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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): January 14, 2003

AMB PROPERTY CORPORATION

Maryland (State or other jurisdiction of Incorporation)		001-13545 (Commission File Number)		94-3281941 (I.R.S. Employer Identification Number)

Pier 1, Bay 1, San Francisco, California 94111

415-394-9000

n/a

 

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	ITEM 5 OTHER EVENTS.
SIGNATURES

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ITEM 5 OTHER EVENTS.

On January 14, 2003, AMB Property Corporation announced fourth quarter and full-year 2002 results as follows:

Earnings per share (EPS) for the fourth quarter were $0.43, including $0.16 per share in net gains; EPS for the full year was $1.37, including $0.24 per share in net gains. Fourth quarter and full-year 2002 EPS were positively impacted by lease termination fees of $0.10 and $0.13 per share, respectively, net of related charges for straight line rents and capitalized leasing costs. Fourth quarter 2002 EPS increased 43.3% from EPS of $0.30 in the same period of 2001; full-year 2002 EPS decreased 6.8% from EPS of $1.47 in the same period of 2001.

AMB’s industrial portfolio, predominantly located in infill submarkets of major distribution markets, was 94.6% leased as of December 31, 2002, 20 basis points above portfolio occupancy as of September 30, 2002 and December 31, 2001. The Company’s same store cash basis net operating income increased 10.1% during the quarter and 3.5% during the year. Tenant retention was 74.2% during 2002, while rents on renewals and rollovers decreased by 1.0% during the year.

Investment Activity

During the fourth quarter, AMB acquired seven properties for a total investment of $157.2 million, disposed of a 4.4 million square foot industrial portfolio in Houston and Dallas for an aggregate price of $155.3 million and sold an additional $73.2 million co-investment partnership interest to an existing partner. Other industrial sales activity in the quarter included two development for sale projects for $5.9 million. During the quarter, AMB also completed and stabilized five industrial development projects, totaling 1.7 million square feet for a total investment of $57.8 million. The industrial development and renovation pipeline through 2004 currently stands at $106.8 million and consists of an estimated 1.7 million square feet, of which $57.8 million, or 54.1%, has been funded and 28% is preleased. AMB’s full-year 2002 transaction activity included $403.3 million in acquisitions, $394.1 million in dispositions and contributions to joint ventures and $135.4 million in development completions.

Additional investment activity in the quarter included the repurchase of 2.2 million shares of AMB’s common stock for a total investment of $57.9 million, at a weighted average purchase price of $26.08 per share. During the fourth quarter, the board of directors increased the Company’s common share repurchase plan to $200 million, from $100 million; $130.6 million of repurchase capacity remains under the updated plan. Since its IPO, the Company has repurchased a total of 5.4 million shares of common stock for a total investment of $129.3 million, at a weighted average purchase price of $23.72 per share.

AMB’s private capital activity in the quarter consisted of an additional $110 million equity commitment from long-standing joint venture partner, the City and County of San Francisco Employees’ Retirement System (CCSFERS). The new equity increases

 

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CCSFERS’ ownership in the existing partnership from 50% to 80% and provides the partnership with additional capital for further investment in distribution facilities nationwide.

AMB renewed its $500 million unsecured revolving line of credit during the quarter. The three-year credit facility includes a multi-currency component under which up to $150 million can be drawn in British pounds sterling, euros or yen. The line of credit matures in December 2005 and replaces the Company’s previous $500 million credit facility, which was to mature in May 2003.

Company Director and Officer Changes

AMB’s board of directors appointed J. Michael Losh as an independent director to the Company’s board. Losh, who joined the board of directors and audit committee on January 1, 2003, brings to AMB 36 years of financial and international expertise, most recently as General Motor’s chief financial officer.

The Company also announced officer promotions for the new year: Mo Barzegar was promoted to senior vice president, international; Tamra Browne to senior vice president and general counsel; Steve Campbell to senior vice president, environmental and engineering; John Meyer to senior vice president, airport facilities; Jill Blechschmidt to vice president, regional manager; Dave King to vice president, regional manager; and Steve Lueck, to vice president, regional manager.

CONSOLIDATED BALANCE SHEETS
(dollars in thousands)

				As of
				December 31, 2002				September 30, 2002				June 30, 2002				March 31, 2002				December 31, 2001
Assets
Investments in real estate:
	Total investments in properties			$	4,924,982			$	4,883,497			$	4,732,321			$	4,566,951			$	4,530,711
	Accumulated depreciation				(362,540	)			(344,949	)			(311,058	)			(289,701	)			(265,653	)
		Net investments in properties			4,562,442				4,538,548				4,421,263				4,277,250				4,265,058
	Investment in unconsolidated joint ventures				64,428				64,822				64,083				71,137				71,097
	Properties held for divestiture, net				107,871				105,613				133,934				139,370				157,174
		Net investments in real estate			4,735,741				4,708,983				4,619,280				4,487,757				4,493,329
Cash and cash equivalents					117,214				90,840				119,287				99,492				81,732
Mortgage receivables					13,133				13,155				87,175				87,214				87,214
Accounts receivable, net					74,207				81,003				80,366				75,399				70,794
Other assets, including discontinued operations					52,199				48,608				39,390				39,392				35,874
		Total assets		$	4,992,494			$	4,942,589			$	4,945,498			$	4,789,254			$	4,768,943
Liabilities and Stockholders’ Equity
Secured debt				$	1,284,675			$	1,305,320			$	1,360,436			$	1,237,564			$	1,228,214
Unsecured senior debt securities					800,000				800,000				800,000				800,000				780,000
Unsecured debt					10,186				10,319				—				—				—
Alliance Fund II credit facility					45,500				72,500				52,000				116,000				123,500
Unsecured credit facility					95,000				12,000				—				—				12,000
Other liabilities, including discontinued operations					181,716				189,076				162,629				155,568				138,601
		Total liabilities			2,417,077				2,389,215				2,375,065				2,309,132				2,282,315
Minority interests:
	Preferred units				308,369				308,388				315,847				275,987				275,987
	Minority interests				582,898				506,533				508,577				455,428				458,299
		Total minority interests			891,267				814,921				824,424				731,415				734,286
Stockholders’ equity:
	Common stock				1,588,156				1,642,459				1,649,909				1,652,607				1,656,242
	Preferred stock				95,994				95,994				96,100				96,100				96,100
		Total stockholders’ equity			1,684,150				1,738,453				1,746,009				1,748,707				1,752,342
		Total liabilities and stockholders’ equity		$	4,992,494			$	4,942,589			$	4,945,498			$	4,789,254			$	4,768,943

 

CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except share data)

				For the Quarters Ended								For the Twelve Months Ended
				December 31,								December 31,
				2002				2001				2002				2001
Revenues
Rental revenues				$	157,262			$	136,581			$	588,522			$	530,041
Equity in earnings of unconsolidated joint ventures					1,231				1,102				5,674				5,467
Private capital income					2,725				2,950				11,193				10,972
Interest and other income					539				3,826				10,454				16,297
	Total revenues				161,757				144,459				615,843				562,777
Expenses
Property operating					39,164				33,590				145,870				127,753
Interest, including amortization					37,442				33,019				147,101				124,866
Depreciation and amortization					37,286				26,504				127,160				104,838
General administrative and other (1)					13,000				9,640				47,207				35,820
Loss on investments in other companies					—				—				—				20,758
	Total expenses				126,892				102,753				467,338				414,035
		Income before minority interests and gains			34,865				41,706				148,505				148,742
Minority interests’ share of income:
	Preferred units				(6,379	)			(7,056	)			(25,149	)			(28,682	)
	Minority interests				(8,324	)			(8,526	)			(37,806	)			(34,835	)
		Total minority interests			(14,703	)			(15,582	)			(62,955	)			(63,517	)
		Net income before discontinued operations and gains from dispositions			20,162				26,124				85,550				85,225
Gains on developments and dispositions and discontinued operations:
	Gains on developments held for sale				414				11,828				1,032				13,169
	Gains/(losses) from disposition of real estate, net of minority interests (2)				5,309				(10,073	)			7,789				23,259
	Discontinued operations				4,697				4,124				18,494				16,300
	Gains from disposition of real estate, discontinued operations				7,428				—				11,372				—
		Total gains on developments and dispositions and discontinued operations			17,848				5,879				38,687				52,728
		Net income			38,010				32,003				124,237				137,953
Preferred stock dividends					(2,123	)			(2,125	)			(8,496	)			(8,500	)
Preferred unit redemption discount/(premium)					—				(4,400	)			412				(4,400	)
Net income available to common stockholders				$	35,887			$	25,478			$	116,153			$	125,053
Net income per common share (diluted)				$	0.43			$	0.30			$	1.37			$	1.47
Weighted average common shares (diluted)					83,648,772				84,338,812				84,795,987				85,214,066

(1)  Prior to May 31, 2001, G&A did not include expenses incurred by two unconsolidated preferred stock subsidiaries, Headlands Realty Corporation and AMB Capital Partners. Adjusted G&A for the twelve months ended December 31, 2001, would have been $39,353 had the subsidiaries been consolidated beginning January 1, 2001.

(2)  Includes unrealized losses $1.2 million and of $8.6 million for the quarters ended December 31, 2002 and 2001, respectively and $1.2 million and $18.6 million for the twelve months ended December 31, 2002 and 2001, respectively.

 

CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS AND SUPPLEMENTAL CASH FLOW INFORMATION
(dollars in thousands, except share data)

					For the Quarters Ended								For the Twelve Months Ended
					December 31,								December 31,
					2002				2001				2002				2001
Income before minority interests and gains					$	34,865			$	41,706			$	148,505			$	148,742
Gains on developments held for sale						414				11,828				1,032				13,169
Total depreciation and amortization						37,286				26,504				127,160				104,838
FF& E depreciation, ground lease amortization and other (1)						(708	)			(507	)			(2,450	)			(1,963	)
Discontinued operations’ FFO						6,613				5,905				26,023				22,900
FFO attributable to minority interests						(14,298	)			(11,025	)			(52,051	)			(40,144	)
Adjustments to derive FFO from unconsolidated JVs:
	AMB’s share of net income					(1,231	)			(1,102	)			(5,674	)			(5,467	)
	AMB’s share of FFO					2,117				1,526				8,728				8,014
Preferred stock dividends						(2,123	)			(2,125	)			(8,496	)			(8,500	)
Preferred units distributions						(6,379	)			(7,056	)			(25,149	)			(28,682	)
Funds from operations					$	56,556			$	65,654			$	217,628			$	212,907
Weighted average common shares and units (diluted)						88,495,159				89,317,086				89,689,310				89,954,598
Supplemental Cash Flow Information:
Straight-line rents					$	628			$	2,514			$	11,013			$	10,093
AMB’s share of unconsolidated JV’s NOI					$	2,713			$	2,357			$	11,055			$	10,181
JV Partners’ share of cash basis NOI					$	24,914			$	20,587			$	86,482			$	65,010
Discontinued operations’ NOI					$	7,650			$	7,372			$	29,949			$	27,642
Stock-based compensation amortization					$	1,315			$	797			$	5,265			$	2,725
Capitalized interest					$	1,762			$	2,836			$	6,919			$	13,650
Recurring capital expenditures:
		Tenant improvements			$	4,340			$	2,149			$	18,977			$	8,168
		Lease commissions and other lease costs				3,910				3,779				17,684				19,822
		Building improvements				4,725				8,716				18,270				19,852
			Sub-total			12,975				14,644				54,931				47,842
		JV Partners’ share of capital expenditures				(1,955	)			(2,995	)			(9,547	)			(5,824	)
			AMB’s share of recurring capital expenditures		$	11,020			$	11,649			$	45,384			$	42,018

(1)  Ground lease amortization represents the amortization of the Company’s investments in ground leased properties, for which the Company does not have a purchase option.

 

Forward Looking Statements

Some of the information included in this report contains forward-looking statements, such as statements pertaining to earnings and results of operations and future plans. 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. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated

 

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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 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 real estate investment trust, environmental uncertainties, risks related to natural disasters, financial market fluctuations, changes in real estate and zoning laws, risks related to doing business internationally 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 under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Business Risks” and elsewhere in our most recent annual report on Form 10-K and under the heading “Other Information—Business Risks” and elsewhere in our most recent quarterly report on Form 10-Q.

 

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		AMB Property Corporation              (Registrant)
Date: January 15, 2003		By:		/s/ Tamra Browne
				Tamra Browne Senior Vice President, General Counsel and Secretary