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
| ITEM 5 OTHER EVENTS. | ||||||||
| SIGNATURES | ||||||||
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
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
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.
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 | ||||
