SECURITIES AND EXCHANGE COMMISSION
Form 10-Q
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(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the quarterly period ended June 30, 2002 | ||
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o
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REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Commission File Number: 001-13545
AMB Property Corporation
| Maryland | 94-3281941 | |
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(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
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Pier 1, Bay 1, San Francisco, California (Address of Principal Executive Offices) |
94111 (Zip Code) |
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(415) 394-9000
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
As of August 2, 2002, there were 83,422,325 shares of the Registrant’s common stock, $0.01 par value per share, outstanding.
AMB PROPERTY CORPORATION
INDEX
| Page | ||||||
| PART I. FINANCIAL INFORMATION | ||||||
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Item 1.
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Financial Statements (unaudited) | |||||
| Condensed Consolidated Balance Sheets as of June 30, 2002, and December 31, 2001 | 2 | |||||
| Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2002 and 2001 | 3 | |||||
| Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2002 and 2001 | 4 | |||||
| Condensed Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2002 | 5 | |||||
| Notes to Condensed Consolidated Financial Statements | 6 | |||||
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 | ||||
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk | 41 | ||||
| PART II. OTHER INFORMATION | ||||||
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Item 1.
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Legal Proceedings | 42 | ||||
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Item 2.
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Changes in Securities and Use of Proceeds | 42 | ||||
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Item 3.
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Defaults Upon Senior Securities | 42 | ||||
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Item 4.
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Submission of Matters to a Vote of Security Holders | 42 | ||||
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Item 5.
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Other Information | 43 | ||||
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Item 6.
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Exhibits and Reports on Form 8-K | 56 | ||||
1
PART I
AMB PROPERTY CORPORATION
| June 30, | December 31, | |||||||||
| 2002 | 2001 | |||||||||
| (Unaudited, dollars in | ||||||||||
| thousands) | ||||||||||
| ASSETS | ||||||||||
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Investments in real estate:
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Land
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$ | 1,117,410 | $ | 1,064,422 | ||||||
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Buildings and improvements
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3,438,408 | 3,285,110 | ||||||||
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Construction in progress
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176,503 | 181,179 | ||||||||
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Total investments in properties
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4,732,321 | 4,530,711 | ||||||||
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Accumulated depreciation and amortization
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(311,058 | ) | (265,653 | ) | ||||||
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Net investments in properties
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4,421,263 | 4,265,058 | ||||||||
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Investment in unconsolidated joint ventures
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64,083 | 71,097 | ||||||||
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Properties held for divestiture, net
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133,934 | 157,174 | ||||||||
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Net investments in real estate
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4,619,280 | 4,493,329 | ||||||||
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Cash and cash equivalents
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109,153 | 73,071 | ||||||||
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Restricted cash
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10,134 | 8,661 | ||||||||
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Mortgages receivable
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87,175 | 87,214 | ||||||||
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Accounts receivable
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80,366 | 70,794 | ||||||||
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Other assets
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31,172 | 27,824 | ||||||||
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Total assets
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$ | 4,937,280 | $ | 4,760,893 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
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Debt:
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Secured debt
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$ | 1,352,218 | $ | 1,220,164 | ||||||
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Unsecured senior debt securities
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800,000 | 780,000 | ||||||||
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Alliance Fund II credit facility
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52,000 | 123,500 | ||||||||
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Unsecured credit facility
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— | 12,000 | ||||||||
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Total debt
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2,204,218 | 2,135,664 | ||||||||
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Dividends payable
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42,289 | 4,960 | ||||||||
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Other liabilities
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120,340 | 133,641 | ||||||||
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Total liabilities
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2,366,847 | 2,274,265 | ||||||||
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Commitments and contingencies
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— | — | ||||||||
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Minority interests
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824,424 | 734,286 | ||||||||
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Stockholders’ equity:
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Series A preferred stock, cumulative,
redeemable, $.01 par value, 4,600,000 shares authorized,
4,000,000 issued and outstanding, $100,000 liquidation preference
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96,100 | 96,100 | ||||||||
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Common stock $.01 par value, 500,000,000 shares
authorized, 84,254,365 and 83,821,829 issued and outstanding
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842 | 838 | ||||||||
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Additional paid-in capital
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1,635,563 | 1,627,764 | ||||||||
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Retained earnings
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13,535 | 27,640 | ||||||||
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Accumulated other comprehensive loss
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(31 | ) | — | |||||||
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Total stockholders’ equity
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1,746,009 | 1,752,342 | ||||||||
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Total liabilities and stockholders’ equity
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$ | 4,937,280 | $ | 4,760,893 | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
AMB PROPERTY CORPORATION
| For the Three Months | For the Six Months | |||||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | |||||||||||||||
| (Unaudited, dollars in thousands, except per share amounts) | ||||||||||||||||||
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REVENUES AND OTHER INCOME
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Rental revenues
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$ | 149,741 | $ | 138,317 | $ | 300,826 | $ | 272,845 | ||||||||||
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Equity in earnings of unconsolidated joint
ventures
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1,638 | 1,255 | 3,121 | 2,729 | ||||||||||||||
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Investment management income
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3,114 | 1,544 | 5,702 | 3,964 | ||||||||||||||
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Interest and other income
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3,330 | 3,692 | 7,312 | 8,831 | ||||||||||||||
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Total revenues and other income
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157,823 | 144,808 | 316,961 | 288,369 | ||||||||||||||
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EXPENSES
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Property operating expenses
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18,639 | 16,580 | 36,997 | 32,763 | ||||||||||||||
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Real estate taxes
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18,204 | 16,697 | 36,557 | 33,049 | ||||||||||||||
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Interest, including amortization
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37,217 | 29,841 | 72,912 | 61,050 | ||||||||||||||
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Depreciation and amortization
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31,972 | 27,140 | 61,464 | 53,812 | ||||||||||||||
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General and administrative
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10,762 | 9,201 | 21,831 | 17,384 | ||||||||||||||
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Loss on investments in other companies
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— | 16,103 | — | 20,758 | ||||||||||||||
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Total expenses
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116,794 | 115,562 | 229,761 | 218,816 | ||||||||||||||
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Income before minority interests, gains from
disposition of real estate, discontinued operations, and
extraordinary items
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41,029 | 29,246 | 87,200 | 69,553 | ||||||||||||||
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Minority interests’ share of income
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(15,379 | ) | (16,874 | ) | (30,942 | ) | (29,756 | ) | ||||||||||
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Gains from dispositions of real estate, net of
minority interests
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2,768 | 17,792 | 2,480 | 34,559 | ||||||||||||||
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Net income before discontinued operations and
extraordinary items
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28,418 | 30,164 | 58,738 | 74,356 | ||||||||||||||
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Discontinued operations
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484 | 207 | 683 | 455 | ||||||||||||||
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Extraordinary items (early debt extinguishments)
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(52 | ) | (438 | ) | (268 | ) | (438 | ) | ||||||||||
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Net income
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28,850 | 29,933 | 59,153 | 74,373 | ||||||||||||||
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Series A preferred stock dividends
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(2,125 | ) | (2,125 | ) | (4,250 | ) | (4,250 | ) | ||||||||||
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Net income available to common stockholders
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$ | 26,725 | $ | 27,808 | $ | 54,903 | $ | 70,123 | ||||||||||
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BASIC INCOME PER COMMON SHARE
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Before discontinued operations and extraordinary
items
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$ | 0.31 | $ | 0.34 | $ | 0.65 | $ | 0.83 | ||||||||||
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Discontinued operations
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0.01 | — | 0.01 | 0.01 | ||||||||||||||
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Extraordinary items
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— | (0.01 | ) | — | (0.01 | ) | ||||||||||||
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Net income available to common stockholders
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$ | 0.32 | $ | 0.33 | $ | 0.66 | $ | 0.83 | ||||||||||
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DILUTED INCOME PER COMMON SHARE
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Before discontinued operations and extraordinary
items
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$ | 0.30 | $ | 0.34 | $ | 0.64 | $ | 0.82 | ||||||||||
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Discontinued operations
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0.01 | — | 0.01 | 0.01 | ||||||||||||||
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Extraordinary items
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— | (0.01 | ) | — | (0.01 | ) | ||||||||||||
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Net income available to common stockholders
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$ | 0.31 | $ | 0.33 | $ | 0.65 | $ | 0.82 | ||||||||||
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
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Basic
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83,710,208 | 84,461,544 | 83,626,889 | 84,178,768 | ||||||||||||||
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Diluted
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85,529,416 | 85,378,727 | 85,120,197 | 85,078,751 | ||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
AMB PROPERTY CORPORATION
| 2002 | 2001 | ||||||||||
| (Unaudited, dollars in | |||||||||||
| thousands) | |||||||||||
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net income
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$ | 59,153 | $ | 74,373 | |||||||
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Adjustments to reconcile net income to net cash
provided by operating activities:
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Depreciation and amortization
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61,647 | 54,177 | |||||||||
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Loss on investments in other companies
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— | 20,758 | |||||||||
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Straight-line rents
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(6,747 | ) | (3,466 | ) | |||||||
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Amortization of debt premiums and financing
costs, net
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(624 | ) | (1,033 | ) | |||||||
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Amortization of stock-based compensation
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1,962 | 1,266 | |||||||||
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Minority interests
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31,002 | 29,971 | |||||||||
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Gains from dispositions of real estate, net of
minority interests
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(2,480 | ) | (34,559 | ) | |||||||
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Non-cash portion of extraordinary items
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(330 | ) | 438 | ||||||||
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Equity in earnings of unconsolidated joint
ventures
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(3,121 | ) | (2,686 | ) | |||||||
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Changes in assets and liabilities:
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Accounts receivable and other assets
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(3,089 | ) | 1,768 | ||||||||
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Accounts payable and other liabilities
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(13,301 | ) | 24,834 | ||||||||
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Net cash provided by operating activities
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124,072 | 165,841 | |||||||||
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CASH FLOWS FROM INVESTING ACTIVITIES
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Change in restricted cash
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(1,473 | ) | (19,119 | ) | |||||||
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Cash paid for property acquisitions
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(136,477 | ) | (159,574 | ) | |||||||
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Additions to buildings, development costs, and
other first generation improvements
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(60,646 | ) | (119,269 | ) | |||||||
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Additions to second generation building
improvements and lease costs
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(27,230 | ) | (16,874 | ) | |||||||
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Contributions to unconsolidated joint ventures
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— | (3,222 | ) | ||||||||
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Distributions received from unconsolidated joint
ventures
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10,135 | 2,518 | |||||||||
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Net proceeds from divestiture of real estate
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50,951 | 97,702 | |||||||||
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Net cash used in investing activities
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(164,740 | ) | (217,838 | ) | |||||||
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CASH FLOWS FROM FINANCING ACTIVITIES
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Issuance of common stock
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4,915 | 1,138 | |||||||||
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Borrowings on secured debt
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166,976 | 138,785 | |||||||||
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Payments on secured debt
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(50,455 | ) | (19,749 | ) | |||||||
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Borrowings on unsecured credit facility
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— | 198,000 | |||||||||
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Payments on unsecured credit facility
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(12,000 | ) | (414,000 | ) | |||||||
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Borrowings on Alliance Fund II credit
facility
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23,500 | 98,100 | |||||||||
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Payments on Alliance Fund II credit facility
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(95,000 | ) | — | ||||||||
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Payment of financing fees
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(2,191 | ) | (1,220 | ) | |||||||
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Net proceeds from issuances of senior debt
securities
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19,883 | 74,563 | |||||||||
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Net proceeds from issuances of preferred units
(minority interests)
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38,939 | 24,856 | |||||||||
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Contributions fro | |||||||||||