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EX-99.1 - EX-99.1 - Prologis, Inc. | f58164exv99w1.htm |
U.S. 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
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): February 3, 2011
AMB PROPERTY CORPORATION
(Exact name of registrant as specified in its charter)
Maryland | 001-13545 | 94-3281941 | ||
(State or other jurisdiction of incorporation) |
(Commission file number) | (I.R.S. employer identification number) |
Pier 1, Bay 1, San Francisco, California 94111
(Address of principal executive offices) (Zip code)
(Address of principal executive offices) (Zip code)
415-394-9000
(Registrants telephone number, including area code)
(Registrants telephone number, including area code)
n/a
(Former name or former address, if changed since last report)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On
February 3, 2011, we issued a press release entitled AMB Property Corporation Announces Fourth
Quarter and Full Year 2010 Results, which sets forth disclosure regarding our results of
operations for the fourth quarter and full year 2010. A copy of the press release is attached
hereto as Exhibit 99.1. This section and the attached exhibit are provided under Item 2.02 of Form
8-K and are furnished to, but not filed with, the Securities and Exchange Commission.
ITEM 8.01 OTHER EVENTS
On
February 3, 2011, we reported results for the fourth quarter and full year 2010. Core FFO, as
adjusted, which excludes the recognition of development gains, was $0.32 for the fourth quarter of
2010 and $1.22 for the full year 2010 compared to $0.32 and $1.46
respectively for the same periods in 2009.
Funds from operations, as adjusted, per fully diluted share and unit (FFOPS, as adjusted), which
includes the recognition of development gains, was $0.33 for the fourth quarter 2010 and $1.27 and
for the full year 2010 compared to $0.32 and $2.09 respectively for the same periods in
2009. The year-over-year change in FFO, as adjusted, was primarily due to higher development gains
recognized in 2009.
Net income (loss) available to common stockholders per fully diluted share (EPS) for the fourth
quarter of 2010 was $0.03, as compared to a loss of $(0.05) for the same quarter in 2009. EPS for
the full year 2010 was $0.06 as compared to a loss of $(0.37) for 2009.
Owned and Managed Portfolio Operating Results
The companys operating results were slightly higher than expectations for the fourth quarter. Our
operating portfolio was 93.7 percent occupied at December 31, 2010, up 110 basis points from
September 30, 2010. Cash-basis same store net operating income (SS NOI), without the effects of
lease termination fees, increased 0.9 percent during the fourth quarter of 2010 compared with the
same period in 2009, driven by increases in occupancy. This increase in quarterly SS NOI marked the
first positive year-over-year performance since the fourth quarter of 2008. SS NOI for the full
year 2010 decreased 3.2 percent. Average rent on renewals and rollovers in our operating portfolio
decreased 11.9 percent for the trailing four quarters ended December 31, 2010.
Leasing Activity
During the
fourth quarter, the company leased a total of 7.7 million square feet (715,400 square
meters) of its operating portfolio, consistent with leasing volume in the fourth quarter of 2009.
The company leased a record 32.0 million square feet (2.9 million square meters) in the full year
2010. The company leased 1.2 million square feet (115,000 square meters) of its development
portfolio in the fourth quarter and more than 5.7 million square feet (530,500 square meters) in
the full year 2010.
Capital Deployment
During 2010, the company continued to invest capital opportunistically. During the fourth quarter,
the company deployed approximately $230.2 million of capital. For the year ended December 31, 2010,
capital deployment totaled $832.2 million, which included:
| $343.3 million in acquisitions at a stabilized capitalization rate of 7.0 percent, composed of 16 properties totaling approximately 4.8 million square feet; | |
| $300.0 million into its open-end funds, consisting of $200.0 million in AMB U.S. Logistics Fund and $100 million in AMB Europe Logistics Fund; | |
| $102.9 million of new development starts in Brazil, China and Mexico; and | |
| $86.0 million in mezzanine debt. |
The company completed dispositions totaling $56.0 million in the fourth quarter at a stabilized
capitalization rate of 7.4 percent, and completed dispositions and contributions totaling $153.3
million in the full year 2010, at a stabilized capitalization rate of 7.3 percent.
Private Capital Activity
During the fourth quarter, the company raised $355.1 million of new third-party capital. For the
year ended December 31, 2010, new commitments in the companys co-investment vehicles totaled
approximately $1.4 billion, including $781.4 million of new third-party equity, our investment of
$300 million into the companys open-end funds and our commitment of $280 million to AMB Mexico
Fondo Logistico and AMB Brazil Logistics Partners Fund I.
New third-party equity raised in 2010 included:
| $312.3 million committed to the companys two open-end funds, AMB U.S. Logistics Fund and AMB Europe Logistics Fund; | |
| $252.2 million (3.3 billion Pesos) contributed to AMB Mexico Fondo Logistico, which was formed in the third quarter. The ventures overall equity commitment is $315.3 million, including AMBs 20 percent co-investment; and | |
| $216.9 million (R$360 million) committed to AMB Brazil Logistics Partners Fund I, which was formed in fourth quarter. The fund overall equity commitment is $433.8 million (R$720 million), including our 50 percent co-investment. |
Financing Activities
The company completed more than $1.9 billion of financings during the fourth quarter. This activity
included $1.5 billion of wholly-owned debt consisting of the renewal of its two lines of credit, a
corporate term loan, a new bond issuance, and $391 million for its co-investment ventures in
Europe, Japan and the U.S. For the year ended December 31, 2010, the company completed financings
of approximately $4.0 billion. These transactions further improved and extended the weighted
average remaining life of the companys share of debt to 4.8 years from 3.8 years at an average
interest rate of 4.6 percent. As of December 31, 2010, the companys share of total debt to share
of total assets was 43 percent, which includes its share of joint venture debt.
As of December 31, 2010, the companys liquidity was approximately $1.6 billion, consisting of
approximately $1.4 billion of availability on its lines of credit and more than $260 million of
unrestricted cash and cash equivalents.
SUPPLEMENTAL EARNINGS MEASURES
Included in the footnotes to the companys attached financial statements is a discussion of why
management believes FFO, as adjusted, FFOPS, as adjusted, Core FFO,
as adjusted, and Core FFOPS, as adjusted (the FFO Measures, as
adjusted),
are useful supplemental measures of operating performance, ways in which investors might use the
FFO Measures, as adjusted when assessing the companys financial
performance and the limitations of the FFO Measures, as adjusted,
as a measurement tool. Reconciliation from net income (loss) available to common stockholders to the FFO
Measures, as adjusted are provided in the attached tables and published in the companys quarterly supplemental
analyst package, available on the companys website at www.amb.com.
We define net operating income (NOI) as rental revenues, including reimbursements, less property
operating expenses. NOI excludes depreciation, amortization, general and administrative expenses,
restructuring charges, real estate impairment losses, development profits (losses), gains (losses)
from sale or contribution of real estate interests, and interest expense. We believe that net
income, as defined by GAAP, is the most appropriate earnings measure. However, NOI is a useful
supplemental measure calculated to help investors understand our operating performance, excluding
the effects of costs and expenses which are not related to the performance of the assets. NOI is
widely used by the real estate industry as a useful supplemental measure, which helps investors
compare our operating performance with that of other companies. Real estate impairment losses have
been excluded in deriving NOI because we do not consider its impairment losses to be a property
operating expense. We believe that the exclusion of impairment losses from NOI is a common
methodology used in the real estate industry. Real estate impairment losses relate to the changing
values of our assets but do not reflect the current operating performance of the assets with
respect to their revenues or expenses. Our real estate impairment losses are non-cash charges which
represent the write down in the value of assets when estimated fair value over the holding period
is lower than current carrying value. The impairment charges were principally a result of increases
in estimated capitalization rates and deterioration in market conditions that adversely impacted
underlying real estate values. Therefore, the impairment charges are not related to the current
performance of our real estate operations and should be excluded from its calculation of NOI.
We consider cash-basis same store net operating income (SS NOI) to be a useful supplemental
measure of our operating performance for properties that are considered part of the same store
pool. We define SS NOI as NOI on a same store basis excluding straight line rents and amortization
of lease intangibles. Same store pool includes all properties that are owned as of the end of both
the current and prior year reporting periods and excludes development properties for both the
current and prior reporting periods. The same store pool is set annually and excludes properties
purchased and developments stabilized after December 31, 2008. We consider SS NOI to be an
appropriate and useful supplemental performance measure because it reflects the operating
performance of the real estate portfolio excluding effects of non-cash adjustments and provides a
better measure of actual cash basis rental growth for a year-over-year comparison. In addition, we
believe that SS NOI helps investors compare the operating performance of our real
estate as compared to other companies. While SS NOI is a relevant and widely used measure of
operating performance of real estate investment trusts, it does not represent cash flow from
operations or net income as defined by GAAP and should not be considered as an alternative to those
measures in evaluating our liquidity or operating performance. SS NOI also does not reflect general
and administrative expenses, interest expenses, real estate impairment losses, depreciation and
amortization costs, capital expenditures and leasing costs, or trends in development and
construction activities that could materially impact our results from operations. Further, our
computation of SS NOI may not be comparable to that of other real estate companies, as they may use
different methodologies for calculating SS NOI. A reconciliation from
net income (loss) to SS NOI is
provided below (dollars in thousands) and published in our quarterly supplemental analyst package,
available on our website at www.amb.com.
For the Quarters Ended | For the Years Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net income (loss) |
$ | 11,309 | $ | (10,102 | ) | $ | 33,594 | $ | (27,960 | ) | ||||||
Private capital income |
(9,001 | ) | (10,615 | ) | (30,860 | ) | (38,013 | ) | ||||||||
Depreciation and amortization |
51,353 | 50,718 | 196,636 | 175,334 | ||||||||||||
Real estate impairment losses |
| | | 172,059 | ||||||||||||
General and administrative and fund costs |
33,783 | 31,369 | 125,155 | 116,404 | ||||||||||||
Restructuring charges |
| 2,544 | 4,874 | 6,368 | ||||||||||||
Total other income and expenses |
27,852 | 39,693 | 108,773 | 89,170 | ||||||||||||
Total discontinued operations |
(5,698 | ) | (2,938 | ) | (24,242 | ) | (96,222 | ) | ||||||||
NOI |
109,598 | 100,669 | 413,930 | 397,140 | ||||||||||||
Less non same-store NOI |
(22,592 | ) | (15,805 | ) | (73,535 | ) | (47,582 | ) | ||||||||
Less non cash adjustments(1) |
(2,129 | ) | (1,596 | ) | (9,045 | ) | (2,803 | ) | ||||||||
Cash-basis same-store NOI |
$ | 84,877 | $ | 83,268 | $ | 331,350 | $ | 346,755 | ||||||||
Less lease termination fees |
$ | (177 | ) | $ | (247 | ) | $ | (3,059 | ) | $ | (2,692 | ) | ||||
Cash-basis same-store NOI, excluding lease termination fees |
$ | 84,700 | $ | 83,021 | $ | 328,291 | $ | 344,063 | ||||||||
(1) | Non-cash adjustments include straight line rents and amortization of lease intangibles for the same store pool only (dollars in thousands). |
Owned and managed is defined by the company as assets in which the company has at least a
10 percent ownership interest, is the property or asset manager, and which it currently intends to
hold for the long-term.
We are a leading owner, operator and developer of industrial real estate, focused on major hub and
gateway distribution markets in the Americas, Europe and Asia. As of December 31, 2010, We owned,
or had investments in, on a consolidated basis or through unconsolidated joint ventures, properties
and development projects expected to total approximately 159.6 million square feet (14.8 million
square meters) in 49 markets within 15 countries. We invest in properties located predominantly in
the infill submarkets of its targeted markets. Our portfolio is comprised of High Throughput
Distribution® facilitiesindustrial properties built for speed and located near
airports, seaports and ground transportation systems.
FORWARD LOOKING STATEMENTS
Some of the information included in this report contains forward-looking statements, such as those
related to estimated build-out potential of our acquisitions and
future funds from operations, which are made pursuant to the
safe-harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and
Section 27A of the Securities Act of 1933, as amended. Because these forward-looking statements
involve numerous risks and uncertainties, there are important factors that could cause our actual
results to differ materially from those in the forward-looking statements, and you should not rely
on the forward-looking statements 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, forecasting, 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 should not be read as guarantees of the future performance or results,
and will not necessarily be accurate indicators of whether, or the time at which, such performance
of results will be achieved. There is no assurance that the events or circumstances reflected in
forward-looking statements will occur or be achieved. 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. We assume no obligation to update or supplement forward-looking statements. The
following factors, among others, could cause actual results and future events to differ materially
from those set forth or contemplated in the forward-looking statements: changes in general economic
conditions in California, the U.S. or globally (including financial market fluctuations), global
trade or in the real estate sector (including risks relating to decreasing real estate valuations
and impairment charges); risks associated with using debt to fund the companys business
activities, including refinancing and interest rate risks (including inflation risks); the
companys failure to obtain, renew, or extend necessary financing or access the debt or equity
markets; the companys failure to maintain its current credit agency ratings or comply with its
debt covenants; risks related to the companys obligations in the event of certain defaults under
co-investment venture and other debt; risks associated with equity and debt securities financings
and issuances (including the risk of dilution); defaults on or non-renewal of leases by customers
or renewal at lower than expected rent or failure to lease at all or on expected terms;
difficulties in identifying properties, portfolios of properties, or interests in real-estate
related entities or platforms to acquire and in effecting acquisitions on advantageous terms and
the failure of acquisitions to perform as the company expects; unknown liabilities acquired in
connection with the acquired properties, portfolios of properties, or interests in real-estate
related entities; the companys failure to successfully integrate acquired properties and
operations; risks and uncertainties affecting property development, redevelopment and value-added
conversion (including construction delays, cost overruns, the companys inability to obtain
necessary permits and financing, the companys inability to lease properties at all or at favorable
rents and terms, and public opposition to these activities); the companys failure to set up
additional funds, attract additional investment in existing funds or to contribute properties to
its co-investment ventures due to such factors as its inability to acquire, develop,
or lease
properties that meet the investment criteria of such ventures, or the co-investment ventures
inability to access debt and equity capital to pay for property contributions or their allocation
of available capital to cover other capital requirements; risks and uncertainties relating to the
disposition of properties to third parties and the companys ability to effect such transactions on
advantageous terms and to timely reinvest proceeds from any such dispositions; risks of doing
business internationally and global expansion, including
unfamiliarity with the new markets and currency and hedging risks; risks of changing personnel and
roles; risks related to suspending, reducing or changing the companys dividends; losses in excess
of the companys insurance coverage; changes in local, state law and regulatory requirements,
including changes in real estate, tax and zoning laws; increases in real property tax rates; risks
associated with the companys tax structuring; increases in interest rates and operating costs or
greater than expected capital expenditures; environmental uncertainties; risks related to natural
disasters; and our failure to qualify and maintain our status as a real estate investment trust.
Our success also depends upon economic trends generally, various market conditions and fluctuations
and those other risk factors discussed under the heading Risk Factors and elsewhere in our most
recent annual report on Form 10-K for the year ended December 31, 2009.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(in thousands, except per share data)
For the Quarters ended | For the Years ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenues |
||||||||||||||||
Rental revenues |
$ | 156,057 | $ | 149,052 | $ | 602,640 | $ | 580,411 | ||||||||
Private capital revenues |
9,001 | 10,615 | 30,860 | 38,013 | ||||||||||||
Total revenues |
165,058 | 159,667 | 633,500 | 618,424 | ||||||||||||
Costs and expenses |
||||||||||||||||
Property operating costs |
(46,459 | ) | (48,383 | ) | (188,710 | ) | (183,271 | ) | ||||||||
Depreciation and amortization |
(51,353 | ) | (50,718 | ) | (196,636 | ) | (175,334 | ) | ||||||||
General and administrative |
(33,605 | ) | (31,131 | ) | (124,364 | ) | (115,342 | ) | ||||||||
Restructuring charges |
| (2,544 | ) | (4,874 | ) | (6,368 | ) | |||||||||
Fund costs |
(178 | ) | (238 | ) | (791 | ) | (1,062 | ) | ||||||||
Real estate impairment losses |
| | | (172,059 | ) | |||||||||||
Other expenses(1) |
(1,946 | ) | (2,176 | ) | (3,197 | ) | (8,681 | ) | ||||||||
Total costs and expenses |
(133,541 | ) | (135,190 | ) | (518,572 | ) | (662,117 | ) | ||||||||
Other income and expenses |
||||||||||||||||
Development profits, net of taxes |
1,020 | 1,368 | 6,739 | 35,874 | ||||||||||||
Equity in earnings of unconsolidated joint ventures, net |
4,956 | 3,824 | 17,372 | 11,331 | ||||||||||||
Other income (expense)(1) |
1,507 | (323 | ) | 3,543 | 3,440 | |||||||||||
Interest expense, including amortization |
(33,036 | ) | (30,772 | ) | (130,338 | ) | (118,867 | ) | ||||||||
Loss on early extinguishment of debt |
(353 | ) | (11,614 | ) | (2,892 | ) | (12,267 | ) | ||||||||
Total other income and expenses, net |
(25,906 | ) | (37,517 | ) | (105,576 | ) | (80,489 | ) | ||||||||
Income (loss) from continuing operations |
5,611 | (13,040 | ) | 9,352 | (124,182 | ) | ||||||||||
Discontinued operations |
||||||||||||||||
Income attributable to discontinued operations |
1,193 | 1,358 | 3,994 | 4,502 | ||||||||||||
Development profits, net of taxes |
| | | 53,002 | ||||||||||||
Gains from sale of real estate interests, net of taxes |
4,505 | 1,580 | 20,248 | 38,718 | ||||||||||||
Total discontinued operations |
5,698 | 2,938 | 24,242 | 96,222 | ||||||||||||
Net income (loss) |
11,309 | (10,102 | ) | 33,594 | (27,960 | ) | ||||||||||
Noncontrolling interests share of net income (loss) |
||||||||||||||||
Joint venture partners share of net income |
(2,058 | ) | (2,234 | ) | (6,278 | ) | (11,063 | ) | ||||||||
Joint venture partners and limited partnership unitholders
share of development profits, net of taxes |
(16 | ) | (942 | ) | (109 | ) | (3,308 | ) | ||||||||
Preferred unitholders |
| | | (4,295 | ) | |||||||||||
Limited partnership unitholders |
(83 | ) | 161 | (88 | ) | 3,625 | ||||||||||
Total noncontrolling interests share of net income (loss) |
(2,157 | ) | (3,015 | ) | (6,475 | ) | (15,041 | ) | ||||||||
Net income (loss) attributable to AMB Property Corporation |
9,152 | (13,117 | ) | 27,119 | (43,001 | ) | ||||||||||
Preferred stock dividends |
(3,950 | ) | (3,950 | ) | (15,806 | ) | (15,806 | ) | ||||||||
Preferred unit redemption discount |
| 9,759 | | 9,759 | ||||||||||||
Allocation to participating securities(2) |
(337 | ) | (257 | ) | (1,346 | ) | (1,029 | ) | ||||||||
Net income (loss) available to common stockholders |
$ | 4,865 | $ | (7,565 | ) | $ | 9,967 | $ | (50,077 | ) | ||||||
Net income (loss) per common share (diluted) |
$ | 0.03 | $ | (0.05 | ) | $ | 0.06 | $ | (0.37 | ) | ||||||
Weighted average common shares (diluted) |
167,311 | 147,047 | 161,988 | 134,321 | ||||||||||||
(1) | Includes changes in liabilities and assets associated with AMBs deferred compensation plan for the three and twelve months ended December 31, 2010 of $1,069 and $1,460, respectively, and for the three and twelve months ended December 31, 2009 of $969 and $7,823, respectively. | |
(2) | Represents net income attributable to AMB Property Corporation, net of preferred stock dividends, allocated to outstanding unvested restricted shares. For the three and twelve months ended December 31, 2010, there were 1,202 unvested restricted shares outstanding. For the three and twelve months ended December 31, 2009, there were 920 unvested restricted shares outstanding. |
CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS, AS ADJUSTED (1)
(in thousands, except per share data)
(in thousands, except per share data)
For the Quarters Ended December 31, | For the Years Ended December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net income (loss) available to common stockholders |
$ | 4,865 | $ | (7,565 | ) | $ | 9,967 | $ | (50,077 | ) | ||||||
Gains from sale or contribution of real estate interests, net of taxes |
(4,505 | ) | (1,580 | ) | (20,248 | ) | (38,718 | ) | ||||||||
Depreciation and amortization |
||||||||||||||||
Total depreciation and amortization |
51,353 | 50,718 | 196,636 | 175,334 | ||||||||||||
Discontinued operations depreciation |
69 | 1,208 | 3,447 | 6,602 | ||||||||||||
Non-real estate depreciation |
(1,906 | ) | (2,576 | ) | (8,432 | ) | (8,593 | ) | ||||||||
Adjustment for depreciation on development profits |
| | (1,546 | ) | | |||||||||||
Adjustments to derive FFO, as adjusted from noncontrolling interests |
||||||||||||||||
Joint venture partners noncontrolling interests (Net income) |
2,058 | 2,234 | 6,278 | 11,063 | ||||||||||||
Limited partnership unitholders noncontrolling interests (Net income (loss)) |
83 | (161 | ) | 88 | (3,625 | ) | ||||||||||
Limited partnership unitholders noncontrolling interests (Development profits) |
16 | 11 | 133 | 2,377 | ||||||||||||
FFO, as adjusted attributable to joint venture partners noncontrolling interests |
(7,454 | ) | (7,245 | ) | (28,251 | ) | (31,571 | ) | ||||||||
Adjustments to derive FFO, as adjusted from unconsolidated joint ventures |
||||||||||||||||
AMBs share of net income |
(4,956 | ) | (3,824 | ) | (17,372 | ) | (11,331 | ) | ||||||||
AMBs share of FFO, as adjusted |
16,070 | 12,549 | 61,903 | 47,549 | ||||||||||||
Adjustments for impairments, restructuring charges and debt extinguishment |
||||||||||||||||
Real estate impairment losses |
| | | 172,059 | ||||||||||||
Discontinued operations real estate impairment losses |
| | | 9,794 | ||||||||||||
Restructuring charges |
| 2,544 | 4,874 | 6,368 | ||||||||||||
Loss on early extinguishment of debt |
353 | 11,614 | 2,892 | 12,267 | ||||||||||||
Preferred unit redemption discount |
| (9,759 | ) | | (9,759 | ) | ||||||||||
Allocation to participating securities(2) |
(58 | ) | (37 | ) | (182 | ) | (898 | ) | ||||||||
Funds from operations, as adjusted(1) |
$ | 55,988 | $ | 48,131 | $ | 210,187 | $ | 288,841 | ||||||||
FFO, as adjusted per common share and unit (diluted) |
$ | 0.33 | $ | 0.32 | $ | 1.27 | $ | 2.09 | ||||||||
Weighted average common shares and units (diluted) |
171,752 | 150,993 | 166,127 | 137,904 | ||||||||||||
Core Funds From Operations, as adjusted |
||||||||||||||||
Funds from operations, as adjusted |
$ | 55,988 | $ | 48,131 | $ | 210,187 | $ | 288,841 | ||||||||
Development profits, net of taxes |
(1,020 | ) | (1,368 | ) | (6,739 | ) | (88,876 | ) | ||||||||
Joint venture partners and limited partnership unitholders share of development profits, net of taxes |
16 | 942 | 61 | 3,308 | ||||||||||||
Limited partnership unitholders noncontrolling interests (Development profits) |
(16 | ) | (11 | ) | (133 | ) | (2,377 | ) | ||||||||
AMBs share of development gains from unconsolidated joint ventures |
| 248 | (9 | ) | (271 | ) | ||||||||||
Allocation to participating securities(2) |
7 | 1 | 49 | 585 | ||||||||||||
Core Funds From Operations, as adjusted(1) |
$ | 54,975 | $ | 47,943 | $ | 203,416 | $ | 201,210 | ||||||||
Core FFO, as adjusted per common share and unit (diluted) |
$ | 0.32 | $ | 0.32 | $ | 1.22 | $ | 1.46 | ||||||||
Weighted average common shares and units (diluted) |
171,752 | 150,993 | 166,127 | 137,904 | ||||||||||||
(1) | Funds From Operations, as adjusted, (FFO, as adjusted), Funds From Operations Per Share and Unit, as adjusted (FFOPS, as adjusted), Core FFO, as adjusted, and Core FFO Per Share and Unit, as adjusted (Core FFOPS, as adjusted)(together with FFO, as adjusted, FFOPS, as adjusted, Core FFO, as adjusted and Core FFOPS, as adjusted, the FFO Measures, as adjusted). AMB believes that net income, as defined by U.S. GAAP, is the most appropriate earnings measure. However, AMB considers funds from operations, as adjusted (or FFO, as adjusted), FFO per share and unit, as adjusted (or FFOPS, as adjusted), Core FFO, as adjusted and Core FFO per share and unit, as adjusted (or Core FFOPS, as adjusted) to be useful supplemental measures of its operating performance. AMB defines FFOPS, as adjusted, as FFO, as adjusted, per fully diluted weighted average share of AMBs common stock and operating partnership units. AMB calculates FFO, as adjusted, as net income ( or loss) available to common stockholders, calculated in accordance with U.S. GAAP, less gains (or losses) from dispositions of real estate held for investment purposes and real estate-related depreciation, and adjustments to derive AMBs pro rata share of FFO, as adjusted, of consolidated and unconsolidated joint ventures. AMB defines Core FFOPS, as adjusted as Core FFO, as adjusted per fully diluted weighted share of AMBs common stock and operating partnership units. AMB calculates Core FFO, as adjusted as FFO, as adjusted excluding AMBs share of development profits. These calculations also include adjustments for items as described below. | |
Unless stated otherwise, AMB includes the gains from development, including those from value-added conversion projects before depreciation recapture, as a component of FFO, as adjusted. AMB believes gains from development should be included in FFO, as adjusted, to more completely reflect the performance of one of our lines of business. AMB believes that value-added conversion dispositions are in substance land sales and as such should be included in FFO, as adjusted, consistent with the real estate investment trust industrys long standing practice to include gains on the sale of land in funds from operations. However, AMBs interpretation of FFO, as adjusted, or FFOPS, as adjusted, may not be consistent with the views of others in the real estate investment trust industry, who may consider it to be a divergence from the NAREIT definition, and may not be comparable to funds from operations or funds from operations per share and unit reported by other real estate investment trusts that interpret the current NAREIT definition differently than AMB does. In connection with the formation of a joint venture, AMB may warehouse assets that are acquired with the intent to contribute these assets to the newly formed venture. Some of the properties held for contribution may, under certain circumstances, be required to be depreciated under U.S. GAAP. If this circumstance arises, AMB intends to include in its calculation of FFO, as adjusted, gains or losses related to the contribution of previously depreciated real estate to joint ventures. Although such a change, if instituted, will be a departure from the current NAREIT definition, AMB believes such calculation of FFO, as adjusted, will better reflect the value created as a result of the contributions. To date, AMB has not included gains or losses from the contribution of previously depreciated warehoused assets in FFO as adjusted. | ||
In addition, AMB calculates FFO, as adjusted, to exclude impairment and restructuring charges, debt extinguishment losses and the Series D preferred unit redemption discount. The impairment charges were principally a result of increases in estimated capitalization rates and deterioration in market conditions that adversely impacted values. The restructuring charges reflected costs associated with AMBs reduction in global headcount and cost structure. Debt extinguishment losses generally included the costs of repurchasing debt securities. AMB repurchased certain tranches of senior unsecured debt to manage its debt maturities in response to the current financing environment, resulting in greater debt extinguishment costs. The |
Series D preferred unit redemption discount reflects the gain associated with the discount to liquidation preference in the Series D preferred unit redemption price less costs incurred as a result of the redemption. Although difficult to predict, these items may be recurring given the uncertainty of the current economic climate and its adverse effects on the real estate and financial markets. While not infrequent or unusual in nature, these items result from market fluctuations that can have inconsistent effects on AMBs results of operations. The economics underlying these items reflect market and financing conditions in the short-term but can obscure AMBs performance and the value of AMBs long-term investment decisions and strategies. Management believes FFO, as adjusted, is significant and useful to both it and its investors. FFO, as adjusted, more appropriately reflects the value and strength of AMBs business model and its potential performance isolated from the volatility of the current economic environment and unobscured by costs (or gains) resulting from AMBs management of its financing profile in response to the tightening of the capital markets. However, in addition to the limitations of FFO Measures, as adjusted, generally discussed below, FFO, as adjusted, does not present a comprehensive measure of AMBs financial condition and operating performance. This measure is a modification of the NAREIT definition of funds from operations and should not be used as an alternative to net income or cash as defined by U.S. GAAP. | ||
AMB believes that the FFO Measures, as adjusted, are meaningful supplemental measures of its operating performance because historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time, as reflected through depreciation and amortization expenses. However, since real estate values have historically risen or fallen with market and other conditions, many industry investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient. Thus, the FFO Measures, as adjusted, are supplemental measures of operating performance for real estate investment trusts that exclude historical cost depreciation and amortization, among other items, from net income available to common stockholders, as defined by U.S. GAAP. AMB believes that the use of the FFO Measures, as adjusted, combined with the required U.S. GAAP presentations, has been beneficial in improving the understanding of operating results of real estate investment trusts among the investing public and making comparisons of operating results among such companies more meaningful. AMB considers the FFO Measures, as adjusted, to be useful measures for reviewing comparative operating and financial performance because, by excluding gains or losses related to sales of previously depreciated operating real estate assets and real estate depreciation and amortization, the FFO Measures, as adjusted, can help the investing public compare the operating performance of a companys real estate between periods or as compared to other companies. While funds from operations and funds from operations per share are relevant and widely used measures of operating performance of real estate investment trusts, the FFO Measures, as adjusted, do not represent cash flow from operations or net income as defined by U.S. GAAP and should not be considered as alternatives to those measures in evaluating AMBs liquidity or operating performance. The FFO Measures, as adjusted, also do not consider the costs associated with capital expenditures related to AMBs real estate assets nor are the FFO Measures, as adjusted, necessarily indicative of cash available to fund AMBs future cash requirements. Management compensates for the limitations of the FFO Measures, as adjusted, by providing investors with financial statements prepared according to U.S. GAAP, along with this detailed discussion of the FFO Measures, as adjusted, and a reconciliation of the FFO Measures, as adjusted, to net income available to common stockholders, a U.S. GAAP measurement. | ||
See Consolidated Statements of Funds from Operations, as adjusted for a reconciliation of FFO, as adjusted, from net income (loss) available to common stockholders and a reconciliation of Core FFO, as adjusted from FFO, as adjusted. | ||
The following table reconciles projected Core FFO, as adjusted, from projected net income (loss) available to common stockholders for the year ended December 31, 2011: |
2011 | ||||||||
Low | High | |||||||
Projected net (loss) income available to common stockholders |
$ | (0.03 | ) | $ | 0.07 | |||
AMBs share of projected depreciation and amortization |
1.36 | 1.36 | ||||||
AMBs share of depreciation on development profits recognized to date |
| | ||||||
AMBs share of gains on dispositions of operating properties recognized to date |
| | ||||||
Loss on early extinguishment of debt |
| | ||||||
Restructuring charges |
| | ||||||
Impact of additional dilutive securities, other, rounding |
(0.03 | ) | (0.03 | ) | ||||
Projected Funds From Operations, as adjusted (FFO, as adjusted) |
$ | 1.30 | $ | 1.40 | ||||
AMBs share of development gains recognized to date |
| | ||||||
Projected Core FFO, as adjusted(3) |
$ | 1.30 | $ | 1.40 | ||||
Amounts are expressed per share, except FFO, as adjusted and Core FFO, as adjusted, which are expressed per share and unit. | ||
(2) | Represents amount of FFO, as adjusted allocated to outstanding unvested restricted shares. For the three and twelve months ended December 31, 2010, there were 1,202 unvested restricted shares. For the three and twelve months ended December 31, 2009, there were 920 unvested restricted shares. | |
(3) | As development gains are difficult to predict in the current economic environment, management believes Core FFO, as adjusted, is the more appropriate and useful measure to reflect its assessment of AMBs projected operating performance. |
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(dollars in thousands)
As of | ||||||||
December 31, 2010 | December 31, 2009 | |||||||
Assets |
||||||||
Investments in real estate |
||||||||
Total investments in properties |
$ | 6,906,176 | $ | 6,708,660 | ||||
Accumulated depreciation and amortization |
(1,268,093 | ) | (1,113,808 | ) | ||||
Net investments in properties |
5,638,083 | 5,594,852 | ||||||
Investments in unconsolidated joint ventures |
883,241 | 462,130 | ||||||
Properties held for sale or contribution, net |
242,098 | 214,426 | ||||||
Net investments in real estate |
6,763,422 | 6,271,408 | ||||||
Cash and cash equivalents and restricted cash |
228,415 | 206,077 | ||||||
Accounts receivable, net |
167,735 | 155,958 | ||||||
Other assets |
213,323 | 208,515 | ||||||
Total assets |
$ | 7,372,895 | $ | 6,841,958 | ||||
Liabilities and equity |
||||||||
Liabilities |
||||||||
Secured debt |
$ | 962,434 | $ | 1,096,554 | ||||
Unsecured senior debt |
1,685,956 | 1,155,529 | ||||||
Unsecured credit facilities |
268,933 | 477,630 | ||||||
Other debt |
413,976 | 482,883 | ||||||
Accounts payable and other liabilities |
339,474 | 338,042 | ||||||
Total liabilities |
3,670,773 | 3,550,638 | ||||||
Equity |
||||||||
Stockholders equity |
||||||||
Common equity |
3,097,311 | 2,716,604 | ||||||
Preferred equity |
223,412 | 223,412 | ||||||
Total stockholders equity |
3,320,723 | 2,940,016 | ||||||
Noncontrolling interests |
||||||||
Joint venture partners |
325,590 | 289,909 | ||||||
Limited
partnership unitholders |
55,809 | 61,395 | ||||||
Total noncontrolling interests |
381,399 | 351,304 | ||||||
Total equity |
3,702,122 | 3,291,320 | ||||||
Total liabilities and equity |
$ | 7,372,895 | $ | 6,841,958 | ||||
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
Exhibit | ||
Number | Description | |
99.1
|
AMB Property Corporation Press Release dated February 3, 2011 |
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: February 3, 2011 | By: | /s/ Tamra D. Browne | ||
Tamra D. Browne | ||||
Senior Vice President, General Counsel & Secretary |
Exhibits
Exhibit | ||
Number | Description | |
99.1
|
AMB Property Corporation Press Release dated February 3, 2011 |