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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q
     
(Mark One)
   
 
þ
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
    For the quarterly period ended September 30, 2004
 
OR
 
o
   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission file number: 001-14245

AMB Property, L.P.

(Exact name of Registrant as Specified in Its Charter)
     
Delaware   94-3285362
(State or Other Jurisdiction of
Incorporation or Organization)		   (I.R.S. Employer
Identification No.)
 
Pier 1, Bay 1, San Francisco, California   94111
(Address of Principal Executive Offices)   (Zip Code)

(415) 394-9000

(Registrant’s Telephone Number, Including Area Code)

          Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o.

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).     Yes þ          No o

AMB PROPERTY, L.P.

INDEX

             
Page
 PART I.  FINANCIAL INFORMATION
   Financial Statements (unaudited)        
     Consolidated Balance Sheets as of September 30, 2004 and December 31, 2003 (Restated)     1  
     Consolidated Statements of Operations for the three months and nine months ended September 30, 2004 and 2003 (Restated)     2  
     Consolidated Statements of Cash Flows for the nine months ended September 30, 2004 and 2003 (Restated)     3  
     Consolidated Statement of Partners’ Capital for the nine months ended September 30, 2004     4  
     Notes to Consolidated Financial Statements     5  
   Management’s Discussion and Analysis of Financial Condition and Results of Operations     26  
   Quantitative and Qualitative Disclosures About Market Risk     53  
   Controls and Procedures     54  
 
 PART II.  OTHER INFORMATION
   Legal Proceedings     55  
   Unregistered Sales of Equity Securities and Use of Proceeds     56  
   Defaults Upon Senior Securities     56  
   Submission of Matters to a Vote of Security Holders     56  
   Other Information     56  
   Exhibits     56  
 EXHIBIT 10.3
 EXHIBIT 10.4
 EXHIBIT 31.1
 EXHIBIT 32.1

Table of Contents

PART I

 
Item 1. Financial Statements

AMB PROPERTY, L.P.

CONSOLIDATED BALANCE SHEETS
As of September 30, 2004 and December 31, 2003 (Restated)
                       
September 30, December 31,
2004 2003
(Restated)
(Unaudited, dollars in
thousands)
ASSETS
Investments in real estate:
               
 
Land
  $ 1,527,247     $ 1,403,807  
 
Buildings and improvements
    4,263,195       3,888,272  
 
Construction in progress
    512,087       199,628  
     
     
 
   
Total investments in properties
    6,302,529       5,491,707  
 
Accumulated depreciation and amortization
    (595,438 )     (485,559 )
     
     
 
   
Net investments in properties
    5,707,091       5,006,148  
Investments in unconsolidated joint ventures
    48,601       52,009  
Properties held for contribution, net
    11,854       —  
Properties held for divestiture, net
    59,924       11,751  
     
     
 
   
Net investments in real estate
    5,827,470       5,069,908  
Cash and cash equivalents
    116,378       127,678  
Restricted cash
    57,945       28,985  
Mortgages receivable
    23,068       43,145  
Accounts receivable, net of allowance for doubtful accounts
    102,078       88,452  
Other assets
    94,711       51,391  
     
     
 
   
Total assets
  $ 6,221,650     $ 5,409,559  
     
     
 
 
LIABILITIES AND PARTNERS’ CAPITAL
Debt:
               
 
Secured debt including unamortized premium
  $ 1,617,944     $ 1,363,890  
 
Unsecured senior debt securities
    1,025,000       925,000  
 
Unsecured debt
    9,182       9,628  
 
Unsecured credit facilities
    583,864       275,739  
     
     
 
   
Total debt
    3,235,990       2,574,257  
Distributions payable
    40,898       39,076  
Accounts payable and other liabilities
    237,452       148,019  
     
     
 
   
Total liabilities
    3,514,340       2,761,352  
Commitments and contingencies (Notes 3 and 12)
               
Minority interests:
               
 
Joint venture partners
    701,639       658,723  
 
Preferred unitholders
    203,260       166,865  
     
     
 
   
Total minority interests
    904,899       825,588  
Partners’ capital:
               
 
General partner, 82,689,635 and 81,563,502 units outstanding, respectively; 2,000,000 Series L preferred units issued and outstanding with a $50,000 liquidation preference and 2,300,000 Series M preferred units issued and outstanding with a $57,500 liquidation preference
    1,639,267       1,657,137  
 
Limited partners, 4,604,910 and 4,618,242 units, respectively; 800,000 Series J preferred units with a $40,000 liquidation preference, 800,000 Series K preferred units with a $40,000 liquidation preference
    163,144       165,482  
     
     
 
   
Total partners’ capital
    1,802,411       1,822,619  
     
     
 
     
Total liabilities and partners’ capital
  $ 6,221,650     $ 5,409,559  
     
     
 

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

1

Table of Contents

AMB PROPERTY, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Nine Months ended September 30, 2004 and 2003 (Restated)
                                         
For the Three Months For the Nine Months
ended September 30, ended September 30,
2004 2003 2004 2003
(Restated) (Restated)
(Unaudited, dollars in thousands,
except share and per share amounts)
REVENUES
                                
   
Rental revenues
  $ 173,803     $ 145,466     $ 497,000     $ 434,589  
   
Private capital income
    2,726       1,928       8,077       7,844  
     
     
     
     
 
     
Total revenues
    176,529       147,394       505,077       442,433  
     
     
     
     
 
COSTS AND EXPENSES
                                
   
Property operating expenses
    (24,678 )     (21,910 )     (70,963 )     (63,627 )
   
Real estate taxes
    (19,275 )     (17,219 )     (57,617 )     (51,923 )
   
Depreciation and amortization
    (42,099 )     (33,734 )     (120,998 )     (102,847 )
   
Impairment losses
    —       —       —       (5,251 )
   
General and administrative
    (15,747 )     (10,824 )     (45,706 )     (34,834 )
     
     
     
     
 
     
Total costs and expenses
    (101,799 )     (83,687 )     (295,284 )     (258,482 )
     
     
     
     
 
OTHER INCOME AND EXPENSES
                                
   
Equity in earnings of unconsolidated joint ventures
    603       1,365       3,256       4,222  
   
Interest and other income
    1,295       653       3,283       3,144  
   
Gains from dispositions of real estate
    —       —       —       7,429  
   
Development profits, net of taxes
    1,521       5,512       4,756       5,512  
   
Interest, including amortization
    (40,324 )     (35,562 )     (118,449 )     (107,132 )
     
     
     
     
 
     
Total other income and expenses, net
    (36,905 )     (28,032 )     (107,154 )     (86,825 )
     
     
     
     
 
       
Income before minority interests and discontinued operations
    37,825       35,675       102,639       97,126  
     
     
     
     
 
   
Minority interests’ share of income:
                               
     
Joint venture partners’ share of operating income
    (10,302 )     (9,546 )     (28,978 )     (24,712 )
     
Joint venture partners’ share of development profits
    (66 )     (3,331 )     (672 )     (3,331 )
     
Preferred unitholders
    (3,378 )     (3,322 )     (10,076 )     (10,098 )
     
     
     
     
 
     
Total minority interests’ share of income
    (13,746 )     (16,199 )     (39,726 )     (38,141 )
     
     
     
     
 
Income from continuing operations
    24,079       19,476       62,913       58,985  
     
     
     
     
 
Discontinued operations:
                               
 
Income (loss) attributable to discontinued operations, net of minority interests
    185       2,030       (181 )     14,357  
 
Gains from dispositions of real estate, net of minority interests
    11,051       8,338       13,034       41,849  
     
     
     
     
 
     
Total discontinued operations
    11,236       10,368       12,853       56,206  
     
     
     
     
 
Net income
    35,315       29,844       75,766       115,191  
 
Series A, L and M preferred unit distributions
    (1,783 )     (1,470 )     (5,349 )     (5,788 )
 
Series B, J and K preferred unit distributions
    (1,590 )     (2,992 )     (4,770 )     (8,975 )
 
Preferred unit redemption issuance costs
    —       (3,671 )     —       (3,671 )
     
     
     
     
 
     
Net income available to common unitholders
  $ 31,942     $ 21,711     $ 65,647     $ 96,757  
     
     
     
     
 
INCOME AVAILABLE TO COMMON UNITHOLDERS ATTRIBUTABLE TO:
                                
 
General partner
  $ 30,266     $ 20,547     $ 62,188     $ 91,391  
 
Limited partners
    1,676       1,164       3,459       5,366  
     
     
     
     
 
     
Net income available to common unitholders
  $ 31,942     $ 21,711     $ 65,647     $ 96,757  
     
     
     
     
 
BASIC INCOME PER COMMON UNIT
                                
 
Income from continuing operations (includes preferred unit distributions)
  $ 0.24     $ 0.13     $ 0.61     $ 0.47  
 
Discontinued operations
    0.13       0.12       0.15       0.66  
     
     
     
     
 
       
Net income available to common unitholders
  $ 0.37     $ 0.25     $ 0.76     $ 1.13  
     
     
     
     
 
DILUTED INCOME PER COMMON UNIT
                                
 
Income from continuing operations (includes preferred unit distributions)
  $ 0.23     $ 0.13     $ 0.59     $ 0.46  
 
Discontinued operations
    0.12       0.12       0.14       0.65  
     
     
     
     
 
       
Net income available to common unitholders
  $ 0.35     $ 0.25     $ 0.73     $ 1.11  
     
     
     
     
 
WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
                                
 
Basic
    86,943,931       85,776,251       86,749,022       85,874,579  
     
     
     
     
 
 
Diluted
    90,146,245       87,399,544       89,764,633       87,342,075  
     
     
     
     
 

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

2

Table of Contents

AMB PROPERTY, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2004 and 2003 (Restated)
                         
2004 2003
(Restated)