Oct. 21, 2009 (PR Newswire) -- SAN FRANCISCO, Oct. 21 /PRNewswire-FirstCall/ -- AMB Property Corporation® (NYSE: AMB), a leading owner, operator and developer of industrial real estate, today reported results for the third quarter 2009. Funds from operations per fully diluted share and unit ("FFOPS") was $0.71 for the third quarter of 2009, as compared to $0.69 for the same quarter in 2008, driven primarily by increased development gains and lower general and administrative expenses.
Net income available to common stockholders per fully diluted share ("EPS") for the third quarter of 2009 was $0.43, as compared to $0.24 for the same quarter in 2008.
Owned and Managed Portfolio Operating Results
AMB's operating portfolio was 91.0 percent occupied at September 30, 2009, up 50 basis points from June 30, 2009. Average occupancy during the quarter was 90.4 percent, compared to 95.3 percent for the same period in 2008. Cash basis same store net operating income ("SS NOI"), without the effects of lease termination fees, decreased 7.0 percent in the third quarter from the comparable period, driven primarily by a combination of lower than average same store occupancies and rent changes on rollovers. For the trailing four quarters ended September 30, 2009, average rent change on renewals and rollovers in AMB's operating portfolio decreased 3.9 percent.
Leasing Activity
During the third quarter of 2009, the company commenced leases of approximately 9.9 million square feet (915,300 square meters) in its global operating portfolio. In its development pipeline, the company leased more than 935,000 square feet (approximately 86,900 square meters).
Disposition Activities
As of September 30, 2009, the company has completed property dispositions and contributions of $670 million, with a stabilized capitalization rate of 6.7 percent.
During the third quarter, the company completed dispositions totaling $209 million, with gains of approximately $60 million and a 6.2 percent capitalization rate, consisting of the following:
-- The sale of three development and value-added conversion properties in
the Americas for an aggregate price of $145 million and an average
margin of 46.9 percent;
-- The sale of four properties from its U.S. operating portfolio for an
aggregate sales price of $32 million; and
-- The transfer of two assets to AMB Alliance Fund III in exchange for
additional units equal to the fair value of the assets, for an aggregate
price of $33 million, increasing its ownership interest in the fund to
22.7 percent from 19.3 percent.
"We have addressed two of the company's main priorities: strengthening our balance sheet and reducing our cost structure. The improvements and progress we have made in our business, over the last nine months, have allowed us to successfully navigate the downturn," said Hamid R. Moghadam, chairman & CEO. "We are now working on a number of initiatives to take advantage of opportunities as the global economy rebounds."
Financing Activities
For the nine months ending September 30, 2009, AMB has completed approximately $1.1 billion of debt repayments, repurchases and extensions, with approximately $122 million during the third quarter.
As of September 30, 2009, the company's share of total debt to share of total assets was 43 percent, which includes its share of joint venture debt. The company's liquidity was approximately $1.3 billion, consisting of $1.1 billion of availability on its lines of credit and approximately $201 million of cash.
Subsequent to quarter end and as previously announced, AMB refinanced its $325 million senior unsecured term loan facility, which was set to mature in September 2010, upsizing it to a $345 million facility, maturing October 2012. The facility now includes Euro and Yen tranches and carries a current interest rate of 275 basis points over the applicable LIBOR index.
"The lending environment has improved for stronger and more liquid borrowers, which has been an advantage to us given our solid balance sheet, liquidity position and lender relationships," said Thomas S. Olinger, AMB's chief financial officer. "We remain very well-positioned to address our financial obligations well in advance of their contractual maturities."
Investment Activity
AMB's global development pipeline at quarter end, which included investments held through unconsolidated joint ventures, totaled more than 6.8 million square feet (635,900 square meters) scheduled for delivery through 2010, with an estimated total investment cost of $547 million. As of September 30, 2009, the company's share of the projected remaining cash to fund the completion of its development pipeline was reduced to $54 million.
FFO Guidance
The company narrowed and increased its previous full-year 2009 FFO guidance to $1.45 to $1.46 per share, without recognition of gains from development activities, non-cash impairment charges or restructuring charges. The full-year EPS guidance is a loss of $0.29 to $0.30 per share. The company will provide details of its outlook for 2010 guidance during its third quarter earnings conference call.
Supplemental Earnings Measures
Included in the footnotes to the company's attached financial statements is a discussion of why management believes FFO, FFOPS and FFO, excluding impairment charges and restructuring charges (the "FFO Measures") are useful supplemental measures of operating performance, ways in which investors might use the FFO Measures when assessing the company's financial performance and the FFO Measures' limitations as a measurement tool. Reconciliation from net income available to common stockholders to the FFO Measures are provided in the attached tables and published in the company's quarterly supplemental analyst package, available on the company's website at www.amb.com.
AMB defines net operating income ("NOI") as rental revenues, including reimbursements, less property operating expenses. NOI excludes depreciation, amortization, general and administrative expenses, restructuring charges, real estate impairment losses, development profits (losses), gains (losses) from sale or contribution of real estate interests, and interest expense. AMB believes that net income, as defined by GAAP, is the most appropriate earnings measure. However, NOI is a useful supplemental measure calculated to help investors understand AMB's operating performance, excluding the effects of costs and expenses which are not related to the performance of the assets. NOI is widely used by the real estate industry as a useful supplemental measure, which helps investors compare AMB's operating performance with that of other companies. Real estate impairment losses have been excluded in deriving NOI because AMB does not consider its impairment losses to be a property operating expense. AMB believes that the exclusion of impairment losses from NOI is a common methodology used in the real estate industry. Real estate impairment losses relate to the changing values of AMB's assets but do not reflect the current operating performance of the assets with respect to their revenues or expenses. AMB's real estate impairment losses are non-cash charges which represent the write down in the value of assets when estimated fair value over the holding period is lower than current carrying value. The impairment charges were principally a result of increases in estimated capitalization rates and deterioration in market conditions that adversely impacted underlying real estate values. Therefore, the impairment charges are not related to the current performance of AMB's real estate operations and should be excluded from its calculation of NOI.
AMB considers cash-basis same store net operating income ("SS NOI") to be a useful supplemental measure of our operating performance for properties that are considered part of the same store pool. AMB defines SS NOI as NOI on a same store basis excluding straight line rents and amortization of lease intangibles. Same store pool includes all properties that are owned as of the end of both the current and prior year reporting periods and excludes development properties for both the current and prior reporting periods. The same store pool is set annually and excludes properties purchased and developments stabilized after December 31, 2007. AMB considers SS NOI to be an appropriate and useful supplemental performance measure because it reflects the operating performance of the real estate portfolio excluding effects of non-cash adjustments and provides a better measure of actual cash basis rental growth for a year-over-year comparison. In addition, AMB believes that SS NOI helps investors compare the operating performance of AMB's real estate as compared to other companies. While SS NOI is a relevant and widely used measure of operating performance of real estate investment trusts, it does not represent cash flow from operations or net income as defined by GAAP and should not be considered as an alternative to those measures in evaluating our liquidity or operating performance. SS NOI also does not reflect general and administrative expenses, interest expenses, real estate impairment losses, depreciation and amortization costs, capital expenditures and leasing costs, or trends in development and construction activities that could materially impact our results from operations. Further, AMB's computation of SS NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating SS NOI. A reconciliation from net income to SS NOI is provided below (dollars in thousands) and published in AMB's quarterly supplemental analyst package, available on AMB's website at www.amb.com.
For the For the Nine
Quarters Ended Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Net income (loss) $76,464 $34,737 $(17,858) $192,502
Private capital income (7,886) (9,502) (27,376) (60,838)
Depreciation and amortization 47,166 45,799 128,133 126,001
Real estate impairment losses - - 174,410 -
General and administrative and
fund costs 27,396 34,725 84,660 104,242
Restructuring charges - - 3,824 -
Total other income and expenses 22,486 3,055 50,402 (11,602)
Total discontinued operations (62,598) (3,028) (91,781) (11,097)
------- ------ ------- -------
NOI 103,028 105,786 304,414 339,208
Less non same-store NOI (20,876) (18,712) (53,305) (78,851)
Less non cash adjustments(1) (43) (374) 855 (2,161)
--- ---- --- ------
Cash-basis same-store NOI $82,109 $86,700 $251,964 $258,196
======= ======= ======== ========
(1) Non-cash adjustments include straight line rents and
amortization of lease intangibles for the same store pool only
"Owned and managed" is defined by the company as assets in which the company has at least a 10 percent ownership interest, is the property or asset manager, and which it currently intends to hold for the long-term.
Conference Call Information
The company will host a conference call to discuss third quarter 2009 results on Wednesday, October 21, 2009 at 10:00 AM PDT / 1:00 PM EDT. Stockholders and interested parties may listen to a live broadcast of the conference call by dialing 877 447 8218 (from the U.S. and Canada) or +1 706 643 7823 (from all other countries) and using reservation code 32466317. A webcast can be accessed through the company's website at www.amb.com in the Investor Relations section.
If you are unable to listen to the live conference call, a telephone and webcast replay will be available through the company's website at www.amb.com in the Investor Relations section after 3:00 PM EDT / 12:00 PM PDT on Wednesday, October 21, 2009 until 8:00 PM EST / 5:00 PM PST on Friday, November 20, 2009 at 800 642 1687 (from the U.S. and Canada) or +1 706 645 9291 (from all other countries), with the reservation code 32466317.
AMB Property Corporation.® Local partner to global trade.(TM)
AMB Property Corporation® is a leading owner, operator and developer of industrial real estate, focused on major hub and gateway distribution markets in the Americas, Europe and Asia.
