AMB PROPERTY CORP - 10-Q Quarterly Report

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 March 31, 2005

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-13545

AMB Property Corporation

(Exact Name of Registrant as Specified in Its Charter)


Maryland		94-3281941
(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

As of May 2, 2005, there were 84,058,181 shares of the Registrant’s common stock, $0.01 par value per share, outstanding.

AMB PROPERTY CORPORATION

INDEX


		Page

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Consolidated Balance Sheets as of March 31, 2005 and December 31, 2004		1
	Consolidated Statements of Operations for the three months ended March 31, 2005 and 2004		2
	Consolidated Statement of Stockholders’ Equity for the three months ended March 31, 2005		3
	Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004		4
	Notes to Consolidated Financial Statements		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		45
Item 4.	Controls and Procedures		47
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		48
Item 2.	Changes in Securities and Use of Proceeds		48
Item 3.	Defaults Upon Senior Securities		48
Item 4.	Submission of Matters to a Vote of Security Holders		48
Item 5.	Other Information		48
Item 6.	Exhibits		48
EXHIBIT 31.1
EXHIBIT 32.1

PART I


Item 1.	*Financial Statements*

AMB PROPERTY CORPORATION

CONSOLIDATED BALANCE SHEETS

As of March 31, 2005 and December 31, 2004


				March 31,			December 31,
				2005			2004

				(Unaudited, dollars in
				thousands)
ASSETS
Investments in real estate:
	Land			$	1,509,648		$	1,509,145
	Buildings and improvements				4,329,161			4,305,622
	Construction in progress				769,928			711,377

		Total investments in properties			6,608,737			6,526,144
	Accumulated depreciation and amortization				(652,085	)		(615,646	)

		Net investments in properties			5,956,652			5,910,498
Investments in unconsolidated joint ventures					105,127			55,166
Properties held for divestiture, net					49,455			87,340

			Net investments in real estate		6,111,234			6,053,004
Cash and cash equivalents					167,781			109,392
Restricted cash					47,287			37,201
Mortgage and loan receivables					21,710			13,738
Accounts receivable, net of allowance for doubtful accounts					135,768			109,028
Deferred financing costs, net					27,163			28,340
Other assets					44,141			36,240

		Total assets		$	6,555,084		$	6,386,943


LIABILITIES AND STOCKHOLDERS’ EQUITY
Debt:
	Secured debt			$	1,915,702		$	1,892,524
	Unsecured senior debt securities				1,003,940			1,003,940
	Unsecured debt				8,869			9,028
	Unsecured credit facilities				422,616			351,699

		Total debt			3,351,127			3,257,191
Security deposits					40,195			40,260
Dividends payable					42,747			41,103
Accounts payable and other liabilities					175,217			180,923

		Total liabilities			3,609,286			3,519,477
Commitments and contingencies (Note 12)
Minority interests:
	Joint venture partners				884,188			828,622
	Preferred unitholders				278,378			278,378
	Limited partnership unitholders				89,377			89,326

		Total minority interests			1,251,943			1,196,326
Stockholders’ equity:
	Series L preferred stock, cumulative, redeemable, $.01 par value, 2,300,000 shares authorized and 2,000,000 issued and outstanding $50,000 liquidation preference				48,017			48,017
	Series M preferred stock, cumulative, redeemable, $.01 par value, 2,300,000 shares authorized and 2,300,000 issued and outstanding $57,500 liquidation preference				55,187			55,187
	Common stock $.01 par value, 500,000,000 shares authorized, 83,963,307 and 83,248,640 issued and outstanding, respectively				839			832
	Additional paid-in capital				1,584,010			1,568,095
	Retained earnings				8,040			—
	Accumulated other comprehensive loss				(2,238	)		(991	)

		Total stockholders’ equity			1,693,855			1,671,140

		Total liabilities and stockholders’ equity		$	6,555,084		$	6,386,943

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

AMB PROPERTY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended March 31, 2005 and 2004


				For the Three Months Ended
				March 31,

				2005			2004

				(Unaudited, dollars in
				thousands, except share
				and per share amounts)
REVENUES
	Rental revenues			$	169,056		$	155,208
	Private capital income				3,318			2,429

		Total revenues			172,374			157,637

COSTS AND EXPENSES
	Property operating expenses				(24,584	)		(22,729	)
	Real estate taxes				(19,845	)		(18,248	)
	Depreciation and amortization				(43,485	)		(37,255	)
	General and administrative				(18,799	)		(14,567	)
	Fund costs				(364	)		(309	)

		Total costs and expenses			(107,077	)		(93,108	)

OTHER INCOME AND EXPENSES
	Equity in earnings of unconsolidated joint ventures, net				1,242			1,709
	Other income and expenses, net				(566	)		1,481
	Gains from dispositions of real estate interests				1,301			—
	Development profits, net of taxes				17,949			—
	Interest expense, including amortization				(40,896	)		(39,018	)

		Total other income and expenses, net			(20,970	)		(35,828	)

			Income before minority interests and discontinued operations		44,327			28,701

	Minority interests’ share of income:
		Joint venture partners’ share of income before minority interests and discontinued operations			(11,284	)		(8,585	)
		Joint venture partners’ share of development profits			(9,837	)		—
		Preferred unitholders			(5,368	)		(4,912	)
		Limited partnership unitholders			(352	)		(731	)

			Total minority interests’ share of income		(26,841	)		(14,228	)

Income from continuing operations					17,486			14,473

Discontinued operations:
	Income attributable to discontinued operations, net of minority interests				1,339			2,395
	Gains (loss) from dispositions of real estate, net of minority interests				27,942			(286	)

		Total discontinued operations			29,281			2,109

	Net income				46,767			16,582
		Preferred stock dividends			(1,783	)		(1,783	)

		Net income available to common stockholders		$	44,984		$	14,799

BASIC INCOME PER COMMON SHARE
	Income from continuing operations (after preferred stock dividends)			$	0.19		$	0.15
	Discontinued operations				0.35			0.03

		Net income available to common stockholders		$	0.54		$	0.18

DILUTED INCOME PER COMMON SHARE
	Income from continuing operations (after preferred stock dividends)			$	0.18		$	0.17
	Discontinued operations				0.34			0.02

		Net income available to common stockholders		$	0.52		$	0.17

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
	Basic				83,133,730			81,691,434

	Diluted				86,516,695			84,861,965

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

AMB PROPERTY CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

For the Three Months Ended March 31, 2005


						Common Stock										Accumulated
										Additional						Other
			Preferred			Number of				Paid-In			Retained			Comprehensive
			Stock			Shares		Amount		Capital			Earnings			Loss			Total

			(Unaudited, dollars in thousands, except share amounts)
Balance as of December 31, 2004			$	103,204			83,248,640	$	832	$	1,568,095		$	—		$	(991	)	$	1,671,140
	Net income			1,783			—		—		—			44,984			—
	Unrealized loss on securities and derivatives			—			—		—		—			—			(1,181	)
	Currency translation adjustment			—			—		—		—			—			(66	)
		Total comprehensive income																		45,520
	Issuance of restricted stock, net			—			205,574		2		9,300			—			—			9,302
	Issuance of stock options, net			—			—		—		3,659			—			—			3,659
	Exercise of stock options			—			482,812		5		10,946			—			—			10,951
	Conversion of partnership units			—			26,281		—		1,019			—			—			1,019
	Forfeiture of restricted stock			—			—		—		(1,531	)		—			—			(1,531	)
	Stock-based deferred compensation			—			—		—		(12,961	)		—			—			(12,961	)
	Stock-based compensation amortization			—			—		—		4,280			—			—			4,280
	Reallocation of partnership interest			—			—		—		1,203			—			—			1,203
	Dividends			(1,783	)		—		—		—			(36,944	)		—			(38,727	)

Balance as of March 31, 2005			$	103,204			83,963,307	$	839	$	1,584,010		$	8,040		$	(2,238	)	$	1,693,855

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

AMB PROPERTY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2005 and 2004


				2005			2004

				(Unaudited, dollars in
				thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income				$	46,767		$	16,582
Adjustments to net income:
	Straight-line rents and amortization of lease intangibles				(4,497	)		(4,168	)
	Depreciation and amortization				43,485			37,255
	Stock-based compensation amortization				4,280			2,557
	Equity in earnings of unconsolidated joint ventures				(1,242	)		(1,709	)
	Gains from dispositions of real estate interest				(1,301	)		—
	Development profits, net of taxes				(17,949	)		—
	Debt premiums, discounts and finance cost amortization, net				1,313			339
	Total minority interests’ share of net income				26,841			14,228
	Discontinued operations:
		Depreciation and amortization			638			2,393
		Joint venture partners’ share of net income			319			555
		Limited partnership unitholders’ share of net income			75			138
		(Gains) loss from dispositions of real estate, net of minority interests			(27,942	)		286
	Changes in assets and liabilities:
		Accounts receivable and other assets			(34,222	)		(2,456	)
		Accounts payable and other liabilities			11,038			1,259

			Net cash provided by operating activities		47,603			67,259

CASH FLOWS FROM INVESTING ACTIVITIES
Change in restricted cash					(10,244	)		3,616
Cash paid for property acquisitions					(58,957	)		(60,899	)
Additions to land, buildings, development costs, building improvements and lease costs					(130,977	)		(113,352	)
Net proceeds from divestiture of real estate					184,287			4,731
Additions to interests in unconsolidated joint ventures					(48,910	)		(814	)
Distributions received from unconsolidated joint ventures					261			568
(Issuance) and repayment of mortgage and loan receivables					(7,972	)		19,525

			Net cash used in investing activities		(72,512	)		(146,625	)

CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock, proceeds from stock option exercises					10,951			12,048
Borrowings on secured debt					38,734			29,953
Payments on secured debt					(20,731	)		(8,735	)
Payments on unsecured debt					(159	)		(146	)
Borrowings on unsecured credit facilities					292,928			94,684
Payments on unsecured credit facilities					(210,818	)		(111,063	)
Payment of financing fees					(824	)		(199	)
Net proceeds from issuances of senior debt securities					—			99,390
Issuance costs on preferred stock or units					—			(161	)
Cont

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