-- Earnings per share (EPS) for the quarter were $0.34, reflecting a
12.8% decline from the third quarter 2000; year-to-date EPS increased
10.4% to $1.17
-- Adjusted EPS (before gains and extraordinary and one-time items)
increased 6.3% from the third quarter of 2000 to $0.34
-- Funds from operations (FFO) per share increased 6.8% from the
third quarter 2000 to $0.63
-- Same store net operating income (NOI) growth was 6.7% for the quarter
and 7.2% year-to-date
-- Occupancy was 96.6% in the industrial portfolio, up from 95.9% at
June 30, 2001
-- Industrial acquisitions totaled $118.1 million and dispositions totaled
$97.3 million including $57.2 million of retails assets
-- Repurchased 1.0 million shares of common stock
-- AMB Institutional Alliance Fund II announces $195 million of
third party equity commitments
SAN FRANCISCO, Oct. 8 /PRNewswire/ -- AMB Property Corporation
"I am very pleased with our strong results in this difficult operating environment. Our overall same store net operating income grew by 6.7% compared to the third quarter of 2000. Our top eight hub and gateway markets, which account for 72.7% of our total revenues, outperformed our entire portfolio with 9.6% same store NOI growth. Our strategy of focusing on the supply constrained submarkets of our hub and gateway markets helped us achieve portfolio-wide occupancy of 96.6% and increase rents by 14.4%. The San Francisco Bay Area came in as our strongest market with an overall occupancy of 99.0%," stated Hamid Moghadam, chairman & chief executive officer. "As we have said before, we anticipate that it will become increasingly difficult to continue to produce operating results at this level, however we will continue to work hard to outperform on a relative basis."
Earnings growth for the quarter was positively impacted by the sale of a value-added conversion project by AMB's subsidiary, Headlands Realty, of $1.3 million. Gains on dispositions of operating properties of $8.8 million was offset by unrealized losses taken against two retail assets held for sale totaling $10.0 million. In the third quarter 2000, AMB recognized gains of $5.8 million. Growth in earnings before gains and extraordinary and one-time items was driven by continued strong operating performance at the company's industrial properties. Same store cash basis NOI growth was 6.7% with a 16.8% increase in same store base rents on lease renewals and rollovers during the quarter, and 65.7% tenant retention at the same store properties. Year-to-date same store NOI growth was 7.2%. Rent increases on renewals and rollovers during the quarter for the entire industrial portfolio were 14.4% and tenant retention was 68.4%. Occupancy for the industrial portfolio was 96.6%, up from 95.9% at the end of the second quarter. The eight hub and gateway markets had occupancy of 97.0%.
Funds from operations (FFO) per fully diluted share were $0.63, including $0.01 per share of gains from Headlands Realty, and reflecting an increase of 6.8% over the third quarter of 2000. Excluding these gains FFO per share was $0.61, an increase of 3.4% over 2000. FFO growth for the quarter was offset by $0.04 from dilution of dispositions and contributions to co-investment ventures earlier in 2001. Year-to-date FFO per share decreased 4.1% to $1.64, negatively impacted by non-cash charges for impairment reserves of $0.23 per share. Excluding the charges, year-to-date FFO per share increased 9.4% to $1.87.
"Since the beginning of the year, AMB has continued to build liquidity by raising private equity capital, disposing of non-core assets and opportunistically raising long-term capital which has resulted in a reduction of our debt-to-book capitalization ratio by 170 basis points," stated W. Blake Baird, president. "It is important to be well positioned with a strong balance sheet in an economic downturn, and we believe this liquidity, including more than $250 million of cash on hand, will enable AMB to execute on opportunities in both the real estate and capital markets."
In the third quarter, AMB purchased 16 industrial buildings totaling 1.7 million square feet for $118.1 million and disposed of $97.3 million of non-core assets, including the largest remaining retail asset for $52.9 million. Industrial development completions totaled 336,000 square feet for $26.8 million, and retail development deliveries totaled 229,000 square feet for $38.9 million. The remaining industrial development commitments through 2003 total $204.6 million, down $49.6 million since the second quarter, and are 43% pre-leased with 67% of the total estimated investment funded. AMB's development commitments represent only 4.2% of total assets.
AMB Institutional Alliance Fund II, a multi-investor fund including pension funds, foundations, endowments and private individuals that co-invest alongside AMB, announced an additional $36 million of private equity capital commitments subsequent to June 30, 2001, bringing the expected total capitalization of Fund II to $487 million when combined with debt financings and AMB's 20% equity investment. Fund II had $136 million invested in operating properties at September 30, 2001.
During the quarter, AMB issued $40 million of fixed rate perpetual preferred units at a coupon of 7.95% and sold $25 million of 10-year notes at a fixed rate of 6.75%. At the end of the quarter, AMB had no outstanding borrowings on its $500 million line of credit. AMB repurchased 1.0 million shares of its common stock for $24.7 million. Under the company's previously announced $100 million share repurchase program, AMB has repurchased a total of 2.5 million common shares in the open market for $52.6 million.
AMB will hold its third quarter 2001 conference call tomorrow, October 9, 2001 at 2:00 p.m. EDT (11:00 a.m. PDT). Stockholders and interested parties may access a webcast of the call through AMB's website at http://www.amb.com/ or a broadcast of the call by dialing 719-457-2629 reservation code 562797. For those who are not able to listen to the live broadcast, a replay will be available for one week following the call through AMB's website at http://www.amb.com/ or by dialing 719-457-0820, reservation code 562797.
AMB Property Corporation is one of the leading owners and operators of industrial real estate nationwide. As of September 30, 2001, AMB owned, managed and had renovation and development projects totaling 92.6 million square feet and 996 buildings in 26 metropolitan markets. AMB targets High Throughput Distribution(TM) properties -- industrial properties located in major distribution markets near airports, seaports and ground transportation systems. These HTD(TM) facilities are built for speed and benefit from barriers to entry due to their supply-constrained locations and proximity to large customer bases. AMB -- A tradition of nontraditional thinking(TM).
AMB's press releases are available on the company website at http://www.amb.com/ or by contacting the Investor Relations department toll-free at 877-285-3111.
This press release contains forward-looking statements about business strategy and future plans, which are made pursuant to the safe-harbor provisions of Section 21E of the Securities Exchange Act of 1934. Forward-looking statements involve numerous risks and uncertainties and should not be relied upon as predictions of future events. The events or circumstances reflected in our forward-looking statements might not occur. In particular, a number of factors could cause AMB's actual results to differ materially from those anticipated, including, among other things, defaults on or non-renewal of leases by tenants, increased interest rates and operating costs, AMB's failure to obtain necessary outside financing, difficulties in identifying properties to acquire and in effecting acquisitions, AMB's failure to successfully integrate acquired properties and operations, AMB's failure to timely reinvest proceeds from any such dispositions, risks and uncertainties affecting property development and construction (including construction delays, cost overruns, AMB's inability to obtain necessary permits and public opposition to these activities), AMB's failure to qualify and maintain its status as a real estate investment trust under the Internal Revenue Code, environmental uncertainties, risks related to natural disasters, financial market fluctuations, risks arising from the California energy shortage, changes in real estate and zoning laws and increases in real property tax rates. AMB's success also depends upon economic trends generally, including interest rates, income tax laws, governmental regulation, legislation and population changes. For further information on these and other factors that could impact AMB and the statements contained herein, reference should be made to AMB's filings with the Securities and Exchange Commission, including AMB's quarterly report on Form 10-Q for the quarter ended June 30, 2001.
Consolidated Balance Sheets
(dollars in thousands)
As of
September 30, June 30, March 31, December 31,
2001 2001 2001 2000
Assets
Investments in
real estate:
Total investments
in properties $4,433,847 $4,361,498 $4,084,799 $4,026,597
Accumulated
depreciation (239,144) (213,923) (202,188) (177,467)
Net investments
in properties 4,194,703 4,147,575 3,882,611 3,849,130
Investment in
unconsolidated joint
ventures 85,707 83,865 85,317 80,432
Properties held for
divestiture, net 106,054 96,209 236,746 197,146
Net investments in
real estate 4,386,464 4,327,649 4,204,674 4,126,708
Cash and cash
equivalents 256,872 176,584 152,224 42,722
Mortgage receivables 92,232 92,250 121,297 115,969
Accounts receivable, net 68,811 68,982 67,482 69,874
Investments in affiliated
companies (A) -- -- 47,285 35,731
Investments in other
companies, net (B) -- -- 15,343 15,965
Other assets 27,245 56,700 29,839 18,657
Total assets $4,831,624 $4,722,165 $4,638,144 $4,425,626
Liabilities and
Stockholders' Equity
Secured debt $1,102,801 $1,058,247 $1,014,054 $940,276
Unsecured senior debt
securities 780,000 755,000 755,000 680,000
Unsecured credit facility -- -- 94,000 216,000
Alliance Fund II credit
facility 125,000 98,100 -- --
Other liabilities 197,377 201,031 177,915 147,042
Total liabilities 2,205,178 2,112,378 2,040,969 1,983,318
Minority interests:
Preferred units 381,834 342,966 342,911 318,053
Minority interests 477,224 476,937 457,372 356,325
Total minority
interests 859,058 819,903 800,283 674,378
Stockholders' equity:
Common stock 1,671,288 1,693,784 1,700,792 1,671,830
Preferred stock 96,100 96,100 96,100 96,100
Total stockholders'
equity 1,767,388 1,789,884 1,796,892 1,767,930
Total liabilities
and stockholders'
equity $4,831,624 $4,722,165 $4,638,144 $4,425,626
(A) On May 31, 2001, the Company acquired all of the voting stock of
Headlands Realty Corporation and its Investment Management Division.
The Company began consolidating Headlands Realty Corporation and its
Investment Management Division for financial reporting purposes
effective May 31, 2001.
(B) Net of impairment reserves totaling $23.2 million at
September 30, 2001, and June 30, 2001, $7.2 million at March 31, 2001,
and $2.5 million at December 31, 2000.
Consolidated Statements of Operations
(dollars in thousands, except share data)
For the Quarters For the Nine Months
Ended Ended
September 30, September 30,
2001 2000 2001 2000
Revenues
Rental revenues (A) $146,089 $118,493 $421,425 $337,356
Equity in earnings of
unconsolidated joint
ventures 1,636 1,447 4,365 4,006
Investment management
income (B) 2,340 940 8,022 2,160
Interest and other income 5,392 491 12,505 1,651
Total revenues 155,457 121,371 446,317 345,173
Operating Expenses
Property operating 35,349 27,394 101,909 77,455
Interest, including
amortization (C) 32,996 22,562 94,754 62,906
Depreciation and
amortization (D) 38,961 23,312 93,138 65,135
General, administrative,
and other (B) 8,796 5,987 26,180 17,322
Loss on investments in
other companies -- -- 20,758 --
Total expenses 116,102 79,255 336,739 222,818
Income from operations 39,355 42,116 109,578 122,355
Minority interests:
Preferred units (7,423) (6,206) (21,626) (17,778)
Minority interests (10,556) (6,879) (26,324) (14,899)
Total minority
interests (17,979) (13,085) (47,950) (32,677)
Net income before
gain from disposition
of real estate 21,376 29,031 61,628 89,678
Gains on developments held
for sale 1,341 -- 1,341 --
Gain from disposition of
real estate, net of
minority interests 8,773 5,815 43,332 6,220
Net income before
extraordinary items 31,490 34,846 106,301 95,898
Extraordinary items
(early debt extinguishments) 87 -- (351) --
Net income 31,577 34,846 105,950 95,898
Preferred stock dividends (2,125) (2,125) (6,375) (6,375)
Net income available to
common stockholders $29,452 $32,721 $99,575 $89,523
Net income per common share:
Basic $0.35 $0.39 $1.18 $1.07
Diluted $0.34 $0.39 $1.17 $1.06
Weighted average common
shares:
Basic 84,395,107 84,115,613 84,135,158 83,937,884
Diluted 85,644,840 84,725,109 85,097,692 84,237,861
(A) Includes straight-line rents of $4,113 and $1,815 for the quarters and
$7,579 and $7,158 for nine months ended September 30, 2001 and 2000,
respectively.
(B) On May 31, 2001, the Company acquired all of the voting stock of
Headlands Realty Corporation and its Investment Management Division.
The Company began consolidating Headlands Realty Corporation and its
Investment Management Division for financial reporting purposes
effective May 31, 2001.
(C) Net of capitalized interest of $3,616 and $4,330 for the quarters and
$10,814 and $11,524 for the nine months ended September 30, 2001 and
2000, respectively.
(D) Includes unrealized losses on assets held for sale of $10.0 million
for the quarter and nine months ended September 30, 2001.
Consolidated Statements of Funds From Operations
(dollars in thousands, except share data)
For the Quarters For the Nine Months
Ended Ended
September 30, September 30,
2001 2000 2001 2000
Income from operations $39,355 $42,116 $109,578 $122,355
Gains on developments held
for sale 1,341 -- 1,341 --
Real estate related
depreciation and
amortization:
Total depreciation and
amortization 38,961 23,312 93,138 65,135
FF& E Depreciation and
ground lease
amortization (A) (483) (223) (1,456) (857)
FFO attributable to
minority interests (B) (13,393) (4,262) (29,119) (9,569)
Adjustments to derive FFO
from unconsolidated
JV's: (C)
Company's share of
net income (1,636) (1,447) (4,365) (4,006)
Company's share of FFO 2,235 1,941 6,488 5,488
Preferred stock dividends (2,125) (2,125) (6,375) (6,375)
Preferred units
distributions (7,423) (6,206) (21,626) (17,778)
Funds from operations $56,832 $53,106 $147,604 $154,393
FFO per common share
and unit:
Basic $0.63 $0.59 $1.65 $1.72
Diluted (D) $0.63 $0.59 $1.64 $1.71
Weighted average common
shares and units:
Basic 89,550,154 89,898,511 89,300,512 89,804,970
Diluted (D) 90,799,887 90,508,007 90,263,046 90,104,947
(A) 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.
(B) Represents FFO attributable to minority interests in consolidated
joint ventures whose interests are not exchangeable into common stock.
The minority interest's share of NOI for the quarters ended
September 30, 2001 and 2000, was $18,203 and $6,796, respectively, and
for the nine months ended September 30, 2001 and 2000, was $44,423 and
$16,937, respectively.
(C) AMB's share of NOI for the quarters ended September 30, 2001 and 2000,
was $2,743 and $2,231, respectively, and for the nine months ended
September 30, 2001 and 2000, was $7,824 and $6,340, respectively.
(D) Includes the dilutive effect of stock options.
SOURCE: AMB Property Corporation
Contact: investors, Victoria R. Heffelfinger, Vice President - Investor
Relations, 877-285-3111, or fax, +1-415-394-9001, or
Christine G. Schadlich, Vice President - Corporate Communications,
+1-415-733-5233, or fax, +1-415-394-9001, or
Property Corporation
Website: http://www.amb.com/
