SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): DECEMBER 1, 1999
AMB PROPERTY CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
MARYLAND 001-13545 94-3281941
---------------- ------------ ---------------
(STATE OR OTHER JURISDICTION OF (COMMISSION (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) FILE NO.) IDENTIFICATION NO.)
505 MONTGOMERY STREET, SAN FRANCISCO, CA 94111
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(415) 394-9000
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
FORWARD-LOOKING STATEMENTS
Some of the information included in this report contains forward-looking
statements, such as statements pertaining to our intended use of proceeds.
Forward-looking statements involve numerous risks and uncertainties and you
should not rely on them as predictions of future events. The events or
circumstances reflected in forward-looking statements might not occur. You can
identify forward-looking statements by the use of forward-looking terminology
such as "believes," "expects," "may," "will," "should," "seeks,"
"approximately," "intends," "plans," "pro forma," "estimates" or "anticipates"
or the negative of these words and phrases or similar words or phrases. You can
also identify forward-looking statements by discussions of strategy, plans or
intentions. Forward-looking statements are necessarily dependent on assumptions,
data or methods that may be incorrect or imprecise and we may not be able to
realize them. We caution you not to place undue reliance on forward-looking
statements, which reflect our analysis only and speak only as of the date of
this report or the dates indicated in the statements.
ITEM 2. DISPOSITION OF ASSETS
On April 8, 1999, we filed a current report on Form 8-K reporting that AMB
Property, L.P., a Delaware limited partnership in which we are the sole general
partner, signed four definitive agreements for the disposition of (1) up to 28
of our retail properties to BPP Retail, LLC and (2) six additional retail
properties to Burnham Pacific Operating Partnership, L.P. The current report
also provided unaudited pro forma financial information. On June 9, 1999, we
filed an amendment no. 1 to the current report to reflect that one of our joint
venture partners who holds an interest in three of the properties indicated that
it will not consent to the disposition of these properties at this time and to
update the pro forma financial information. On June 15, 1999, we filed a current
report on Form 8-K reporting the closing of the first transaction with BPP
Retail, LLC, with respect to nine of our retail properties, totaling
approximately 1.4 million square feet, for an aggregate price of $207.4 million.
On July 1, 1999, we filed a current report on Form 8-K reporting the termination
of the agreement with Burnham Pacific Operating Partnership, L.P. On August 19,
1999, we filed a current report on Form 8-K reporting the closing of the second
transaction with BPP Retail, LLC with respect to 12 of our retail properties,
totaling approximately 2.1 million square feet, for an aggregate price of $245.8
million. On October 15, 1999, we filed a current report on Form 8-K regarding
our 1999 property acquisitions. On November 16, 1999, we filed an 8-K containing
certain audited financial statements relating to our 1999 property acquisitions
and unaudited pro forma financial information pertaining to the 1999 property
acquisitions.
We are filing this current report on Form 8-K to (1) report that on December 1,
1999, we closed the third transaction with BPP Retail, LLC, with respect to four
retail properties, totaling approximately 0.9 million square feet, for an
aggregate price of $107.1 million and (2) to file updated pro forma financial
information, which reflects the closing of the third transaction with BPP
Retail, LLC and supersedes the pro forma financial information filed with the
November 16, 1999 Form 8-K.
We used the net proceeds from the first transaction for the following purposes:
$35.1 million to repay secured debt (including prepayment penalties of $3.3
million) related to the properties divested, $96.4 million to partially pay down
the Operating Partnership's unsecured debt facility, and $72.2 million for
property acquisitions and for general corporate purposes. We used the net
proceeds from the second transaction for the following purposes: $23.6 million
to repay secured debt (including prepayment penalties of $1.3 million) related
to the properties divested, $111.7 million to partially pay down the Operating
Partnership's unsecured debt facility, and $107.2 million for potential property
acquisitions and/or like-kind exchanges and for general corporate purposes. We
used the proceeds from the third closing to pay approximately $1.0 million in
transaction expenses, and $106.1 million for potential property acquisitions
and/or like-kind exchanges and for general corporate purposes.
The description of the disposition of the properties to BPP Retail, LLC
contained in this report is qualified in its entirety by reference to the
purchase agreements related thereto, which are filed as exhibits to this report.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following pro forma financial information supersedes the pro forma financial
information filed with the November 16, 1999 amendment to a Form 8-K:
(b) Pro Forma Financial Information for AMB Property Corporation (Unaudited):
Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1999
Notes and adjustments to Pro Forma Condensed Consolidated Balance Sheet as
of September 30, 1999
Pro Forma Condensed Consolidated Statement of Operations for the nine
months ended September 30, 1999
Notes and adjustments to Pro Forma Condensed Consolidated Statement of
Operations for the nine months ended September 30, 1999
Pro Forma Condensed Consolidated Statement of Operations for the year ended
December 31, 1998
Notes and adjustments to Pro Forma Condensed Consolidated Statement of
Operations for the year ended December 31, 1998
(c) Exhibits
Number Description
- ------ -----------
2.1 Agreement for Purchase and Exchange, entered into as of March 9, 1999, by
and among AMB Property, L.P., AMB Property II, L.P., Long Gate, L.L.C.,
regarding the transaction which closed on June 15, 1999 (incorporated by
reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999).
2.2 Agreement for Purchase and Exchange, entered into as of March 9, 1999, by
and among AMB Property, L.P., AMB Property II, L.P., Long Gate, L.L.C.,
regarding the transaction which closed on August 4, 1999 (incorporated by
reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999).
2.3 Agreement for Purchase and Exchange, entered into as of March 9, 1999, by
and among AMB Property, L.P., AMB Property II, L.P., Long Gate, L.L.C.,
regarding the transaction which is currently expected to close on or about
December 1, 1999 (incorporated by reference to Exhibit 10.3 to our Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999).
2
AMB PROPERTY CORPORATION
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
BACKGROUND
On March 9, 1999, AMB Property, L.P., a Delaware limited partnership (the
"Operating Partnership") in which AMB Property Corporation (the "Company") is
the sole general partner, signed three definitive agreements with BPP Retail,
LLC ("BPP Retail"), a co-investment entity between Burnham Pacific Properties
("BPP") and the California Public Employees' Retirement System ("CalPERS"),
pursuant to which, if fully consummated, BPP Retail would have acquired up to 28
retail shopping centers from the Operating Partnership, totaling 5.1 million
square feet, for an aggregate price of $663,400. The disposition of three of the
properties was subject to the consent of one of the Company's joint venture
partners, which did not consent to the sale of these properties. As a result,
the price with respect to the 25 remaining properties, totaling approximately
4.3 million square feet, was approximately $560,300. Pursuant to the agreements,
BPP Retail acquired the 25 centers in three separate transactions (the
"Divestiture") as follows:
SQUARE FOOTAGE PRICE
CLOSING DATE CENTERS (000's) (MILLIONS)
---------- -------------- ----------
June 15, 1999 9 1,409 $ 207.4
August 4, 1999 12 2,036 245.8
December 1, 1999 4 868 107.1
---------- ---------- ----------
TOTAL 25 4,313 $ 560.3
========== ========== ==========
The accompanying unaudited pro forma condensed consolidated balance sheet as of
September 30, 1999 has been prepared to reflect the Operating Partnership
divesting of the remaining four retail shopping centers in connection with the
third transaction of the Divestiture for an aggregate price of $107.1 million as
if the closing had occurred on September 30, 1999.
The accompanying unaudited pro forma condensed consolidated statement of
operations for the nine months ended September 30, 1999 has been prepared to
reflect: (i) the Divestiture, (ii) the sale of 7.75% Series D Cumulative
Redeemable Preferred Units (the "Series D Preferred Units") of AMB Property II,
L.P., a subsidiary of the Operating Partnership, and the sale of 7.75% Series E
Cumulative Redeemable Preferred Units (the "Series E Preferred Units") of AMB
Property II, L.P. and the application of the resulting net proceeds and (iii)
the incremental effect of the acquisition of properties during 1999 by the
Operating Partnership (the "1999 Property Acquisitions") as if such transactions
and adjustments had occurred on January 1, 1998 and were carried forward through
September 30, 1999.
The accompanying unaudited pro forma condensed consolidated statement of
operations for the year ended December 31, 1998 has been prepared to reflect:
(i) the incremental effect of the acquisition of properties during 1998 by the
Operating Partnership (the "1998 Property Acquisitions"), (ii) pro forma debt
and other adjustments resulting from the sale of the Operating Partnership's
senior debt securities, the sale of 8.5% Series A Cumulative Redeemable
Preferred Stock (the "Series A Preferred Stock") of the Company, the sale of
8.625% Series B Cumulative Redeemable Preferred Units (the "Series B Preferred
Units") of the Operating Partnership, the sale of 8.75% Series C Cumulative
Redeemable Preferred Units (the "Series C Preferred Units") of AMB Property II,
L.P., the sale of the Series D Preferred Units of AMB Property II, L.P. and the
sale of the Series E Preferred Units of AMB Property II, L.P., and the
application of the resulting net proceeds, (iii) the 1999 Property Acquisitions
and (iv) the Divestiture, as if such transactions and adjustments had occurred
on January 1, 1998 and were carried forward through December 31, 1998.
Acquisitions and dispositions which occurred subsequent to September 30, 1999,
other than the third transaction of the Divestiture, were not significant and
were therefore excluded from the accompanying unaudited pro forma financials.
These unaudited pro forma condensed consolidated statements should be read in
connection with the historical consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1998 and Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999. In the opinion of management, the pro forma condensed
consolidated financial information provides for all adjustments necessary to
reflect the effects of the sale of the senior debt securities, the sale of the
Series A Preferred Stock, the sale of the Series B Preferred Units, the sale of
the Series C Preferred Units, the sale of the Series D Preferred Units, the sale
of the Series E Preferred Units and the application of the resulting net
proceeds therefrom, the 1998 Property Acquisitions, the Divestiture and the 1999
Property Acquisitions.
The pro forma information is unaudited and is not necessarily indicative of the
consolidated results that would have occurred if the transactions and
adjustments reflected therein had been consummated in the period or on the date
presented, or on any particular date in the future, nor does it purport to
represent the financial position, results of operations or cash flows for future
periods.
3
AMB PROPERTY CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1999 (UNAUDITED, IN THOUSANDS)
COMPANY(1) DIVESTITURE(2) PRO FORMA
----------- -------------- -----------
ASSETS
Investments in real estate, net .............................. $ 3,041,862 $ -- $ 3,041,862
Properties held for divestiture, net ......................... 477,815 (94,216) 383,599
Cash and cash equivalents .................................... 70,821 106,166 176,987
Other assets ................................................. 57,449 -- 57,449
----------- ----------- -----------
Total assets ........................................... $ 3,647,947 $ 11,950 $ 3,659,897
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Secured debt ................................................. $ 749,571 $ -- $ 749,571
Secured credit facility ...................................... 80,000 -- 80,000
Unsecured credit facility .................................... 49,000 -- 49,000
Unsecured senior debt securities ............................. 400,000 -- 400,000
Other liabilities ............................................ 138,360 -- 138,360
----------- ----------- -----------
Total liabilities ...................................... 1,416,931 -- 1,416,931
----------- ----------- -----------
Minority interests ........................................... 428,221 598 428,819
----------- ----------- -----------
Stockholders' Equity
Series A Preferred Stock ................................... 96,100 -- 96,100
Common Shares ............................................. 865 -- 865
Additional paid-in capital ................................. 1,678,988 -- 1,678,988
Retained earnings .......................................... 26,842 11,352 32,194
----------- ----------- -----------
Total equity ........................................... 1,802,795 11,352 1,814,147
----------- ----------- -----------
Total liabilities and stockholders' equity ............. $ 3,647,947 $ 11,950 $ 3,659,897
=========== =========== ===========
4
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1999
(UNAUDITED, DOLLARS IN THOUSANDS)
(1.) Reflects the historical consolidated balance sheet of AMB Property
Corporation (the "Company") as of September 30, 1999. See the historical
consolidated financial statements and notes thereto included in AMB Property
Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30,
1999.
On March 9, 1999, AMB Property, L.P., a Delaware limited partnership (the
"Operating Partnership") in which the Company is the sole general partner,
signed three definitive agreements with BPP Retail, LLC ("BPP Retail"), a
co-investment entity between Burnham Pacific Properties ("BPP") and the
California Public Employees' Retirement System ("CalPERS"), pursuant to which,
if fully consummated, BPP Retail would have acquired up to 28 retail shopping
centers from the Operating Partnership, totaling 5.1 million square feet, for an
aggregate price of $663,400. The disposition of three of the properties was
subject to the consent of one of the Company's joint venture partners, which did
not consent to the sale of these properties. As a result, the price with respect
to the 25 remaining properties, totaling approximately 4.3 million square feet,
was approximately $560,300. The Company intends to dispose of the remaining
three properties or its interests in the joint ventures through which it holds
the three properties and has therefore continued to reflect the properties as
properties held for divestiture in the accompanying pro forma balance sheet.
Pursuant to the agreements, BPP Retail acquired the 25 centers in three separate
transactions (the "Divestiture"). Under the agreements, the Operating
Partnership had the right to extend the closing dates for a period of up to
either 20 or 50 days. The Operating Partnership 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 closing of the first transaction,
BPP Retail acquired nine retail shopping centers, totaling approximately 1.4
million square feet, for an aggregate price of approximately $207,400. The
Operating Partnership used the net proceeds from the first transaction to repay
secured debt of $35,100 (including prepayment penalties of $3,300) related to
the properties divested, to partially pay down $96,400 under the Operating
Partnership's unsecured credit facility, and $72,200 for property acquisitions
and for general corporate purposes. The first transaction resulted in an
approximate gain of $11,600 and an approximate extraordinary loss of $1,500,
consisting of prepayment penalties with an off-set for the write-off of debt
premiums related to the indebtedness extinguished.
On August 4, 1999, the second transaction with BPP Retail closed. Pursuant to
the closing of the second transaction, BPP Retail acquired 12 of the Operating
Partnership's retail shopping centers, totaling approximately 2.0 million square
feet, for an aggregate price of $245,800. The Operating Partnership used the
proceeds from the second transaction to repay secured debt of $23,600 (including
prepayment penalties of $1,800) related to the properties divested, to partially
pay down $111,700 under the Operating Partnership's unsecured credit facility,
to pay $1,000 in transaction expenses, and $107,200 for potential property
acquisitions and/or like-kind exchanges and for general corporate purposes. The
second transaction resulted in an approximate gain of $21,500 and an
extraordinary loss of approximately $1,300, consisting of prepayment penalties
of approximately $1,800 offset by the write-off of approximately $500 in debt
premiums related to the indebtedness extinguished.
In addition, the Operating Partnership entered into a definitive agreement,
subject to a financing condition, with BPP, pursuant to which, if fully
consummated, BPP would have acquired up to six additional retail centers,
totaling approximately 1.5 million square feet, for approximately $284,400. On
June 30, 1999, this agreement was terminated pursuant to its terms as a result
of BPP's decision not to waive the financing condition. Subsequently to
September 30, 1999, the Operating Partnership disposed of two of these retail
properties. The Operating Partnership currently intends to dispose of the
remaining three properties, either on an individual or portfolio basis, or its
interest in the joint venture which holds one of the three properties. For
purposes of the September 30, 1999 proformas, the Operating Partnership has
continued to reflect all five properties as properties held for divestiture in
the accompanying pro forma balance sheet.
In connection with the BPP Retail transactions, the Company has granted CalPERS
an option to purchase up to 2,000,000 shares of the Company's common stock for
an exercise price of $25.00 per share that CalPERS may exercise on or before
March 31, 2000. The Company has registered the 2,000,000 shares of common stock
issuable upon exercise of the option.
(2.) The Operating Partnership closed the third transaction of the Divestiture
on December 1, 1999. The Operating Partnership used the proceeds of
approximately $107,100 from the third transaction to pay $1,000 in transaction
expenses, and $106,100 for potential property acquisitions and/or like-kind
exchanges and for general corporate purposes. The adjustments reflect the
elimination of the real estate assets being divested in connection with the
third transaction of the Divestiture. Of the pro forma balance in cash and cash
equivalents, approximately $94,500 represents cash in escrow. The third
transaction resulted in an estimated gain of approximately $12,000. The gain has
been allocated among the Company and the limited partners based on their
respective ownership of the Operating Partnership as of September 30, 1999,
resulting in minority interest of $598.
5
AMB PROPERTY CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
SERIES D AND
SERIES E
PREFERRED UNIT 1999 PROPERTY
COMPANY(1) DIVESTITURE(2) OFFERINGS(3) ACQUISITIONS(4) PRO FORMA
------------------------------------------------------------------------------------
REVENUES
Rental revenues $ 330,895 $ (38,108) $ -- $ 14,200 $ 306,987
Equity in earnings of unconsolidated
joint venture 3,580 -- -- -- 3,580
Investment management and other income 2,258 (242) -- -- 2,016
------------ ------------ ------------ ------------ ------------
Total revenues 336,733 (38,350) -- 14,200 312,583
OPERATING EXPENSES
Property operating expenses
And real estate taxes 82,541 (10,872) -- 3,759 75,428
General, administrative and other 19,116 ---- -- -- 19,116
Depreciation and amortization 49,295 (3,571) -- 2,649 48,373
Interest expense 67,705 (10,163) (2,006) 2,513 58,049
------------ ------------ ------------ ------------ ------------
Total operating expenses 218,657 (24,606) (2,006) 8,921 200,966
------------ ------------ ------------ ------------ ------------
Income from operations before
minority interests 118,076 (13,744) 2,006 5,279 111,617
Minority interests' share of net
income (24,367) 687 (2,786) (1,032) (27,498)
------------ ------------ ------------ ------------ ------------
Net income before gain from
Divestiture and extraordinary items 93,709 (13,057) (780) 4,247 84,119
Preferred stock dividends (6,375) -- -- -- (6,375)
------------ ------------ ------------ ------------ ------------
Net income available to common
stockholders before gain from
Divestiture and extraordinary items $ 87,334 $ (13,057) $ (780) $ 4,247 $ 77,744
============ ============ ============ ============ ============
Net income per common share before gain
from Divestiture and extraordinary items:
Basic $ 1.01 $ .90
============ ============
Diluted $ 1.01 $ .90
============ ============
Weighted average common shares outstanding:
Basic 86,274,878 86,274,878
============ ============
Diluted 86,375,711 86,375,711
============ ============
6
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE AND UNIT DATA)
(1.) Reflects the historical consolidated operations of AMB Property Corporation
(the Company") for the nine months ended September 30, 1999. See the historical
consolidated financial statements and notes thereto included in AMB Property
Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30,
1999.
(2.) Reflects the elimination of the historical revenues and expenses for the
period from January 1, 1999 to June 15, 1999 related to the real estate assets
divested in connection with the first transaction of the Divestiture, the
elimination of the historical revenues and expenses for the period from January
1, 1999 to August 4, 1999 related to the real estate assets divested in
connection with the second transaction of the Divestiture and the elimination of
the historical revenues and expenses for the nine months ended September 30,
1999 for the real estate assets divested in connection with the third
transaction of the Divestiture. The interest expense adjustment consists of a
reduction of interest related to the mortgage debt on the properties divested of
$2,077 and interest related to the partial pay down of the unsecured credit
facility with proceeds from the first and second Divestiture transactions of
$8,086.
(3.) In May 1999, AMB Property II, L.P. , a partnership in which a wholly owned
subsidiary of the Company owns an approximate 1% general partnership interest
and the Operating Partnership owns an approximate 99% common limited partnership
interest, issued and sold 1,595,337 units of 7.75% Series D Cumulative
Redeemable Preferred Units at a price of $50.00 per unit (the "Series D
Preferred Units") in a private placement. Distributions are cumulative from the
date of original issuance and are payable quarterly in arrears at a rate per
unit equal to $3.875 per annum. The Series D Preferred Units are redeemable by
AMB Property II, L.P. on or after May 5, 2004, subject to certain conditions,
for cash at a redemption price equal to $50.00 per unit, plus accumulated and
unpaid distributions thereon, if any, to the redemption date. The Series D
Preferred Units are exchangeable, at specified times and subject to certain
conditions, on a one-for-one basis, for shares of the Company's Series D
Preferred Stock. AMB Property II, L.P. used the net proceeds of approximately
$77,800 to make a loan to the Operating Partnership in the amount of
approximately $20,100 and to purchase an unconsolidated joint venture interest
for approximately $57,700 from the Operating Partnership. The loan was repaid in
full in August 1999. The Operating Partnership used the funds to partially repay
borrowings under the unsecured credit facility.
In August 1999, AMB Property II, L.P. issued and sold 220,440 units of 7.75%
Series E Cumulative Redeemable Preferred Units at a price of $50.00 per unit
(the "Series E Preferred Units") in a private placement. Distributions are
cumulative from the date of original issuance and are payable quarterly in
arrears at a rate per unit equal to $3.875 per annum. The Series E Preferred
Units are redeemable by AMB Property II, L.P. on or after August 31, 2004,
subject to certain conditions, for cash at a redemption price equal to $50.00
per unit, plus accumulated and unpaid distributions thereon, if any, to the
redemption date. The Series E Preferred Units are exchangeable, at specified
times and subject to certain conditions, on a one-for-one basis, for shares of
the Company's Series E Preference Stock. AMB Property II, L.P. used the net
proceeds of approximately $10,800 to repay loans made to it by the Operating
Partnership. The Operating Partnership used the funds to partially repay amounts
outstanding under the unsecured credit facility and for general corporate
purposes.
The adjustments reflect a reduction of interest expense of approximately $2,006
related to the partial pay down of the unsecured credit facility with proceeds
from the sale of the Series D Preferred Units of AMB Property II, L.P. and the
sale of the Series E Preferred Units of AMB Property II, L.P. The adjustments
also reflect $2,686 related to Series D and Series E Preferred Unit
distributions at a rate of 7.75%.
7
(4) The following reflects the incremental effects of the 1999 Property
Acquisitions during the nine month period ended September 30, 1999 based on
the historical operations of such properties for the periods prior to
acquisition by the Operating Partnership:
REAL ESTATE
TAXES AND REVENUES IN
PROPERTY EXCESS OF
ACQUISITION RENTAL OPERATING CERTAIN
DATE REVENUES EXPENSES EXPENSES
----------- ----------- ----------- -----------
Columbia Business Center ........ 2/01/99 $ 150 $ (55) $ 95
Manekin Portfolio ............... 2/01/99 1,053 (376) 677
Technology Park II .............. 4/30/99 1,649 (304) 1,345
WOCAC Portfolio ................. 5/26/99 4,432 (1,342) 3,090
Junction Industrial Park ........ 6/23/99 1,493 (256) 1,237
Miami Airport Business Center ... 6/28/99 1,825 (617) 1,208
----------- ----------- -----------
Audited total .............. 10,602 (2,950) 7,652
Shawnee Industrial .............. 3/26/99 200 (32) 168
141 Campanelli Drive ............ 5/21/99 64 (10) 54
Sylvan Industrial ............... 6/30/99 558 (80) 478
Wilmington Avenue Warehouse ..... 8/11/99 784 (115) 669
Pardee Drive .................... 8/26/99 168 (79) 89
Murray Hill Parkway ............. 9/15/99 146 (41) 105
East Valley Warehouse ........... 9/29/99 - - -
Pioneer Alburtis ................ 9/29/99 813 (182) 631
Williams & Burroughs ............ 9/30/99 865 (270) 595
----------- ----------- -----------
$ 14,200 $ (3,759) $ 10,441
=========== =========== ===========
The Operating Partnership purchased the 1999 Property Acquisitions with proceeds
from the Divestiture, borrowings on the unsecured credit facility, the
assumption of mortgage indebtedness and the issuance of Operating Partnership
units. The adjustments reflect additional interest expense of $3,891 related to
borrowings on the unsecured credit facility and assumption of mortgage
indebtedness related to the 1999 Property Acquisitions.
The East Valley Warehouse was vacant upon acquisition and is in the process of
being leased. As such, no property operations have been reflected in the
accompanying pro forma statement of operations related to this acquisition.
Also reflects the estimated incremental depreciation and amortization of $2,649
for the 1999 Property Acquisitions based on estimated useful lives of 40 years.
The Operating Partnership contributed the WOCAC Portfolio to AMB Institutional
Alliance Fund I, L.P. (the "Alliance Fund I") on September 24, 1999. The
Operating Partnership is projected to hold an approximate 20% general
partnership interest therein upon final closing of the Alliance Fund I. The
Operating Partnership consolidates the Alliance Fund I for financial reporting
purposes. The Alliance Fund I obtained an $80,000 secured credit facility to
acquire the WOCAC Portfolio from the Operating Partnership. The adjustments
also reflect additional interest expense of $3,728 related to this secured
credit facility. The Operating Partnership received approximately $100,000 from
the Alliance Fund I for its contribution of the WOCAC Portfolio. The Operating
Partnership used the $100,000 in proceeds to partially repay amounts
outstanding under the unsecured credit facility. The adjustments also include a
reduction of interest expense of $5,106 related to this transaction. Minority
interest of $768 has been reflected in the accompanying pro forma statement of
operations related to the WOCAC Portfolio.
8
AMB PROPERTY CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
1999
DEBT AND PROPERTY
1998 PROPERTY PREFERRED ACQUISITIONS PRO FORMA
COMPANY(1) ACQUISITIONS(2) OFFERINGS(3) Divestiture(4) (5) (6)
------------ --------------- ------------ -------------- ------------ ------------
REVENUES
Rental revenues .......................... $ 354,658 $ 52,457 $ -- $ (66,205) $ 38,846 $ 379,756
Investment management and other
Income ................................. 4,229 2,988 -- (543) -- 6,674
------------ ------------ ------------ ------------ ------------ ------------
Total revenues ......................... 358,887 55,445 -- (66,748) 38,846 386,430
------------ ------------ ------------ ------------ ------------ ------------
OPERATING EXPENSES
Real estate taxes and property
Operating expenses .................. 96,074 11,863 -- (18,379) 11,286 100,844
Interest expense ......................... 69,670 9,868 3,597 (11,003) 3,465 75,597
Depreciation and amortization ............ 57,464 7,732 -- (12,759) 7,063 59,500
General, administrative and other ........ 11,929 -- -- -- -- 11,929
------------ ------------ ------------ ------------ ------------ ------------
Total operating expenses ........ 235,137 29,463 3,597 (42,141) 21,814 247,870
------------ ------------ ------------ ------------ ------------ ------------
Income from operations before
minority interests .................. 123,750 25,982 (3,597) (24,607) 17,032 138,560
------------ ------------ ------------ ------------ ------------ ------------
Minority interests' share of net income .. (11,157) (3,657) (20,673) 1,503 (1,091) (35,075)
------------ ------------ ------------ ------------ ------------ ------------
Net income before gain from
Divestiture and extraordinary
items.......................... 112,593 22,325 (24,270) (23,104) 15,941 103,485
Preferred stock dividends ................ (3,639) -- (4,861) -- -- (8,500)
============ ============ ============ ============ ============ ============
Net income available to common
stockholders before gain from
Divestiture and extraordinary items..... $ 108,954 $ 22,325 $ (29,131) $ (23,104) $ 15,941 $ 94,985
============ ============ ============ ============ ============ ============
Net income per common share before gain
from Divestiture and extraordinary items:
Basic .................................. $ 1.27 $ 1.11
============ ============
Diluted ................................ $ 1.26 $ 1.10
============ ============
Weighted average common shares:
Outstanding
Basic .................................. 85,876,393 85,876,393
============ ============
Diluted ................................ 86,235,176 86,235,176
============ ============
9
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE AND UNIT DATA)
(1.) Reflects the historical consolidated operations of AMB Property Corporation
for the year ended December 31, 1998. See the historical consolidated financial
statements and notes thereto included in AMB Property Corporation's Annual
Report on Form 10-K for the year ended December 31, 1998.
(2.) The following reflects the incremental effects of properties acquired
during the year ended December 31, 1998 (the "1998 Property Acquisitions") based
on the historical operations of such properties for the periods prior to
acquisition by the Operating Partnership:
REAL ESTATE TAXES REVENUES IN
AND PROPERTY EXCESS OF
OPERATING CERTAIN
RENTAL REVENUES EXPENSES EXPENSES
--------------- ----------------- -----------
Cascade ................................... $ 44 $ (11) $ 33
Wilsonville................................ 167 (41) 126
Atlanta South Phase II..................... 116 (30) 86
Boston Industrial Portfolio................ 2,853 (108) 2,745
Mansfield Industrial Portfolio............. 71 (2) 69
Orlando Central Park....................... 804 (260) 544
Jamesburg Property......................... 1,466 (543) 923
Corporate Park Industrial.................. 757 (130) 627
Minneapolis Industrial Portfolio........... 592 (230) 362
Houston Service Center..................... 706 (249) 457
Meadowridge Business Park.................. 1,058 (238) 820
Northwest Business Center.................. 323 (75) 248
Forbes..................................... -- -- --
Southfield................................. -- -- --
Crysen Corridor Warehouse.................. 247 (63) 184
Garland Industrial Portfolio............... 1,966 (412) 1,554
Suffolk.................................... 165 (42) 123
Minnetonka Industrial Portfolio............ 2,022 (768) 1,254
Alsip Industrial........................... 374 (106) 268
Suffolk Industrial......................... 444 (112) 332
Chamway Industrial......................... 688 (140) 548
Amberjack Portfolio........................ 5,924 (2,151) 3,773
Willow Lake Portfolio...................... 4,501 (1,026) 3,475
Willow Park Portfolio...................... 9,610 (1,977) 7,633
Porete Avenue Warehouse.................... 1,352 (270) 1,082
Movah Portfolio............................ 3,379 (282) 3,097
National Distribution Portfolio............ 8,180 (1,731) 6,449
South Point Business Park.................. 2,087 (201) 1,886
Northridge................................. 108 (43) 65
Totan Lake Malls........................... 758 (277) 481
Around Lenox............................... 1,695 (345) 1,350
------- -------- -------
$52,457 $(11,863) $40,594
======= ======== =======
10
Five of the property acquisitions, Jamesburg Property, Corporate Park
Industrial, Garland Industrial Portfolio, Minnetonka Industrial Portfolio and
South Point Business Park, represent a joint venture with a client of AMB
Investment Management in which the Company owns a controlling 50.0005% interest.
The joint venture acquisitions are accounted for on a consolidated basis and,
accordingly, minority interests of $2,384 has been reflected relative to these
acquisitions.
Two of the property acquisitions, Forbes and Southfield, represent the purchase
of vacant buildings which are in the process of being leased. As such, no
property operations have been reflected in the accompanying pro forma statement
of operations relative to these acquisitions.
Also reflects the acquisition of a non-controlling unconsolidated limited
partnership interest in an existing real estate joint venture which owns the
DuPage Elk Grove Property. As such, the Company's incremental share of equity in
earnings of this joint venture of $2,988 is included in interest and other
income in the accompanying pro forma statement of operations.
Also reflects the estimated incremental depreciation and amortization of the
1998 Property Acquisitions based on estimated useful lives of 40 years and
additional interest expense related to the assumption of secured debt related
to the 1998 Property Acquisitions.
(3.) In June 1998, the Operating Partnership issued $400,000 aggregate principal
amount of unsecured notes ("Unsecured Senior Debt Securities") in an
underwritten public offering, of which the net proceeds of approximately
$394,466 were contributed to the Operating Partnership and used to repay amounts
outstanding under the unsecured credit facility. The Unsecured Senior Debt
Securities mature in June 2008, June 2015 and June 2018 and bear interest at a
weighted average rate of 7.18%.
In July, 1998, the Company sold 4,000,000 shares of 8.5% Series A Cumulative
Redeemable Preferred Stock at $25.00 per share for $100,000 in an underwritten
public offering. These shares are redeemable solely at the option of the Company
on or after July 27, 2003. The net proceeds of $96,100 from the offering were
contributed to the Operating Partnership in exchange for 4,000,000 Series A
preferred units with the terms identical to the Series A Preferred Stock. The
Operating Partnership used these proceeds to partially repay borrowings under
the unsecured credit facility.
In November 1998, the Operating Partnership issued and sold 1,300,000 8.625%
Series B Cumulative Redeemable Preferred Units at a price of $50.00 per unit in
a private placement. Distributions are cumulative from the date of original
issuance and are payable quarterly in arrears at a rate per unit equal to
$4.3125 per annum. The Series B Preferred Units are redeemable by the Operating
Partnership on or after November 12, 2003, subject to certain conditions, for
cash at a redemption price equal to $50.00 per unit, plus accumulated and unpaid
distributions thereon, if any, to the redemption date. The Series B Preferred
Units are exchangeable, at specified times and subject to certain conditions, on
a one-for-one basis, for shares of the Company's Series B Preferred Stock. The
Operating Partnership used the net proceeds of $62,259 to repay partially
borrowings under the unsecured credit facility.
In November 1998, AMB Property II, L.P. issued and sold 2,200,000 units of 8.75%
Series C Cumulative Redeemable Preferred Units at a price of $50.00 per unit in
a private placement. Distributions are cumulative from the date of original
issuance and are payable quarterly in arrears at a rate per unit equal to $4.375
per annum. The Series C Preferred Units are redeemable by AMB Property II, L.P.
on or after November 24, 2003, subject to certain conditions, for cash at a
redemption price equal to $50.00 per unit, plus accumulated and unpaid
distributions thereon, if any, to the redemption date. The Series C Preferred
Units are exchangeable, at specified times and subject to certain conditions, on
a one-for-one basis, for shares of the Company's Series C Preferred Stock. AMB
Property II, L.P. used the net proceeds of $105,734 to make a loan to the
Operating Partnership, which used the funds to repay partially borrowings under
the unsecured credit facility. The loan to the Operating Partnership was repaid
in full in August 1999.
Reflects an adjustment to interest expense as follows:
Unsecured Senior Debt Securities.......................... $ 14,820
Unsecured Credit Facility................................. (11,223)
--------
$ 3,597
========
The net increase in pro forma interest expense is the result of the issuance of
unsecured senior debt securities which is partially offset by the repayment of
borrowings on the unsecured credit facility using the net proceeds from the sale
of the Unsecured Senior Debt Securities, Series A Preferred Shares, Series B
Preferred Units, Series C Preferred Units, Series D Preferred Units and Series E
Preferred Units.
11
Also reflects the payment of pro forma Series A Preferred Stock dividends at a
dividend rate of 8.5%, Series B Preferred Unit distributions at a distribution
rate of 8.625%, Series C Preferred Unit distributions at a distribution rate of
8.75%, Series D Preferred Unit distributions at a distribution rate of 7.75% and
Series E Preferred Unit distributions at a distribution rate of 7.75%.
(4.) Reflects the elimination of the historical revenues and expenses for the
year ended December 31, 1998 related to the real estate assets divested in
connection with the Divestiture. The interest expense adjustment consists of a
reduction of interest related to the mortgage debt on the properties divested of
$4,928 and interest related to the partial pay down of the unsecured credit
facility with proceeds from the first and second transactions related to the
Divestiture of $6,075.
(5.) The following reflects the historical operations for 1998 related to the
1999 Property Acquisitions:
REAL ESTATE
TAXES AND REVENUES IN
PROPERTY EXCESS OF
ACQUISITION RENTAL OPERATING CERTAIN
DATE REVENUES EXPENSES EXPENSES
----------- ----------- ----------- -----------
Columbia Business Center ...... 2/01/99 $ 1,776 $ (470) $ 1,306
Manekin Portfolio ............. 2/01/99 12,260 (4,138) 8,122
Technology Park II ............ 4/21/99 4,737 (721) 4,016
WOCAC ......................... 5/26/99 10,402 (3,043) 7,359
Junction Industrial Park ...... 6/23/99 2,830 (558) 2,272
Miami Airport Business Center.. 6/28/99 3,715 (1,376) 2,339
----------- ----------- -----------
Audited total .............. $ 35,720 $ (10,306) $ 25,414
Shawnee Industrial ............ 3/26/99 - (64) (64)
141 Campanelli Drive .......... 5/21/99 146 (1) 145
Sylvan Industrial ............. 6/30/99 251 (296) (45)
Wilmington Avenue Warehouse ... 8/11/99 1,301 (168) 1,133
Pardee Drive .................. 8/26/99 233 (58) 175
Murray Hill Parkway ........... 9/15/99 205 (58) 147
East Valley Warehouse ......... 9/29/99 - - -
Pioneer Alburtis .............. 9/29/99 71 (50) 21
Williams & Burroughs .......... 9/30/99 919 (285) 634
=========== =========== ===========
$ 38,846 $ (11,286) $ 27,560
=========== =========== ===========
Also reflects the estimated incremental depreciation and amortization of the
1999 Property Acquisitions based on estimated useful lives of 40 years.
The adjustments also reflect additional interest of $5,264 related to the
$80,000 secured credit facility. The adjustments also reflect a reduction of
interest expense of $6,580 related to the partial paydown of the unsecured
credit facility with proceeds from the contribution of the WOCAC Portfolio to
the Alliance Fund I. An adjustment to minority interest of $256 has been
reflected related to the Alliance Fund I.
(6.) The pro forma taxable income of the Company for the year ended December
31, 1998 is approximately $103,900, which is based upon pro forma net income of
approximately $138,600, plus book depreciation and amortization of approximately
$31,800 less other book/tax differences of approximately $7,800 and less tax
depreciation and amortization of approximately $58,700.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMB PROPERTY CORPORATION
(Registrant)
Date: December 14, 1999 By: /s/ MICHAEL A. COKE
-----------------------------
Michael A. Coke
Chief Financial Officer and
Senior Vice President
(Principal Financial and
Accounting Officer)
13