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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

------------------------

FORM 10-Q
------------------------

(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER: 001-13545

------------------------

AMB PROPERTY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

MARYLAND 94-3281941
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
505 MONTGOMERY ST., SAN FRANCISCO, CALIFORNIA 94111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

(415) 394-9000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

------------------------

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 [X] No [ ]

As of July 31, 1998, there were 85,874,513 shares of the Registrant's
common stock, $0.01 par value per share, outstanding.

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2

AMB PROPERTY CORPORATION

INDEX

PAGE
----

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets as of December 31,
1997 and June 30, 1998 (unaudited)................. 1

Consolidated Statements of Operations for the
six and three months ended June 30, 1997 and 1998
(unaudited)........................................ 2

Consolidated Statements of Cash Flows for the
six months ended June 30, 1997 and 1998
(unaudited)........................................ 3

Consolidated Statement of Stockholders' Equity
for the six months ended June 30, 1998
(unaudited)........................................ 4

Notes to Consolidated Financial Statements
(unaudited)........................................ 5

Item 2. Management's Discussion and Analysis of Financial
Condition and Results
of Operations................................... 10

Item 3. Quantitative and Qualitative Disclosures About
Market Risk............................................

PART II. OTHER INFORMATION

Item 1. Legal Proceedings................................. 17

Item 2. Changes in Securities............................. 17

Item 3. Defaults Upon Senior Securities................... 17

Item 4. Submission of Matters to a Vote of Security
Holders................................................ 18

Item 5. Other Information................................. 18

Item 6. Exhibits and Reports on Form 8-K.................. 19

i
3

PART I

ITEM 1. FINANCIAL STATEMENTS

AMB PROPERTY CORPORATION

CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND JUNE 30, 1998
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

ASSETS

DECEMBER 31, 1997 JUNE 30, 1998
----------------- -------------

Investments in real estate:
Land...................................................... $ 550,635 $ 654,926
Buildings and improvements................................ 1,822,516 2,163,452
Construction in progress.................................. 69,848 111,346
---------- ----------
Total investments in properties................... 2,442,999 2,929,724
Accumulated depreciation and amortization................. (4,153) (29,252)
---------- ----------
Net investments in properties..................... 2,438,846 2,900,472
Investment in unconsolidated joint venture................ -- 67,149
---------- ----------
Net investments in real estate.................... 2,438,846 2,967,621
Cash and cash equivalents................................... 39,968 29,167
Other assets................................................ 27,441 36,318
---------- ----------
Total assets...................................... $2,506,255 $3,033,106
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Debt:
Unsecured credit facilities............................... $ 150,000 $ 137,000
Senior debt securities.................................... -- 400,000
Secured debt.............................................. 535,652 592,430
---------- ----------
Total debt........................................ 685,652 1,129,430
Other liabilities........................................... 49,350 84,508
Payable to affiliates....................................... 38,071 --
---------- ----------
Total liabilities................................. 773,073 1,213,938
Commitments and contingencies............................... -- --
Minority interests.......................................... 65,152 149,751
Stockholders' equity:
Common stock, $0.01 par value, 500,000,000 shares
authorized, 85,874,513 issued and outstanding.......... 859 859
Additional paid-in capital................................ 1,667,171 1,668,558
Retained earnings......................................... -- --
---------- ----------
Total stockholders' equity........................ 1,668,030 1,669,417
---------- ----------
Total liabilities and stockholders' equity........ $2,506,255 $3,033,106
========== ==========

The accompanying notes are an integral part of these consolidated financial
statements.
1
4

AMB PROPERTY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 1997 AND 1998
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

FOR THE SIX MONTHS ENDED FOR THE THREE MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- ---------------------------
1997 1998 1997 1998
---------- ----------- ----------- ------------

REVENUES
Rental revenues....................... $ -- $ 159,003 $ -- $ 84,401
Investment management and other
income............................. 11,083 1,796 5,971 613
---------- ----------- ---------- -----------
Total revenues................ 11,083 160,799 5,971 85,014

OPERATING EXPENSES
Property operating expenses........... -- 21,231 -- 11,227
Real estate taxes..................... -- 21,273 -- 11,025
General and administrative............ -- 5,862 -- 3,144
Interest, including amortization...... -- 27,561 -- 15,720
Depreciation and amortization......... -- 25,302 -- 13,516
Investment management expenses........ 8,319 -- 4,446 --
---------- ----------- ---------- -----------
Total operating expenses...... 8,319 101,229 4,446 54,632
---------- ----------- ---------- -----------
Income from operations before
minority interests.......... 2,764 59,570 1,525 30,382
Minority interests' share of net
income............................. -- (3,686) -- (2,404)
---------- ----------- ---------- -----------
Net income available to common
stockholders................ $ 2,764 $ 55,884 $ 1,525 $ 27,978
========== =========== ========== ===========

INCOME PER SHARE OF COMMON STOCK
Basic................................. $ 0.54 $ 0.65 $ 0.30 $ 0.33
========== =========== ========== ===========
Diluted............................... $ 0.54 $ 0.65 $ 0.30 $ 0.32
========== =========== ========== ===========

WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
Basic................................. 5,079,855 85,874,513 5,079,855 85,874,513
========== =========== ========== ===========
Diluted............................... 5,079,855 86,222,175 5,079,855 86,253,456
========== =========== ========== ===========

The accompanying notes are an integral part of these consolidated financial
statements.
2
5

AMB PROPERTY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1998
(UNAUDITED, DOLLARS IN THOUSANDS)

FOR THE SIX MONTHS ENDED
JUNE 30,
------------------------
1997 1998
--------- -----------

CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................................. $ 2,764 $ 55,884
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. -- 25,302
Straight-line rents....................................... -- (5,489)
Amortization of debt premiums and financing costs......... -- (1,274)
Minority interests' share of net income................... -- 3,686
Equity in income of AMB Investment Management............. -- 95
Changes in assets and liabilities:
Other assets.............................................. 236 (6,958)
Other liabilities......................................... 2,816 4,474
------- ---------
Net cash provided by operating activities.............. 5,816 75,720
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for property acquisitions......................... -- (246,213)
Additions to land and building improvements................. -- (16,922)
Additions to tenant improvements and leasing costs.......... -- (4,965)
Additions to construction in progress....................... -- (25,319)
Acquisition of interest in unconsolidated joint venture..... -- (67,149)
Reduction of payable to affiliates in connection with
Formation Transactions.................................... -- (38,071)
------- ---------
Net cash used in investing activities.................. -- (398,639)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on unsecured credit facilities................... -- 382,000
Borrowings on secured debt.................................. -- 16,914
Payments on unsecured credit facilities..................... -- (395,000)
Payments on secured debt.................................... -- (59,545)
Proceeds from issuance of senior debt securities............ -- 399,166
Dividends paid to shareholders.............................. -- (29,413)
Distributions to minority interests......................... -- (2,004)
Deferred offering costs..................................... (2,291) --
Distributions to stockholders of Predecessor................ (5,754) --
Principal payment of notes receivable from stockholders of
Predecessor............................................... 363 --
------- ---------
Net cash provided by (used in) financing activities.... (7,682) 312,118
Net decrease in cash and cash equivalents................... (1,866) (10,801)
Cash and cash equivalents at beginning of period............ 2,783 39,968
------- ---------
Cash and cash equivalents at end of period.................. $ 917 $ 29,167
======= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest.................................................. $ -- $ 26,583
======= =========
Property acquisitions:
Acquisitions of properties................................ $ -- $ 434,353
Assumption of secured debt................................ -- (99,623)
Minority interests' contribution.......................... -- (88,517)
------- ---------
Cash paid for property acquisitions....................... $ -- $ 246,213
======= =========

The accompanying notes are an integral part of these consolidated financial
statements.

3
6

AMB PROPERTY CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED, DOLLARS IN THOUSANDS)

COMMON STOCK
------------------- ADDITIONAL
NUMBER PAID-IN RETAINED
OF SHARES AMOUNT CAPITAL EARNINGS TOTAL
---------- ------ ---------- -------- ----------

BALANCE AT DECEMBER 31, 1997.............. 85,874,513 $859 $1,667,171 $ -- $1,668,030
Net income.............................. -- -- -- 55,884 55,884
Reallocation of Limited Partners'
interests in Operating Partnership... -- -- 4,328 -- 4,328
Distributions declared to AMB Property
Corporation stockholders............. -- -- (2,941) (55,884) (58,825)
---------- ---- ---------- -------- ----------
BALANCE AT JUNE 30, 1998.................. 85,874,513 $859 $1,668,558 $ -- $1,669,417
========== ==== ========== ======== ==========

The accompanying notes are an integral part of these consolidated financial
statements.
4
7

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND UNIT AMOUNTS)

1. ORGANIZATION AND FORMATION

AMB Property Corporation, a Maryland corporation (the "Company"), commenced
operations as a fully integrated real estate company effective with the
completion of its initial public offering (the "IPO") on November 26, 1997. The
Company expects to be taxed as a real estate investment trust ("REIT") under
Sections 856 through 860 of the Internal Revenue Code of 1986 (the "Code"), as
amended. The Company, through its controlling interest in its subsidiary AMB
Property, L.P., a Delaware limited partnership (the "Operating Partnership"), is
engaged in the acquisition, ownership, operation, management, renovation,
expansion and development of industrial buildings and community shopping centers
in target markets nationwide. Unless the context otherwise requires, the
"Company" means AMB Property Corporation, the Operating Partnership and its
other controlled subsidiaries.

The Company and the Operating Partnership were formed shortly before
consummation of the IPO. AMB Institutional Realty Advisors, Inc., a California
corporation and registered investment advisor (the "Predecessor") formed AMB
Property Corporation, a wholly owned subsidiary, and merged with and into the
Company (the "Merger") in exchange for 4,746,616 shares of the Company's Common
Stock. In addition, the Company and the Operating Partnership acquired, through
a series of mergers and other transactions, 31.8 million rentable square feet of
industrial property and 6.3 million rentable square feet of retail property in
exchange for 65,022,185 shares of the Company's Common Stock, 2,542,163 limited
partner interests ("LP Units") in the Operating Partnership, the assumption of
debt and, to a limited extent, cash. The net assets of the Predecessor and the
properties acquired with Common Stock were contributed to the Operating
Partnership in exchange for 69,768,801 units. The purchase method of accounting
was applied to the acquisition of the properties. Collectively, the Merger and
the other formation transactions described above are referred to as the
"Formation Transactions."

On November 26, 1997, the Company completed its IPO of 16,100,000 shares of
Common Stock, $0.01 par value per share (the "Common Stock") for $21.00 per
share, resulting in gross offering proceeds of approximately $338,100. Net of
underwriters' commission and offering costs aggregating $38,068, the Company
received approximately $300,032 in proceeds from the IPO. The net proceeds of
the IPO were used to repay indebtedness, to purchase interests from certain
investors who elected not to receive shares or units in connection with the
Formation Transactions, to fund property acquisitions, and for general corporate
working capital requirements.

As of June 30, 1998, the Company owned an approximate 95.8% general partner
interest in the Operating Partnership. The remaining 4.2% limited partner
interest is owned by nonaffiliated investors. For local law purposes, properties
in certain states are owned through limited partnerships and limited liability
companies owned 99% by the Operating Partnership and 1% by a wholly owned
subsidiary of the Company. The ownership of such properties through such
entities does not materially affect the Company's overall ownership of the
interests in the properties. As the sole general partner of the Operating
Partnership, the Company has the full, exclusive and complete responsibility and
discretion in the day-to-day management and control of the Operating
Partnership.

In connection with the Formation Transactions, the Operating Partnership
formed AMB Investment Management, Inc., a Maryland corporation ("AMB Investment
Management"). The Operating Partnership purchased 100% of AMB Investment
Management's non-voting preferred stock (representing a 95% economic interest
therein). Certain executive officers of the Company collectively purchased 100%
of the Investment Management Subsidiary's voting common stock (representing a 5%
economic interest therein). The Operating Partnership accounts for its
investment in AMB Investment Management using the equity method of accounting.
AMB Investment Management was formed to succeed to the Predecessor's investment
management business of providing real estate investment management services on a
fee basis to clients.

5
8
AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND UNIT AMOUNTS)

As of June 30, 1998, the Company owned 500 industrial buildings and retail
centers, consisting of 463 industrial buildings (the "Industrial Properties")
and 37 retail centers (the "Retail Properties") located in 28 markets throughout
the United States. The Industrial Properties, principally warehouse distribution
buildings, encompass approximately 47.7 million rentable square feet and, as of
June 30, 1998, were 95.1% leased to over 1,200 tenants. The Retail Properties,
principally grocer-anchored community shopping centers, encompass approximately
6.8 million rentable square feet and, as of the same date, were 95.0% leased to
over 900 tenants. The Industrial Properties and the Retail Properties
collectively are referred to as the "Properties."

2. INTERIM FINANCIAL STATEMENTS

The consolidated financial statements included herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Accordingly, certain information and note disclosures normally included in the
annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The consolidated financial
statements for prior periods have been reclassified to conform to current
classifications with no effect on results of operations. In the opinion of
management, the accompanying unaudited consolidated financial statements contain
all adjustments, of a normal recurring nature, necessary for a fair presentation
of the Company's consolidated financial position and results of operations for
the interim periods.

The interim financial information for the six months and for the three
months ended June 30, 1997, represents the results of the Predecessor, an
investment manager. The Predecessor's revenues consisted primarily of fees
earned in connection with real estate investment management services. As such,
information presented for the six months and for the three months ended June 30,
1997 and 1998 is not comparable given the differences in lines of business
between the Company and the Predecessor.

The interim results of the six and three months ended June 30, 1997 and
1998 are not necessarily indicative of the results expected for the entire year.
These financial statements should be read in conjunction with the financial
statements and the notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1997.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

6
9
AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND UNIT AMOUNTS)

3. DEBT

In connection with the Formation Transactions, the Company assumed certain
secured debt with an aggregate principal value of $517,031 and a fair value of
$535,613. The difference between the principal value and the fair value was
recorded as a debt premium. The debt premium is being amortized into interest
expense over the term of the related debt instruments using the effective
interest method. As of June 30, 1998, the unamortized debt premium was $16,799.
As of June 30, 1998, debt, excluding unamortized debt premiums, consists of the
following:

Unsecured credit facilities, variable interest at LIBOR plus
90 basis points (6.59% at June 30, 1998), $50,000 due July
1998, remainder due November 2000......................... $ 137,000
Senior debt securities, weighted average interest rate of
7.18%, due June 2008, June 2015 and June 2018............. 400,000
Secured debt, varying interest rates from 4.00% to 10.38%
due November 1998 to January 2014......................... 575,631
----------
Total Debt........................................ $1,112,631
==========

Secured debt generally requires monthly principal and interest payments.
The secured debt is secured by deeds of trust on certain Properties. All of the
secured debt bears interest at fixed rates, except for two loans totaling $9,173
which bear interest at variable rates. The secured debt has various financial
and non-financial covenants. Additionally, certain of the secured debt is
cross-collateralized. The weighted-average fixed interest rate on secured debt
at June 30, 1998, was 7.91%.

The Company has a $500,000 unsecured revolving credit agreement (the
"Credit Facility") with Morgan Guaranty Trust Company of New York as agent, and
a syndicate of twelve other banks. The Credit Facility has a term of three
years, and is subject to a fee that accrues on the daily average undrawn funds,
which varies between 15 and 25 basis points of the undrawn funds based on the
Company's credit rating (15 basis points at June 30, 1998). The Credit Facility
has various financial and non-financial covenants. In addition, in April 1998,
the Company obtained a $50,000 unsecured acquisition facility from NationsBank,
bearing interest at LIBOR plus 90 basis points (6.59% at June 30, 1998). The
$50,000 unsecured acquisition facility was repaid in July 1998.

Capitalized interest related to construction projects for the six and three
months ended June 30, 1998, was $3,098 and $1,845, respectively. There was no
capitalized interest for periods prior to the Formation Transactions.

The scheduled maturities of the secured debt as of June 30, 1998 are as
follows:

1998...................................... $ 16,939
1999...................................... 11,188
2000...................................... 13,192
2001...................................... 38,698
2002...................................... 54,364
Thereafter................................ 441,250
--------
$575,631
========

7
10
AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND UNIT AMOUNTS)

In June 1998, the Company issued $400,000 aggregate principal amount of
unsecured notes ("Senior Debt Securities") in an underwritten public offering,
the net proceeds of which were used to repay amounts outstanding under the
unsecured credit facilities. As of June 30, 1998, the Senior Debt Securities
consisted of the following:

PRINCIPAL INTEREST
AMOUNT RATE MATURITY
--------- -------- ---------

2008 Notes...................................... $175,000 7.10% June 2008
2015 Notes -- Putable/Callable 2005............. 100,000 6.90 June 2015
2018 Notes...................................... 125,000 7.50 June 2018
-------- ----
Total/Weighted Average................ $400,000 7.18%
======== ====

Interest on the Senior Debt Securities is payable semiannually in each June
and December commencing December 1998. The 2015 notes are putable and callable
in June 2005.

4. MINORITY INTERESTS

Minority interests in the Company represent the limited partnership
interests in the Operating Partnership and interests held by certain third
parties (some of which are Institutional Alliance Partners(TM)) in 14 real
estate joint ventures that are consolidated for financial reporting purposes.
Such investments are consolidated because (i) the Company owns a majority
interest, or (ii) the Company holds significant control over the entity through
a 50% or greater ownership interest combined with the ability to control major
operating decisions such as approval of budgets, selection of property managers
and changes in financing.

The following table sets forth the minority interest ownership held by
certain joint ventures, Institutional Alliance Partners(TM) and the limited
partners' interests in the Operating Partnership as of June 30, 1998.

Minority Interest -- Joint Ventures......................... $ 15,649
Minority Interest -- Institutional Alliance Partners(TM).... 61,031
Minority Interest -- Limited Partners....................... 73,071
--------
$149,751
========

5. STOCKHOLDERS' EQUITY

On June 19, 1998, the Company and the Operating Partnership declared a
quarterly cash distribution of $0.3425 per share of common stock and operating
partnership unit, payable on July 9, 1998, to stockholders and unitholders of
record as of June 30, 1998.

6. EARNINGS PER SHARE

The Company's only dilutive securities outstanding for the six and three
months ended June 30, 1998 were stock options issued under its stock incentive
plan. The effect of the stock options was to increase weighted average shares
outstanding by 347,662 and 378,943 shares for the six and three months ended
June 30, 1998, respectively. Such dilution was computed using the treasury stock
method. The Predecessor had no dilutive securities outstanding during the six
months ended June 30, 1997.

8
11
AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND UNIT AMOUNTS)

7. PRO FORMA INFORMATION

The following summary unaudited pro forma financial information for the six
and three months ended June 30, 1997 has been prepared as if the Formation
Transactions, the IPO (as described in Note 1) and property acquisitions and
dispositions during the year ended December 31, 1997 had occurred on January 1,
1997. The pro forma financial information does not purport to present the
consolidated results that would have occurred if the aforementioned transactions
had been consummated on January 1, 1997, nor does it purport to be indicative of
the consolidated results of operations for future periods.

FOR THE SIX FOR THE THREE
MONTHS ENDED MONTHS ENDED
JUNE 30, 1997 JUNE 30, 1997
------------- -------------

Total revenues.................................... $ 139,232 $ 70,610
Income from operations before minority
interests....................................... 49,809 25,482
Net income available to common stockholders....... 47,109 23,767
Income Per Share of Common Stock
Basic........................................... $ 0.55 $ 0.28
=========== ===========
Diluted......................................... $ 0.55 $ 0.28
=========== ===========
Weighted Average Common Shares Outstanding
Basic........................................... 85,874,513 85,874,513
=========== ===========
Diluted......................................... 85,874,513 85,874,513
=========== ===========

8. SUBSEQUENT EVENTS

On July 27, 1998, the Company sold 4,000,000 shares of 8.5% Series A
cumulative redeemable preferred stock for $100,000 in an underwritten public
offering. The net proceeds of $96,850 from the offering were used to repay
borrowings under the Credit Facility, for property acquisitions and for other
general corporate purposes.

9
12

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion and analysis of the consolidated financial
condition and results of operations should be read in conjunction with the Notes
to Consolidated Financial Statements. Statements contained herein which are not
historical facts may be forward looking statements. Forward-looking statements
can be identified 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 thereof or
other variations thereof or comparable terminology, or by discussions of
strategy, plans or intentions. Forward-looking statements involve numerous risks
and uncertainties and should not be relied upon as predictions of future events,
and there can be no assurance that the events or circumstances reflected in such
forward-looking statements will be achieved or occur. 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
or non-renewal of leases, increased interest rates and operating costs, failure
to obtain necessary outside financing, difficulties in identifying properties to
acquire and in effecting acquisitions, failure to successfully integrate
acquired properties and operations, risks and uncertainties affecting property
development and construction (including, without limitation, construction
delays, cost overruns, inability to obtain necessary permits and public
opposition to such activities), the Company's failure to qualify and maintain
its status as a real estate investment trust under the Internal Revenue Code of
1986, as amended, environmental uncertainties, risks related to natural
disasters, financial market fluctuations, changes in real estate and zoning laws
and increases in real property tax rates. The success of the Company also
depends upon economic trends generally, including interest rates, income tax
laws, governmental regulation, legislation, population changes and those risk
factors discussed in the section entitled "Business -- Business Risks" in the
Company's Annual Report on Form 10-K for fiscal year ended December 31, 1997.
Readers are cautioned not to place undue reliance on forward-looking statements,
which reflect management's analysis only and speak only as of the date hereof.

THE COMPANY

The Company is a fully integrated real estate company engaged in the
ownership, operation, management, acquisition, renovation, expansion and
development of industrial buildings and community shopping centers in target
markets nationwide.

INDUSTRIAL AND RETAIL PROPERTIES BY REGION
AS OF JUNE 30, 1998

INDUSTRIAL PROPERTIES RETAIL PROPERTIES TOTAL
------------------------------ --------------------------- --------------------------------
NUMBER RENTABLE NUMBER RENTABLE NUMBER OF RENTABLE
OF SQUARE % OF OF SQUARE % OF BUILDINGS SQUARE % OF
REGION BUILDINGS FEET TOTAL CENTERS FEET TOTAL AND CENTERS FEET TOTAL
------ --------- ---------- ----- ------- --------- ----- ----------- ---------- -----

Eastern....................... 77 9,864,840 20.7% 4 1,272,968 18.6% 81 11,137,808 20.4%
Midwestern.................... 103 11,868,394 24.9 4 710,833 10.4 107 12,579,227 23.1
Southern...................... 142 13,169,885 27.6 12 1,957,051 28.6 154 15,126,936 27.7
Western....................... 141 12,772,141 26.8 17 2,907,986 42.4 158 15,680,127 28.8
--- ---------- ----- -- --------- ----- --- ---------- -----
Total..................... 463 47,675,260 100.0% 37 6,848,838 100.0% 500 54,524,098 100.0%
=== ========== ===== == ========= ===== === ========== =====

ACQUISITION AND DEVELOPMENT ACTIVITY

During the second quarter, the Company invested $180.4 million in operating
properties, consisting of 48 industrial buildings aggregating 3.7 million square
feet, including $29.7 million for the Company's share of co-investments with its
Institutional Alliance Partners(TM) and $62.0 million of properties purchased
from its Institutional Alliance Partners(TM).

The Company initiated five new development projects during the quarter,
with a total estimated cost of $81.4 million upon completion in projects
aggregating 1.6 million square feet. As of June 30, 1998, the Company had 13
industrial projects under development with a total estimated investment of
$227.1 million upon completion in 5.2 million square feet, and three retail
projects under development representing an estimated investment of $81.5 million
upon completion in 654,400 square feet.

10
13

At June 30, 1998, the Company owned and operated a total of 500 industrial
buildings and retail centers totaling 54.5 million square feet in 28 markets
nationwide. In addition, the Company operated 4.6 million square feet of
property on behalf of investment management clients.

INCREASED PRESENCE IN KEY MARKETS

The Company continued to execute its research-based target market strategy
by selectively expanding its presence in key markets nationwide.

DALLAS: The Company increased its presence in this major distribution
market by 27% to 4.8 million square feet with the addition of 1.0 million
square feet of existing industrial space. In addition, the Company
currently has three development projects underway in the Dallas/Fort Worth
market, including two initiated in the second quarter and the 205,000
square foot air cargo facility on the tarmac of the Dallas/Forth Worth
Airport which was initiated in the first quarter of 1998 and is 100%
pre-leased.

NORTHERN NEW JERSEY: The Company increased its portfolio in this active
distribution market by 35% with the addition of 626,500 square feet in a
new industrial development project with Development Alliance Partner(TM)
Trammell Crow.

BALTIMORE/WASHINGTON, D.C.: The Company doubled its presence in this key
distribution market with the addition of 963,100 square feet in seven
industrial buildings. The Company now owns 1.9 million square feet in this
market.

Further investments in existing properties in excess of 400,000 square feet
were made in existing Company markets, including Minneapolis (516,000
square feet), Atlanta (469,100 square feet), and Houston (418,700 square
feet).

STRATEGIC ALLIANCE PROGRAMS(TM)

The Company has been a leader in systematically forming alliances with
local and regional real estate experts through its Stategic Alliance
Programs(TM).

DEVELOPMENT ALLIANCE PROGRAM(TM): The Company's strategy for its
Development Alliance Program(TM) is to enhance its development capability
by forming alliances with development firms with a strong local presence
and expertise.

During the second quarter, the Company initiated two development projects
with Development Alliance Partner(TM) Trammell Crow: a $29.0 million
investment in a 626,500 square foot project adjacent to the New Jersey
Turnpike and a $17.3 million investment in a 443,200 square foot project in
Orlando Central Park (the dominant industrial park in Orlando). The Company
added two new Development Alliance Partners(TM) during the quarter: Gale &
Wentworth, one of New Jersey's most prominent real estate organizations,
who will source, develop, and manage industrial projects in New Jersey; and
National Development of New England, one of the premier commercial
developers in New England, with whom the Company initiated a 415,000 square
foot industrial project during the quarter.

UPREIT ALLIANCE PROGRAM(TM): Through its UPREIT Alliance Program(TM), the
Company issues operating partnership units in exchange for properties, thus
providing additional growth for the portfolio. The Company expanded its
UPREIT Alliance Program(TM) in the second quarter through the acquisition
of a 153,600 square foot industrial property in Alsip, Illinois (a
submarket of Chicago) and a 269,800 square foot property in Atlanta. The
Company believes that UPREIT Alliance Partners(TM), who can benefit from a
tax advantaged transaction structure, have been, and will continue to be,
an attractive source of new acquisitions.

INSTITUTIONAL ALLIANCE PROGRAM(TM): The Company's strategy for its
Institutional Alliance Program(TM) is to form institutional alliances
through the co-investment program of AMB Investment Management to provide
access to private capital, including during those times when the public
markets are less attractive. Two acquisitions were made through this
program during the second quarter, with a total acquisition cost of $59.4
million, of which $29.7 million was co-invested by the Company: a 1,019,200
square foot
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industrial warehouse portfolio in Dallas/Fort Worth and a 516,000 square
foot portfolio in Minneapolis. The Company's long-standing relationships
with institutional investors is also a source of new acquisitions. During
the quarter, the Company invested $62.0 million in industrial properties
totaling 1.6 million square feet through such relationships.

During the quarter, the Company initiated a comprehensive branding program
intended to support the expansion of the Strategic Alliance Programs(TM) and to
establish consistency for all customers and users of AMB services. The Company
intends to continue its program of managing its relationships with local vendors
to take advantage of the economies of scale of a nationwide portfolio.

RESULTS OF OPERATIONS

OVERVIEW

Because of the significant impact of the Formation Transactions and the IPO
on the Company's results of operations, the discussion below is presented as
follows: (i) results of the Company and its Predecessor for the six and three
months ended June 30, 1998 and 1997, and (ii) results of the Properties for the
six and three months ended June 30, 1998 and 1997. Because the Company commenced
its operations as a REIT in connection with the IPO in November 1997, a separate
discussion of the historical operations of the Properties for the comparative
periods prior to the IPO is presented below.

COMPANY AND PREDECESSOR RESULTS OF OPERATIONS

Company and Predecessor -- Six and Three Months Ended June 30, 1998 and 1997

Rental revenues. Rental revenues, including straight-line rents, tenant
reimbursements and other property related income, totaled $160.8 and $85.0
million for the six and three months ended June 30, 1998. The Predecessor's
revenues consisted primarily of fees earned in connection with real estate
management services. As such, no such rental revenues existed for the
Predecessor for the six and three months ended June 30, 1997.

Property operating expenses and real estate taxes. Property operating
expenses, including asset management costs and real estate taxes, totaled $42.5
and $22.3 million for the six and three months ended June 30, 1998. The
Predecessor's expenses consisted primarily of salaries and other general and
administrative costs. As such, no such property operating expenses existed
during the six and three months ended June 30, 1997.

General and administrative expenses. The Company's general and
administrative expenses were $5.9 and $3.1 million for the six and three months
ended June 30, 1998, as compared to the Predecessor's investment management
expenses of $8.3 and $4.4 million for the six and three months ended June 30,
1997. Investment management expenses of the Predecessor consisted primarily of
salaries and other general and administrative expenses. The $2.4 million, or
29%, and $1.3 million, or 30%, decreases, respectively, in general and
administrative expenses is attributable to the change in the operations of the
Company from an investment manager to a fully integrated real estate company,
and the formation of AMB Investment Management. In connection with the Formation
Transactions, AMB Investment Management assumed employment and other related
costs of certain employees who transferred from the Predecessor to AMB
Investment Management for the purpose of carrying on the investment management
business.

PROPERTIES RESULTS OF OPERATIONS

The historical results of operations of the Properties for periods prior to
November 26, 1997 include Properties that were managed by the Predecessor and
exclude the results of four properties that were contributed to the Company in
the Formation Transactions that were not previously managed by the Predecessor.

The historical property financial data presented herein show significant
increases in revenues and expenses principally attributable to substantial
portfolio growth. As a result, the Company does not believe the year-to-year
financial data are comparable. Therefore, the analysis below shows (i) changes
resulting from Properties that were owned as of January 1, 1997, excluding
development projects (the "Same Store

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15

Properties"), and (ii) changes attributable to acquisition and development
activity during 1997 and 1998. For the comparison between the six and three
month periods ended June 30, 1998 and 1997, the Same Store Properties consist of
properties aggregating 30.4 million square feet. The Company's future financial
condition and results of operations, including rental revenues, may be impacted
by the acquisition of additional properties. No assurance can be given that the
past trends of revenues, expenses or income of the Company will continue in the
future at their historical rates, and any variation therefrom may be material.

Properties -- Six and Three Months Ended June 30, 1998 and 1997

Rental revenues. Rental revenues, including straight-line rents, tenant
reimbursements and other property related income, increased by $49.5 and $28.5
million, or 44% and 50%, for the six and three months ended June 30, 1998, to
$160.8 and $85.0 million, respectively, as compared with the same periods in
1997. Approximately $7.0 and $3.5 million, or 14% and 12% of this increase, was
attributable to Same Store Properties, with the remaining $42.5 and $25.0
million attributable to Properties acquired in 1997 and 1998, respectively. The
growth in rental revenues in Same Store Properties resulted primarily from the
incremental effect of rental rate increases, changes in occupancy and
reimbursement of expenses. During the trailing 12 months ended June 30, 1998,
such increase in average base rents (cash basis) was 12.1% on 7.0 million square
feet leased.

Property operating expenses and real estate taxes. Property operating
expenses, including asset management costs and real estate taxes, increased by
$8.2 and $4.6 million, or 24% and 26%, for the six and three months ended June
30, 1998, respectively, to $42.5 and $22.3 million as compared with the same
periods in 1997. Same Store Properties operating expenses decreased by
approximately $0.6 and $0.2 million for the six and three months ended June 30,
1998, respectively, while operating expenses attributable to Properties acquired
in 1998 and 1997 added $8.8 and $4.8 million, respectively. The change in Same
Store Properties operating expenses and real estate taxes relates to increases
in Same Store Properties real estate taxes and insurance expense of
approximately $0.2 and $0.1 million for the six and three months ended June 30,
1998, respectively, offset by decreases in Same Store Properties other property
operating expenses (excluding real estate taxes and insurance) of approximately
$0.8 and $0.3 million for the six and three months ended June 30, 1998,
respectively. The decrease in other property operating expenses is attributable
to lower asset management costs in 1998 as compared to 1997 resulting from the
change in ownership structure.

LIQUIDITY AND CAPITAL RESOURCES

The Company expects that its principal sources of working capital and
funding for acquisitions, development, expansion and renovation of Properties
will include borrowings under the Credit Facility, other forms of secured or
unsecured financing, proceeds from equity or debt offerings by the Company or
the Operating Partnership (including issuances of Units in the Operating
Partnership) and cash flows provided by operations. Management believes that its
sources of working capital and its ability to access private and public debt and
equity capital are adequate to continue to meet liquidity requirements for the
foreseeable future.

Capital Resources

The Company has a $500 million unsecured revolving credit agreement with
Morgan Guaranty Trust Company of New York, as agent, and a syndicate of twelve
other banks. The Credit Facility has a term of three years and is subject to a
fee that accrues on the daily average undrawn funds, which varies between 15 and
25 basis points (currently 15 basis points) of the undrawn funds based on the
Company's credit rating. The Company uses the Credit Facility principally for
acquisitions and for general working capital requirements. Borrowings under the
Credit Facility bear interest at LIBOR plus 90 to 120 basis points (currently
LIBOR plus 90 basis points), depending on the Company's debt rating at the time
of such borrowings. As of June 30, 1998, the outstanding balance on the Credit
Facility was $87.0 million and bore interest at LIBOR plus 90 basis points
(6.59% as of such date). Monthly debt service payments on the Credit Facility
are interest only. The Credit Facility matures in November 2000. The total
amount available under the Credit Facility fluctuates based upon the borrowing
base, as defined in the agreement governing the Credit Facility. At June 30,
1998, the maximum amount available under the Credit Facility was approximately
$413.0 million. In
13
16

addition, in April 1998, the Company obtained a $50.0 unsecured acquisition
facility from NationsBank, bearing interest at LIBOR plus 90 basis points (6.59%
at June 30, 1998). The $50.0 unsecured acquisition facility was repaid in July
1998.

In April 1998, the Company received credit ratings for its unsecured debt
of Baa1 from Moody's Investors Service, BBB from Standard & Poor's Corporation
and BBB+ from Duff & Phelps Credit Rating Co. As a result of the receipt of the
investment-grade credit ratings, the interest rate on the Credit Facility was
reduced by 20 basis points to the current rate of LIBOR plus 90 basis points.

In June 1998, the Company issued $400,000 aggregate principal amount of
unsecured notes ("Senior Debt Securities") in an underwritten public offering,
the net proceeds of which were used to repay amounts outstanding under the
Credit Facility. The Senior Debt Securities mature in June 2008, June 2015 and
June 2018 and bear interest at a weighted average rate of 7.18%, which is
payable in June and December of each year, commencing in December 1998. The 2015
notes are putable and callable in June 2005.

In connection with the Formation Transactions and property acquisitions
consummated subsequent thereto, the Company has assumed various mortgages and
other secured debt. As of June 30, 1998, the aggregate principal amount of such
secured debt was $575.6 million, excluding unamortized debt premiums of $16.8
million. The secured debt bears interest at rates varying from 4.00% to 10.38%
per annum (with a weighted average of 7.91%) and final maturity dates ranging
from November 1998 to January 2014.

As of June 30, 1998, the Company's total outstanding debt was approximately
$1.1 billion, including unamortized debt premiums of approximately $16.8
million. See Notes to Consolidated Financial Statements. The total amount of
debt to be repaid during the remainder of 1998 is approximately $16.9 million,
including scheduled principal amortization of approximately $3.3 million.

In order to maintain financial flexibility and facilitate the rapid
deployment of capital through market cycles, the Company presently intends to
operate with a debt-to-total market capitalization ratio of less than 45%.
Additionally, the Company presently intends to continue to structure its balance
sheet in order to maintain an investment grade rating on its senior unsecured
debt. As of June 30, 1998, the Company's debt-to-total market capitalization
ratio was approximately 34.2%.

Liquidity

As of June 30, 1998, the Company had approximately $29.2 million in cash
and cash equivalents and $413.0 million of additional available borrowings under
the Credit Facility. Additionally, on July 20, 1998, the Company sold $100
million of Series A preferred stock in an underwritten public offering, the net
proceeds of which were used to repay outstanding borrowings on its Credit
Facility.

The Company intends to use cash from operations and available borrowings
under its Credit Facility as well as net proceeds from future debt or equity
offerings, if any, to fund property acquisitions, development activities, and
capital expenditures and to provide for general working capital requirements.

On June 19, 1998, the Company and the Operating Partnership declared a
quarterly cash distribution of $0.3425 per common share and operating
partnership unit, payable on July 9, 1998 to stockholders and unitholders of
record on June 30, 1998.

The anticipated size of the Company's distributions, using only cash from
operations, will not allow it to retire all of its debt as it comes due.
Therefore, the Company intends to also repay maturing debt with net proceeds
from future debt and/or equity financings. No assurance can be given, however,
that future financings will be available to the Company or that the terms of any
such financings will be favorable from the Company's perspective.

Capital Commitments

In addition to recurring capital expenditures and costs to renew or
re-tenant space, the Company is currently in the process of renovating,
expanding or developing 16 projects at a total estimated cost of $308.6 million
upon completion. The Company presently expects to fund these expenditures with
cash from
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operations, borrowings under the Credit Facility or debt or equity issuances.
Other than these capital items, the Company has no material capital commitments.
During the period from January 1, 1998 to June 30, 1998, the Company invested
$415.5 million in 104 industrial buildings, aggregating 10.2 million rentable
square feet. The acquisitions were funded through borrowings under the Credit
Facility, cash, debt assumption of approximately $99.6 million, co-investments
by Institutional Alliance Partners(TM) of approximately $60.3 million and the
issuance of LP Units with a value of approximately $28.2 million at the date of
issuance. The Company expects that its funds from operations and borrowings
under its Credit Facility will be sufficient to meet expected capital
commitments for the next 12 months.

YEAR 2000 COMPLIANCE

Many computer programs have been written using two digits rather than four
to define the applicable year. Computer programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. This "year 2000 issue" could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices or engage in similar normal
business activities.

The Company's current financial systems adequately provide for a four-digit
year and management believes the year 2000 issue will not materially affect its
business operations or financial condition. Additionally, the Company does not
expect that the year 2000 issue will materially affect its operations due to
problems encountered by its suppliers, customers and lenders.

FUNDS FROM OPERATIONS

Management believes that Funds from Operations ("FFO"), as defined by
NAREIT, is an appropriate measure of performance for an equity REIT. While FFO
is a relevant and widely used measure of operating performance of REITs, it does
not represent cash flow from operations or net income as defined by GAAP, and it
should not be considered as an alternative to those indicators in evaluating
liquidity or operating performance. Further, FFO as disclosed by other REITs may
not be comparable.

The following table reflects the calculation of the Company's FFO for the
six and three months ended June 30, 1997 and 1998. The 1997 FFO was prepared on
a pro forma basis (giving effect to the completion of the Formation
Transactions, the IPO, and certain 1997 property acquisitions and dispositions)
as if they had occurred on January 1, 1997 (dollars in thousands).

FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------------ ------------------------------
1997 (PRO FORMA) 1998 1997 (PRO FORMA) 1998
---------------- ----------- ---------------- -----------

Income from operations before
minority interests................. $ 25,482 $ 30,382 $ 49,809 $ 59,570
Real estate related depreciation and
amortization:
Total depreciation and
amortization.................... 11,472 13,516 23,238 25,302
Furniture, fixtures and equipment
depreciation.................... (43) (111) (86) (215)
FFO attributable to minority
interests(1)(2).................... (400) (1,513) (951) (2,088)
----------- ----------- ----------- -----------
FFO(1)............................. $ 36,511 $ 42,274 $ 72,010 $ 82,569
=========== =========== =========== ===========
Weighted average shares and units
outstanding (diluted).............. 88,416,676 89,886,673 88,416,676 89,362,932
=========== =========== =========== ===========

- ---------------
(1) The White Paper on Funds from Operations approved by the Board of Governors
of the National Association of Real Estate Investment Trusts ("NAREIT") in
March 1995 (the "White Paper") defines Funds from Operations as net income
(loss) (computed in accordance with GAAP), excluding gains (or losses) from
debt restructuring and sales of properties, plus real estate related
depreciation and

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amortization. Management considers FFO an appropriate measure of performance
of an equity REIT because it is predicated on cash flow analyses. The
Company computes FFO in accordance with standards established by the White
Paper, which may differ from the methodology for calculating FFO utilized by
other REITs and, accordingly, may not be comparable to such other REITs. FFO
should not be considered as an alternative to net income (determined in
accordance with GAAP) as an indicator of financial performance or to cash
flow from operating activities (determined in accordance with GAAP) as a
measure of liquidity, nor is it indicative of funds available to fund cash
needs, including the ability to make distributions.

(2) Represents FFO attributable to minority interests in consolidated joint
ventures for the period presented, which has been computed as minority
interests' share of net income plus minority interests' share of real
estate-related depreciation and amortization of the consolidated joint
ventures for such period. Such minority interests are not convertible into
shares of Common Stock.

TENANT RETENTION RATES AND RENT INCREASES

The following table sets forth information relating to tenant retention
rates and rent increases on renewal and re-tenanted space for the Industrial
Properties and the Retail Properties for the periods presented.

FOR THE THREE FOR THE SIX
YEARS ENDED DECEMBER 31, MONTHS ENDED MONTHS ENDED
-------------------------- JUNE 30, JUNE 30, WEIGHTED
1995 1996 1997 1998 1998 AVERAGE
------ ------ ------ ------------- ------------ --------

INDUSTRIAL PROPERTIES
Retention rate.................. 67.9% 79.2% 69.5% 88.1% 82.5% 74.7%
Rent increases.................. 4.8% 4.7% 13.0% 21.2% 13.6% 11.4%
RETAIL PROPERTIES
Retention rate.................. 63.5% 88.4% 87.8% 82.8% 84.7% 83.3%
Rent increases.................. 3.2% 5.4% 10.1% 20.3% 23.2% 15.9%

RECURRING TENANT IMPROVEMENTS AND LEASING COMMISSIONS PER SQUARE FOOT LEASED

The table below summarizes for the Industrial Properties and the Retail
Properties, separately, the recurring tenant improvements and leasing
commissions per square foot leased for the periods presented. The recurring
tenant improvements and leasing commissions represent costs incurred to lease
space after the initial lease term of the initial tenant, excluding costs
incurred to relocate tenants as part of a re-tenanting strategy. The tenant
improvements and leasing commissions set forth below are not necessarily
indicative of future tenant improvements and leasing commissions.

INDUSTRIAL PROPERTIES
Expenditures per renewed
square foot leased........ $0.91 $0.93 $1.05 $0.69 $0.72 $0.89
Expenditures per re-tenanted
square foot leased........ 1.75 1.97 1.62 2.69 2.32 1.82
Weighted average.......... 1.32 1.29 1.30 1.00 0.99 1.23
RETAIL PROPERTIES
Expenditures per renewed
square foot leased........ $5.53 $4.72 $4.25 $1.19 $1.55 $3.52
Expenditures per re-tenanted
square foot leased........ 5.37 6.53 7.92 2.00 4.50 7.10
Weighted average.......... 5.46 5.61 6.41 1.25 1.78 5.04

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OCCUPANCY AND AVERAGE BASE RENT

The table below sets forth weighted average occupancy rates and average
base rent per square foot, based on square feet leased, of the Industrial
Properties and the Retail Properties for the periods presented.

AS OF DECEMBER 31,
-------------------------- AS OF
1995 1996 1997 JUNE 30, 1998
------ ------ ------ -------------

INDUSTRIAL PROPERTIES
Occupancy rate at period end........................ 97.3% 97.2% 95.7% 95.1%
Average base rent per square foot(1)................ $ 3.43 $ 3.81 $ 4.26 $ 4.38
RETAIL PROPERTIES
Occupancy rate at period end........................ 92.4% 92.4% 96.1% 95.0%
Average base rent per square foot(1)................ $10.46 $11.32 $11.98 $11.85

- ---------------
(1) Average base rent per square foot represents the total annualized
contractual base rental revenue for the period divided by the average
occupied square feet during the period.

ITEM 1. LEGAL PROCEEDINGS

As of June 30, 1998, there were no pending legal proceedings to which the
Company is a party or of which any of its Properties is the subject, the adverse
determination of which in the view of management would be anticipated to have a
material adverse effect upon the Company's financial condition and results of
operations.

ITEM 2. CHANGES IN SECURITIES

During the three months ended June 30, 1998, the Operating Partnership
issued 99,395 limited partner interests ("LP Units") in consideration for the
acquisition of certain properties. Holders of the LP Units may redeem part or
all of their LP Units for cash, or at the election of the Company, exchange such
LP Units for shares of Common Stock on a one-for-one basis. This
redemption/exchange right may not be exercised prior to April 1999.

The issuance of LP Units in connection with the aforementioned acquisitions
constituted private placements of securities which were exempt from the
registration requirement of the Securities Act of 1933, as amended, pursuant to
Section 4 (2) and Rule 506 of Regulation D promulgated thereunder.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company held its Annual Meeting of Stockholders on May 15, 1998. The
stockholders voted to elect nine directors to the Company's Board of Directors
to serve until the next annual meeting of stockholders and until their
successors are duly elected and qualify.

The stockholders' votes with respect to the election of directors were as
follows:

VOTES AGAINST VOTES BROKER NON-
VOTES FOR OR WITHHELD ABSTAINED VOTES
--------- ------------- --------- -----------

Douglas D. Abby 59,475,853 21,110 -- --
Hamid R. Moghadam 59,475,853 21,110 -- --
T. Robert Burke 59,476,053 20,910 -- --
Daniel H. Case, III 59,209,564 287,399 -- --
Robert H. Edelstein, Ph.D. 59,476,053 20,910 -- --
Lynn M. Sedway 59,475,753 25,210 -- --
Jeffrey L. Skelton, Ph.D. 59,471,053 25,910 -- --
Thomas W. Tusher 59,475,753 21,210 -- --
Caryl B. Welborn, Esq. 59,475,753 21,210 -- --

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

EXHIBIT
NUMBER DESCRIPTION
------- -----------

3.1(1) Articles of Incorporation of the Registrant.
3.2(1) Bylaws of the Registrant.
3.3(1) Form of Certificate for Common Stock of the Registrant.
3.4(4) Articles Supplementary establishing and fixing the rights
and preferences of the 8.5% Series A Cumulative Redeemable
Preferred Stock.
3.5(2) Form of Certificate for the 8.5% Series A Cumulative
Redeemable Preferred Stock of the Registrant.
4.1(3) Indenture by and among the Registrant, the Operating
Partnership and State Street Bank and Trust Company of
California, N.A., as trustee.
4.2(3) First Supplemental Indenture, by and among the Operating
Partnership, the Registrant and State Street Bank and Trust
Company of California, N.A., as trustee; Second Supplemental
Indenture, by and among the Operating Partnership, the
Registrant and State Street Bank and Trust Company of
California, N.A., as trustee; and Third Supplemental
Indenture, by and among the Operating Partnership, the
Registrant and State Street Bank and Trust Company of
California, N.A., as trustee.
4.3(3) Specimen of 7.10% Notes due 2008.
4.4(3) Specimen of 7.50% Notes due 2018.
4.5(3) Specimen of 6.90% Reset Put Securities due 2015.
10.1(2) Form of Second Amended and Restated Agreement of Limited
Partnership of AMB Property, L.P.
10.2(4) Amended Credit Agreement between AMB Property, L.P. and
NationsBank of Texas, N.A. dated April 16, 1998 deleting
subsidiary guarantees.
27.1(4) Financial Data Schedule -- AMB Property Corporation

- ---------------
(1) Previously filed as an exhibit to Registration Statement on Form S-11 (No.
333.35915) and incorporated herein by reference.

(2) Previously filed as an exhibit to Registration Statement on Form S-11 (No.
333.58107) and incorporated herein by reference.

(3) Previously filed as an exhibit to Registration Statement on Form S-11 (No.
333.49163) and incorporated herein by reference.

(4) Filed herewith.

(b) Reports on Form 8-K:

Form 8-K for the event dated June 30, 1998, was filed July 9, 1998 in
connection with the issuance of $400 million principal amount of senior
debt securities.

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SIGNATURES

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

AMB PROPERTY CORPORATION
Registrant

Date August 14, 1998 By: /s/ HAMID R. MOGHADAM
----------------------------------------------------
Hamid R. Moghadam
President and Chief Executive Officer,
Director (Principal Executive Officer)

Date August 14, 1998 And: /s/ S. DAVIS CARNIGLIA
---------------------------------------------------
S. Davis Carniglia
Chief Financial Officer, Managing Director
(Principal Financial Officer)

Date August 14, 1998 And: /s/ MICHAEL A. COKE
---------------------------------------------------
Michael A. Coke
Director of Financial Management
And Reporting, Chief Accounting
Officer (Principal Accounting Officer)

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EXHIBIT INDEX

Exhibits Description
- -------- -----------

3.4 Articles Supplementary establishing and fixing the rights
and preferences of the 8.5% Series A Cumulative Redeemable
Preferred Stock.
10.2 Amended Credit Agreement between AMB Property, L.P. and
NationsBank of Texas, N.A. dated April 16, 1998 deleting
subsidiary guarantees.
27.1 Financial Data Schedule