset tests and to take such other
actions within the 30 days after the close of any quarter as may be required to
cure any noncompliance. If we fail to cure noncompliance with the asset tests
within this time period, we would cease to qualify as a REIT.



     In connection with recent property acquisitions, we acquired partnership
interests and may have inadvertently acquired the voting securities of shell
corporations in violation of the 10% asset test at March 31, 1999. However,
while no assurance can be given, based on the advice of counsel in the relevant
jurisdiction and other factors, we do not believe that we have in fact violated
this test or that we would lose our status as a real estate investment trust as
a result of this matter.


     Annual Distribution Requirements. To maintain our qualification as a REIT,
we are required to distribute dividends (other than capital gain dividends) to
our stockholders in an amount at least equal to the sum of 95% of our "REIT
taxable income" (computed without regard to the dividends paid deduction and our
net capital gain) and 95% of our net income (after tax), if any, from
foreclosure property, minus the excess of the sum of certain items of noncash
income (i.e., income attributable to leveled stepped rents, original issue
discount on purchase money debt, or a like-kind exchange that is later
determined to be taxable) over 5% of "REIT taxable income" as described above.

     These distributions must be paid in the taxable year to which they relate,
or in the following taxable year if they are declared before we timely file our
tax return for such year and if paid on or before the first regular dividend
payment after such declaration. Except as provided below, these distributions
are taxable to our stockholders (other than tax-exempt entities, as discussed
below) in the year in which paid. This is so even though these distributions
relate to the prior year for purposes of our 95% distribution requirement. The
amount distributed must not be preferential -- e.g., every stockholder of the
class of stock to which a distribution is made must be treated the same as every
other stockholder of that class, and no class of stock may be treated otherwise
than in accordance with its dividend rights as a class. To the extent that we do
not distribute all of our net capital gain or distribute at least 95%, but less
than 100%, of our "REIT taxable income," as adjusted, we will be subject to tax
thereon at regular ordinary and capital gain corporate tax rates. We believe we
have made and intend to continue to make timely distributions sufficient to
satisfy these annual distribution requirements. In this regard, the Partnership
Agreement authorizes us, as general partner of the Operating Partnership, to
take such steps as may be necessary to cause the Operating Partnership to
distribute to its partners an amount sufficient to permit us to meet these
distribution requirements.

     We expect that our REIT taxable income will be less than our cash flow due
to the allowance of depreciation and other non-cash charges in computing REIT
taxable income. Accordingly, we anticipate that we will generally have
sufficient cash or liquid assets to enable us to satisfy the distribution
requirements described above. However, from time to time, we may not have
sufficient cash or other liquid assets to meet these distribution requirements
due to timing differences between the actual receipt of income and actual
payment of deductible expenses, and the inclusion of income and deduction of
expenses in arriving at our taxable income. If these timing differences occur,
in order to meet the distribution requirements, we may need to arrange for
short-term, or possibly long-term, borrowings or need to pay dividends in the
form of taxable stock dividends.

     Under certain circumstances, we may be able to rectify a failure to meet
the distribution requirement for a year by paying "deficiency dividends" to
stockholders in a later year, which may be included in our deduction for
dividends paid for the earlier year. Thus, we may be able to avoid being taxed
on amounts

                                       44

distributed as deficiency dividends. However, we will be required to pay
interest based upon the amount of any deduction taken for deficiency dividends.

     Furthermore, we would be subject to a 4% excise tax on the excess of the
required distribution over the amounts actually distributed if we should fail to
distribute during each calendar year (or in the case of distributions with
declaration and record dates falling in the last three months of the calendar
year, by the end of January immediately following such year) at least the sum of
85% of our REIT ordinary income for such year, 95% of our REIT capital gain
income for the year and any undistributed taxable income from prior periods. Any
REIT taxable income and net capital gain on which this excise tax is imposed for
any year is treated as an amount distributed during that year for purposes of
calculating such tax.


     Earnings and Profits Distribution Requirement. In order to qualify as a
REIT, we cannot have at the end of any taxable year any undistributed "earnings
and profits" that are attributable to a "C corporation" taxable year (i.e., a
year in which a corporation is neither a REIT nor an S corporation). In
connection with our formation transactions, we succeeded to various tax
attributes of AMB Institutional Realty Advisors, Inc., AMB Current Income Fund,
Inc. and AMB Value Added Fund, Inc. (if the mergers of AMB Current Income Fund,
Inc. and AMB Value Added Fund, Inc. into AMB Institutional Realty Advisors, Inc.
(which we refer to as the "private REIT mergers") were treated as tax-free
reorganizations under the Internal Revenue Code), including any undistributed C
corporation earnings and profits of such corporations. If AMB Institutional
Realty Advisors, Inc. qualified as an S corporation for each year in which its
activities would have created earnings and profits, and each of AMB Current
Income Fund, Inc. and AMB Value Added Fund, Inc. qualified as a REIT during its
existence and its merger into us was treated as a tax-free reorganization under
the Internal Revenue Code, then those corporations would not have any
undistributed C corporation earnings and profits. If, however, either AMB
Current Income Fund, Inc. or AMB Value Added Fund, Inc. failed to qualify as a
REIT throughout the duration of its existence, or AMB Institutional Realty
Advisors, Inc. failed to qualify as an S corporation for any year in which its
activities would have created earnings and profits, then we would have acquired
undistributed C corporation earnings and profits that, if not distributed by us
prior to the end of its first taxable year, would prevent us from qualifying as
a REIT.



     We believe that each of AMB Current Income Fund, Inc. and AMB Value Added
Fund, Inc. qualified as a REIT throughout the duration of its existence and
that, in any event, neither AMB Current Income Fund, Inc. nor AMB Value Added
Fund, Inc. had any undistributed C corporation earnings and profits at the time
of the applicable private REIT merger. We believe that AMB Institutional Realty
Advisors, Inc. qualified as an S corporation since its 1989 taxable year and
that its activities prior to such year did not create any earnings and profits.
In addition, in connection with our initial public offering, counsel to AMB
Current Income Fund, Inc. and AMB Value Added Fund, Inc. rendered opinions with
respect to the qualification of those corporations as REITs for federal income
tax purposes, and Latham & Watkins rendered an opinion with respect to AMB
Institutional Realty Advisors, Inc.'s status as an S corporation for federal
income tax purposes. Those opinions were based on certain representations and
assumptions. However, the IRS may contend otherwise on a subsequent audit of AMB
Institutional Realty Advisors, Inc., AMB Current Income Fund, Inc. or AMB Value
Added Fund, Inc.



     Property Transfers. The proceeds from many of the properties transferred to
BPP Retail, LLC (see "The Company -- Recent Developments -- BPP Retail, LLC
Transactions") will exceed their tax bases, resulting in gains that will be
allocable to the partners of the Operating Partnership, including us, in
accordance with the terms of the Partnership Agreement. The Operating
Partnership currently expects to defer recognition of a substantial portion of
these gains by acquiring replacement properties pursuant to the
like-kind-exchange provisions of Section 1031 of the Internal Revenue Code.
However, there can be no assurance that the Operating Partnership will be able
to defer this gain.


     Any gain realized by us on the sale of any property held as inventory or
other property held primarily for sale to customers in the ordinary course of
business (including our share of any such gain realized by the Operating
Partnership, either directly or through its subsidiary partnerships) will be
treated as income from a

                                       45


prohibited transaction that is subject to a 100% penalty tax. This prohibited
transaction income may also adversely affect our ability to satisfy the income
tests for qualification as a REIT. Under existing law, whether property is held
as inventory or primarily for sale to customers in the ordinary course of a
trade or business is a question of fact that depends on all the facts and
circumstances surrounding the particular transaction. The Operating Partnership
intends to hold its properties for investment with a view to long-term
appreciation, to engage in the business of acquiring, developing and owning its
properties and to make occasional sales of the properties as are consistent with
the Operating Partnership's investment objectives. However, the IRS may
successfully contend that some or all of the sales made by the Operating
Partnership or its subsidiary partnerships (including some or all of the sales
to BPP Retail, LLC), are prohibited transactions. We would be subject to the
100% penalty tax on our allocable share of the gains resulting from any such
sales.


FAILURE TO QUALIFY


     If we fail to qualify for taxation as a REIT in any taxable year, and the
relief provisions do not apply, we will be subject to tax (including any
applicable alternative minimum tax) on our taxable income at regular corporate
rates. Distributions to stockholders in any year in which we fail to qualify
will not be deductible by us and we will not be required to distribute any
amounts to our stockholders. As a result, our failure to qualify as a REIT would
reduce the cash available for distribution by us to our stockholders. In
addition, if we fail to qualify as a REIT, all distributions to stockholders
will be taxable as ordinary income to the extent of our current and accumulated
earnings and profits, and subject to certain limitations of the Internal Revenue
Code, corporate distributees may be eligible for the dividends received
deduction. Unless entitled to relief under specific statutory provisions, we
will also be disqualified from taxation as a REIT for the four taxable years
following the year during which we lost our qualification. It is not possible to
state whether in all circumstances we would be entitled to this statutory
relief. In addition, President Clinton's Year 2000 Federal Budget Proposal
contains a provision which, if enacted in its present form, would result in the
immediate taxation of all gain inherent in a C corporation's assets upon an
election by the corporation to become a REIT in taxable years beginning after
January 1, 2000. If enacted, this provision could impose a substantial tax upon
our re-election to be taxed as a REIT following a loss of our status as a REIT.



TAX ASPECTS OF THE OPERATING PARTNERSHIP AND THE JOINT VENTURES


     General. Substantially all of our investments will be held indirectly
through the Operating Partnership. In addition, the Operating Partnership holds
certain of its investments indirectly through joint ventures. In general,
partnerships are "pass-through" entities which are not subject to federal income
tax. Rather, partners are allocated their proportionate shares of the items of
income, gain, loss, deduction and credit of a partnership, and are potentially
subject to tax thereon, without regard to whether the partners receive a
distribution from the partnership. We will include in our income our
proportionate share of the foregoing partnership items for purposes of the
various REIT income tests and in the computation of our REIT taxable income.
Moreover, for purposes of the REIT asset tests, we will include our
proportionate share of assets held by the Operating Partnership and joint
ventures. See "-- Taxation of the Company."

     Entity Classification. Our interests in the Operating Partnership and the
joint ventures involve special tax considerations, including the possibility of
a challenge by the IRS of the status of the Operating Partnership or a
partnership as a partnership (as opposed to an association taxable as a
corporation) for federal income tax purposes. If the Operating Partnership or a
partnership were treated as an association, it would be taxable as a corporation
and therefore be subject to an entity-level tax on its income. In such a
situation, the character of our assets and items of gross income would change
and preclude us from satisfying the asset tests and possibly the income tests
(see "-- Taxation of the Company -- Asset Tests" and "-- Income Tests"). This,
in turn, would prevent us from qualifying as a REIT. See "-- Failure to Qualify"
for a discussion of the effect of our failure to meet these tests for a taxable
year. In addition, a change in the Operating Partnership's or a partnership's
status for tax purposes might be treated as a taxable event. If so, we might
incur a tax liability without any related cash distributions.

                                       46


     Treasury Regulations that apply for tax periods beginning on or after
January 1, 1997 provide that a domestic business entity not otherwise classified
as a corporation and which has at least two members (an "eligible entity") may
elect to be taxed as a partnership for federal income tax purposes. Unless it
elects otherwise, an eligible entity in existence prior to January 1, 1997 will
have the same classification for federal income tax purposes that it claimed
under the entity classification Treasury Regulations in effect prior to this
date. In addition, an Eligible Entity which did not exist, or did not claim a
classification, prior to January 1, 1997, will be classified as a partnership
for federal income tax purposes unless it elects otherwise. The Operating
Partnership and each of our joint ventures intend to claim classification as a
partnership under the Final Regulations, and, as a result, we believe such
partnerships will be classified as partnerships for federal income tax purposes.



     Allocations of Operating Partnership Income, Gain, Loss and Deduction. The
Partnership Agreement provides for preferred distributions of cash and preferred
allocations of income to AMB Property Corporation with respect to its Series A
Preferred Units and to the holders of Series B Preferred Units. In addition, to
the extent we issue Series C Preferred Stock, Series D Preferred Stock or Series
E Preferred Stock in exchange for AMB Property II Series C Preferred Units, AMB
Property II Series D Preferred Units or AMB Property II Series E Preferred
Units, respectively, the Operating Partnership will issue Series C Preferred
Units, AMB Property II Series D Preferred Units or AMB Property II Series E
Preferred Units, respectively, to us and the Partnership Agreement will be
amended to provide for similar preferred distributions of cash and preferred
allocations of income to us with respect to its Series C Preferred Units, Series
D Preferred Units or Series E Preferred Units. As a consequence, we will receive
distributions from the Operating Partnership and attributable to its other
assets that we would use to pay dividends on shares of Series A Preferred Stock
and any shares of Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock or Series E Preferred Stock issued by us before any other
partner in the Operating Partnership (other than a holder of Series B Preferred
Units, if such units are not then held by us) receives a distribution. In
addition, if necessary, income will be specially allocated to us, and losses
will be allocated to the other partners of the Operating Partnership, in amounts
necessary to ensure that the balance in our capital account will at all times be
equal to or in excess of the amount payable by us on the Series A Preferred
Stock and any Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock or Series E Preferred Stock then issued by us upon liquidation
or redemption. As long as we do not hold the Series B Preferred Units, similar
preferred distributions and allocations will be made for the benefit of the
holders of such units. All remaining items of operating income and loss will be
allocated to the holders of common Units in proportion to the number of Units or
Performance Units held by each such unitholder. All remaining items of gain or
loss relating to the disposition of the Operating Partnership's assets upon
liquidation will be allocated first to the partners in the amounts necessary, in
general, to equalize AMB Property Corporation's and the limited partners' per
unit capital accounts, with any special allocation of gain to the holders of
Performance Units being offset by a reduction in the gain allocation to us and
unitholders which were Performance Investors. Certain limited partners have
agreed to guarantee debt of the Operating Partnership, either directly or
indirectly through an agreement to make capital contributions to the Operating
Partnership under limited circumstances. As a result of these guarantees or
contribution agreements, and notwithstanding the foregoing discussion of
allocations of income and loss of the Operating Partnership to holders of common
Units, such limited partners could under limited circumstances be allocated a
disproportionate amount of net loss upon a liquidation of the Operating
Partnership, which net loss would have otherwise been allocable to us.



     If an allocation is not recognized for federal income tax purposes, the
item subject to the allocation will be reallocated in accordance with the
partners' interests in the partnership. This reallocation will be determined by
taking into account all of the facts and circumstances relating to the economic
arrangement of the partners with respect to such item. The Operating
Partnership's allocations of taxable income and loss are intended to comply with
the requirements of Section 704(b) of the Internal Revenue Code and the Treasury
Regulations promulgated under this section of the Internal Revenue Code.


                                       47


     Tax Allocations with Respect to the Properties. Under Section 704(c) of the
Internal Revenue Code, income, gain, loss and deduction attributable to
appreciated or depreciated property that is contributed to a partnership in
exchange for an interest in the partnership, must be allocated in a manner so
that the contributing partner is charged with the unrealized gain or benefits
from the unrealized loss associated with the property at the time of the
contribution. The amount of the unrealized gain or unrealized loss is generally
equal to the difference between the fair market value of contributed property at
the time of contribution and the adjusted tax basis of the property at the time
of contribution (a "book-tax difference"). These allocations are solely for
federal income tax purposes and do not affect the book capital accounts or other
economic or legal arrangements among the partners. The Operating Partnership was
formed by way of contributions of appreciated property. Moreover, subsequent to
the formation of the Operating Partnership, additional appreciated property has
been contributed to the Operating Partnership in exchange for interests in the
Operating Partnership. The Partnership Agreement requires that these allocations
be made in a manner consistent with Section 704(c) of the Internal Revenue Code.



     In general, the partners of the Operating Partnership (including us) which
contributed assets having an adjusted tax basis less than their fair market
value at the time of contribution will be allocated depreciation deductions for
tax purposes which are lower than such deductions would have been if determined
on a pro rata basis. In addition, in the event of the disposition of any of the
contributed assets which have such a Book-Tax Difference, all income
attributable to such Book-Tax Difference generally will be allocated to such
contributing partners. These allocations will tend to eliminate the Book-Tax
Difference over the life of the Operating Partnership. However, the special
allocation rules of Section 704(c) do not always entirely eliminate the Book-Tax
Difference on an annual basis or with respect to a specific taxable transaction
such as a sale. Thus, the carryover basis of the contributed assets in the hands
of the Operating Partnership may cause us or other partners to be allocated
lower depreciation and other deductions, and possibly an amount of taxable
income in the event of a sale of such contributed assets in excess of the
economic or book income allocated to us or other partners as a result of such
sale. Such an allocation might cause us or other partners to recognize taxable
income in excess of cash proceeds, which might adversely affect our ability to
comply with the REIT distribution requirements. See "-- Taxation of the
Company -- Requirements for Qualification" and "-- Annual Distribution
Requirements."



     Treasury Regulations issued under Section 704(c) of the Internal Revenue
Code provide partnerships with a choice of several methods of accounting for
Book-Tax Differences, including retention of the "traditional method" or the
election of certain methods which would permit any distortions caused by a
Book-Tax Difference to be entirely rectified on an annual basis or with respect
to a specific taxable transaction such as a sale. We and the Operating
Partnership have determined to use the "traditional method" for accounting for
Book-Tax Differences for the properties initially contributed to the Operating
Partnership and for certain assets contributed subsequently. We and the
Operating Partnership have not yet decided what method will be used to account
for Book-Tax Differences for properties acquired by the Operating Partnership in
the future.



     Any property acquired by the Operating Partnership in a taxable transaction
will initially have a tax basis equal to its fair market value, and Section
704(c) of the Internal Revenue Code will not apply.


TAXATION OF TAXABLE U.S. STOCKHOLDERS

     As used below, the term "U.S. Stockholder" means a holder of shares of
common stock who (for United States federal income tax purposes):

     - is a citizen or resident of the United States;

     - is a corporation, partnership, or other entity created or organized in or
       under the laws of the United States or of any state thereof or in the
       District of Columbia, unless, in the case of a partnership, Treasury
       Regulations provide otherwise;

                                       48

     - is an estate the income of which is subject to United States federal
       income taxation regardless of its source; or

     - is a trust whose administration is subject to the primary supervision of
       a United States court and which has one or more United States persons who
       have the authority to control all substantial decisions of the trust.

     Notwithstanding the preceding sentence, to the extent provided in Treasury
Regulations, certain trusts in existence on August 20, 1996, and treated as
United States persons prior to this date that elect to continue to be treated as
United States persons, shall also be considered U.S. Stockholders.

     Distributions Generally. As long as we qualify as a REIT, distributions out
of our current or accumulated earnings and profits, other than capital gain
dividends discussed below, will constitute dividends taxable to our taxable U.S.
Stockholders as ordinary income. These distributions will not be eligible for
the dividends-received deduction in the case of U.S. Stockholders that are
corporations. For purposes of determining whether distributions to holders of
common stock are out of current or accumulated earnings and profits, our
earnings and profits will be allocated first to the outstanding preferred stock
(if any) and then to the common stock.

     To the extent that we make distributions in excess of our current and
accumulated earnings and profits, these distributions will be treated first as a
tax-free return of capital to each U.S. Stockholder. This treatment will reduce
the adjusted basis which each U.S. Stockholder has in his shares of stock for
tax purposes by the amount of the distribution (but not below zero).
Distributions in excess of a U.S. Stockholder's adjusted basis in his shares
will be taxable as capital gains (provided that the shares have been held as a
capital asset) and will be taxable as long-term capital gain if the shares have
been held for more than one year. Dividends we declare in October, November, or
December of any year and payable to a stockholder of record on a specified date
in any of these months shall be treated as both paid by us and received by the
stockholder on December 31 of that year, provided we actually pay the dividend
on or before January 31 of the following calendar year. Stockholders may not
include in their own income tax returns any of our net operating losses or
capital losses.

     Capital Gain Distributions. Distributions that we properly designate as
capital gain dividends will be taxable to taxable U.S. Stockholders as gains (to
the extent that they do not exceed our actual net capital gain for the taxable
year) from the sale or disposition of a capital asset. Depending on the period
of time we have held the assets which produced these gains, and on certain
designations, if any, which we may make, these gains may be taxable to
non-corporate U.S. stockholders at a 20% or 25% rate. U.S. Stockholders that are
corporations may, however, be required to treat up to 20% of certain capital
gain dividends as ordinary income. For a discussion of the manner in which that
portion of any dividends designated as capital gain dividends will be allocated
among the holders of our preferred stock and common stock, see " -- Description
of Capital Stock."

     Passive Activity Losses and Investment Interest Limitations. Distributions
we make and gain arising from the sale or exchange by a U.S. Stockholder of our
shares will not be treated as passive activity income. As a result, U.S.
Stockholders generally will not be able to apply any "passive losses" against
this income or gain. Distributions we make (to the extent they do not constitute
a return of capital) generally will be treated as investment income for purposes
of computing the investment interest limitation. Gain arising from the sale or
other disposition of our shares, however, will not be treated as investment
income under certain circumstances.

     Retention of Net Long-Term Capital Gains. We may elect to retain, rather
than distribute as a capital gain dividend, our net long-term capital gains. If
we make this election, we would pay tax on our retained net long-term capital
gains. In addition, to the extent we designate, a U.S. Stockholder generally
would:

                                       49

     - include its proportionate share of our undistributed long-term capital
       gains in computing its long-term capital gains in its return for its
       taxable year in which the last day of our taxable year falls (subject to
       certain limitations as to the amount that is includable);

     - be deemed to have paid the capital gains tax imposed on us on the
       designated amounts included in the U.S. Stockholder's long-term capital
       gains;

     - receive a credit or refund for the amount of tax deemed paid by it;

     - increase the adjusted basis of its common stock by the difference between
       the amount of includable gains and the tax deemed to have been paid by
       it; and

     - in the case of a U.S. Stockholder that is a corporation, appropriately
       adjust its earnings and profits for the retained capital gains in
       accordance with Treasury Regulations to be prescribed by the IRS.

DISPOSITIONS OF COMMON STOCK

     If you are a U.S. Stockholder and you sell or dispose of your shares of
common stock, you will recognize gain or loss for federal income tax purposes in
an amount equal to the difference between the amount of cash and the fair market
value of any property you receive on the sale or other disposition and your
adjusted basis in the shares for tax purposes. This gain or loss will be capital
if you have held the common stock as a capital asset and will be long-term
capital gain or loss if you have held the common stock for more than one year.
However, if you are a U.S. Stockholder and you recognize loss upon the sale or
other disposition of common stock that you have held for six months or less
(after applying certain holding period rules), the loss you recognize will be
treated as a long-term capital loss, to the extent you received distributions
from us which were required to be treated as long-term capital gains.

BACKUP WITHHOLDING

     We report to our U.S. Stockholders and the IRS the amount of dividends paid
during each calendar year, and the amount of any tax withheld. Under the backup
withholding rules, a stockholder may be subject to backup withholding at the
rate of 31% with respect to dividends paid unless the holder is a corporation or
comes within certain other exempt categories and, when required, demonstrates
this fact, or provides a taxpayer identification number, certifies as to no loss
of exemption from backup withholding, and otherwise complies with applicable
requirements of the backup withholding rules. A U.S. Stockholder that does not
provide us with his correct taxpayer identification number may also be subject
to penalties imposed by the IRS. Backup withholding is not an additional tax.
Any amount paid as backup withholding will be creditable against the
stockholder's income tax liability. In addition, we may be required to withhold
a portion of capital gain distributions to any stockholders who fail to certify
their non-foreign status. See "-- Taxation of Non-U.S. Stockholders."

TAXATION OF TAX-EXEMPT STOCKHOLDERS


     The IRS has ruled that amounts distributed as dividends by a qualified REIT
do not constitute unrelated business taxable income when received by a
tax-exempt entity. Based on that ruling, provided that a tax-exempt stockholder
(except certain tax-exempt stockholders described below) has not held its shares
as "debt financed property" within the meaning of the Code (generally, shares of
common stock, the acquisition of which was financed through a borrowing by the
tax exempt stockholder) and the shares are not otherwise used in a trade or
business, dividend income from us will not be unrelated business taxable income
to a tax-exempt stockholder. Similarly, income from the sale of shares will not
constitute unrelated business taxable income unless a tax-exempt stockholder has
held its shares as "debt financed property" within the meaning of the Internal
Revenue Code or has used the shares in its trade or business.


     For tax-exempt stockholders which are social clubs, voluntary employee
benefit associations, supplemental unemployment benefit trusts, and qualified
group legal services plans exempt from federal income taxation
                                       50


under Internal Revenue Code Section 501(c)(7), (c)(9), (c)(17) and (c)(20),
respectively, income from an investment in our shares will constitute unrelated
business taxable income unless the organization is able to properly deduct
amounts set aside or placed in reserve for certain purposes so as to offset the
income generated by its investment in our shares. These prospective investors
should consult their own tax advisors concerning these "set aside" and reserve
requirements.



     Notwithstanding the above, however, a portion of the dividends paid by a
"pension held REIT" shall be treated as unrelated business taxable income as to
certain types of trusts which hold more than 10% (by value) of the interests in
the REIT.


     A REIT will not be a "pension held REIT" if it is able to satisfy the "not
closely held" requirement without relying upon the "look-through" exception with
respect to certain trusts. As a result of certain limitations on the transfer
and ownership of stock contained in our charter, we do not expect to be
classified as a "pension held REIT," and, as a result, the tax treatment
described above should be inapplicable to our stockholders.

TAXATION OF NON-U.S. STOCKHOLDERS


     The preceding discussion does not address the rules governing United States
federal income taxation of the ownership and disposition of common stock by
persons that are not U.S. stockholders. In general, Non-U.S. stockholders may be
subject to special tax withholding requirements on distributions from us and
with respect to their sale or other disposition of our common stock, except to
the extent reduced or eliminated by an income tax treaty between the United
States and the Non-U.S. stockholder's country. A Non-U.S. stockholder who is a
stockholder of record and is eligible for reduction or elimination of
withholding must file an appropriate form with us in order to claim such
treatment. Non-U.S. stockholders should consult their own tax advisors
concerning the federal income tax consequences to them of an acquisition of
shares of common stock, including the federal income tax treatment of
dispositions of interests in, and the receipt of distributions from, us.



PROPOSED LEGISLATION



     The Clinton Administration's fiscal year 2000 budget proposal, announced
February 1, 1999, includes a proposal that would limit a REITs ability to own
more than 10% by vote or value of the stock of another corporation. As discussed
above under the heading "Taxation of the Company-Asset Tests," a REIT cannot
currently own more than 10% of the outstanding voting securities of any one
issuer. The budget proposal would allow a REIT to own all or a portion of the
voting stock and value of a "taxable REIT subsidiary" provided all of a REIT's
taxable REIT subsidiaries do not represent more than 15% of the REIT's total
assets. In addition under the budget proposal, a "taxable REIT subsidiary" would
not be entitled to deduct any interest on debt funded directly or indirectly by
the REIT. The budget proposal, if enacted in its current form, may require that
we restructure our interest in AMB Investment Management, Inc. and Headlands
Realty Corporation because we currently own more than 10% of the value of these
subsidiaries and because we have loaned funds to one of them. The budget
proposal, if enacted in its current form, would be effective after the date of
its enactment and would provide transition rules to allow corporations, like AMB
Investment Management, Inc. and Headlands Realty Corporation to convert into
"taxable REIT subsidiaries" tax-free.



     Proposals that are similar to the Clinton Administration's fiscal year 2000
budget proposal have been introduced in both the House of Representatives and
the Senate as part of a number of legislative proposals. Several of these
proposals have been approved by the House of Representatives and the Senate, but
as of November 24, 1999, none have yet been enacted into law. As with the
Clinton budget proposal, the bills introduced in the House of Representatives
and in the Senate would prohibit the ownership by a REIT of more than 10%, by
vote or value, of the securities of another corporation, but would likewise
permit a REIT to own all or a portion of the voting securities and value of a
taxable REIT subsidiary. However, the provisions of these proposed bills are
less restrictive than the Clinton budget proposal in many respects. For example,


                                       51


instead of limiting the value of a REIT's taxable REIT subsidiaries to 15% of
the REIT's total assets, under certain of the bills, a REIT's ownership of
taxable REIT subsidiaries would be limited to 20% of the REIT's total assets.
Additionally, unlike the Clinton budget proposal, these proposed bills would
permit the deduction by a taxable REIT subsidiary of interest on debt funded
directly or indirectly by the REIT, subject only to rules regarding the
subsidiary's debt to equity ratio and the amount of this interest expense. The
proposed bills also propose changes to the REIT provisions of the Internal
Revenue Code which are not discussed in the Clinton budget proposal. Most
notably, they would reduce the REIT distribution requirements from 95% to 90% of
a REIT's taxable income. As with the Clinton proposal, the bills introduced in
the House of Representatives and the Senate provide transitional rules which
would allow a REIT to convert its "non-controlled" subsidiaries into "taxable
REIT subsidiaries" tax-free.



     As of November 24, 1999, it is uncertain whether any proposal regarding
REIT subsidiaries, including the Clinton budget proposal, will be enacted, or if
enacted, what the terms of such proposal, including its effective date, will be.


OTHER TAX CONSEQUENCES

     We may be subject to state or local taxation in various state or local
jurisdictions, including those in which we transact business and our
stockholders may be subject to state or local taxation in various state or local
jurisdictions, including those in which they reside. Our state and local tax
treatment may not conform to the federal income tax consequences discussed
above. In addition, your state and local tax treatment may not conform to the
federal income tax consequences discussed above. Consequently, you should
consult your own tax advisors regarding the effect of state and local tax laws
on an investment in our shares.

                              ERISA CONSIDERATIONS


     The following is a summary of material considerations arising under the
Employee Retirement Income Securities Act of 1974, as amended ("ERISA") and the
prohibited transaction provisions of Section 4975 of the Internal Revenue Code
that may be relevant to a prospective purchaser (including a prospective
purchaser that is not an employee benefit plan which is subject to ERISA, but is
a tax-qualified retirement plan or an individual retirement account, individual
retirement annuity, medical savings account or education individual retirement
account (collectively, an "IRA")). This discussion does not purport to deal with
all aspects of ERISA or Section 4975 of the Internal Revenue Code or, to the
extent not preempted, state law that may be relevant to particular employee
benefit plan stockholders (including plans subject to Title I of ERISA, other
employee benefit plans and IRAs subject to the prohibited transaction provisions
of Section 4975 of the Internal Revenue Code, and governmental plans and church
plans that are exempt from ERISA and Section 4975 of the Internal Revenue Code
but that may be subject to state law requirements) in light of their particular
circumstances.


     A FIDUCIARY MAKING THE DECISION TO INVEST IN SHARES OF COMMON STOCK ON
BEHALF OF A PROSPECTIVE PURCHASER WHICH IS AN ERISA PLAN, A TAX QUALIFIED
RETIREMENT PLAN, AN IRA OR OTHER EMPLOYEE BENEFIT PLAN IS ADVISED TO CONSULT ITS
OWN LEGAL ADVISOR REGARDING THE SPECIFIC CONSIDERATIONS ARISING UNDER ERISA,
SECTION 4975 OF THE INTERNAL REVENUE CODE, AND (TO THE EXTENT NOT PRE-EMPTED)
STATE LAW WITH RESPECT TO THE PURCHASE, OWNERSHIP OR SALE OF SHARES OF COMMON
STOCK BY SUCH PLAN OR IRA. Plans should also consider the entire discussion
under the heading "Certain Federal Income Tax Considerations," as material
contained in that section is relevant to any decision by an employee benefit
plan, tax-qualified retirement plan or IRA to purchase our common stock.

                                       52

EMPLOYEE BENEFIT PLANS, TAX-QUALIFIED RETIREMENT PLANS AND IRAS

     Each fiduciary of an employee benefit plan subject to Title I of ERISA (an
"ERISA Plan") should carefully consider whether an investment in shares of
common stock is consistent with its fiduciary responsibilities under ERISA. In
particular, the fiduciary requirements of Part 4 of Title I of ERISA require
that

     - an ERISA Plan make investments that are prudent and in the best interests
       of the ERISA Plan, its participants and beneficiaries;

     - an ERISA Plan make investments that are diversified in order to reduce
       the risk of large losses, unless it is clearly prudent for the ERISA Plan
       not to do so;

     - an ERISA Plan's investments are authorized under ERISA and the terms of
       the governing documents of the ERISA Plan; and

     - the fiduciary not cause the ERISA Plan to enter into transactions
       prohibited under Section 406 of ERISA.


     In determining whether an investment in shares of common stock is prudent
for purposes of ERISA, the appropriate fiduciary of an ERISA Plan should
consider all of the facts and circumstances, including whether the investment is
reasonably designed, as a part of the ERISA Plan's portfolio for which the
fiduciary has investment responsibility, to meet the objectives of the ERISA
Plan, taking into consideration the risk of loss and opportunity for gain (or
other return) from the investment, the diversification, cash flow and funding
requirements of the ERISA Plan, and the liquidity and current return of the
ERISA Plan's portfolio. A fiduciary should also take into account the nature of
our business, the length of our operating history and other matters described
under "Business Risks" under Item 5 of our Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1999, which is incorporated by reference
into this prospectus, as updated by our subsequent Exchange Act filings, and
other similar statements contained in this prospectus.



     The fiduciary of an IRA or of an employee benefit plan not subject to Title
I of ERISA because it is a governmental or church plan (if no election has been
made under Section 410(d) of the Internal Revenue Code) or because it does not
cover common law employees (a "Non-ERISA Plan") should consider that such an IRA
or Non-ERISA Plan may only make investments that are either authorized or not
prohibited by the appropriate governing documents, not prohibited under Section
4975 of the Internal Revenue Code and permitted under applicable state law.


STATUS OF THE COMPANY UNDER ERISA


     A prohibited transaction may occur if our assets are deemed to be assets of
the investing ERISA Plans and disqualified persons deal with such assets. In
certain circumstances where an ERISA Plan holds an interest in an entity, the
assets of the entity are deemed to be ERISA Plan assets (the "look-through
rule"). Under those circumstances, any person that exercises authority or
control with respect to the management or disposition of the assets is an ERISA
Plan fiduciary. ERISA Plan assets are not defined in ERISA or the Internal
Revenue Code, but the United States Department of Labor has issued regulations,
effective March 13, 1987, that outline the circumstances under which an ERISA
Plan's interest in an entity will be subject to the look-through rule.



     The Department of Labor regulations apply only to the purchase by an ERISA
Plan of an "equity interest" in an entity, such as stock of a REIT. However, the
Department of Labor regulations provide an exception to the look-through rule
for equity interests that are "publicly-offered securities." The Department of
Labor regulations also provide exceptions to the look-through rule for equity
interests in certain types of entities, including any entity which qualifies as
either a "real estate operating company" or a "venture capital operating
company".


                                       53

     Under the Department of Labor regulations, a "publicly-offered security" is
a security that is:

     - freely transferable;

     - part of a class of securities that is widely-held; and

     - either part of a class of securities that is registered under section
       12(b) or 12(g) of the Exchange Act or sold to an ERISA Plan as part of an
       offering of securities to the public pursuant to an effective
       registration statement under the Securities Act and the class of
       securities of which such security is a part is registered under the
       Exchange Act within 120 days (or such longer period allowed by the SEC)
       after the end of the fiscal year of the issuer during which the offering
       of such securities to the public occurred.

     Whether a security is considered "freely transferable" depends on the facts
and circumstances of each case. Under the Department of Labor regulations, if
the security is part of an offering in which the minimum investment is $10,000
or less, then any restriction on or prohibition against any transfer or
assignment of such security for the purposes of preventing a termination or
reclassification of the entity for federal or state tax purposes will not
ordinarily prevent the security from being considered freely transferable.
Additionally, limitations or restrictions on the transfer or assignment of a
security which are created or imposed by persons other than the issuer of the
security or persons acting for or on behalf of the issuer will ordinarily not
prevent the security from being considered freely transferable. A class of
securities is considered "widely-held" if it is a class of securities that is
owned by 100 or more investors independent of the issuer and of one another.


     Under the Department of Labor regulations, a real estate operating company
is defined as an entity which on certain testing dates has at least 50% of its
assets (other than short-term investments pending long-term commitment or
distribution to investors), valued at cost, invested in real estate which is
managed or developed and with respect to which the entity has the right to
substantially participate directly in the management or development activities
and which, in the ordinary course of its business, is engaged directly in real
estate management or development activities. A venture capital operating company
is defined as an entity which on certain testing dates has at least 50% of its
assets (other than short-term investments pending long-term commitment or
distribution to investors), valued at cost, invested in one or more operating
companies with respect to which the entity has management rights and which, in
the ordinary course of its business, actually exercises its management rights
with respect to one or more of the operating companies in which it invests.



     We expect that the shares of our common stock offered in this prospectus
will meet the criteria of the publicly-offered securities exception to the
look-through rule. First, the common stock should be considered to be freely
transferable, as the minimum investment will be less than $10,000 and the only
restrictions upon its transfer are those required under federal tax laws to
maintain our status as a REIT, resale restrictions under applicable federal
securities laws with respect to securities not purchased pursuant to this
prospectus and those owned by our officers, directors and other affiliates, and
voluntary restrictions agreed to by the selling stockholders regarding volume
limitations. Second, we expect the common stock to be held by 100 or more
investors and we expect that at least 100 or more of these investors will be
independent of us and of one another. Third, the shares of common stock will be
part of an offering of securities to the public pursuant to an effective
registration statement under the Securities Act and the common stock is
registered under the Exchange Act. In addition, we have obtained management
rights with respect to the Operating Partnership and conduct our affairs in such
a manner that we will qualify as either a real estate operating company or
venture capital operating company under the Department of Labor regulations.
Accordingly, we believe that if an ERISA Plan purchases the common stock, our
assets should not be deemed to be ERISA Plan assets and, therefore, that any
person who exercises authority or control with respect to our assets should not
be an ERISA Plan fiduciary.


                                       54

                              SELLING STOCKHOLDERS


     "Selling stockholders" are those persons who may receive shares of our
common stock registered pursuant to this registration statement upon exchange of
common limited partnership units of the Operating Partnership. The following
table provides the names of the selling stockholders, the maximum number of
shares of common stock issuable to each of the selling stockholders in the
exchange and the aggregate number of shares of common stock that will be owned
by the selling stockholders after the exchange. The number of shares on the
following table represents the number of shares of common stock into which
limited partnership units of the Operating Partnership held by the person are
exchangeable. Since the selling stockholders may sell all, some or none of their
shares, we cannot estimate the aggregate number of shares that the selling
stockholders will offer pursuant to this prospectus or that each selling
stockholder will own upon completion of the offering to which this prospectus
relates.



     Edgar M. Thrift, Jr., Preston Butcher, Gary J. Rossi and Stuart L. Leeder
have informed us that they have granted Lincoln Partners Agency Corporation a
security interest in their limited partnership units in the Operating
Partnership and shares of our common stock issuable upon exchange listed below.
If any of those selling stockholders defaults in his obligations to Lincoln
Partners Agency Corporation pursuant to the security agreement, Lincoln Partners
Agency Corporation may take possession of that selling stockholder's units and
the shares of common stock issuable upon exchange. Lincoln Partners Agency
Corporation would then become a selling stockholder under this prospectus.


     The selling stockholders named below may from time to time offer the shares
of common stock offered by this prospectus:


<TABLE>
<CAPTION>
                                                               MAXIMUM
                                                              NUMBER OF
                                                              SHARES OF        AGGREGATE
                                                               COMMON          NUMBER OF      PERCENTAGE OF
                                                                STOCK          SHARES OF       OUTSTANDING
                                            SHARES OF      ISSUABLE IN THE    COMMON STOCK     COMMON STOCK
                                          COMMON STOCK      EXCHANGE AND         OWNED            OWNED
                                         OWNED PRIOR TO     AVAILABLE FOR    FOLLOWING THE    FOLLOWING THE
                 NAME                    THE EXCHANGE(A)       RESALE        EXCHANGE(1)(2)   EXCHANGE(1)(2)
                 ----                    ---------------   ---------------   --------------   --------------
<S>                                      <C>               <C>               <C>              <C>
Mack Pogue(3)..........................         --               4,199            4,199
Edgar M. Thrift, Jr. ..................         --              85,261           85,261              *
Preston Butcher........................         --             277,830          277,830              *
Gary J. Rossi..........................         --               4,798            4,798              *
Stuart L. Leeder.......................         --               1,984            1,984              *
Mack Pogue Inc. .......................         --             215,547          215,547              *
Edward D. O'Brien......................        500              31,599           32,099              *
David Brent Pogue......................         --              57,366           57,366              *
                                                               -------          -------
          Total........................                        678,584          679,084            0.8%
                                                               =======          =======
</TABLE>


- ---------------

(1) Based on information available to us as of November 1, 1999.



(2) Assumes the selling stockholders exchange all of their limited partnership
    units in the Operating Partnership for shares of common stock. Also assumes
    that no transactions with respect to common stock or limited partnership
    units occur other than the exchange.



(3) Mack Pogue may be deemed to beneficially own the limited partnership units
    held by Mack Pogue Inc. and any shares of common stock issued in exchange
    for those units.


 *  Less than 1%.


     The selling stockholders received the limited partnership units listed in
the table above in connection with the distribution of the units by Lincoln
Property Company No. 238 Limited Partnership, Lincoln Property Company No. 287,
Ltd., Lincoln Property Company No. 355, Ltd., Lincoln Property Company No. 440,
Ltd. and Lincoln Property Company No. 1179 to certain of their partners in
private placement transactions. Those

                                       55


partnerships received the units in connection with our purchase of properties
from them. Various affiliates of the selling stockholders provide us with
property management, leasing and development services, for which we pay
customary compensation, in connection with certain of our properties.
Additionally, an affiliate of Edgar M. Thrift, Jr., Preston Butcher, Gary J.
Rossi, and Stuart L. Leeder is a member of a limited liability company in which
the Operating Partnership is also a member and through which we own properties.
Prior to our purchase of the properties, one of our Managing Directors was a
limited partner of each of the partnerships which distributed the limited
partnership units to the selling stockholders. One of our Vice Presidents was
formerly a limited partner of one of the partnerships which distributed the
limited partnership units to the selling stockholders.


                              PLAN OF DISTRIBUTION


     This prospectus relates to the offer and sale from time to time by the
selling stockholders of up to 678,584 shares of common stock that we may issue
to those selling stockholders upon exchange of their common Units.


     We are registering the shares of common stock to provide the selling
stockholders with freely tradeable securities, but the registration of these
shares does not necessarily mean that we will issue any of these shares to the
selling stockholders or that the selling stockholders will offer or sell the
shares.

     We will not receive any proceeds from the issuance of the shares of common
stock to the selling stockholders or from the sale of the shares by the selling
stockholders, but we have agreed to pay certain expenses of the registration of
the shares. The selling stockholders may from time to time sell the shares
directly to purchasers. Alternatively, the selling stockholders may from time to
time offer the shares through dealers or agents, who may receive compensation in
the form of commissions from the selling stockholders and for the purchasers of
the shares for whom they may act as agent. The selling stockholders and any
dealers or agents that participate in the distribution of the shares may be
deemed to be "underwriters" within the meaning of the Securities Act and any
profit on the sale of the common stock by them and any commissions received by
any such dealers or agents might be deemed to be underwriting commissions under
the Securities Act.


     In connection with distribution of the shares of common stock covered by
this prospectus, the selling stockholders may enter into hedging transactions
with broker-dealers, and the broker-dealers may engage in short sales of the
common stock in the course of hedging the positions they assume with the selling
stockholders. The selling stockholders also may sell the common stock short and
deliver the common stock to close out such short positions. The selling
stockholders also may enter into option or other transactions with
broker-dealers that involve the delivery of the shares to the broker-dealers,
who may then resell or otherwise transfer the shares. The selling stockholders
may transfer the units or shares to a donee and any donee would become a selling
stockholder under this prospectus. The selling stockholders also may loan or
pledge the units or shares. If a selling stockholder defaults on an obligation
secured by the units or shares, the pledgee could obtain ownership of them and
would then become a selling stockholder under this prospectus.


                                 LEGAL MATTERS

     Ballard, Spahr, Andrews & Ingersoll, LLP, Baltimore, Maryland will issue an
opinion to us regarding certain matters of Maryland law. Latham & Watkins will
issue an opinion to us regarding certain tax matters described under "Certain
Federal Income Tax Considerations."

                                    EXPERTS

     The audited financial statements and schedules incorporated by reference in
this prospectus and elsewhere in the registration statement to the extent and
for the periods indicated in their reports have been audited by Arthur Andersen
LLP, independent public accountants, and are included herein in reliance upon
the authority of said firm as experts in accounting and auditing in giving said
reports.

                                       56

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

     The following table itemizes the expenses incurred by the Registrant in
connection with the issuance and registration of the securities being registered
hereunder. All amounts shown are estimates except the Securities and Exchange
Commission registration fee.

<TABLE>
<S>                                                         <C>
SEC Registration Fee......................................  $  4,000
NYSE Listing Fee..........................................  $    581
Printing and Engraving Expenses...........................  $100,000
Legal Fees and Expenses...................................  $ 40,000
Accounting and Fees and Expenses..........................  $ 10,000
Miscellaneous.............................................  $  5,419
                                                            --------
          Total...........................................  $160,000
                                                            ========
</TABLE>


     All of the costs identified above will be paid for by us.


ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS


     Section 2-418 of the Maryland General Corporation Law permits a corporation
to indemnify its directors and officers and certain other parties against
judgments, penalties, fines, settlements, and reasonable expenses actually
incurred by them in connection with any proceeding to which they may be made a
party by reason of their service in those or other capacities unless it is
established that (i) the act or omission of the director or officer was material
to the matter giving rise to the proceeding and (a) was committed in bad faith
or (b) was the result of active and deliberate dishonesty; (ii) the director or
officer actually received an improper personal benefit in money, property or
services; or (iii) in the case of any criminal proceeding, the director or
officer had reasonable cause to believe that the act or omission was unlawful.
Indemnification may be made against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by the director or officer in connection
with the proceeding; provided, however, that if the proceeding is one by or in
the right of the corporation, indemnification may not be made with respect to
any proceeding in which the director or officer has been adjudged to be liable
to the corporation. In addition, a director or officer may not be indemnified
with respect to any proceeding charging improper personal benefit to the
director or officer, whether or not involving action in the director's or
officer's official capacity, in which the director or officer was adjudged to be
liable on the basis that personal benefit was received. The termination of any
proceeding by conviction, or upon a plea of nolo contendere or its equivalent,
or an entry of any order of probation prior to judgment, creates a rebuttable
presumption that the director or officer did not meet the requisite standard of
conduct required for indemnification to be permitted.



     In addition, Section 2-418 of the Maryland General Corporation Law requires
that, unless prohibited by its charter, a corporation indemnify any director or
officer who is made a party to any proceeding by reason of service in that
capacity against reasonable expenses incurred by the director or officer in
connection with the proceeding, in the event that the director or officer is
successful, on the merits or otherwise, in the defense of the proceeding.



     Our Charter and Bylaws provide in effect for the indemnification by us of
our directors and officers to the fullest extent permitted by applicable law. We
have purchased directors' and officers' liability insurance for the benefit of
our directors and officers.



     We have entered into indemnification agreements with each of our executive
officers and directors. The indemnification agreements require, among other
matters, that we indemnify our executive officers and


                                      II-1

directors to the fullest extent permitted by law and reimburse the executive
officers and directors for all related expenses as incurred, subject to return
if it is subsequently determined that indemnification is not permitted.

ITEM 16. EXHIBITS


<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           EXHIBIT INDEX
- -------                          -------------
<C>       <S>                                                           <C>
   4.1    Articles of Incorporation of the Registrant (incorporated by
          reference to Exhibit 3.1 of the Registrant's Registration
          Statement on Form S-11 (No. 333-35915)).
   4.2    Articles Supplementary establishing and fixing the rights
          and preferences of the 8 1/2% Series A Cumulative Redeemable
          Preferred Stock (incorporated by reference to Exhibit 3.4(4)
          of our Quarterly Report on Form 10-Q for the quarterly
          period ended June 30, 1998).

   4.3    Certificate of Correction of the Registrant's Articles
          Supplementary establishing and fixing the rights and
          preferences of the 8 1/2% Series A Cumulative Redeemable
          Preferred Stock (incorporated by reference to Exhibit 3.2 of
          our Annual Report on Form 10-K for the year ended December
          31, 1998).

   4.4    Articles Supplementary establishing and fixing the rights
          and preferences of the 8 5/8% Series B Cumulative Redeemable
          Preferred Stock (incorporated by reference to Exhibit 3.1 of
          the Registrant's current report on Form 8-K filed on January
          7, 1999).

   4.5    Articles Supplementary establishing and fixing the rights
          and preferences of the 8.75% Series C Cumulative Redeemable
          Preferred Stock (incorporated by reference to Exhibit 3.2 of
          the Registrant's current report on Form 8-K filed on January
          7, 1999).

   4.6    First Amended and Restated Bylaws of the Registrant
          (incorporated by reference to Exhibit 3.5 of the
          Registrant's Annual Report for the year ended December 31,
          1998).

   4.7    Specimen common stock certificate (incorporated by reference
          to Exhibit 3.3 of the Registrant's Registration Statement on
          Form S-11 (No. 333-35915)).

   4.8    Indenture dated as of June 30, 1998 by and among the
          Operating Partnership, AMB Property Corporation and State
          Street Bank and Trust Company of California, N.A., as
          trustee (incorporated by reference to Exhibit 4.1 of the
          Registrant's Registration Statement on Form S-11 (No.
          333-49163)).

   4.9    First Supplemental Indenture dated as of June 30, 1998 by
          and among the Operating Partnership, AMB Property
          Corporation and State Street Bank and Trust Company of
          California, N.A., as trustee (incorporated by reference to
          Exhibit 4.2 to our Registration Statement on Form S-11 (No.
          333-49163)).

   4.10   Second Supplemental Indenture dated as of June 30, 1998 by
          and among the Operating Partnership, AMB Property
          Corporation and State Street Bank and Trust Company of
          California, N.A., as trustee (incorporated by reference to
          Exhibit 4.3 to our Registration Statement on Form S-11 (No.
          333-49163)).

   4.11   Third Supplemental Indenture dated as of June 30, 1998 by
          and among the Operating Partnership, AMB Property
          Corporation and State Street Bank and Trust Company of
          California, N.A., as trustee (incorporated by reference to
          Exhibit 4.4 to our Registration Statement on Form S-11 (No.
          333-49163)).

   4.12   Specimen of 7.10% Notes due 2008 (included in the First
          Supplemental Indenture incorporated by reference as Exhibit
          4.2 to our Registration Statement on Form S-11 (No.
          333-49163)).

   4.13   Specimen of 7.50% Notes due 2018 (included in the Second
          Supplemental Indenture incorporated by reference as Exhibit
          4.3 to our Registration Statement on Form S-11 (No.
          333-49163)).

   4.14   Specimen of 6.90% Reset Put Securities due 2015 (included in
          the Third Supplemental Indenture incorporated by reference
          as Exhibit 4.4 to our Registration Statement on Form S-11
          (No. 333-49163)).

  *5.1    Opinion of Ballard, Spahr, Andrews & Ingersoll, LLP
          regarding the validity of the common stock being registered.
</TABLE>


                                      II-2


<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           EXHIBIT INDEX
- -------                          -------------
<C>       <S>                                                           <C>
  *8.1    Opinion of Latham & Watkins regarding certain federal income
          tax matters.

  23.1    Consent of Arthur Andersen, LLP.

 *23.2    Consent of Ballard, Spahr, Andrews & Ingersoll, LLP
          (included in Exhibit 5.1).

 *23.3    Consent of Latham & Watkins (included in Exhibit 8.1).

 *24.1    Power of Attorney.
</TABLE>


- ---------------


* Previously filed.


ITEM 17. UNDERTAKINGS

     The undersigned Registrant hereby undertakes:

          (1) To file, during any period in which offers or sales are being
     made, a post-effective amendment to this registration statement:

             (i) To include any prospectus required by Section 10(a)(3) of the
        Securities Act of 1933;

             (ii) To reflect in the prospectus any facts or events arising after
        the effective date of the registration statement (or the most recent
        post-effective amendment thereof) which, individually or in the
        aggregate, represent a fundamental change in the information set forth
        in the registration statement;

             (iii) To include any material information with respect to the plan
        of distribution not previously disclosed in the registration statement
        or any material change to such information in the registration
        statement;

provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.

          (2) That, for the purpose of determining any liability under the
     Securities Act of 1933, each such post-effective amendment shall be deemed
     to be a new registration statement relating to the securities offered
     therein, and the offering of such securities at that time shall be deemed
     to be the initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment
     any of the securities being registered which remain unsold at the
     termination of the offering.

     The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration statement shall be
deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

     The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given the
latest quarterly
                                      II-3

report that is specifically incorporated by reference in the prospectus to
provide such interim financial information.

     The undersigned Registrant hereby further undertakes that:

          (1) For purposes of determining any liability under the Securities Act
     of 1933, the information omitted from the form of prospectus filed as part
     of this registration statement in reliance under Rule 430A and contained in
     a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
     (4), or 497(h) under the Securities Act of 1933 shall be deemed to be part
     of this registration statement as of the time it was declared effective.

          (2) For the purpose of determining any liability under the Securities
     Act of 1933, each post-effective amendment that contains a form of
     prospectus shall be deemed to be a new registration statement relating to
     the securities offered therein, and the offering of such securities at that
     time shall be deemed to be the initial bona fide offering thereof.


     Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Exchange Act of 1934, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Exchange Act of 1934, and will be governed by the final adjudication
of such issue.


                                      II-4

                                   SIGNATURES


     Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized in the City of San Francisco, State of California, on
the 23rd day of November, 1999.


                                          AMB PROPERTY CORPORATION


                                          By:      /s/ DAVID S. FRIES

                                            ------------------------------------

                                                       David S. Fries


                                               Chief Administrative Officer,
                                                      Managing Director,


                                               Secretary and General Counsel



     Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to the Registration Statement has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.



<TABLE>
<CAPTION>
                     SIGNATURE                                   TITLE                     DATE
                     ---------                                   -----                     ----

<S>                                                  <C>                             <C>
                         *                             Chairman of the Board and     November 23, 1999
- ---------------------------------------------------             Director
                  T. Robert Burke
                         *                             President, Chief Executive    November 23, 1999
- ---------------------------------------------------       Officer and Director
                 Hamid R. Moghadam                   (Principal Executive Officer)

                         *                               Chairman of Investment      November 23, 1999
- ---------------------------------------------------      Committee and Director
                 Douglas D. Abbey

                         *                             Senior Vice President and     November 23, 1999
- ---------------------------------------------------     Chief Financial Officer
                  Michael A. Coke                     (Principal Financial Officer
                                                        and Principal Accounting
                                                                Officer)

                         *                                      Director             November 23, 1999
- ---------------------------------------------------
                Daniel H. Case, III

                         *                                      Director             November 23, 1999
- ---------------------------------------------------
            Robert H. Edelstein, Ph.D.

                                                                Director
- ---------------------------------------------------
                  Lynn M. Sedway

                         *                                      Director             November 23, 1999
- ---------------------------------------------------
             Jeffrey L. Skelton, Ph.D.

                         *                                      Director             November 23, 1999
- ---------------------------------------------------
                 Thomas W. Tusher

                         *                                      Director             November 23, 1999
- ---------------------------------------------------
                 Caryl B. Welborn

              *By: /s/ DAVID S. FRIES
   ---------------------------------------------
                  David S. Fries
                 Attorney-In-Fact
</TABLE>


                                      II-5

                                 EXHIBIT INDEX


<TABLE>
<CAPTION>
EXHIBIT                            EXHIBIT
NUMBER                              INDEX
- -------                            -------
<S>      <C>
 4.1     Articles of Incorporation of the Registrant (incorporated by
         reference to Exhibit 3.1 of the Registrant's Registration
         Statement on Form S-11 (No. 333-35915)).
 4.2     Articles Supplementary establishing and fixing the rights
         and preferences of the 8 1/2% Series A Cumulative Redeemable
         Preferred Stock (incorporated by reference to Exhibit 3.4(4)
         of our Quarterly Report on Form 10-Q for the quarterly
         period ended June 30, 1998).
 4.3     Certificate of Correction of the Registrant's Articles
         Supplementary establishing and fixing the rights and
         preferences of the 8 1/2% Series A Cumulative Redeemable
         Preferred Stock (incorporated by reference to Exhibit 3.2 of
         our Annual Report on Form 10-K for the year ended December
         31, 1998).
 4.4     Articles Supplementary establishing and fixing the rights
         and preferences of the 8 5/8% Series B Cumulative Redeemable
         Preferred Stock (incorporated by reference to Exhibit 3.1 of
         the Registrant's current report on Form 8-K filed on January
         7, 1999).
 4.5     Articles Supplementary establishing and fixing the rights
         and preferences of the 8.75% Series C Cumulative Redeemable
         Preferred Stock (incorporated by reference to Exhibit 3.2 of
         the Registrant's current report on Form 8-K filed on January
         7, 1999).
 4.6     First Amended and Restated Bylaws of the Registrant
         (incorporated by reference to Exhibit 3.5 the Registrant's
         Annual Report for the year ended December 31, 1998).
 4.7     Specimen common stock certificate (incorporated by reference
         to Exhibit 3.3 of the Registrant's Registration Statement on
         Form S-11 (No. 333-35915)).
 4.8     Indenture dated as of June 30, 1998 by and among the
         Operating Partnership, AMB Property Corporation and State
         Street Bank and Trust Company of California, N.A., as
         trustee (incorporated by reference to Exhibit 4.1 of the
         Registrant's Registration Statement on Form S-11 (No.
         333-49163)).
 4.9     First Supplemental Indenture dated as of June 30, 1998 by
         and among the Operating Partnership, AMB Property
         Corporation and State Street Bank and Trust Company of
         California, N.A., as trustee (incorporated by reference to
         Exhibit 4.2 to our Registration Statement on Form S-11 (No.
         333-49163)).
 4.10    Second Supplemental Indenture dated as of June 30, 1998 by
         and among the Operating Partnership, AMB Property
         Corporation and State Street Bank and Trust Company of
         California, N.A., as trustee (incorporated by reference to
         Exhibit 4.3 to our Registration Statement on Form S-11 (No.
         333-49163)).
 4.11    Third Supplemental Indenture dated as of June 30, 1998 by
         and among the Operating Partnership, AMB Property
         Corporation and State Street Bank and Trust Company of
         California, N.A., as trustee (incorporated by reference to
         Exhibit 4.4 to our Registration Statement on Form S-11 (No.
         333-49163)).
 4.12    Specimen of 7.10% Notes due 2008 (included in the First
         Supplemental Indenture incorporated by reference as Exhibit
         4.2 to our Registration Statement on Form S-11 (No.
         333-49163)).
 4.13    Specimen of 7.50% Notes due 2018 (included in the Second
         Supplemental Indenture incorporated by reference as Exhibit
         4.3 to our Registration Statement on Form S-11 (No.
         333-49163)).
 4.14    Specimen of 6.90% Reset Put Securities due 2015 (included in
         the Third Supplemental Indenture incorporated by reference
         as Exhibit 4.4 to our Registration Statement on Form S-11
         (No. 333-49163)).
</TABLE>



<TABLE>
<CAPTION>
EXHIBIT                            EXHIBIT
NUMBER                              INDEX
- -------                            -------
<S>      <C>
 *5.1    Opinion of Ballard, Spahr, Andrews & Ingersoll, LLP
         regarding the validity of the common stock being registered.
 *8.1    Opinion of Latham & Watkins regarding certain federal income
         tax matters.
 23.1    Consent of Arthur Andersen, LLP.
*23.2    Consent of Ballard, Spahr, Andrews & Ingersoll, LLP
         (included in Exhibit 5.1).
*23.3    Consent of Latham & Watkins (included in Exhibit 8.1).
*24.1    Power of Attorney.
</TABLE>


- ---------------


* Previously filed.