AMB PROPERTY CORP, S-11, 1997-09-18

AMB PROPERTY CORP
S-11, 1997-09-18

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 18, 1997
REGISTRATION NO. 333-
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-11
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

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

505 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(SUCCESSOR TO AMB INSTITUTIONAL REALTY ADVISORS, INC.)

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

S. DAVIS CARNIGLIA
MANAGING DIRECTOR,
CHIEF FINANCIAL OFFICER AND GENERAL COUNSEL
AMB PROPERTY CORPORATION
505 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94111
(NAME AND ADDRESS OF AGENT FOR SERVICE)
------------------------

COPIES TO:

<TABLE>
<S> <C>
EDWARD SONNENSCHEIN, JR., ESQ. KENNETH M. DORAN, ESQ.
J. SCOTT HODGKINS, ESQ. GIBSON, DUNN & CRUTCHER LLP
LATHAM & WATKINS 333 SOUTH GRAND AVENUE
633 WEST FIFTH STREET LOS ANGELES, CALIFORNIA 90071
LOS ANGELES, CALIFORNIA 90071 (213) 229-7000
(213) 485-1234
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the
earlier effective registration statement of the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------

CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
PROPOSED MAXIMUM AMOUNT OF
AGGREGATE OFFERING REGISTRATION FEE
TITLE OF SECURITIES BEING REGISTERED PRICE(1)
- -----------------------------------------------------------------------------------------------
Common Stock, $.01 par value per share............... $287,500,000 $87,121
===============================================================================================
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) of the Securities Act of 1933.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2

EXPLANATORY NOTE

This registration statement contains two forms of prospectus: one to be
used in connection with a United States and Canadian offering of the Company's
shares of Common Stock (the "U.S. Prospectus") and one to be used in connection
with a concurrent international offering of the shares of Common Stock (the
"International Prospectus" and, together with the U.S. Prospectus, the
"Prospectuses"). The International Prospectus will be identical to the U.S.
Prospectus except that it will have a different front cover page. The alternate
front cover page for the International Prospectus is included herein and has
been labeled "Alternate Cover Page for International Prospectus."

CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
FORM S-11 ITEM NO. AND HEADING LOCATION OR HEADING IN PROSPECTUS
------------------------------------------- -------------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus..... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus.............................. Inside Front Cover Page; Outside Back Cover
Page
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges............... Prospectus Summary; Risk Factors
4. Determination of Offering Price............ Underwriting
5. Dilution................................... Dilution
6. Selling Security Holders................... Not Applicable
7. Plan of Distribution....................... Underwriting
8. Use of Proceeds............................ Use of Proceeds
9. Selected Financial Data.................... Selected Financial and Other Data for AMB
Property Corporation
10. Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................. Management's Discussion and Analysis of
Financial Condition and Results of
Operations
11. General Information as to Registrant....... Prospectus Summary; Business and
Properties; Management; Principal
Stockholders; Certain Provisions of
Maryland Law and of the Company's Articles
of Incorporation and Bylaws
12. Policy with Respect to Certain
Activities................................. Policies With Respect to Certain Activities
13. Investment Policies of Registrant.......... Policies With Respect to Certain Activities
14. Description of Real Estate................. Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business and Properties
15. Operating Data............................. Business and Properties
16. Tax Treatment of Registrant and Its
Security Holders........................... Certain Federal Income Tax Consequences
17. Market Price of and Dividends on the
Registrant's Common Equity and Related
Stockholder Matters........................ Risk Factors; Distributions; Principal
Stockholders; Shares Available for Future
Sale
18. Description of Registrant's Securities..... Description of Capital Stock; Certain
Provisions of Maryland Law and of the
Company's Articles of Incorporation and
Bylaws
19. Legal Proceedings.......................... Business and Properties; Legal Proceedings
</TABLE>
<PAGE> 3

<TABLE>
<CAPTION>
FORM S-11 ITEM NO. AND HEADING LOCATION OR HEADING IN PROSPECTUS
------------------------------------------- -------------------------------------------
<C> <S> <C>
20. Security Ownership of Certain Beneficial
Owners and Management...................... Principal Stockholders
21. Directors and Executive Officers........... Management
22. Executive Compensation..................... Management
23. Certain Relationships and Related
Transactions............................... Risk Factors; Business and Properties;
Management; Certain Relationships and
Related Transactions; Principal
Stockholders
24. Selection, Management and Custody of
Registrant's Investments................... Risk Factors; Business and Properties;
Policies With Respect to Certain Activities
25. Policies with Respect to Certain
Transactions............................... Risk Factors; Business and Properties;
Policies With Respect to Certain
Activities; Management; Certain
Relationships and Related Transactions;
Principal Stockholders
26. Limitations of Liability................... Management; Certain Provisions of Maryland
Law and of the Company's Articles of
Incorporation and Bylaws
27. Financial Statements and Information....... Index to Financial Information
28. Interests of Named Experts and Counsel..... Not Applicable
29. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................ Not Applicable
30. Quantitative and Qualitative Disclosures
About Market Risk.......................... Risk Factors
</TABLE>
<PAGE> 4

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

PROSPECTUS (Subject to Completion)
Issued , 1997
Shares

AMB Property Corporation
COMMON STOCK
------------------------

AMB PROPERTY CORPORATION (TOGETHER WITH ITS SUBSIDIARIES, THE "COMPANY") HAS
BEEN FORMED TO CONTINUE AND GROW AMB INSTITUTIONAL REALTY ADVISORS, INC.'S
NATIONAL INDUSTRIAL AND RETAIL PROPERTY BUSINESS. UPON CONSUMMATION OF THE
OFFERING (AS DEFINED BELOW), THE COMPANY WILL BE ONE OF THE LARGEST
PUBLICLY-TRADED REAL ESTATE COMPANIES IN THE UNITED STATES, WITH A NATIONWIDE
PORTFOLIO OF 103 PROPERTIES COMPRISED OF 70 INDUSTRIAL PROPERTIES, PRINCIPALLY
WAREHOUSE DISTRIBUTION PROPERTIES, AGGREGATING APPROXIMATELY 34.4 MILLION
RENTABLE SQUARE FEET, AND 33 RETAIL PROPERTIES, PRINCIPALLY GROCER-ANCHORED
COMMUNITY SHOPPING CENTERS, AGGREGATING APPROXIMATELY 6.4 MILLION RENTABLE
SQUARE FEET. THE COMPANY IS A SELF-ADMINISTERED REAL ESTATE COMPANY AND EXPECTS
TO QUALIFY AS A REAL ESTATE INVESTMENT TRUST ("REIT") FOR FEDERAL INCOME TAX
PURPOSES.
------------------------

OF THE SHARES OF COMMON STOCK, $.01 PAR VALUE PER SHARE (THE "COMMON STOCK"), OF
THE COMPANY OFFERED HEREBY (THE "OFFERING"), ARE BEING OFFERED INITIALLY
IN THE UNITED STATES AND CANADA BY THE U.S. UNDERWRITERS AND ARE BEING
OFFERED INITIALLY OUTSIDE THE UNITED STATES AND CANADA BY THE INTERNATIONAL
UNDERWRITERS. ALL OF THE SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING SOLD BY
THE COMPANY AND WILL REPRESENT APPROXIMATELY % OF THE COMPANY'S OUTSTANDING
COMMON EQUITY. THE REMAINING COMMON EQUITY (OR INTERESTS EXCHANGEABLE FOR COMMON
EQUITY) IN THE COMPANY WILL BE BENEFICIALLY OWNED % BY THE COMPANY'S
OFFICERS AND DIRECTORS AND % BY THE COMPANY'S OTHER EXISTING STOCKHOLDERS
EXCLUDING SHARES TO BE PURCHASED IN THE OFFERING. SEE "UNDERWRITING."
------------------------

PRIOR TO THE OFFERING, THERE HAS BEEN NO PUBLIC MARKET FOR THE COMMON STOCK. IT
IS CURRENTLY ESTIMATED THAT THE INITIAL PUBLIC OFFERING PRICE PER SHARE WILL BE
BETWEEN $ AND $ . SEE "UNDERWRITING" FOR A DISCUSSION OF THE
FACTORS CONSIDERED IN DETERMINING THE INITIAL PUBLIC OFFERING PRICE. APPLICATION
HAS BEEN MADE TO LIST THE COMMON STOCK ON THE NEW YORK STOCK EXCHANGE UNDER THE
SYMBOL "AMB."
------------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 14 HEREIN FOR CERTAIN FACTORS RELEVANT TO
AN INVESTMENT IN THE SHARES OF COMMON STOCK, INCLUDING:

- - The possibility that the consideration paid by the Company for the properties
and other assets contributed to the Company in its formation may exceed their
fair market value, and the fact there were no arm's-length negotiations or
third-party appraisals of such properties in connection with the Company's
formation.

- - Conflicts of interest with, and material benefits to, affiliates of the
Company, including certain officers and directors, in connection with the
Company's formation and the operation of its ongoing businesses.

- - Taxation of the Company as a corporation if it fails to qualify as a REIT for
Federal income tax purposes and the resulting decrease in cash available for
distribution.

- - REIT distribution requirements may limit the Company's ability to finance
future acquisitions, expansions and developments without additional debt or
equity financing necessary to achieve the Company's business plan, which in
turn may adversely affect the price of the Common Stock.

- - The ability of the Board of Directors to change the Company's growth and
investment strategy, financing and certain other policies without a vote of
the Company's stockholders.

- - Real estate investment and property management risks, such as the need to
renew leases or relet space upon lease expirations, the potential instability
of cash flows and changes in the value of the Company's properties due to
economic and other conditions.

- - The possible anti-takeover effect of the Company's ability to limit the
ownership of shares of Common Stock to 9.8% of the outstanding shares and of
certain other provisions in the organizational documents of the Company and
the Operating Partnership which could have the effect of delaying, deferring
or preventing a transaction or change in control of the Company.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------

PRICE $ A SHARE
------------------------

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
Per Share............... $ $ $
Total(3)................ $ $ $
</TABLE>

- ------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(2) Before deducting expenses payable by the Company estimated at $
million.
(3) The Company has granted to the U.S. Underwriters an option, exercisable
within 30 days of the date hereof, to purchase up to an aggregate of
additional shares of Common Stock at the price to public less
underwriting discounts and commissions for the purpose of covering
over-allotments, if any. If the U.S. Underwriters exercise such option in
full, the total price to public, underwriting discounts and commissions
and proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."

The shares of Common Stock are offered, subject to prior sale, when, as, and
if accepted by the Underwriters named herein, and subject to approval of certain
legal matters by Gibson, Dunn & Crutcher LLP, counsel for the Underwriters. It
is expected that delivery of the shares of Common Stock will be made on or about
, 1997, at the offices of Morgan Stanley & Co. Incorporated, New York,
N.Y., against payment therefor in immediately available funds.
Morgan Stanley Dean Witter
BT Alex. Brown

Lehman Brothers

Montgomery Securities

Smith Barney Inc.
, 1997
<PAGE> 5

[INSERT MAPS, PHOTOS, ETC.]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SHARES OF COMMON
STOCK. SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE
OFFERING, AND MAY BID FOR, AND PURCHASE SHARES OF COMMON STOCK IN THE OPEN
MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE> 6

No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained or
incorporated herein by reference in this Prospectus in connection with the offer
made by this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or the Underwriters. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the shares of Common
Stock offered hereby, nor does it constitute an offer to sell or a solicitation
of any offer to buy the shares of Common Stock by anyone in any jurisdiction in
which such offer or solicitation is not authorized, or in which the person
making such offer or solicitation is not qualified to do so, or to any person to
whom it is unlawful to make such offer or solicitation. Neither the delivery of
this Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of the
Company since the date hereof.
------------------------

Until , 1997 (25 days after the commencement of the
Offering), all dealers effecting transactions in the Common Stock, whether or
not participating in this distribution, may be required to deliver a Prospectus.
This delivery requirement is in addition to the obligation of dealers to deliver
a Prospectus when acting as Underwriters and with respect to unsold allotments
or subscriptions.
------------------------

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................... 1
Risk Factors......................... 14
The Company.......................... 28
Focus on Industrial Properties and
Community Shopping Centers.........
Business and Operating Strategies....
Strategies for Growth................
Use of Proceeds...................... 29
Distributions........................ 30
Capitalization....................... 34
Dilution............................. 35
Selected Financial and Other Data for
AMB Property Corporation........... 36
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 39
Business and Properties.............. 46
Policies with Respect to Certain
Activities......................... 81
Management........................... 85
Certain Relationships and Related
Transactions....................... 100

<CAPTION>
PAGE
----
<S> <C>
Principal Stockholders............... 102
Formation and Structure of the
Company............................ 103
Description of Capital Stock......... 106
Certain Provisions of Maryland Law
and of the Company's Articles of
Incorporation and Bylaws........... 111
Description of Certain Provisions of
the Partnership Agreement of the
Operating Partnership.............. 114
Shares Available for Future Sale..... 122
Certain Federal Income Tax
Consequences....................... 124
ERISA Considerations................. 139
Underwriting......................... 142
Legal Matters........................ 145
Experts.............................. 145
Additional Information............... 145
Glossary............................. 146
Index to Financial Information....... F-1
</TABLE>

AMB and its logo are registered service marks of the Company. All other
trademarks and service marks appearing in this Prospectus are the property of
their respective holders.

Certain statements contained under "Prospectus Summary," "Risk Factors,"
"The Company," "Focus on Industrial Properties and Community Shopping Centers,"
"Business and Operating Strategies," "Strategies for Growth," "Distributions,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business and Properties" including, without limitation, those
concerning the Company's strategy and its growth plans, contain certain
forward-looking statements concerning the Company's operations, economic
performance and financial condition. Because such statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. Factors that could cause such
differences include, but are not limited to, those discussed under "Risk
Factors."

i
<PAGE> 7

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial data, including the financial statements and notes
thereto, set forth elsewhere in this Prospectus. Unless otherwise indicated, all
calculations and information contained in this Prospectus assume (i) an initial
public offering price of $ per share (representing the midpoint of the
range set forth on the cover page of this Prospectus), (ii) the Underwriters'
over-allotment option will not be exercised and (iii) the consummation of the
Formation Transactions described under the heading "Formation and Structure of
the Company." Unless the context otherwise requires, (i) the "Company" shall
include AMB Property Corporation, a to-be-formed Maryland corporation and
successor to AMB and its subsidiaries, including AMB Property, L.P., a Delaware
limited partnership (the "Operating Partnership"), AMB Institutional Realty
Advisors, Inc., a Maryland corporation (the "Investment Management Subsidiary"),
and with respect to the period prior to the Offering, the AMB Predecessors, (ii)
the "AMB Predecessors" shall mean, collectively, AMB Institutional Realty
Advisors, Inc., a California corporation (including its predecessor entities,
"AMB"), certain real estate investment funds, trusts, corporations and
partnerships that prior to the Formation Transactions owned the Properties, as
identified in "Note 1. Organization and Basis of Presentation" to the historical
combined financial statements of the AMB Contributed Properties, including AMB
Current Income Fund, Inc. ("CIF"), AMB Value Added Fund, Inc. ("VAF"), AMB
Western Properties Fund-I ("WPF") and certain individual account investors of
AMB (the "Individual Account Investors") and (iii) the "Continuing Investors"
shall mean the persons and entities which beneficially own interests in the AMB
Predecessors or in the Properties which will receive shares of Common Stock, or
limited partnership interests ("Units") in the Operating Partnership, in
exchange for those interests in connection with the Formation Transactions,
including three institutional accredited investors which have irrevocably
committed to acquire the interests of such persons or entities in the Formation
Transactions. See "Formation and Structure of the Company." Additional
capitalized terms shall have the meanings set forth herein and in the Glossary
beginning on page .

THE COMPANY

Upon consummation of the Offering, AMB Property Corporation will be one of
the largest publicly-traded real estate companies in the United States. The
Company has been formed to continue and grow AMB's business of acquiring and
operating industrial properties and community shopping centers in target markets
nationwide. AMB was founded in 1983 by Douglas D. Abbey, Hamid R. Moghadam and
T. Robert Burke, and in 14 years has grown to become a leading real estate
investment manager with $2.6 billion under management for over 70
well-recognized institutional investors. Since its inception, AMB has acquired
on behalf of its clients over 160 properties representing an aggregate
investment of approximately $3 billion and encompassing over 57 million rentable
square feet.

The Company is led by Mr. Moghadam, its Chief Executive Officer. Messrs.
Abbey and Burke also play active roles in the Company's operations as the
Chairman of its Investment Committee and the Chairman of its Board of Directors,
respectively. The Company's 10 Executive Officers have an average of 22 years of
experience in the real estate industry and have worked together for an average
of nine years building the AMB real estate business. The Company employs 104
individuals, 88 of whom are located at its San Francisco headquarters and 16 of
whom are located in its Boston office. Upon consummation of the Offering, the
Company's employees will own approximately % of the Common Stock, including
interests exchangeable into shares of Common Stock. See "Management" and
"Principal Stockholders."

In August 1997, AMB presented a proposal to each of its over 70
institutional clients and fund investors offering them, in connection with the
Formation Transactions, an opportunity to either (i) contribute or exchange
their assets or interests in certain private funds managed and sponsored by AMB
in exchange for equity interests in the Company or the Operating Partnership,
(ii) retain their existing direct real estate format and have the Company
continue to manage their investments through the Company's Investment Management
Subsidiary or (iii) terminate their relationships with AMB. In response to this
proposal, substantially all of such institutional investors chose to become
stockholders in the Company (or unitholders in the Company's Operating
Partnership), or to continue their real estate investment through the Investment
Management Subsidiary. See "Formation Transactions."

1
<PAGE> 8

PROPERTIES

Upon consummation of the Offering, the Company will own 103 properties,
including the "Pending Acquisitions," comprised of 70 Industrial Properties and
33 Retail Properties located in 24 markets throughout the United States. As of
June 30, 1997, the Industrial Properties (representing 306 buildings), excluding
the Pending Acquisitions, principally warehouse distribution properties,
encompassed approximately 30.4 million rentable square feet and were 94.2%
leased to over 700 tenants. The Retail Properties, principally grocer-anchored
community shopping centers, encompassed approximately 5.5 million rentable
square feet and, as of the same date, were 93.0% leased to over 600 tenants. See
"Business and Properties." The following table sets forth certain summary
information with respect to the Properties, excluding the Pending Acquisitions,
as of June 30, 1997. See "-- Pending Acquisitions."

INDUSTRIAL AND RETAIL PROPERTIES BY REGION

<TABLE>
<CAPTION>
INDUSTRIAL PROPERTIES RETAIL PROPERTIES
------------------------------------------- --------------------------- TOTAL
RENTABLE NUMBER RENTABLE --------------------------------
NUMBER OF NUMBER OF SQUARE % OF OF SQUARE % OF NUMBER OF RENTABLE % OF
REGION PROPERTIES BUILDINGS FEET TOTAL CENTERS FEET TOTAL PROPERTIES SQUARE FEET TOTAL
- ------------------- ---------- --------- ---------- ----- ------- --------- ----- ---------- ----------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Western............ 24 128 10,690,015 35.1% 15 2,192,446 39.9% 39 12,882,461 35.9%
Southern........... 15 78 7,610,919 25.0 9 1,400,718 25.5 24 9,011,637 25.1
Midwestern......... 16 80 9,790,994 32.2 4 710,523 13.0 20 10,501,517 29.2
Eastern............ 6 20 2,327,351 7.7 3 1,184,462 21.6 9 3,511,813 9.8
-- --- ---------- ----- -- --------- ----- -- ---------- -----
Total.............. 61 306 30,419,279 100.0% 31 5,488,149 100.0% 92 35,907,428 100.0%
== === ========== ===== == ========= ===== == ========== =====
</TABLE>

BUSINESS AND OPERATING STRATEGIES

The Company focuses its investment activities in hub distribution markets
and retail trade areas throughout the U.S. where opportunities exist to acquire
and develop additional properties on an advantageous basis. The Company believes
that the industrial property sector is well-positioned to benefit from strong
market fundamentals and growth in international trade and that the retail
property sector will benefit from limited new construction in in-fill locations
and from projected growth in personal income and retail sales levels. The
Company seeks to capitalize on these current conditions in the industrial and
retail property sectors by implementing the following business and operating
strategies:

- National Property Company. The Company believes that its national
strategy enables it to increase or decrease investments in certain
regions to take advantage of the relative strengths and attractive
investment opportunities in different real estate markets. Through its
presence in markets throughout the U.S., the Company has developed
expertise in leasing, expense management, tenant retention strategies and
property design and configuration.

- Two Complementary Property Types. Management believes that its dual
property strategy provides significant opportunities to allocate capital
and organizational resources, and offers the Company an optimal
combination of growth, strong current income and stability through market
cycles.

- Select Market Focus. The Company focuses on acquiring, redeveloping and
operating properties in "in-fill" locations which are characterized by
limited new construction opportunities. As the strength of these markets
continues to grow and the demand for well-located properties increases,
the Company believes that it will benefit from an upward pressure on
rents resulting from the increased demand combined with the relative lack
of new available space.

- Research-Driven Market Selection. The Company's decisions regarding the
deployment of capital are experience- and research-driven, with
investments based on thorough qualitative and quantitative research and
analysis of local markets. The Company employs a dedicated research
department using proprietary methodology and systems.

- Property Management. The Company actively manages its Properties through
its experienced staff of regional managers, each of whom makes all major
business decisions regarding the Properties. The Company typically
outsources property management to a select group of third-party local
managers

2
<PAGE> 9

with whom the Company has established strong relationships. Management believes
that by utilizing third-party property managers, the Company is better able to
service its customers and more efficiently manage its costs.

- Disciplined Investment Process. The Company has established a disciplined
approach to the investment process through operating divisions that are
subject to the overall policy direction of its Investment Committee. AMB
has also established efficient and effective proprietary systems and
procedures to manage and track a high volume of acquisition proposals and
transactions.

- Renovation, Expansion and Development. Management believes that
renovation and expansion of value added properties and development of
well-located, high-quality industrial properties and community shopping
centers will continue to provide the Company with attractive
opportunities for increased cash flow and a higher risk-adjusted rate of
return than may be obtained from the purchase of stabilized properties.

- Financing Strategy. The Company intends to operate with a Debt-to-Total
Market Capitalization Ratio generally of less than 45% and plans to
structure its balance sheet in order to obtain an investment grade rating
on its senior unsecured debt. Upon consummation of the Offering, the
Company's Debt-to-Total Market Capitalization Ratio will be approximately
%. The Company expects to obtain a $300 million unsecured credit
facility which the Company expects to use for acquisitions and for
general corporate purposes.

STRATEGIES FOR GROWTH

Growth Through Operations. The Company intends to improve operating margins
by taking advantage of the economies of owning, operating and growing a
large-scale national portfolio. In the first six months of 1997, the Company
increased average contractual or base rental rates by 11.0% on 172 new and
renewing leases totaling 3.1 million rentable square feet (representing 8.6% of
the Properties' aggregate square footage). During 1998, leases encompassing an
aggregate of 7.1 million rentable square feet (19.8% of the Company's aggregate
rentable square footage) are subject to contractual rent increases resulting in
an average rent increase per rentable square foot of $0.74, or 5.8%. Management
believes that it will have an opportunity to increase the average rental rate on
expiring leases during 1998 covering an aggregate of 5.3 million rentable square
feet.

Growth Through Acquisitions. Management believes its significant
acquisition experience and its extensive network of property acquisition sources
will continue to provide opportunities for external growth. Since 1983, AMB's
management team has invested over $3 billion on behalf of its clients in over
160 properties, 75 of which (totaling over $1.4 billion) were acquired during
the three years ended June 30, 1997. In 1996, AMB acquired on behalf of its
clients 28 properties totaling $585 million in aggregate investment encompassing
over 10 million rentable square feet, and in the nine-month period ended
September 30, 1997, it acquired properties encompassing million rentable
square feet, totaling $ million in aggregate investment. The Company
believes this pace of acquisitions makes it one of the most active buyers of
industrial properties and community shopping centers in the country.

Management believes that there is a growing trend among large private
institutional holders of real estate assets to shift a portion of their direct
investments in real estate assets to more liquid securities such as common stock
and units in publicly-traded REITs. The Company believes its relationships with
leading pension funds and other institutional investors will provide an
important source of acquisition opportunities.

Growth Through Renovation, Expansion and Development. Management believes
it has market expertise and access to identify and acquire value added
properties and, on a selective basis, develop new properties. The Company has
developed the in-house expertise to create value through acquiring and managing
value added properties and believes its national market presence and experience
will enable it to generate and capitalize on such opportunities.

3
<PAGE> 10

INVESTMENT MANAGEMENT SUBSIDIARY

The Company intends to grow the operations of the Investment Management
Subsidiary exclusively through its co-investment program and by taking over the
management of portfolios owned by others. The purposes of the co-investment
program will be to generate incremental revenues for the Company by leveraging
AMB's successful track record and established relationships with institutional
investors who currently prefer a private market format. See "Business and
Operating Strategies -- Investment Management Subsidiary." The continuation of
the investment management business will provide certain other benefits such as:

- Enhanced returns on equity investments acquired on a co-investment basis
as a result of earning acquisition, asset management and incentive fees.

- Economies of scale and operational synergies resulting from the expansion
of the Company's portfolio.

- An additional source of private equity financing.

- The ability to share the risks associated with development and value
added projects with co-investment partners.

- A potential source of acquisition opportunities from co-investment
partners who wish to contribute their property interests to the Company.

In order to comply with Federal tax requirements for REIT status, the
Company will own 100% of the non-voting preferred stock of the Investment
Management Subsidiary (representing 95% of its economic interest). All of the
outstanding voting common stock of the Investment Management Subsidiary
(representing 5% of its economic interest) will be owned by the Executive
Officers. The co-investment program will also be subject to the requirements of
ERISA with respect to pension plan investors which are subject to ERISA.

The Company is self-administered and expects to qualify as a REIT for
Federal income tax purposes beginning with the year ending December 31, 1997.
The principal executive offices of the Company and the Operating Partnership are
located at 505 Montgomery Street, San Francisco, California 94111, and their
telephone number is (415) 394-9000.

ADVANTAGES OF CONVERSION TO A PUBLIC REIT

The Company believes that it can maximize long-term value in a public REIT
operating structure by continuing the successful investment strategies developed
and refined by the AMB management team during the past 14 years. Given the
successful history of its predecessor as an institutional investment manager,
the Company believes that as a public REIT, it will be well-positioned to
capitalize on opportunities presented by the continuing consolidation in the
real estate market and the shift from private to public ownership. The following
is an overview of certain advantages the Company expects to achieve in a public
REIT operating structure:

- Broader Access to Growth Capital. The Company expects its borrowing costs
of public debt to be lower than rates generally available to it in the
private market and on more flexible terms. Access to public debt and
equity capital is also expected to provide the Company greater
flexibility in responding to time-sensitive or unique investment
opportunities.

4
<PAGE> 11

- Benefits of a National Presence. With a large portfolio under single
ownership, the Company will have greater flexibility to respond to space
planning needs of national tenants and develop a stronger franchise and
brand image.

- Operational Efficiencies. The Company believes that it will enjoy
economies of scale and operational synergies by spreading overhead costs
over a single large portfolio.

- Established Institutional Relationships. Management believes that as the
shift from private to public ownership of real estate continues, the
Company will benefit from its long-standing relationships with large
institutional owners of real estate and that it will benefit from
acquisition opportunities as many of these institutions exchange their
holdings for shares in publicly-traded companies. The Company will
actively maintain its strong contacts in the private institutional
investor market in order to attract these opportunities.

- Tax-Efficient Acquisition Vehicle. The Company's ability to purchase
properties in exchange for Units in the Operating Partnership provides
greater access to attractive portfolio investment opportunities by
allowing developers and owners to contribute their properties to the
Company (through the Operating Partnership) on a tax-deferred basis.

RISK FACTORS

An investment in the Common Stock involves various material risks.
Prospective investors should carefully consider the following risk factors, in
addition to the other information set forth in this Prospectus, before making an
investment decision regarding the shares of Common Stock offered hereby. Each of
these matters could have adverse consequences to the Company. Such risks
include, among others:

- the absence of arm's-length negotiations and third-party appraisals with
respect to the Properties and other assets, including AMB, contributed to
the Company in its formation, such that the consideration paid by the
Company for such assets may exceed their fair market value and that the
market value of the shares of Common Stock may exceed the stockholders'
proportionate share of the aggregate fair market value of such assets;

- conflicts of interest in connection with the Company's formation and
operation including (i) the influence of certain directors, officers and
significant stockholders on the management and operation of the Company,
and as stockholders, on the outcome of matters submitted to a vote of the
stockholders, (ii) the potential failure to enforce the terms of
agreements relating to the Formation Transactions and (iii) the continued
involvement in other real estate activities and investments by the
directors or Executive Officers of the Company;

- possible conflicts of interest imposed by the fiduciary obligations of
the Company to the limited partners of the Operating Partnership, in its
capacity as the general partner of the Operating Partnership, the
requirement for the limited partners to approve certain amendments
affecting their rights and the ability of the limited partners to approve
certain transactions that affect all stockholders of the Company;

- taxation of the Company as a corporation if it fails to qualify as a REIT
for Federal income tax purposes, the Company's liability for certain
Federal, state and local income taxes in such event, and the resulting
decrease in cash available for distribution;

- the distribution requirements of REITs which may limit the Company's
ability to finance future acquisitions, expansions and development
without additional debt or equity financing necessary to achieve the
Company's business plan, which in turn may adversely affect the price of
the Common Stock, and risks associated with the Company's reliance on
external sources of capital;

- the ability of the Board of Directors to change the Company's growth and
investment strategy and its financing, distribution and operating
policies without a vote of the Company's stockholders;

- the need to renew leases or re-lease space upon lease expirations and to
pay renovation and re-leasing costs in connection therewith, the effect
of economic and other conditions on property cash flows and

5
<PAGE> 12

values, the ability of tenants to make lease payments, the ability of a
property to generate revenue sufficient to meet operating expenses
(including future debt service), and the illiquidity of real estate
investments;

- the possible anti-takeover effect of the Company's ability to limit the
actual or constructive ownership of shares of Common Stock to 9.8% of the
outstanding shares of Common Stock, and of certain other provisions
contained in the organizational documents of the Company and the
Operating Partnership, which could have the effect of delaying, deferring
or preventing a transaction or change in control of the Company that
might involve a premium price for the shares of Common Stock or otherwise
would be in the best interests of the Company's stockholders;

- risks associated with the Company's acquisition activities, including the
risk that the investments will fail to perform in accordance with the
Company's expectations, inaccurate estimates of costs of improvements to
bring an acquired property up to standards, competition for attractive
investment opportunities and other general risks associated with any real
estate investment;

- risks associated with the Company's acquisition and development
activities, including the risk that financing may not be available on
favorable terms, delays due to the inability to obtain necessary permits
or authorizations and the need for a substantial portion of management's
time and attention;

- risks of uninsured loss or a loss in excess of insured limits relating to
certain activities, including fire, rental loss and seismic activity;

- risks involved in the Company's property ownership through partnerships
and joint ventures, including the risk that a co-venturer of the Company
or another partner in a partnership may (i) become bankrupt while the
Company and any other remaining partners or joint venturers remain liable
for the liabilities of such partnerships or joint ventures, (ii) have
economic interests inconsistent with those of the Company or (iii) sell
its interest at a disadvantageous time or on disadvantageous terms;

- the inability to refinance outstanding indebtedness upon maturity or
refinance such indebtedness on favorable terms, the risks of rising
interest rates in connection with its unsecured line of credit and other
variable-rate borrowings and the ability of the Company to incur more
debt without stockholder approval, thereby increasing its debt service
obligations, which could adversely affect the Company's cash flow;

- dependence on key personnel;

- potential liability of the Company for contingent or unknown liabilities
assumed by the Company as the surviving entity in the Formation
Transactions;

- fees earned by the Investment Management Subsidiary will be dependent
upon various factors including the ability to attract and retain
investment management clients and the overall returns achieved on managed
assets;

- potential liability of the Company for environmental matters and the
costs of compliance with certain government regulations;

- potential increase in real estate taxes resulting from possible
reassessment of certain Properties by local real property tax assessors
as a result of the Formation Transactions and the transfer of interests
in connection therewith; and

- absence of a prior public market for the shares of Common Stock and no
assurance that a public market will develop or be sustained, and
potential adverse effects on the value of the shares of Common Stock from
fluctuations in equity markets or rising market interest rates, which may
negatively impact the price at which shares of Common Stock may be resold
and which may limit the Company's ability to raise additional equity to
finance future development.

6
<PAGE> 13

FINANCING POLICIES

The Company's financing policies and objectives are determined by the Board
of Directors and may be altered without the consent of the Company's
stockholders. The Company's organizational documents do not limit the amount of
indebtedness that it may incur. The Company presently intends to limit its
Debt-to-Total Market Capitalization Ratio to approximately 45%. As of June 30,
1997, on a pro forma basis after giving effect to the Formation Transactions and
Offering and the application of the net proceeds therefrom as described in "Use
of Proceeds," the Company's Debt-to-Total Market Capitalization Ratio was
approximately % (approximately % if the Underwriters' over-allotment
option is exercised in full). The Company believes that the Debt-to-Total Market
Capitalization Ratio is a useful indicator of a company's ability to incur
indebtedness and has gained acceptance as an indicator of leverage for real
estate companies. The Company intends to utilize one or more sources of capital
for future acquisitions, development and capital improvements, which may include
undistributed cash flow, borrowings under the Credit Facility (as defined
below), issuance of debt or equity securities, funds from its co-investment
partners and other bank and/or institutional borrowings. There can be no
assurance, however, that the Company will be able to obtain capital for any such
acquisitions, developments or improvements on terms favorable to the Company.
See "Strategies For Growth," "Risk Factors -- Debt Financing" and "Business and
Properties -- Debt Financing."

The Company expects to obtain a $300 million credit facility, which is
expected to be used principally for acquisitions and for working capital
purposes. See "Business and Properties -- Debt Financing -- Unsecured Debt."
Certain of the Properties secure indebtedness with an aggregate principal amount
outstanding at June 30, 1997 on a historical combined basis of $502 million. See
"Business and Properties -- Debt Financing -- Secured Debt" and "-- Mortgage
Debt."

FORMATION AND STRUCTURE OF THE COMPANY

The Company and the Operating Partnership will be formed shortly before
consummation of the Offering. The Investment Management Subsidiary will be
formed to succeed to AMB's investment management business. Concurrently with the
consummation of the Offering, the Company, the Operating Partnership and the
Investment Management Subsidiary will engage in certain transactions (the
"Formation Transactions") designed to enable the Company to continue and grow
the real estate operations of the AMB Predecessors, to facilitate the Offering,
to enable the Company to qualify as a REIT for Federal income tax purposes
commencing with its taxable year ending December 31, 1997 and to preserve
certain tax advantages for the existing owners of the Properties.

The Formation Transactions include the following:

- (i) CIF, VAF and the Company's predecessor, AMB, will effect a series of
mergers pursuant to which such entities will merge into the Company, with
the institutional stockholders of CIF and VAF and the current
stockholders of AMB receiving shares of Common Stock or, in the case of
CIF stockholders and VAF stockholders, to a limited extent, cash; (ii)
the limited partnership interests in WPF (the "WPF Interests") will be
contributed to the Company in exchange for shares of Common Stock, or, to
a limited extent, cash; (iii) the real property interests of the
Individual Account Investors will be contributed to either the Company in
exchange for shares of Common Stock or to the Operating Partnership in
exchange for Units, or, to a limited extent, cash; (iv) the interests of
certain current owners of joint venture interests in the Properties will
be contributed to the Operating Partnership in exchange for Units; (v)
the Company will contribute substantially all of its assets, subject to
its liabilities, to the Operating Partnership, in exchange for the
general partnership interest therein; and (vi) the Operating Partnership
and the Executive Officers will contribute certain assets and cash to the
Investment Management Subsidiary in exchange for its stock.

- The Company will sell shares of Common Stock in the Offering.

- The Company will contribute the Properties and the net proceeds of the
Offering to the Operating Partnership in exchange for a % interest
therein represented by a number of units of general partnership interest
("GP Units") equal to the total number of shares of Common Stock to be
outstanding after the Offering.

7
<PAGE> 14

- The Executive Officers, during the second year following the Offering,
may receive a profits interest in the Operating Partnership in the form
of units ("Performance Units"), depending on the trading price of and
dividends on the shares of Common Stock. The issuance of any Performance
Units is subject to a share escrow arrangement with certain Continuing
Investors and will not dilute the interests of purchasers of Common Stock
in the Offering. The maximum number of Performance Units which may be
issued is expected to be .
- Cash in an amount equal to the net working capital balances of the AMB
Predecessors as of the consummation of the Formation Transactions will be
distributed to the investors in the AMB Predecessors approximately 60
days thereafter.
All persons and entities receiving shares of Common Stock or Units in the
Formation Transactions (i.e., the Continuing Investors), and all persons who may
receive Performance Units are "accredited investors" as defined in Regulation D
under the Securities Act. The irrevocable consent of each of the Continuing
Investors to the Formation Transactions was received before September 18, 1997
pursuant to a private solicitation thereof in compliance with Regulation D.
Following the consummation of the Offering, (i) the Operating Partnership
will directly or indirectly own interests in all of the Properties and (ii) all
of the outstanding shares of Common Stock will be owned by the purchasers of the
Common Stock in the Offering and the Continuing Investors. As a consequence of
the Formation Transactions, the Company will be the general partner of, and will
own % of the ownership interests in, the Operating Partnership. The
remaining % ownership interest in the Operating Partnership will be owned by
Individual Account Investors that elected to receive Units in lieu of shares of
Common Stock and certain owners of joint venture interests in the Properties
which have agreed to contribute their interests in the joint ventures to the
Operating Partnership in the Formation Transactions.
BENEFITS OF THE FORMATION TRANSACTIONS AND THE OFFERING TO THE EXECUTIVE
OFFICERS AND AFFILIATES OF THE COMPANY
Certain Executive Officers and affiliates of the Company will realize
certain material benefits in connection with the Formation Transactions,
including the following:
- The current stockholders of AMB, who are comprised entirely of the
Executive Officers and certain of their affiliated trusts, will be the
beneficial owners of an aggregate of shares of Common Stock, with
a total value of $ million (based on the assumed initial public
offering price of $ per share). Such shares will be issued in
exchange for the shares of AMB in the Formation Transactions. The
aggregate net book value of such shares of AMB common stock as of June
30, 1997, was approximately $3.7 million. The Company does not believe
that the net book value of such shares of AMB common stock (which
reflects the historical cost of such interests and assets of AMB and does
not reflect the value of its client base, management portfolio business
systems or employees) is equivalent to the fair market value of such
shares, but the fair market value of such shares may vary from the value
of the shares of Common Stock issued in exchange therefor.
- The Executive Officers, in their capacity as limited partners of the
Operating Partnership, may become the beneficial owners of up to
Performance Units during the second year following the
Offering. Such Performance Units will be issued depending on the trading
price of and dividends on the shares of Common Stock as of each
Measurement Date and will be similar to Units in many respects. Any
issuance of these Performance Units will not dilute the interests of the
purchasers of Common Stock in the Offering. See "Formation and Structure
of the Company -- Escrows of Shares; Performance Units and Performance
Shares."
- The Continuing Investors will realize an immediate accretion in the net
tangible book value of their investment in the Company of $ per
share, representing an aggregate accretion amount of $ .
- The former AMB stockholders will serve as the Executive Officers of the
Company, will enter into employment agreements with the Company and will
participate in the Stock Incentive Plan, including

8
<PAGE> 15

receiving grants of options to purchase an aggregate of shares
of Common Stock at the initial offering price, all as set forth under
"Management -- Executive Compensation."
- Commencing on the first anniversary of the Offering, Continuing Investors
who received Units in the Formation Transactions, and Executive Officers,
in their capacity as limited partners of the Operating Partnership, who
receive Performance Units, will have certain registration rights with
respect to shares of Common Stock that may be issued in exchange for such
Units and Performance Units.
- The Company will assume a line of credit balance of AMB of not more than
$1.1 million incurred in connection with AMB's purchase of furniture,
fixtures and equipment, leasehold interests, and other assets
historically used in connection with the Company's business from AMBI, a
corporation owned entirely by certain Executive Officers. The total
purchase price of the assets (equal to their approximate net book value)
will be paid partly with the proceeds of the above indebtedness and
partly through the reduction of an intercompany debt owed by AMBI to AMB.
The Company will also assume a note payable of AMBI to WPF in the amount
of $790,329 as consideration for the transfer to the Company of AMBI's
general partner interest in WPF (which the Company believes has a value
equal to or greater than the amount of the note).
- Certain Executive Officers will be relieved of their respective
guarantees of a portion of a $4.0 million revolving line of credit of
AMB.
- A portion of the incentive fees earned and paid to the Investment
Management Subsidiary after the consummation of the Offering, in respect
of assets subject to such arrangements with AMB at the time of the
Formation Transactions, will be allocated to certain officers and
employees of the Company.

9
<PAGE> 16

ORGANIZATION

The Company, the Operating Partnership and their subsidiaries have been
organized in a manner to facilitate the completion of the Formation Transactions
and the Offering. The Company will be the sole general partner of the Operating
Partnership and the other holders of Units will be limited partners. See
"Formation and Structure of the Company -- Formation Transactions."

The following diagram illustrates the structure of the Company, the
Operating Partnership and the Investment Management Subsidiary:

LOGO

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

(1) The Operating Partnership is owned by the Company, which holds a %
general partnership interest, and the limited partners who own,
collectively, a % limited partnership interest, without giving effect to
the exchange of Units representing such limited partnership interests for
shares of Common Stock. See "Description of Certain Provisions of the
Partnership Agreement of the Operating Partnership -- Redemption/Exchange
Rights." For local law purposes, Properties in certain states may be owned
through limited partnerships owned 99% by the Operating Partnership and 1%
by a wholly-owned subsidiary of the Company. The ownership of such
Properties through such limited partnerships will not affect the overall
ownership of the interests in the Properties by the Company.

(2) The Investment Management Subsidiary is owned by the Operating Partnership
which owns 100% of the non-voting preferred stock (representing a 95%
economic interest therein) and the Executive Officers who, collectively, own
100% of the voting common stock (representing a 5% economic interest
therein).

10
<PAGE> 17

THE INDUSTRIAL AND RETAIL PROPERTIES

The following tables set forth certain information relating to the
Industrial Properties and Retail Properties (excluding the Pending Acquisitions)
as of June 30, 1997, unless indicated otherwise.

INDUSTRIAL PROPERTIES BY REGION
AS OF JUNE 30, 1997

<TABLE>
<CAPTION>
PERCENTAGE ANNUALIZED
OF TOTAL PERCENTAGE BASE RENT
RENTABLE INDUSTRIAL ANNUALIZED OF NUMBER PER LEASED
NUMBER OF NUMBER OF SQUARE RENTABLE PERCENTAGE BASE RENT ANNUALIZED OF SQUARE
REGION PROPERTIES BUILDINGS FEET SQUARE FEET LEASED (000S) BASE RENT LEASES FOOT(1)
- -------------- --------- --------- ----------- ----------- ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Western....... 24 128 10,690,015 35.1% 94.1% $ 48,950 40.4% 297 $ 4.87
Southern...... 15 78 7,610,919 25.0 96.6 31,361 25.9 267 4.27
Midwestern.... 16 80 9,790,994 32.2 94.1 32,853 27.1 209 3.56
Eastern....... 6 20 2,327,351 7.7 87.2 7,887 6.6 37 3.89
--
--- ---------- ----- ---- -------- ----- --- -----
Total/Weighted
Average..... 61 306 30,419,279 100.0% 94.2 $121,051 100.0% 810 $ 4.22
== === ========== ===== ==== ======== ===== === =====
</TABLE>

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

(1) Calculated as Annualized Base Rent divided by rentable square feet actually
leased as of June 30, 1997.

RETAIL PROPERTIES BY REGION
AS OF JUNE 30, 1997

<TABLE>
<CAPTION>
LEASED PERCENTAGE ANNUALIZED
LEASED NON- OF TOTAL BASE RENT
ANCHOR ANCHOR AVAILABLE TOTAL RETAIL PERCENTAGE PER
NUMBER RENTABLE RENTABLE RENTABLE RENTABLE RENTABLE ANNUALIZED OF OCCUPIED
OF SQUARE SQUARE SQUARE SQUARE SQUARE PERCENTAGE BASE RENT ANNUALIZED SQUARE
REGION CENTERS FEET(2) FEET FEET FEET FEET LEASED (000S) BASE RENT FOOT(1)
- ----------------- --------- --------- --------- --------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Western... 15 1,315,910 800,412 76,124 2,192,446 39.9% 96.5% $ 26,815 45.2% $12.67
Southern... 9 881,640 293,050 226,028 1,400,718 25.5 83.9 12,830 21.6 10.92
Midwestern... 4 552,577 125,404 32,542 710,523 13.0 95.4 6,628 11.2 9.78
Eastern... 3 1,001,323 134,660 48,479 1,184,462 21.6 95.9 13,034 22.0 11.47
--
--------- -------- ------- --------- ----- ---- ------- ----- ------
Total/Weighted
Average... 31 3,751,450 1,353,526 383,173 5,488,149 100.0% 93.0% $ 59,307 100.0% $11.62
== ========= ======== ======= ========= ===== ==== ======= ===== ======
</TABLE>

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

(1) Calculated as total Annualized Base Rent divided by rentable square feet
actually leased as of June 30, 1997.

(2) Anchor Tenants are those retail tenants occupying more than 10,000 rentable
square feet and all grocers and drugstores located at the Retail Properties.

11
<PAGE> 18

PENDING ACQUISITIONS

The following tables set forth the Properties acquired, or in the process
of being acquired, after June 30, 1997, and renovation, expansion and
development projects expected to be completed following such date. The Company
estimates that the total acquisition costs, including due diligence and closing
costs, relating to the Pending Acquisitions is approximately $282 million. Data
with respect to Pending Acquisitions are not included in the geographic
distribution, occupancy or Annualized Base Rent information presented elsewhere
in this Prospectus. See "Business and Properties."

PROPERTY ADDITIONS AFTER JUNE 30, 1997

<TABLE>
<CAPTION>
RENTABLE EXPECTED
PROPERTY NAME LOCATION SQUARE FEET CLOSING DATE
- ------------------------------------------------ -------------------- ----------- -------------
<S> <C> <C> <C>
INDUSTRIAL PROPERTIES:
Elk Grove Village,
Elk Grove Industrial Portfolio(1)............. IL 2,054,520 Oct-97
Cabot Business Park........................... Mansfield, MA 1,071,517 Sept-97
Beacon Building 8............................. Miami, FL 269,881 Sept-97
Acer Distribution............................. San Jose, CA 196,643 Sept-97
Patuxent...................................... Jessup, MD 147,383 Closed
Shady Oak..................................... Eden Prairie, MN 104,243 Closed
Executive Drive............................... Addison, IL 75,020 Sept-97
Windsor....................................... Addison, IL 56,640 Closed
Elk Grove Village,
Greenleaf..................................... IL 50,695 Sept-97
Fairway Land (Phase III)(2)................... San Leandro, CA N/A Closed
----------
Subtotal -- Industrial.......................... 4,026,542
RETAIL PROPERTIES:
Manhattan Village Shopping Center(3).......... Manhattan Beach, CA 469,466 Closed
Weslayan Plaza(4)............................. Houston, TX 356,309 Sept-97
Manhattan Village-Phase II(5)................. Manhattan Beach, CA 46,200 Sept-97
----------
Subtotal -- Retail.............................. 871,975
----------
Subtotal -- Pending Acquisitions................ 4,898,517
Square footage at June 30, 1997................. 35,907,428
----------
Total square footage............................ 40,805,945
==========
</TABLE>

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

(1) Represents the Company's prospective 52% limited partnership interest in an
unconsolidated joint venture that owns the Property. See "Business and
Properties -- Properties Held Through Joint Ventures, Limited Liability
Companies and Partnerships."

(2) Represents an undeveloped parcel of land (approximately six acres) which is
presently planned for development. This parcel is adjacent to the existing
Fairway Drive property and is not counted as a separate Pending Acquisition
in determining the aggregate number of the Company's Properties in this
Prospectus.

(3) This Property is held in a joint venture partnership in which the Company
holds a 90% interest.

(4) The Company acquired the Property subject to a $4.7 million mortgage loan
which the Company expects to repay with a portion of the net proceeds of the
Offering. See "Use of Proceeds."

(5) This parcel consists of an existing 46,200 square foot building. Plans to
develop an additional 45,600 square feet are included in the Company's
acquisition plan. This parcel is considered a part of Manhattan Village
Shopping Center and is not counted as a separate Pending Acquisition in
determining the aggregate number of the Company's properties for this
Prospectus. This parcel is also held in a joint venture partnership.

12
<PAGE> 19

RENOVATION, EXPANSION AND DEVELOPMENT PROJECTS IN PROGRESS

The following table sets forth the Properties owned by the Company which
are currently undergoing renovation, expansion, or development. Other data with
respect to completed portions of renovation, expansion and development projects
are included in the geographic diversification, occupancy and Annualized Base
Rent information presented elsewhere in this Prospectus, as such Properties were
acquired prior to June 30, 1997.

<TABLE>
<CAPTION>
SQUARE
INITIAL FEET
DATE ACQUISITION OF
PROPERTY NAME LOCATION ACQUIRED PRICE ACQUISITION
- --------------------------------------------- -------------------- ---------- ------------- ---------
<S> <C> <C> <C> <C>
Industrial Properties
Dock's Corner.............................. South Brunswick, NJ May-96 $ 21,000 554,521
Fairway Drive Phase II..................... San Leandro, CA Aug-96 5,400 175,325
Mendota Heights............................ Mendota Heights, MN Jun-97 1,100 --(1)
------- ---------
Subtotal -- Industrial....................... 27,500 729,846

Retail Properties
Plaza at Delray............................ Miami, FL July-95 10,800 309,448
Palm Aire.................................. Miami, FL May-96 3,100 143,987
Southwest Pavilion......................... Reno, NV Sept-90 8,600 76,757
------- ---------
Subtotal -- Retail........................... 22,500 530,192
------- ---------
Total........................................ $ 50,000 1,260,088
======= =========
</TABLE>

<TABLE>
<CAPTION>
DEVELOPMENT ACTIVITY
------------------------------------------------------------
SQUARE
ESTIMATED TOTAL FEET
COMPLETION ESTIMATED AT
PROPERTY NAME TYPE(2) DATE(3) INVESTMENT(4) COMPLETION
- --------------------------------------------- -------------------- ---------- ------------- ---------
<S> <C> <C> <C> <C>
Industrial Properties
Dock's Corner.............................. Expansion Jun-98 $ 46,900 1,200,000
Fairway Drive Phase II..................... Development Jan-98 10,400 255,300
Mendota Heights............................ Development Nov-97 6,900 150,400
------------- ---------
Subtotal -- Industrial....................... 64,200 1,605,700

Retail Properties
Plaza at Delray............................ Renovation July-97 29,000 314,700
Palm Aire.................................. Renovation Feb-98 11,900 144,300
Southwest Pavilion......................... Expansion Jan-98 9,000 80,800
------------- ---------
Subtotal -- Retail........................... 49,900 539,800
------------- ---------
Total........................................ $ 114,100 2,145,500
============ =========
</TABLE>

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

(1) Represents the development of a building or 10.3 acres of land.

(2) Renovation means properties in which capital improvements have totaled 20%
or more of total cost within a 24-month period or have resulted in a
material improvement of the physical condition. Expansion means construction
resulting in an increase in the rentable square footage of an existing
structure or the development of additional buildings on a property on which
existing buildings are located. Development means new construction on a
previously undeveloped location.

(3) Represents expected date of shell completion. Such dates are based upon the
Company's current planning estimates and forecasts and therefore are subject
to change.

(4) Represents total estimated cost of renovation, expansion or development,
including initial acquisition. The estimates are based on the Company's
current planning estimates and forecasts and therefore are subject to
change.

13
<PAGE> 20

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered hereby
United States offering...........................
International offering...........................
Total.........................................
Common Stock to be outstanding after the
Offering(1)......................................
Units to be outstanding after the Offering(2)......
Common Stock and Units to be outstanding after the
Offering(1)......................................
Use of Proceeds.................................... To repay indebtedness, acquire interests
in Properties from certain investors in
the Formation Transactions and for
general corporate and working capital
purposes
Proposed NYSE Symbol............................... "AMB"
</TABLE>

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

(1) Excludes shares of Common Stock reserved for issuance pursuant to
the Company's Stock Option and Incentive Plan (the "Stock Incentive Plan"),
of which not more than shares will be subject to outstanding
options upon completion of the Offering.

(2) Units are exchangeable on a one-for-one basis for shares of Common Stock or,
at the option of the Company, cash, subject to certain exceptions. See
"Description of Certain Provisions of the Partnership Agreement of the
Operating Partnership -- Redemption/Exchange Rights."

DISTRIBUTIONS

The Company intends to make regular quarterly distributions to its
stockholders, commencing with a pro rata distribution for the period from the
completion of the Offering through December 31, 1997 based upon $ per
share for a full quarter. On an annualized basis, this would be $ per
share (of which the Company currently estimates approximately % may
represent a return of capital for tax purposes), or an annual distribution rate
of approximately % based on an assumed initial public offering price per
share of $ (representing the midpoint of the range set forth on the
cover page of this Prospectus). The Company intends to maintain its initial
distribution rate for the 12-month period following completion of the Offering
unless actual results of operations, economic conditions or other factors
adversely affect its cash available for distribution. Actual distributions will
be determined by the Board of Directors and will be dependent upon a number of
factors. In addition, in order to maintain its qualification as a REIT under the
Code, the Company will be required to distribute 95% of its taxable income to
its stockholders. See "Distributions." The Company does not intend to reduce the
expected distribution per share if the Underwriters' over-allotment option is
exercised.

TAX STATUS OF THE COMPANY

The Company will elect to be taxed as a REIT under Sections 856 through 860
of the Internal Revenue Code of 1986, as amended (the "Code"), commencing with
its taxable year ending December 31, 1997, and believes its current organization
and method of operation will enable it to meet the requirements for
qualification as a REIT. To maintain REIT status, an entity must meet a number
of organizational and operational requirements, including a requirement that it
currently distribute at least 95% of its REIT taxable income (determined without
regard to the dividends paid deduction and by excluding net capital gains) to
its stockholders. As a REIT, the Company generally will not be subject to
Federal income tax on net income it distributes currently to its stockholders.
If the Company fails to qualify as a REIT in any taxable year, it will be
subject to Federal income tax at regular corporate rates and may not be able to
qualify as a REIT for the four subsequent taxable years. See "Risk
Factors -- Adverse Consequences of Failure to Qualify as a REIT" and "Federal
Income Tax Consequences -- Failure of the Company to Qualify as a REIT." Even if
the Company qualifies for taxation as a REIT, the Company may be subject to
certain Federal, state and local taxes on its income and property. In addition,
the Investment Management Subsidiary will be subject to Federal and state income
tax at regular corporate rates on its net income.

14
<PAGE> 21

SUMMARY FINANCIAL AND OTHER DATA

The following tables set forth summary financial and other data on a pro
forma basis for the Company, on an historical basis for AMB and on an historical
combined basis for the AMB Contributed Properties. The historical financial
information contained in the tables has been derived from and should be read in
conjunction with the financial statements and notes thereto of AMB and the
combined financial statements and notes thereto of the AMB Contributed
Properties included elsewhere in this Prospectus. The AMB Predecessors will
consummate the Formation Transactions immediately prior to the Offering. In
accordance with GAAP, the Formation Transactions will be accounted for as a
purchase business combination with AMB as the "accounting acquirer."

The accompanying unaudited pro forma condensed consolidated balance sheet
data as of June 30, 1997 has been prepared to reflect (i) the Pending
Acquisitions, (ii) the disposition or partial disposition of properties
subsequent to June 30, 1997, (iii) the Formation Transactions, (iv) the Offering
and the application of the net proceeds therefrom and (v) certain other
adjustments as if such transactions and adjustments had occurred on June 30,
1997. The accompanying unaudited pro forma condensed consolidated operating and
other data have been prepared to reflect (i) the incremental effect of the
acquisition of properties during the six months ended June 30, 1997 and during
the year ended December 31, 1996, (ii) the Pending Acquisitions, (iii) the
incremental effect of the disposition or partial disposition of properties
during 1996 and 1997, (iv) the Formation Transactions, (v) pro forma debt
adjustments resulting from repayment of indebtedness with net proceeds of the
Offering and (vi) certain other adjustments as if such transactions and
adjustments had occurred on January 1, 1996.

In the opinion of management, the pro forma condensed consolidated
financial information provides for all adjustments necessary to reflect the
effects of the Formation Transactions, the Offering, property acquisitions and
dispositions and certain other transactions. The pro forma information is
unaudited and is not necessarily indicative of the consolidated results that
would have occurred if the transactions and adjustments reflected therein had
been consummated in the period or on the date presented, or on any particular
date in the future, nor does it purport to represent the financial position,
results of operations or changes in cash flows for future periods.

15
<PAGE> 22

AMB PROPERTY CORPORATION
SUMMARY FINANCIAL AND OTHER DATA
(IN THOUSANDS EXCEPT PER SHARE DATA, PERCENTAGES AND NUMBER OF PROPERTIES)
<TABLE>
<CAPTION>
AS OF AND FOR THE SIX
MONTHS
ENDED JUNE 30,
AS OF AND FOR THE YEARS ENDED DECEMBER 31, ------------------------
---------------------------------------------------------------------------
COMPANY AMB CONTRIBUTED
AMB CONTRIBUTED PROPERTIES(1) PRO FORMA PROPERTIES(1)
------------------------------------------------------------- ----------- ------------------------
1992 1993 1994 1995 1996 1996 1996 1997
--------- --------- ---------- ---------- ----------- ----------- ---------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues............ $ 9,644 $ 24,398 $ 52,006 $ 112,487 $ 176,233 $ 249,877 $ 82,560 $ 115,408
Property operating
expenses.......... 1,729 6,245 13,678 31,800 48,084 69,828 22,564 31,442
Interest expense.... 34 4,700 12,068 20,902 27,076 38,134 13,016 22,751
Depreciation and
amortization...... 2,078 4,642 8,845 18,124 29,191 41,676 14,410 18,131
Asset management
fees to
affiliates........ 733 1,746 3,167 6,250 9,508 -- 4,370 6,342
General,
administrative and
other expenses.... 513 194 350 782 838 6,142 335 415
Income from
operations before
disposal of
properties and
minority
interest.......... 4,557 6,871 13,898 34,629 61,536 94,097 27,865 36,327
Net income.......... 4,557 6,871 13,339 34,641 59,600 90,793 27,688 36,046
Pro forma net income
per share(2)......
BALANCE SHEET DATA:
Investment in real
estate (before
accumulated
depreciation)..... $ 196,202 $ 323,230 $ 672,756 $1,101,165 $ 1,698,575 $1,298,225 $1,766,888
Net investment in
real estate....... 193,655 316,041 656,577 1,067,439 1,636,871 1,250,284 1,688,083
Total assets........ 200,004 326,586 727,215 1,199,665 1,705,043 1,314,272 1,759,153
Mortgage loans(3)... 47,500 100,496 205,489 257,597 406,851 326,070 429,047
Secured debt
facility(3)....... -- -- -- -- 73,000 -- 73,000
Secured line of
credit............ -- -- -- -- 46,313 -- 48,613
Credit Facility..... -- -- -- -- 25,500 -- 45,900
Stockholders'
equity............ 150,193 210,597 503,075 916,153 1,106,555 955,099 1,119,466
OTHER DATA:
EBITDA(4)........... $ 6,669 $ 16,213 $ 34,811 $ 73,655 $ 117,803 $ 173,907 $ 55,291 $ 77,209
Funds from
Operations(5)..... 6,635 11,513 22,123 52,498 90,004 135,568 41,919 53,864
Cash flows provided
by (used in):
Operating
activities........ 7,275 12,429 28,700 55,118 96,718 141,578 40,593 52,014
Investing
activities........ (156,126) (121,397) (357,383) (422,315) (572,880) (926,924) (189,315) (74,629)
Financing
activities........ 152,326 110,161 382,311 419,126 398,808 692,567 67,712 20,914
PROPERTY DATA:
INDUSTRIAL
PROPERTIES
Total rentable
square footage of
properties at end
of period......... 1,963 5,638 13,514 21,748 29,743 24,747 30,419
Number of properties
at end of
period............ 5 12 29 45 61(6) 53 61(6)
Occupancy rate at
end of period..... 94.5% 97.4% 97.0% 97.3% 96.9% 94.6% 94.2%
RETAIL PROPERTIES
Total rentable
square footage of
properties at end
of period......... 997 1,074 2,422 3,299 5,282 4,189 5,488
Number of properties
at end of
period............ 8 9 14 19 30 23 31
Occupancy rate at
end of period..... 97.0% 96.5% 93.7% 92.4% 92.4% 88.0% 93.0%

16
<PAGE> 23
<TABLE>
<CAPTION>
AS OF AND FOR THE SIX
AS OF AND FOR THE YEARS ENDED DECEMBER 31, MONTHS ENDED JUNE 30,
------------------------------------------------------------- ------------------------
AMB(7) 1992 1993 1994 1995 1996 1996 1997
- -------------------- --------- --------- ---------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues............ $ 7,040 $ 7,155 $ 12,865 $ 16,826 $ 23,846 $ 9,695 $ 11,083
Expenses............ 5,850 6,357 9,940 13,564 16,843 7,751 8,319
Net income.......... 1,190 798 2,925 3,262 7,003 1,944 2,764
BALANCE SHEET DATA:
Total assets........ $ 3,275 $ 2,739 $ 4,092 $ 4,914 $ 6,948 $ 5,700 $ 7,137
Stockholders'
equity............ 3,029 2,480 3,848 4,241 6,300 4,061 3,673
OTHER DATA:
Cash flows provided
by (used in):
Operating
activities........ $ 1,071 $ 372 $ 2,705 $ 2,062 $ 6,647 $ 3,003 $ 5,816
Investing
activities........ -- 242 -- -- -- -- --
Financing
activities........ (405) (1,325) (1,557) (2,869) (4,944) (2,124) (7,682)
</TABLE>

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

(1) Represents historical combined financial and other data for the AMB
Contributed Properties. See Note 1 to Combined Financial Statements of the
AMB Contributed Properties.

(2) Pro forma net income per share equals the pro forma net income divided by
shares.

(3) Mortgage loans and secured debt facility on a pro forma basis as of June 30,
1997 include debt premiums of approximately $12.5 million and $1.2 million,
respectively. See Note 6 to the Pro Forma Condensed Consolidated Balance
Sheet of AMB Property Corporation.

(4) EBITDA is computed as income from operations before disposal of properties
and minority interests plus interest expense, income taxes, depreciation and
amortization. Management believes that in addition to cash flows and net
income, EBITDA is a useful financial performance measure for assessing the
operating performance of an equity REIT because, together with net income
and cash flows, EBITDA provides investors with an additional basis to
evaluate the ability of a REIT to incur and service debt and to fund
acquisitions and other capital expenditures. To evaluate EBITDA and the
trends it depicts, the components of EBITDA, such as rental revenues, rental
expenses, real estate taxes and general and administrative expenses, should
be considered. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations." Excluded from EBITDA are financing
costs such as interest as well as depreciation and amortization, each of
which can significantly affect a REIT's results of operations and liquidity
and should be considered in evaluating a REIT's operating performance.
Further, EBITDA does not represent net income or cash flows from operating,
financing and investing activities as defined by GAAP and does not
necessarily indicate that cash flows will be sufficient to fund cash needs.
It should not be considered as an alternative to net income as an indicator
of the Company's operating performance or to cash flows as a measure of
liquidity.

(5) FFO represents net income (loss) before minority interests and extraordinary
items, adjusted for depreciation on real property and amortization of tenant
improvement costs and lease commissions, gains (losses) from the disposal of
properties and FFO attributable to minority interests in consolidated joint
ventures whose interests are not convertible into shares of Common Stock. In
addition to cash flow and net income, management and industry analysts
generally consider FFO to be one additional measure of the performance of an
equity REIT because together with net income and cash flows, FFO provides
investors with an additional basis to evaluate the ability of an entity to
incur and service debt and to fund acquisitions and other capital
expenditures. However, FFO does not measure whether cash flow is sufficient
to fund all of an entity's cash needs including principal amortization,
capital improvements and distributions to stockholders. FFO also does not
represent cash generated from operating, investing or financing activities
as determined in accordance with GAAP. FFO should not be considered as an
alternative to net income as an indicator of an entity's operating
performance or as an alternative to cash flow as a measure of liquidity.
Further, FFO as disclosed by other REITs may not be comparable to the
Company's calculation of FFO. The Company calculates FFO in accordance with
the White Paper on FFO approved by the Board of Governors of NAREIT in March
1995.

(6) The increase in rentable square feet is attributable to the acquisition of
buildings which were combined with Properties owned as of December 31, 1996.
Therefore, there is no change to the total number of Industrial Properties
between the periods ended December 31, 1996 and the six months ended June
30, 1997.

(7) Represents the historical financial and other data of AMB for periods prior
to the Formation Transactions.

17
<PAGE> 24

RISK FACTORS

An investment in the shares of Common Stock involves various material
risks. Prospective investors should carefully consider the following risk
factors, in addition to the other information set forth in this Prospectus, in
connection with an investment in the shares of Common Stock offered hereby.

CONFLICTS OF INTEREST

Absence of Arm's-Length Negotiations in the Formation Transactions. No
arm's-length negotiations or third-party appraisals with respect to the
valuation of the Properties and other assets, including AMB, contributed to the
Company were obtained by the Company in connection with the Formation
Transactions. See "Formation and Structure of the Company -- Formation
Transactions." As a result, the consideration paid by the Company for such
assets may exceed their fair market value and the market value of the shares of
Common Stock may exceed a stockholder's proportionate share of the aggregate
fair value of such assets. Further, there were no arm's-length negotiations with
respect to other terms of the Formation Transactions, in particular with respect
to the representations and warranties made by the contributors of properties to
the Company, or the indemnification provided for breach of such representations
and warranties. Such indemnification is limited generally to an amount equal to
1% of the value of consideration paid by the Company for the Properties and the
business of the Investment Management Subsidiary. In addition, the executive
officers of AMB, who had significant influence in structuring the Formation
Transactions, will receive substantial economic benefits as a result of the
Formation Transactions. Further, in the course of structuring the Formation
Transactions, such persons had the ability to influence the type and level of
benefits that they, as Executive Officers of the Company, will receive from the
Company.

Continued Involvement in Other Real Estate Activities and
Investments. Stockholders of AMB who will become Executive Officers own
interests in certain real estate-related businesses and investments which will
continue following the Offering. Such interests include minority ownership of
Institutional Housing Partners, a residential housing finance company (through
AMB Institutional Housing Partners); and ownership of AMB Development, Inc. and
AMB Properties L.P., developers which own property that management believes is
not suitable for ownership by the Company. Neither AMB Development, Inc. nor AMB
Properties L.P. will initiate any new development projects following the
Offering, nor will they make any further investments in industrial or retail
properties following the Offering other than those currently under development.
Such persons are also owners of AMB Corporate Real Estate Advisors, Inc.
("AMBCREA"), which is principally a real estate services company for corporate
and professional tenants of real estate. AMBCREA is in the process of winding
down its business, and it is anticipated that AMBCREA will cease operations
during the first six months of 1998. Each of the Executive Officers will enter
into a non-competition agreement with the Company pursuant to which, among other
things, they will agree not to engage in any activities, directly or indirectly,
in respect of commercial real estate, and will agree not make any investment in
respect of industrial or retail real estate, other than through ownership of not
more than 5% of the outstanding shares of a public company engaged in such
activities or through the existing investments referred to herein.

The Company anticipates that following the Formation Transactions and the
Offering, AMBCREA, AMB Institutional Housing Partners, AMB Development, Inc. and
AMB Properties L.P. will continue to use the name "AMB" pursuant to royalty-free
license arrangements with the Company. In addition, prior to its cessation of
operations, AMBCREA will continue to sublease office space from the Company at a
rental rate equal to the Company's average cost for space in its headquarters,
and the Company may continue to provide certain administrative services to
AMBCREA at arm's-length charges.

Conflicts of Interest in Connection with Properties Owned or Controlled by
Executive Officers and Directors. AMB Properties L.P. owns interests in 11
retail development projects in the U.S., each of which consists of a single
free-standing Walgreens drugstore, and, together with other entities controlled
by nine of the executive officers, a low income housing apartment building
located in the San Francisco Bay Area. In addition, Messrs. Abbey, Moghadam and
Burke, each a founder, executive officer and director of the Company, own less
than 1% interests in two partnerships which own office buildings in various
markets; these interests have negligible value. Luis Belmonte, an Executive
Officer of the Company, owns less than a 10%

18
<PAGE> 25

interest, representing an estimated value of $75,000, in a limited partnership
which owns an office building located in Oakland, California.

In addition, several of the Executive Officers individually own: (i) less
than 1% interests in the stocks of certain publicly-traded REITs, including
mortgage REITs, and residential developers; (ii) certain interests in and rights
to developed and undeveloped real property located outside the United States;
(iii) interests in single-family homes and residential apartments in the San
Francisco Bay Area; (iv) certain passive interests, not believed to be material,
in real estate businesses in which such persons were previously employed; and
(v) certain other de minimis holdings in equity securities. Thomas W. Tusher, a
member of the Company's Board of Directors, is a limited partner in a
partnership in which Messrs. Abbey, Moghadam and Burke are general partners and
which owns a 75% interest in an office building. Mr. Tusher owns a 20% interest
in the partnership, valued at approximately $939,000. Messrs. Abbey, Moghadam
and Burke each have an approximately 26.7% interest in the partnership, each
valued at approximately $1,252,000. Paul P. Shepherd, a member of the Company's
Board of Directors, is a general partner in two partnerships which own warehouse
facilities in the San Francisco Bay Area.

The Company believes that the properties and activities set forth above
generally do not directly compete with any of the Properties; however, it is
possible that a property in which an Executive Officer or director of the
Company, or an affiliate of such person, has an interest may compete with the
Company in the future if the Company were to invest in a property similar and in
close proximity to such property. Following the Offering, the Company will be
prohibited from acquiring any properties from the principals of AMB or their
affiliates without the approval of a majority of its Independent Directors. See
"Policies With Respect to Certain Activities -- Conflict of Interest Policies."

Conflicts Relating to the Operating Partnership. After the consummation of
the Formation Transactions and the Offering, the Company, as the general partner
of the Operating Partnership, will have fiduciary obligations to the limited
partners in the Operating Partnership, the discharge of which may conflict with
the interests of the Company's stockholders. In addition, those persons holding
Units, as limited partners, will have the right to vote as a class on certain
amendments to the Partnership Agreement of the Operating Partnership
("Partnership Agreement") and individually to approve certain amendments that
would adversely affect their rights, which voting rights may be exercised in a
manner that conflicts with the interests of those Investors who acquire shares
of Common Stock in the Offering. In addition, under the terms of the Partnership
Agreement, the holders of Units (including Performance Units) will have certain
approval rights with respect to certain transactions that affect all
stockholders. See "Certain Provisions of the Partnership Agreement of the
Operating Partnership -- Removal of General Partner; Transferability of the
Company's Interests."

Influence of Directors, Executive Officers and Significant
Stockholders. Upon consummation of the Formation Transactions and the Offering,
five of the Company's stockholders will beneficially own approximately % of
the outstanding Common Stock, with the largest of these owning
approximately % of the Common Stock. In addition, the Executive Officers and
directors will own % of the Common Stock on a fully converted basis, after
giving effect to the issuance of Common Stock on a one-for-one basis upon the
exchange of Units (before issuance of any Performance Units), and will have
influence on the management and operation of the Company and, as stockholders,
on the outcome of any matters submitted to a vote of the stockholders. Such
influence might be exercised in a manner that is inconsistent with the interests
of other stockholders. Although there is no understanding or arrangement for
these directors, officers and stockholders and their affiliates to act in
concert, such parties would be in a position to exercise significant influence
over the Company's affairs should they choose to do so. See "Management" and
"Principal Stockholders."

Failure to Enforce Terms of Certain Agreements. As recipients of shares of
outstanding Common Stock and, potentially, Performance Units, certain directors
and Executive Officers of the Company will have a conflict of interest with
respect to their obligations as directors and officers of the Company to
vigorously enforce the terms of the agreements relating to the Formation
Transactions. The potential failure to enforce the material terms of those
agreements could result in a monetary loss to the Company, which loss could have
a material adverse effect on the Company's financial condition or results of
operations.

19
<PAGE> 26

RISKS OF OWNERSHIP OF COMMON STOCK

Limitations on Changes in Control Contained in the Articles of
Incorporation and Bylaws. Certain provisions of the Company's Articles of
Incorporation and Bylaws may have the effect of delaying, deferring or
preventing a change in control of the Company or other transaction that could
provide the holders of shares of Common Stock with the opportunity to realize a
premium over the then-prevailing market price of such shares of Common Stock.
The Ownership Limit (described under the caption "-- Possible Adverse
Consequences of Ownership Limit") also may have the effect of delaying,
deferring or preventing a change in control of the Company even if such a change
in control were in the best interests of some, or a majority, of the Company's
stockholders. The Company's Articles of Incorporation authorize the issuance of
additional shares of Common Stock and the issuance of shares of preferred stock,
$0.01 par value per share ("Preferred Stock"), in series, and to establish the
preferences, rights and other terms of any series of Preferred Stock so issued.
See "Description of Capital Stock." Although the Board of Directors has no such
intention at the present time, it could establish a series of Preferred Stock
that could delay, defer or prevent a transaction or a change in control of the
Company that might involve a premium price for the Common Stock or otherwise be
in the best interest of the stockholders. The Company's Articles of
Incorporation and Bylaws also contain other provisions that may delay, defer or
prevent a transaction or a change in control of the Company that might involve a
premium price for the Common Stock or otherwise be in the best interest of the
stockholders.

Possible Adverse Consequences of Ownership Limit. To maintain its
qualification as a REIT for Federal income tax purposes, not more than 50% in
value of the outstanding shares of beneficial interest of the Company may be
owned, actually or constructively, by five or fewer individuals (as defined in
the Code to include certain entities) during the last half of a taxable year
after the first taxable year for which a REIT election is made. See "Federal
Income Tax Consequences -- Taxation of the Company -- Requirements for
Qualification." Furthermore, after the first taxable year for which a REIT
election is made, the Company's shares of Common Stock must be held by a minimum
of 100 persons for at least 335 days of a 12-month taxable year (or a
proportionate part of a short tax year). In addition, if the Company, or an
owner of 10% or more of the Company, actually or constructively owns 10% or more
of a tenant of the Company (or a tenant of any partnership in which the Company
is a partner), the rent received by the Company (either directly or through any
such partnership) from such tenant will not be qualifying income for purposes of
the REIT gross income tests of the Code. To facilitate maintenance of its
qualification as a REIT for Federal income tax purposes, the Company generally
will prohibit ownership, actually or by virtue of the constructive ownership
provisions of the Code, by any single stockholder of more than 9.8% (by value or
number of shares of Common Stock, whichever is more restrictive) of the issued
and outstanding shares of Common Stock (the "Ownership Limit") and presently
expects to prohibit ownership, actually or by virtue of the constructive
ownership provisions of the Code, by any single stockholder of more than 9.8%
(by value or number of shares of Common Stock, whichever is more restrictive) of
the issued and outstanding shares of any class or series of the Preferred Stock.
Common Stock acquired or held in violation of the Ownership Limit will be
transferred to a trust for the benefit of a designated charitable beneficiary,
with the person who acquired such shares in violation of the Ownership Limit not
entitled to any distributions thereon, to vote such shares, or to receive any
proceeds from the subsequent sale thereof in excess of the lesser of the price
paid therefor or the amount realized from such sale. A transfer of shares in
violation of the above limits may be void under certain circumstances. See
"Description of Capital Stock -- Restrictions on Ownership Transfer." The
Ownership Limit may have the effect of delaying, deferring or preventing a
change in control and, therefore, could adversely affect the stockholders'
ability to realize a premium over the then-prevailing market price for the
shares of Common Stock in connection with such transaction.

Changes in Investment and Financing Policies Without Stockholder
Vote. Subject to the Company's fundamental investment policy to maintain its
qualification as a REIT (unless a change is approved by the Company's Board of
Directors under certain circumstances), the Company's Board of Directors will
determine its investment and financing policies, its growth strategy, and its
debt, capitalization, distribution and operating policies. Although the Board of
Directors has no present intention to revise or amend these strategies and
policies, the Board of Directors may do so at any time without a vote of the
Company's stockholders. See "Policies With Respect to Certain
Activities -- Financing Policies" and "-- Other Policies." Accordingly,
stockholders will have no control over changes in strategies and policies of the
Company

20
<PAGE> 27

(other than through the election of directors), and such changes may not serve
the interests of all stockholders and could adversely affect the Company's
financial condition or results of operations, including its ability to
distribute cash to stockholders.

Issuance of Additional Securities. The Company has authority to offer
shares of Common Stock or other equity or debt securities in exchange for
property or otherwise. Similarly, the Company may cause the Operating
Partnership to offer additional Units or preferred units of the Operating
Partnership in exchange for property or otherwise. Existing stockholders will
have no preemptive right to acquire any such securities, and any such issuance
of equity securities could result in dilution of an existing stockholder's
investment in the Company.

Risks Involved in Investments in Securities Related to Real Estate. The
Company may pursue its investment objectives through the ownership of securities
of entities engaged in the ownership of real estate. Ownership of such
securities may not entitle the Company to control the ownership, operation and
management of the underlying real estate. In addition, the Company may have no
ability to control the distributions with respect to such securities, which may
adversely affect the Company's ability to make required distributions to
stockholders. Furthermore, if the Company desires to control an issuer of
securities, it may be prevented from doing so by the limitations on percentage
ownership and gross income tests which must be satisfied by the Company in order
for it to qualify as a REIT. See "Federal Income Tax Consequences -- Taxation of
the Company -- Requirements for Qualification." The Company intends to operate
its business in a manner that will not require the Company to register under the
Investment Company Act of 1940 and stockholders will therefore not have the
protection of that Act.

The Company may also invest in mortgages, and may do so as a strategy for
ultimately acquiring the underlying property. In general, investments in
mortgages include the risk that borrowers may not be able to make debt service
payments or pay principal when due, the risk that the value of the mortgaged
property may be less than the principal amount of the mortgage note securing
such property and the risk that interest rates payable on the mortgages may be
lower than the Company's cost of funds to acquire these mortgages. In any of
these events, FFO and the Company's ability to make required distributions to
stockholders could be adversely affected.

Dependence on External Sources of Capital. In order to qualify as a REIT
under the Code, the Company generally is required each year to currently
distribute to its stockholders at least 95% of its REIT taxable income
(determined without regard to the dividends paid deduction and by excluding any
net capital gain). See "Federal Income Tax Consequences -- Taxation of the
Company -- Annual Distribution Requirements." Because of this distribution
requirement, it is unlikely that the Company will be able to fund all future
capital needs, including capital needs in connection with acquisitions, from
cash retained from operations. As a result, to fund future capital needs, the
Company likely will have to rely on third-party sources of capital, which may or
may not be available on favorable terms or at all. The Company's access to
third-party sources of capital will depend upon a number of factors, including
the market's perception of the Company's growth potential and its current and
potential future earnings and cash distributions and the market price of the
shares of Common Stock. Moreover, additional equity offerings may result in
substantial dilution of stockholders' interests in the Company, and additional
debt financing may substantially increase the Company's leverage. See "Policies
with Respect to Certain Activities -- Financing Policies."

Effect on Price of Shares Available for Future Sale. No prediction can be
made as to the effect, if any, that future sales of shares of Common Stock, or
the availability of shares of Common Stock for future sale, will have on the
market price of the shares of Common Stock. Sales of substantial amounts of
shares of Common Stock in the public market (or upon exchange of Units) or the
perception that such sales might occur could adversely affect the market price
of the shares. The Company and each of the Executive Officers and Independent
Directors will be required, as a condition to the Underwriters' participation in
the Offering, to agree that they will not, without the consent of Morgan
Stanley, offer, sell, contract to sell, pledge, grant any option to purchase or
otherwise sell or dispose of any (other than in connection with mergers,
acquisitions, or similar transactions) shares of Common Stock (including any
shares of Common Stock acquired upon exchange of Units), or any securities
convertible or exchangeable into shares of Common Stock for a period

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of, in the case of the Executive Officers, two years, and in the case of the
Company and the Independent Directors, one year, following the date of this
Prospectus. See "Underwriting."

The shares of Common Stock issued in the Formation Transactions and all
shares of Common Stock issuable upon the redemption of Units and Performance
Units will be deemed to be "restricted securities" within the meaning of Rule
144 under the Securities Act and may not be transferred unless registered under
the Securities Act or an exemption from registration is available, including any
exemption from registration provided under Rule 144 of the Securities Act. In
general, upon satisfaction of certain conditions, Rule 144 of the Securities Act
permits the sale of certain amounts of restricted securities one year following
the date of acquisition of the restricted securities from the Company and, after
two years, permits unlimited sales by persons unaffiliated with the Company.

Commencing on the first anniversary of the date of acquisition of Units,
Units may be redeemed by the Operating Partnership at the request of the holders
for cash (based on the fair market value of an equivalent number of shares of
Common Stock at the time of such redemption) or, at the Company's option,
exchanged for an equal number of shares of Common Stock, subject to certain
antidilution adjustments. It is expected that immediately after the Offering the
Company will grant options to purchase shares of Common Stock at the initial
public offering price and/or issue restricted shares of Common Stock to certain
directors, executive officers and other employees of the Company and additional
shares of Common Stock will be reserved for issuance as restricted shares of
Common Stock or upon the exercise of options granted under the Stock Incentive
Plan. See "Management -- Stock Incentive Plan." In addition, the Company may
issue from time to time additional shares of Common Stock or Units in connection
with the acquisition of properties. The Company has agreed to file and generally
keep continuously effective beginning one year after the completion of the
Offering a registration statement covering the issuance of shares of Common
Stock upon the exchange of Units and Performance Units and the resale of such
shares. The Company also anticipates that it will file a registration statement
with respect to the shares of Common Stock issuable under the Stock Incentive
Plan following the consummation of the Offering. Such registration statements
and registration rights generally will allow shares of Common Stock covered
thereby, including shares of Common Stock issuable upon exchange of Units or the
exercise of options or restricted shares of common stock, to be transferred or
resold without restriction under the Securities Act.

Future sales of the shares of Common Stock described above could have an
adverse effect on the market price of the Common Stock. The existence of Units,
options and shares of Common Stock reserved for issuance upon exchange of Units,
and the exercise of options and registration rights referred to above, also may
adversely affect the terms upon which the Company may be able to obtain
additional capital through the sale of equity securities.

Absence of Prior Public Market for Shares. Prior to the completion of the
Offering, there will have been no public market for the shares of Common Stock
and there can be no assurance that an active trading market will develop or be
sustained or that shares of Common Stock will be resold at or above the price to
the public in the Offering. The initial offering price of the shares of Common
Stock will be determined by agreement among the Company and the Underwriters and
may not be indicative of the market price for the shares of Common Stock after
the completion of the Offering. The market value of the shares of Common Stock
could be substantially affected by general market conditions.

Effect on Common Stock Price of Market Conditions. As with other
publicly-traded equity securities, the value of the shares of Common Stock will
depend upon various market conditions, which may change from time to time. Among
the market conditions that may affect the value of the Common Stock are the
following: the extent to which a secondary market develops for the Common Stock
following the completion of the Offering; the extent of investor interest in the
Company; the general reputation of REITs and the attractiveness of their equity
securities in comparison to other equity securities (including securities issued
by other real estate-based companies); the Company's financial performance; and
general stock and bond market conditions, including changes in interest rates on
fixed income securities which may lead prospective purchasers of the Common
Stock to demand a higher annual yield from future distributions. Such an
increase in the required yield from distributions may adversely affect the
market price of Common Stock. Moreover, other factors such as governmental
regulatory action and changes in tax laws could have a significant impact

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<PAGE> 29

on the future market price of the Common Stock. Although the initial offering
price of the Common Stock has been determined by the Company in consultation
with the Underwriters, there can be no assurance that the Common Stock will not
trade below the offering price following the completion of the Offering.

Effect on Common Stock Price of Earnings and Cash Distributions, Asset
Value and Market Interest Rates. The market value of the equity securities of a
REIT generally is based primarily upon the market's perception of the REIT's
growth potential and its current and potential future earnings and cash
distributions, whether from operations, sales or refinancings, and is
secondarily based upon the real estate market value of the underlying assets.
For that reason, shares of Common Stock may trade at prices that are higher or
lower than the net asset value per share. To the extent the Company retains
operating cash flow for investment purposes, working capital reserves or other
purposes, these retained funds, while increasing the value of the Company's
underlying assets, may not correspondingly increase the market price of the
Common Stock. The failure of the Company to meet the market's expectation with
regard to future earnings and cash distributions likely would adversely affect
the market price of the Common Stock. Another factor that will influence the
price of the Common Stock will be the distribution yield on the Common Stock (as
a percentage of the price of the Common Stock) relative to market interest
rates. Thus, an increase in market interest rates might lead prospective
purchasers of Common Stock to expect a higher distribution yield, which would
adversely affect the market price of the Common Stock. If the market price of
the Common Stock declined significantly, the Company might breach certain
covenants with respect to future debt obligations, which breach might adversely
affect the Company's liquidity and its ability to make future acquisitions.

Immediate and Substantial Dilution. As set forth more fully under
"Dilution," the pro forma net tangible book value per share of the assets of the
Company after the Offering will be substantially less than the estimated initial
public offering price per share. Accordingly, purchasers of the shares of Common
Stock offered hereby will experience immediate and substantial dilution of
approximately $ in the net tangible book value per share of Common
Stock from the estimated initial public offering price. The Company does not
believe that book value is a meaningful basis for analyzing the value of REIT
shares. See "Dilution."

GENERAL REAL ESTATE RISKS

Uncontrollable Factors Affecting Performance and Value. Real property
investments are subject to varying degrees of risk. The yields available from
equity investments in real estate depend on the amount of income earned and
capital appreciation generated by the related properties as well as the expenses
incurred in connection therewith. If the Properties do not generate income
sufficient to meet operating expenses, including debt service and capital
expenditures, the ability to make distributions to the Company's stockholders
could be adversely affected. Income from, and the value of, the Properties may
be adversely affected by the general economic climate, local conditions such as
oversupply of industrial or retail space or a reduction in demand for industrial
or retail space in the area, the attractiveness of the Properties to potential
tenants, competition from other industrial and retail properties, and the
ability of the Company to provide adequate maintenance and insurance and
increased operating costs (including insurance premiums, utilities and real
estate taxes). In addition, revenues from properties and real estate values are
also affected by such factors as the cost of compliance with regulations and the
potential for liability under applicable laws, including changes in tax laws,
interest rate levels and the availability of financing. The Company's income
would be adversely affected if a significant number of tenants were unable to
pay rent or if industrial or retail and other space could not be rented on
favorable terms. Certain significant expenditures associated with an investment
in real estate (such as mortgage payments, real estate taxes and maintenance
costs) generally do not decline when circumstances cause a reduction in income
from the investment.

Illiquidity of Real Estate Investments. Because real estate investments
are relatively illiquid, the Company's ability to vary its portfolio promptly in
response to economic or other conditions will be limited. The prohibition in the
Code and related regulations on a REIT holding property for sale may affect the
Company's ability to sell properties without adversely affecting distributions
to the Company's stockholders. Any of the foregoing factors or events will
impede the ability of the Company to respond to adverse changes in the
performance of its investments and could have an adverse effect on the Company's
financial condition and results of operations.

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<PAGE> 30

Renewal of Leases and Reletting of Space. The Company will be subject to
the risks that leases may not be renewed, space may not be relet or the terms of
renewal or reletting (including the cost of required renovations) may be less
favorable than current lease terms. Leases on a total of approximately 50.4% of
the rentable square feet in the Properties will expire on or prior to December
31, 2000. In addition, numerous properties compete with the Company's Properties
in attracting tenants to lease space, particularly with respect to retail
properties. The number of competitive commercial properties in a particular area
could have a material adverse effect on the Company's ability to lease space in
its Properties or newly-acquired properties and on the rents charged. If the
Company were unable to promptly relet or renew the leases for all or a
substantial portion of this space, if the rental rates upon such renewal or
reletting were significantly lower than expected or if its reserves for these
purposes proved inadequate, the Company's cash flow and ability to make expected
distributions to stockholders could be adversely affected. See "Business and
Properties -- Industrial Properties -- Industrial Property Lease
Expirations -- Portfolio Total" and "-- Retail Properties -- Retail Property
Lease Expirations -- Portfolio Total."

Uninsured Loss. The Company carries comprehensive liability, fire,
extended coverage and rental loss insurance covering all of the Properties, with
policy specifications and insured limits which the Company believes are adequate
and appropriate under the circumstances given relative risk of loss, the cost of
such coverage and industry practice. There are, however, certain types and
magnitudes of losses that are not generally insured because it is not
economically feasible to insure against such losses, such as losses due to riots
or acts of war, or may be insured subject to certain limitations including large
deductibles or co-payments, such as losses due to floods or seismic activity.
See "-- Uninsured Losses From Seismic Activity." Should an uninsured loss or a
loss in excess of insured limits occur with respect to one or more of the
Properties, the Company could lose its capital invested in such Properties, as
well as the anticipated future revenue from such Properties and, in the case of
debt which is with recourse to the Company, the Company would remain obligated
for any mortgage debt or other financial obligations related to such Properties.
Moreover, as the general partner of the Operating Partnership, the Company will
generally be liable for all of the Operating Partnership's unsatisfied
obligations other than non-recourse obligations. Any such liability could
adversely affect the Company.

Uninsured Losses from Seismic Activity. A number of both the Industrial
and Retail Properties are located in areas that are known to be subject to
earthquake activity, including in California where 20 Industrial Properties and
10 Retail Properties are located. The Company carries replacement cost
earthquake insurance on all of its Properties located in areas historically
subject to seismic activity, subject to coverage limitations and deductibles
which the Company believes are commercially reasonable. Through an annual
analysis prepared by outside consultants, the Company evaluates its earthquake
insurance coverage in light of current industry practice and determines the
appropriate amount of earthquake insurance to carry. No assurance can be given,
however, that material losses in excess of insurance proceeds will not occur or
that such insurance will continue to be available at commercially reasonable
rates.

Risk of Third-Party Management. For most Properties, the Company contracts
with local third-party property managers to provide certain routine services
such as rent collection, property maintenance and handling and responding to
tenant service needs. The Company performs such services directly for certain
Properties located within the San Francisco Bay Area, and its staff of regional
managers supervises the local property managers performing such functions. Risks
associated with the management of properties by third parties include the risk
that management contracts (which are typically cancelable with 30 days' notice)
will be terminated by the local third-party property manager (or, in the case of
Properties in which the Company has a non-controlling partnership or joint
venture interest, by the entity controlling the Property), that such contracts
may not be renewed upon expiration or may not be renewed on terms consistent
with current terms or that a third-party property manager might fail to perform
services for tenants consistent with the high quality standards established by
the Company.

Risks Involved in Property Ownership Through Partnerships and Joint
Ventures. The Company will have ownership interest in five industrial and three
retail joint ventures, limited liability companies or partnerships. The Company
may make investments through such ventures in the future and presently plans to
do so with clients of the Investment Management Subsidiary. Partnership or joint
venture investments may, under certain circumstances, involve risks such as the
possibility that the Company's partners or co-venturers

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<PAGE> 31

might become bankrupt (in which event the Company and any other remaining
general partners or joint ventures would generally remain liable for the
liabilities of such partnership or joint venture), that such partners or
co-venturers might at any time have economic or other business interests or
goals which are inconsistent with the business interests or goals of the
Company, or that such partners or co-venturers may be in a position to take
action contrary to the instructions or the requests of the Company or contrary
to the Company's policies or objectives, including the Company's policy with
respect to maintaining its qualification as a REIT. In addition, agreements
governing joint ventures and partnerships often contain restrictions on the
transfer of a joint venturer's or partner's interest or "buy-sell" or similar
provisions which may result in a purchase or sale of such an interest at a
disadvantageous time or on disadvantageous terms. The Company will, however,
seek to maintain sufficient control of such partnerships or joint ventures to
permit the Company's business objectives to be achieved. There is no limitation
under the Company's organizational documents as to the amount of available funds
that may be invested in partnerships or joint ventures.

Risk of Acquisition Activities. The Company intends to continue to
actively acquire industrial and retail properties. See "The Company -- Business
Strategy." Acquisitions of industrial and retail properties entail risks that
investments will fail to perform in accordance with expectations. Estimates of
the costs of improvements to bring an acquired property up to standards
established for the market position intended for that property may prove
inaccurate. In addition, there are general investment risks associated with any
new real estate investment. Further, the Company expects that there will be
significant competition for attractive investment opportunities from other major
real estate investors with significant capital including both publicly traded
REITs and private institutional investment funds. The Company anticipates that
future acquisitions will be financed through a combination of 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 and
with shares of Common Stock or Units in the Operating Partnership, which could
have a dilutive effect on the Company's stockholders.

Risk of Renovation and Development Activities. The real estate development
business, including the renovation and rehabilitation of existing properties,
involves significant risks in addition to those involved in the ownership and
operation of established industrial buildings and community shopping centers,
including the risks that financing may not be available on favorable terms for
development projects and construction may not be completed on schedule or within
budget, resulting in increased debt service expense and construction costs and
delays in leasing such properties and generating cash flow. Once completed, such
new or renovated properties may perform below anticipated levels, producing cash
flow below budgeted amounts. In addition, substantial renovation as well as new
development activities, regardless of whether or not they are ultimately
successful, typically require a substantial portion of management's time and
attention. Substantial renovation and new development activities are also
subject to risks relating to the inability to obtain, or delays in obtaining,
all necessary zoning, land-use, building, occupancy, and other required
governmental permits and authorizations. The Company anticipates that future
activities will be financed, in whole or in part, through additional equity
offerings, and public or private debt financing, including commercial lines of
credit, and other forms of secured or unsecured financing. If such activities
are financed through construction loans, there is a risk that, upon completion
of construction, permanent financing may not be available or may be available
only on disadvantageous terms. Equity financing of future developments could
have a dilutive effect on the interests of existing stockholders of the Company.

FEDERAL INCOME TAX RISKS

Adverse Consequences of the Company's Failure to Qualify as a REIT. The
Company intends to operate so as to qualify as a REIT under the Code. Although
management believes that it will be organized and will operate in such a manner,
no assurance can be given that the Company will be organized or will be able to
operate in a manner so as to qualify or remain so qualified. Qualification as a
REIT involves the satisfaction of numerous requirements (some on an annual and
quarterly basis) established under highly technical and complex Code provisions
for which there are only limited judicial and administrative interpretations,
and involves the determination of various factual matters and circumstances not
entirely within the Company's control. For example, in order to qualify as a
REIT, at least 95% of the Company's gross income in any year must be derived
from qualifying sources, and the Company must pay distributions to stockholders
aggregating

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<PAGE> 32

annually at least 95% of its REIT taxable income (determined without regard to
the dividends paid deduction and by excluding capital gains). The complexity of
these provisions and of the applicable Treasury Regulations that have been
promulgated under the Code is greater in the case of a REIT, such as the
Company, that holds its assets in partnership form. No assurance can be given
that legislation, new regulations, administrative interpretations or court
decisions will not significantly change the tax laws with respect to
qualification as a REIT or the Federal income tax consequences of such
qualification. The Company, however, is not aware of any pending tax legislation
that would adversely affect the Company's ability to operate as a REIT.

The Company expects to receive at the time of the consummation of the
Formation Transactions and the Offering an opinion of Latham & Watkins, tax
counsel to the Company, to the effect that the Company will be organized in
conformity with the requirements for qualification as a REIT and that its
proposed method of operation will enable it to meet the requirements for
qualification and taxation as a REIT. See "Federal Income Tax
Consequences -- Taxation of the Company." Such legal opinion, however, will be
based on various assumptions and factual representations by the Company
regarding the Company's ability to meet the various requirements for
qualification as a REIT, and no assurance can be given that actual operating
results will meet these requirements. Such legal opinion will not be binding on
the Internal Revenue Service ("IRS") or any court. Moreover, the Company's
qualification and taxation as a REIT will depend upon the Company's ability to
meet (through actual annual operating results, distribution levels and diversity
of stock ownership) the various qualification tests imposed under the Code, the
results of which will not be reviewed by Latham & Watkins.

If the Company were to fail to qualify as a REIT in any taxable year, the
Company would be subject to Federal income tax (including any applicable
alternative minimum tax) on its taxable income at regular corporate rates.
Moreover, unless entitled to relief under certain statutory provisions, the
Company also would be disqualified from treatment as a REIT for the four taxable
years following the year during which qualification was lost. This treatment
would significantly reduce the net earnings of the Company available for
investment or distribution to stockholders because of the additional tax
liability to the Company for the years involved. In addition, distributions to
stockholders would no longer be required to be made. See "Federal Income Tax
Consequences -- Taxation of the Company -- Failure of the Company to Qualify as
a REIT."

Adverse Consequences to the Company if CIF or VAF are Not Qualified as
REITs. If either CIF or VAF has failed to qualify as a REIT throughout the
duration of its existence, then it might have undistributed "C corporation
earnings and profits" that, if not distributed by the Company prior to the end
of its first taxable year, could prevent the Company from qualifying as a REIT.
Also, CIF or VAF may have incurred material income tax liabilities if they did
not qualify as REITs, which tax liabilities would be assumed by the Company by
reason of the mergers which are part of the Formation Transactions (the
"Mergers"). In addition, if either CIF or VAF has failed to qualify as a REIT at
any time during its existence, such entity would recognize taxable gain on the
Merger, even if the Merger qualifies as a "reorganization" for tax purposes,
unless the Company makes a special election that is available under current law.
The Company intends to make such an election as a protective matter, which would
have the effect of requiring the Company to pay corporate income tax with
respect to the existing gain on assets acquired from CIF or VAF in the event
that either has not qualified as a REIT if such assets are sold within 10 years
after the Offering. See "Federal Income Tax Consequences -- Taxation of the
Company -- General." Furthermore, if either CIF or VAF did not qualify as a REIT
at the time of the Merger, and the Merger did not qualify as a tax-free
reorganization, CIF or VAF would recognize a material amount of gain in the
Merger, with the Company assuming the resulting tax liability. The Company and
each of CIF and VAF believe that each of CIF and VAF has qualified as a REIT
throughout the duration of its existence and that, in any event, neither CIF nor
VAF should be considered to have any undistributed "C corporation earnings and
profits" at the time of the Merger. The Company expects to receive at the time
of the consummation of the Formation Transactions and the Offering, certain
legal opinions of Morrison & Foerster LLP, to the effect that CIF and VAF have
been organized in conformity with the requirements for qualification as a REIT
and that each corporation's method of operation has enabled it to meet the
requirements for qualification and taxation as a REIT through the date of the
consummation of the Formation Transactions and the Offering. Such legal opinions
will be based on various assumptions and factual representations by CIF and VAF,
as applicable, regarding their respective abilities to meet the various

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<PAGE> 33

requirements for qualification as a REIT imposed under the Code, the results of
which have not been reviewed by Morrison & Foerster LLP. Such legal opinions are
not binding on the IRS or any court.

Adverse Consequences to the Company if AMB is not an S Corporation. If AMB
failed to qualify as an S corporation for its 1989 taxable year or thereafter,
then it might have undistributed "C corporation earnings and profits" that, if
not distributed by the Company prior to the end of its first taxable year, would
prevent the Company from qualifying as a REIT. Furthermore, if AMB were not an S
corporation in the calendar year in which the Formation Transactions occur, AMB
would not be permitted to have a short S corporation taxable year and a short C
corporation taxable year, as described in "Federal Income Tax
Consequences -- Taxation of the Company -- Termination of S Status." In such
case, the Company likely would not qualify as a REIT for its taxable year
including the Formation Transactions and Offering and perhaps subsequent years.
Also, AMB may have incurred income tax liabilities if it did not qualify as an S
corporation, which tax liabilities would be assumed by the Company as a result
of the Formation Transactions. In addition, if AMB has failed to qualify as an S
corporation for its 1989 taxable year or thereafter, the Company will recognize
taxable gain upon its election to be taxed as a REIT, unless the Company makes a
special election that is available under current law. The Company intends to
make such an election as a protective matter, which would have the effect of
requiring the Company to pay corporate income tax with respect to the existing
gain on assets acquired from AMB in the event AMB has not qualified as an S
corporation, if such assets are sold within 10 years after the Offering. The
Company and AMB each believe that AMB has qualified as an S corporation for its
1989 taxable year and thereafter and that AMB had no income or assets prior to
1989.

Other Tax Liabilities. Even if the Company qualifies as a REIT, it will be
subject to certain Federal, state and local taxes on its income and property. In
addition, the net taxable income, if any, from the activities conducted through
the Investment Management Subsidiary will be subject to Federal and state income
tax. See "Federal Income Tax Consequences -- Other Tax Consequences."

DEBT FINANCING

Debt Financing and Existing Debt Maturities. The Company will be subject
to risks normally associated with debt financing, including the risk that the
Company's cash flow will be insufficient to pay distributions at expected levels
and meet required payments of principal and interest, the risk that existing
indebtedness on the Properties (which in all cases will not have been fully
amortized at maturity) will not be able to be refinanced or that the terms of
such refinancing will not be as favorable as the terms of existing indebtedness.
Upon consummation of the Offering, the Company expects to have substantial
outstanding indebtedness which will be secured by certain of the Properties. See
"Business and Properties -- Debt Financing." If principal payments due at
maturity cannot be refinanced, extended or paid with proceeds of other capital
transactions, such as new equity capital, the Company expects that its cash flow
will not be sufficient in all years to pay distributions at expected levels and
to repay all such maturing debt. Furthermore, if prevailing interest rates or
other factors at the time of refinancing (such as the reluctance of lenders to
make commercial real estate loans) resulted in higher interest rates upon
refinancing, the interest expense relating to such refinanced indebtedness would
increase, which would adversely affect the Company's cash flow and the amount of
distributions it could make to stockholders. If a Property or Properties are
mortgaged to secure payment of indebtedness and the Company is unable to meet
mortgage payments, the Property could be foreclosed upon or otherwise
transferred to the mortgagee with a consequent loss of income and asset value to
the Company.

Risk of Rising Interest Rates and Variable Rate Debt. Upon consummation of
the Offering, the Company, through the Operating Partnership, expects to
increase the amount available under the Credit Facility to $300 million. The
Company, which expects to incur indebtedness through the Operating Partnership,
may incur other variable rate indebtedness in the future. Increases in interest
rates on such indebtedness could increase the Company's interest expense, which
would adversely affect the Company's cash flow and its ability to pay expected
distributions to stockholders. Accordingly, the Company may in the future engage
in other transactions to further limit its exposure to rising interest rates as
appropriate and cost effective. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."

No Limitations on Indebtedness. The Company presently plans to adopt a
policy of incurring debt, either directly or through the Operating Partnership,
only if upon such incurrence the Company's Debt-to-Total-

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Market Capitalization Ratio would be approximately 45% or less. The Company
believes that market capitalization is a better indicator than book value of its
ability to meet debt service requirements. The market capitalization of the
Company, however, is expected to be more variable than book value, and will not
necessarily reflect the fair market value of the underlying assets of the
Company. Notwithstanding the foregoing policy, the organizational documents of
the Company and the Operating Partnership will not contain any limitation on the
amount of indebtedness that may be incurred. Accordingly, the Board of Directors
could alter or eliminate this policy and would do so, for example, if it were
necessary for the Company to continue to qualify as a REIT. If this policy were
changed, the Company could become more highly leveraged, resulting in an
increase in debt service that could adversely affect the Company's FFO and,
consequently, the amount of cash available for distribution to stockholders and
could increase the risk of default on the Company's indebtedness.

Distributions. If the Company fails to achieve its expected operating
results, the Company's ability to pay its estimated initial annual distribution
of $ per share to stockholders out of cash available for distribution
could be adversely affected. If the Company is unable to pay such distribution
out of cash available for distribution, the Company could be required to draw
down under its unsecured line of credit to provide funds for such distribution,
or to reduce the amount of such distribution.

LACK OF OPERATING HISTORY AS A PUBLIC REIT

Although the Company will be continuing the business of owning and
operating the Properties, the Company will not have any operating history in the
proposed organizational structure. See "The Company."

DEPENDENCE ON KEY PERSONNEL

The Company is dependent on the efforts of its Executive Officers,
particularly Messrs. Abbey, Moghadam and Burke, the Chairman of the Company's
Investment Committee, its Chief Executive Officer and the Chairman of its Board
of Directors, respectively. While the Company believes that it could find
suitable replacements for these key personnel, the loss of their services could
have an adverse effect on the Company's financial condition and results of
operations. However, all Executive Officers will enter into employment
agreements with the Company. See "Management."

CONTINGENT OR UNKNOWN LIABILITIES

The AMB Predecessors have been in existence for varying lengths of time up
to 14 years. In the Formation Transactions, the Company will acquire the assets
of CIF, VAF, AMB and WPF, and certain assets of the Individual Account Assets,
subject to all of the potential existing liabilities of an existing company.
There can be no assurances that there are no current liabilities and will not be
any future liabilities arising from prior activities that are unknown and,
therefore not disclosed in this Prospectus. Such liabilities will be assumed by
the Company as the surviving entity in the various merger and contribution
transactions that comprise the Formation Transactions or as general partner of
the Operating Partnership. Existing liabilities for indebtedness generally are
taken into account (directly or indirectly) in connection with the allocation of
the shares of Common Stock and/or Units, but no other liabilities are taken into
account for such purposes. The Company will not have recourse against CIF, VAF,
AMB or WPF or any of their respective stockholders or partners or against the
Individual Account Investors, with respect to any unknown liabilities except to
the extent provided by the Indemnity Escrow (as defined below). Unknown
liabilities might include liabilities for clean-up or remediation of undisclosed
environmental conditions, claims of tenants, vendors or other persons dealing
with the entities prior to the Formation Transactions (that had not been
asserted prior to the Formation Transactions), accrued but unpaid liabilities
incurred in the ordinary course of business, and claims for indemnification by
the officers and directors of CIF, VAF and AMB and others indemnified by such
entities, including clients of AMB. See "-- Government
Regulations -- Environmental Matters" below as to the possibility of undisclosed
environmental conditions potentially affecting the value of the Properties.

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<PAGE> 35

INVESTMENT MANAGEMENT SUBSIDIARY

Adverse Consequences of Lack of Control Over the Business of the Investment
Management Subsidiary. To comply with the REIT asset tests that restrict
ownership of shares of other corporations, the Operating Partnership will own
100% of the nonvoting preferred stock of the Investment Management Subsidiary
(representing approximately 95% of its economic interest) and the Executive
Officers will own all of the outstanding voting common stock of the Investment
Management Subsidiary (representing approximately 5% of its economic interest).
This ownership structure is necessary to permit the Company to share in the
income of the Investment Management Subsidiary while maintaining its status as a
REIT. Although the Company will receive substantially all of the economic
benefit of the business carried on by the Investment Management Subsidiary
through the Company's right to receive dividends through the Operating
Partnership, the Company will not be able to elect directors or officers of the
Investment Management Subsidiary and, therefore, the Company will not have the
ability to influence the operation of the Investment Management Subsidiary or
require that the Investment Management Subsidiary's board of directors declare
and pay a cash dividend on the non-voting stock of the Investment Management
Subsidiary held by the Operating Partnership. As a result, the board of
directors and management of the Investment Management Subsidiary might implement
business policies or decisions that would not have been implemented by persons
controlled by the Company and that are adverse to the interests of the Company
or that lead to adverse financial results, which could adversely impact the
Company's net operating income and cash flows. In addition, the Investment
Management Subsidiary will be subject to tax on its income, reducing its cash
available for distribution. See "Formation and Structure of the
Company -- Formation Transactions."

Uncertainty of Investment Management Subsidiary Operations. Fees earned by
the Investment Management Subsidiary will be dependent upon various factors,
including factors beyond the control of the Company and the Operating
Partnership affecting the ability to attract and retain investment management
clients and the overall returns achieved on managed assets. Failure of the
Investment Management Subsidiary to attract investment management clients or
achieve sufficient overall returns on managed assets would reduce its ability to
make distributions in respect of the nonvoting preferred stock owned by the
Operating Partnership. Such failure would also limit co-investment opportunities
to the Company and, as a result, the Company's ability to generate rental
revenues from such co-investments and use the co-investment program as a source
to finance property acquisitions and leverage acquisition opportunities. See
"Business and Operating Strategies -- Investment Management Subsidiary."

GOVERNMENT REGULATIONS

Many laws and governmental regulations are applicable to the Properties and
changes in these laws and regulations, or their interpretation by agencies and
the courts, occur frequently.

Costs of Compliance with Americans with Disabilities Act. Under the
Americans with Disabilities Act of 1990 (the "ADA"), all places of public
accommodation are required to meet certain Federal requirements related to
access and use by disabled persons. Compliance with the ADA might require
removal of structural barriers to handicapped access in certain public areas
where such removal is "readily achievable." Noncompliance with the ADA could
result in the imposition of fines or an award of damages to private litigants.
The impact of application of the ADA to the Properties, including the extent and
timing of required renovations, is uncertain. If required changes involve a
greater amount of expenditures than the Company currently anticipates or if the
changes must be made on a more accelerated schedule than the Company currently
anticipates, the Company's ability to make expected distributions to
stockholders could be adversely affected.

Environmental Matters. Under Federal, state and local laws and regulations
relating to the protection of the environment ("Environmental Laws"), a current
or previous owner or operator of real estate may be liable for contamination
resulting from the presence or discharge of hazardous or toxic substances or
petroleum products at such property, and may be required to investigate and
clean-up such contamination at such property or such contamination which has
migrated from such property. Such laws typically impose liability and clean-up
responsibility without regard to whether the owner or operator knew of or caused
the presence of the contaminants, and the liability under such laws has been
interpreted to be joint and several unless the harm is divisible and there is a
reasonable basis for allocation of responsibility. In addition, the owner or

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<PAGE> 36

operator of a site may be subject to claims by third parties based on personal
injury, property damage and/or other costs, including investigation and clean-up
costs, resulting from environmental contamination present at or emanating from a
site.

Environmental Laws also govern the presence, maintenance and removal of
asbestos-containing building materials ("ACBM"). Such laws require that ACBM be
properly managed and maintained, that those who may come into contact with ACBM
be adequately apprised or trained and that special precautions, including
removal or other abatement, be undertaken in the event ACBM is disturbed during
renovation or demolition of a building. Such laws may impose fines and penalties
on building owners or operators for failure to comply with these requirements
and may allow third parties to seek recovery from owners or operators for
personal injury associated with exposure to asbestos fibers. Some of the
Properties may contain ACBM.

Some of the Properties are leased or have been leased, in part, to owners
and operators of dry cleaners that operate on-site dry cleaning plants, to
owners and operators of gas stations or to owners or operators of other
businesses that use, store or otherwise handle petroleum products or other
hazardous or toxic substances. Some of these Properties contain, or may have
contained, underground storage tanks for the storage of petroleum products and
other hazardous or toxic substances. These operations create a potential for the
release of petroleum products or other hazardous or toxic substances. Some of
the Properties are adjacent to or near other properties that have contained or
currently contain underground storage tanks used to store petroleum products or
other hazardous or toxic substances. In addition, certain of the Properties are
on, or are adjacent to or near other properties upon which others, including
former owners or tenants of the Properties, have engaged or may in the future
engage in activities that may release petroleum products or other hazardous or
toxic substances.

All of the Properties were subject to a Phase I or similar environmental
assessments by independent environmental consultants at the time of acquisition
or shortly after acquisition. Phase I assessments are intended to discover and
evaluate information regarding the environmental condition of the surveyed
property and surrounding properties. Phase I assessments generally include an
historical review, a public records review, an investigation of the surveyed
site and surrounding properties, and preparation and issuance of a written
report, but do not include soil sampling or subsurface investigations and
typically do not include an asbestos survey. Some of the Company's environmental
assessments of the Properties do not contain a comprehensive review of the past
uses of the Properties and/or the surrounding properties.

None of the Company's environmental assessments of the Properties has
revealed any environmental liability that the Company believes would have a
material adverse effect on the Company's financial condition or results of
operations taken as a whole, nor is the Company aware of any such material
environmental liability. Nonetheless, it is possible that the Company's
assessments do not reveal all environmental liabilities or that there are
material environmental liabilities of which the Company is unaware. In addition,
only certain of such assessments have been updated for purposes of this
Offering, and approximately 50% of the Properties have environmental assessments
which are more than two years old. Moreover, there can be no assurance that (i)
future laws, ordinances or regulations will not impose any material
environmental liability or (ii) the current environmental condition of the
Properties will not be affected by tenants, by the condition of land or
operations in the vicinity of the Properties (such as releases from underground
storage tanks), or by third parties unrelated to the Company. If the costs of
compliance with the various environmental laws and regulations, now existing or
hereafter adopted, exceed the Company's budgets for such items, the Company's
ability to make expected distributions to stockholders could be adversely
affected.

Other Regulations. The Properties are also subject to various Federal,
state and local regulatory requirements such as state and local fire and life
safety requirements. Failure to comply with these requirements could result in
the imposition of fines by governmental authorities or awards of damages to
private litigants. The Company believes that the Properties are currently in
substantial compliance with all such regulatory requirements. However, there can
be no assurance that these requirements will not be changed or that new
requirements will not be imposed which would require significant unanticipated
expenditures by the Company, which expenditures could have an adverse effect on
the Company's financial condition and results of operations.

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<PAGE> 37

Risk of Reassessment. Certain local real property tax assessors may seek
to reassess certain of the Properties as a result of the Formation Transactions
and the transfer of interests to occur in connection therewith. In jurisdictions
such as California, where Proposition 13 limits the assessor's ability to
reassess real property so long as there is no change in ownership, the assessed
value could increase by as much as the full value of any appreciation that has
occurred during the AMB Predecessors' period of ownership. Where appropriate,
the Company would contest vigorously any such reassessment. Subject to market
conditions, current leases may permit the Company to pass through to tenants a
portion of the effect of any increases in real estate taxes resulting from any
such reassessment.

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<PAGE> 38

THE COMPANY

PROPERTIES

Upon consummation of the Offering, the Company will own 103 properties,
including the Pending Acquisitions, comprised of 70 industrial properties and 33
retail properties located in 24 markets throughout the United States. As of June
30, 1997, the Industrial Properties (representing 306 buildings), excluding the
Pending Acquisitions, principally warehouse distribution properties, encompassed
approximately 30.4 million rentable square feet and were 94.2% leased to over
700 tenants. The Retail Properties, excluding the Pending Acquisitions,
principally grocer-anchored community shopping centers, encompassed
approximately 5.5 million rentable square feet and, as of the same date, were
93.0% leased to over 600 tenants. Additionally, upon completion of the Offering,
the Company's Investment Management Subsidiary expects to manage on behalf of
clients approximately $ million of assets, encompassing
million rentable square feet of industrial space, million rentable square
feet of community shopping center space and other property types encompassing
million rentable square feet. The following table sets forth certain
summary information with respect to the Properties, excluding the Pending
Acquisitions, as of June 30, 1997. See "Business and Properties -- Property
Additions and Projects in Progress."

INDUSTRIAL AND RETAIL PROPERTIES BY REGION

<TABLE>
<CAPTION>
INDUSTRIAL PROPERTIES RETAIL PROPERTIES TOTAL
------------------------------------------- ------------------------------ -------------------------------
RENTABLE RENTABLE NUMBER RENTABLE
NUMBER OF NUMBER OF SQUARE % OF NUMBER OF SQUARE % OF OF SQUARE % OF
REGION PROPERTIES BUILDINGS FEET TOTAL CENTERS FEET TOTAL PROPERTIES FEET TOTAL
- --------------------------- --------- ---------- ----- ---------- --------- ----- ---------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Western.......... 24 128 10,690,015 35.1% 15 2,192,446 39.9% 39 12,882,461 35.9%
Southern......... 15 78 7,610,919 25.0 9 1,400,718 25.5 24 9,011,637 25.1
Midwestern....... 16 80 9,790,994 32.2 4 710,523 13.0 20 10,501,517 29.2
Eastern.......... 6 20 2,327,351 7.7 3 1,184,462 21.6 9 3,511,813 9.8
---- ----
-- -- --
--- ---------- ----- --------- ----- -----
Total............ 61 306 30,419,279 100.0% 31 5,488,149 100.0% 92 35,907,428 100.0%
== === ========== ===== == ========= ===== ========== =====
</TABLE>

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<PAGE> 39

HISTORY

Since its inception in 1983, AMB has grown to become a leading real estate
investment manager with over $2.6 billion under management. AMB's growth is, in
part, the result of its ability to achieve investment returns consistently above
the National Council of Real Estate Investment Fiduciaries ("NCREIF") National
Property Index (the "NCREIF NPI"), the recognized industry benchmark. For the
10-year period ended December 31, 1996, AMB's average annual unleveraged rate of
return exceeded the average annual rate of return of the NCREIF NPI by 450 basis
points.

AMB has been one of the nation's most active acquirers of industrial
properties and community shopping centers in recent years and has developed
extensive expertise and proprietary systems and procedures to handle a high
volume of transaction activity. During the three years ended June 30, 1997, AMB
acquired 75 properties representing an aggregate investment of over $1.4 billion
and encompassing over 31 million rentable square feet, including 28 properties
acquired in 1996 with a total investment of approximately $585 million
encompassing over 10 million rentable square feet. In addition, during the
nine-month period ended September 30, 1997, the Company acquired
Properties encompassing million rentable square feet totaling $ in
aggregate investment. In addition, over the past nine years, AMB has assumed the
management of 10 existing real estate portfolios by replacing other real estate
investment managers. These "takeover" portfolios represent over $725 million in
invested capital, comprising an aggregate of 96 properties representing over 12
million rentable square feet. As shown in the following graph, for the period
beginning January 1, 1988 through June 30, 1997, AMB's cumulative acquisition
and "takeover" portfolio activity (giving effect to the Pending Acquisitions)
grew at an average annual rate of 42.7% based on the aggregate purchase price of
such transactions. See "Business and Properties -- Property Additions and
Projects in Progress."

[AMB ACQUISITIONS CHART]

The Company believes that active management and high quality service are
critical to tenant satisfaction and, ultimately, property performance. Each year
since 1992, AMB has conducted a program of measuring and monitoring the
satisfaction of its tenants, including surveys conducted by an outside market
research firm. Based on independent surveys of over 700 tenants, property
managers and leasing brokers over the last three years, AMB was rated at
consistently high levels in areas such as professionalism, knowledge and
responsiveness.

AMB has also been highly rated by institutional investor consultants who
frequently recommend AMB to their clients and have rated AMB as an industry
leader with respect to its capabilities in the acquisition, management and
disposition of real estate investments. Since 1990, independent surveys of AMB
clients and

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<PAGE> 40

their consultants rated AMB as a leader in areas such as quality and expertise
of its investment professionals and client confidence in AMB's expected future
investment performance. In connection with AMB's historical investment
management business, no AMB client has ever replaced AMB as its real estate
investment portfolio manager.

AMB has been an innovator in the institutional real estate management arena
in the early formation of private REITs as an alternative to traditional
commingled funds. AMB also has led the industry by incorporating progressive
corporate governance provisions, and using incentive based compensation
arrangements rather than a traditional fee structure based on appraised value.
Demonstrating their satisfaction with AMB's service and investment returns,
substantially all of AMB's institutional clients elected to become stockholders
of the Company, including the following:

<TABLE>
<CAPTION>
CORPORATE PENSION PLANS PUBLIC PENSION PLANS FOUNDATIONS AND ENDOWMENTS
- ------------------------------------ --------------------------------- ---------------------------
<S> <C> <C>
Ameritech Chicago Public Teachers Ford Foundation
Blue Cross Blue Shield Association City and County of San Francisco Hewlett Foundation
Consolidated Freightways City of Milwaukee Pomona College
Edison International City of Orlando Rockefeller Foundation
International Monetary Fund City of San Diego Stanford University
Southern Company Denver Employees The Kresge Foundation
The World Bank Illinois Municipal University of Illinois
</TABLE>

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<PAGE> 41

FOCUS ON INDUSTRIAL PROPERTIES AND COMMUNITY SHOPPING CENTERS

The Company operates industrial properties and community shopping centers
in hub distribution and retail trade areas throughout the United States.
Management believes that its dual property strategy provides greater
opportunities to deploy capital and organizational resources between industrial
properties and community shopping centers, providing the Company greater
flexibility in investing and balancing its property mix.

Management believes that industrial properties and community shopping
centers share the following characteristics:

Fragmented Ownership. Historically, both industrial properties and
community shopping centers have been developed and operated by local real estate
investors and, as a result, are characterized by fragmented ownership. The
Company believes this fragmented ownership provides opportunities for
consolidation on a national basis.

Competition for Acquisitions. Management believes that, because of their
relative size and fragmented ownership, industrial properties and community
shopping centers are not as widely marketed and attract less significant buyer
interest than larger property types. Accordingly, management believes that these
properties can be acquired on a less competitive basis.

Distribution of Goods and Necessities. Industrial property and community
shopping center tenants distribute goods and necessities, either at the
wholesale or retail level, or both. Management believes that such tenants are
relatively insulated from the adverse effects of an economic downturn, and that
industrial properties located in hub distribution markets and community shopping
centers located in selected trade areas generally have higher occupancy rates
across market cycles.

Construction and Maintenance. Industrial properties and community shopping
centers are typically single-story construction, and improvements to such
properties are generally limited to moving demising walls and repairing roofs
and parking lots. Such property types also require less maintenance as compared
to most other commercial property types.

Redevelopment Opportunities. As compared to other commercial property
types, industrial properties and community shopping centers generally require
less time and capital to renovate and reposition and management believes the
corresponding increase in cash yield upon renovation tends to be higher.

Tenant Improvements. Industrial properties and community shopping centers
generally do not require significant tenant improvements to attract new tenants
as compared to other commercial property types.

Management. Industrial properties and community shopping centers generally
do not require on-site property management.

INDUSTRIAL PROPERTY GROWTH OPPORTUNITIES

The Company believes that the industrial property sector is well-positioned
to benefit from strong market fundamentals and growth in international trade.
See "Strategies for Growth -- Growth Through Operations."

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<PAGE> 42

Low Level of Construction and High Occupancy. Industrial properties
typically have stable occupancy rates because they have a shorter development
lead time and therefore are not as susceptible to oversupply cycles as other
commercial property types. CB Commercial/Torto Wheaton Research projects
industrial property vacancy rates for major markets nationally to remain
approximately 7% through the year 2001, and for annual construction as a
percentage of inventory to remain below 2% for the same period. The following
graph outlines national vacancy and new construction data for industrial
properties for the periods presented:

[INDUSTRIAL & VACANCY GRAPH]

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<PAGE> 43

Growth of International Trade. Management believes that continued growth in
international trade, as presently forecasted, will result in increased demand
for industrial space and upward pressure on rental rates in the nation's hub
distribution and selected regional markets. The Company should benefit from this
trend, as the majority of the Industrial Properties are located in these
markets. See "Business and Properties -- Industrial Properties -- Overview of
Major Target Markets." As shown below, the growth in U.S. imports and exports
has exceeded the growth in the U.S. gross domestic product ("GDP") since 1991
and is forecasted to continue:

[INTERNATIONAL TRADE & GDP GRAPH]

COMMUNITY SHOPPING CENTER GROWTH OPPORTUNITIES

Management believes the retail property sector will benefit from the
prevailing low levels of new construction, projected growth in personal income
and retail sales levels, and greater opportunities for redevelopment.

Low Level of Construction and High Occupancy. An important element of the
Company's strategy of acquiring and operating community shopping centers is to
focus on supply-constrained locations where retail sales volumes are proven and
barriers to entry are high and sustainable. These target trade areas typically
have high population densities and above-average income levels which in turn
lead to higher sales volumes and, ultimately, higher rents and occupancy rates.
The following graph shows the decline in new shopping center

37
<PAGE> 44

construction as a percentage of retail center inventory since 1985 and the
current retail vacancy rate of approximately 8%:

[U.S. RETAIL VACANCY RATE GRAPH]

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<PAGE> 45

Personal Income and Retail Sales. The following graph summarizes the
historical and projected trends for personal income and retail sales compared to
the Consumer Price Index on a national basis. These two factors have grown at
rates significantly in excess of inflation as measured by the Consumer Price
Index. According to projections by Regional Financial Associates, these positive
trends are expected to continue for the next five years.

[U.S. RETAIL SALES AND INCOME GROWTH GRAPH]

Redevelopment Opportunities. Management believes that because community
shopping centers have historically been owned and operated by local real estate
investors who are often undercapitalized, the acquisition and redevelopment of
such properties presents attractive investment opportunities. In addition, the
Company believes that it can capitalize on the recent shift in desired space
configuration from small stores to larger formats by redeveloping older centers.

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<PAGE> 46

BUSINESS AND OPERATING STRATEGIES

The Company focuses its investment activities in hub distribution markets
and retail trade areas throughout the U.S. where opportunities exist to acquire
and develop additional properties on an advantageous basis. The Company's
operations are conducted through its 104 employees, 88 of whom are located in
its San Francisco headquarters and 16 of whom are located in its Boston office.
The Company is a full-service real estate company with in-house expertise in
acquisitions, development and redevelopment, asset management and leasing,
finance and accounting and market research. The Company has long-standing
relationships with most of its 47 real estate management firms across the
country which provide local property management and leasing services to the
Company on a fee basis. See "-- Property Management."

NATIONAL PROPERTY COMPANY

Upon consummation of the Offering, the Company will own 103 Properties
(including the Pending Acquisitions) in 24 markets throughout the country. The
Company believes that its national strategy enables it to (i) increase or
decrease investments in certain regions to take advantage of the relative
strengths in different real estate markets; (ii) retain and accommodate tenants
as they consolidate or expand, particularly in its Industrial Properties; and
(iii) build brand awareness as well as customer loyalty through the delivery of
consistent service and quality product. Through its presence in markets
throughout the U.S., the Company has developed expertise in leasing, expense
management, tenant retention strategies and property design and configuration.

TWO COMPLEMENTARY PROPERTY TYPES

Management believes its strategy of owning and operating both industrial
properties and community shopping centers offers the Company an optimal
combination of growth opportunities, strong current income and stability through
market cycles. The Company has developed the expertise, infrastructure and
management information systems to acquire, reposition, develop and operate these
two property types. Management believes that its dual property strategy provides
significant opportunities to allocate capital and organizational resources
between property types according to changing market conditions and its
investment strategy. See "Focus on Industrial Properties and Community Shopping
Centers."

SELECT MARKET FOCUS

The Company intends to continue its strategy of investing in hub
distribution markets and retail trade areas across the country to capitalize on
changes in the relative economic strength of these regions. The Company focuses
on acquiring, redeveloping and operating properties in in-fill locations which
are characterized by limited new construction opportunities. As the strength of
these markets continues to grow and the demand for well-located properties
increases, the Company believes that it will benefit from an upward pressure on
rents resulting from the increased demand combined with the relative lack of new
available space.

Industrial Property Selected Hub Distribution Markets. The Company intends
to continue to focus its industrial property investment activities in six hub
markets which dominate national warehouse distribution property activities: San
Francisco Bay Area, Los Angeles, Chicago, Dallas/Fort Worth, Atlanta and
Northern New Jersey. According to CB Commercial/Torto Wheaton Research, these
markets accounted for approximately (i) 38% of the warehouse property inventory
as of December 31, 1996, and (ii) for the three-year period ended December 31,
1996, 35% of industrial property net absorption, in the nation's 53 major
industrial markets. In addition, such hub markets contain approximately 69% of
the Industrial Properties based on aggregate square footage. The Company also
invests in selected regional distribution markets including Boston, Houston,
Miami, Minneapolis, San Diego, Seattle and Baltimore/Washington, D.C. The
Company focuses on these established industrial markets because they offer large
and broadly diversified tenant bases which provide greater demand for properties
over market cycles than secondary markets. In-fill locations within these
markets also typically have significant barriers to new construction including
geographic or regulatory supply constraints, and benefit from an access to large
labor supplies and well-developed transportation networks. See "Business and
Properties -- Industrial Properties -- Overview of Major Target Markets."

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<PAGE> 47

Community Shopping Center Trade Areas. The Retail Properties generally are
located in supply-constrained trade areas of 15 major metropolitan areas. The
Company's national operating strategy for the community shopping center business
is based on detailed research regarding these target trade areas. These target
trade areas typically enjoy high population densities and above-average income
levels. See "Business and Properties -- Retail Properties -- Retail Trade
Areas." The Company believes that its experience and relationships with
community shopping center retailers enable it to make investment decisions which
meet the site selection and store configuration needs of these tenants.
Management believes that by continuing to acquire and develop additional
community shopping centers in new and existing target trade areas, the Company
will increase its market share and operating efficiencies.

The Company assesses the competitive position and trade area strength of a
potential acquisition with a research process that focuses on the following five
key characteristics: (i) supply-constrained trade area (trade areas, including
in-fill locations, where it is difficult to introduce competing retail shopping
centers, retailers have established positions required to serve the local
market, competition and competing development sites are limited and there is an
existing balance between market demand and supply); (ii) high-traffic location
(convenient locations, good visibility and ease of access, which increase
customer traffic and foster customer loyalty); (iii) strong anchor tenant
line-up (ability to attract recognized anchor tenants with above average sales
within trade areas, such as the number one or two grocer in the market); (iv)
suitable physical layout (a site configuration with functional store size and
layout to support the format preferences of the major anchor tenants and with a
supportable amount of shop space, and sufficient parking); and (v) favorable
demographics (selection of a trade area which has a relatively high population
density and above-average income levels to provide a strong customer and retail
sales base). Management believes that together these characteristics tend to
result in centers with above-average retail sales fostering tenant loyalty, high
rents and high occupancy.

RESEARCH-DRIVEN MARKET SELECTION

The Company's decisions regarding the deployment of capital are experience-
and research-driven, with investments made based upon information as to
underlying market demand for industrial and retail space and long-term trends in
the economy which influence demand patterns. The Company seeks to identify
industrial submarkets and retail trade areas with characteristics that support
relatively high occupancy and increasing rents.

The Company has built a dedicated research department and has developed
proprietary methodology and systems to analyze the economic base of major U.S.
markets, demographic trends and supply and demand characteristics of such
markets. The Company's research also assesses the viability of market
infrastructure and transportation networks to assist in targeting strong
industrial submarkets, and studies trends in distribution, retailing and other
industries that impact location, demand and value of industrial properties and
community shopping centers.

The Company's research is focused on analyzing and understanding local
markets. This approach includes a thorough analysis of local markets, submarkets
and individual properties, including demographics, tenant base, infrastructure,
political climate, local taxes, competing properties and other submarket and
investment issues. The direction of rental rates is assessed within markets and
incorporated into the Company's pricing and leasing strategy, including whether
to structure new and renewing leases on a long- or short-term basis.

PROPERTY MANAGEMENT

The Company actively manages its Properties through its experienced staff
of 12 regional managers, each of whom specializes in the management of
industrial properties or community shopping centers in designated markets. The
Company typically outsources property management to a select group of
third-party local managers with whom the Company has developed strong
relationships. Regional, market and property-type focus provides regional
managers with extensive knowledge of real estate trends and supply and demand
activity in their markets as well as an effective network of local contacts who
provide sources for market data, leads for new tenants and property
acquisitions, and opportunities to enhance the value of the Properties. From
January 1, 1994 through June 30, 1997, the Company's weighted average tenant
retention rate was

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<PAGE> 48

approximately 70% at its Industrial Properties and approximately 79% at its
Retail Properties, based on aggregate square footage. Management believes that
these tenant retention rates reflect the success of the Company's operating and
tenant-service driven property management strategy.

The Company's regional managers make all major business decisions regarding
the Properties, and have broad responsibilities that include implementing an
annual business plan for each asset, formulating leasing strategies,
establishing leasing terms and conditions, negotiating leases, approving and
monitoring leases and capital expenditures, planning and implementing
renovation, expansion and development, establishing annual operating and capital
budgets and effecting dispositions. The Company's regional managers utilize
local leasing agents to identify prospective tenants and document lease
transactions. Third-party local property service providers are engaged to
oversee custodial property matters such as rent collection, tenant requests,
maintenance and repair, and supervision of cleaning and security services. The
Company monitors the performance of its Properties on a daily basis through the
use of the Company's proprietary asset information system. This management tool
enables the Company not only to monitor the operating performance of a property
(and the local property manager), but also to review and communicate strategic
initiatives to the local property manager on a real-time basis and to compare
the property's performance to on-line budgets and objectives.

Management believes that its approach to property management and its
relationships with third-party property management companies enable the Company
to more effectively manage fixed operating costs associated with a national
portfolio. By employing third-party local property managers which management
believes to be the best in their respective market, the Company can enter and
exit markets efficiently without the administrative burden of retaining a large
staff. Since the Company is the customer, rather than the competitor, of
third-party management firms, these firms are also a source of new acquisition
opportunities in the respective markets, thus providing the Company with greater
access to transaction flow. Management believes this approach also gives the
Company a competitive advantage in capitalizing on the increasing trend among
corporations to outsource their real estate service requirements to property
management companies.

DISCIPLINED INVESTMENT PROCESS

Over the past 14 years, AMB has established a disciplined approach to the
investment process through operating divisions that are subject to the overall
policy direction of its Investment Committee. The stages in the investment
process are highly integrated, with Investment Committee review at critical
points in the process.

Approval of each investment is the responsibility of the Investment
Committee with sponsorship from both the acquisitions officer and regional
manager who will be responsible for managing the property. The initial
investment recommendation is thoroughly discussed, and approval is required in
order to proceed to contract and full due diligence. The approach to offer terms
and transaction structure is determined as part of the initial approval and is
the responsibility of the acquisitions officer. The regional manager is involved
in providing and verifying underwriting assumptions and developing the operating
strategy. After the due diligence review and before removing conditions to the
contract, a final Investment Committee recommendation is prepared by the
acquisition and asset management team. The Investment Committee conducts a
complete review of the information developed during the due diligence process
and either rejects or gives final approval.

AMB has also established proprietary systems and procedures to manage and
track a high volume of acquisition proposals, transactions and important market
data. This includes an on-line open issues database that provides current
information on the status of each transaction, highlighting the issues that must
be addressed prior to closing, and a database that includes and compiles data on
all transaction proposals and markets reviewed by the Company.

RENOVATION, EXPANSION AND DEVELOPMENT

The multidisciplinary background of the Company's employees provide it with
the skills and experience to capitalize on strategic renovation, expansion and
development opportunities. Several of the Company's officers have extensive
experience in real estate development, both at AMB and with national development

42
<PAGE> 49

firms. The Company generally pursues development projects in joint ventures with
local developers. In this way, the Company leverages the development skill,
access to opportunities and capital of such developers, transferring a
significant amount of the development risk to them and eliminating the need and
expense of an in-house development staff. At the request of institutional
owners, AMB has assumed the management of a total of 96 "takeover" properties,
many of which required repositioning, renovation or expansion. See "Strategies
for Growth -- Growth Through Renovation, Expansion and Development."

FINANCING STRATEGY

In order to maintain financial flexibility and facilitate the rapid
deployment of capital over market cycles, the Company intends to operate with a
Debt-to-Total Market Capitalization Ratio of less than 45%. Additionally, the
Company intends to structure its balance sheet in order to obtain an investment
grade rating on its senior unsecured debt, although no assurance can be given
that such objective will be achieved. The Company intends to keep the majority
of its assets unencumbered to facilitate such rating. Upon consummation of the
Offering, the Company's Debt-to-Total Market Capitalization Ratio will be
approximately %. See "Policies with Respect to Certain
Activities -- Financing Policies."

The Company may utilize multiple sources of equity capital including public
or private common stock offerings, convertible or non-convertible preferred
stock offerings and purchases of property with Common Stock, convertible shares
or Units. Additionally, the Company's co-investment program will also serve as a
source of capital, particularly when more traditional sources of capital may not
be available on attractive terms. See "-- Investment Management Subsidiary."

Upon consummation of the Offering, the Company expects to increase the
availability under the Credit Facility to $300 million. Such facility will bear
interest at a rate equal to LIBOR plus 125 to 150 basis points. The Credit
Facility is expected to be used for acquisitions and for general corporate
purposes. See "Management's Discussion of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Business and
Properties -- Debt Financing."

INVESTMENT MANAGEMENT SUBSIDIARY

In connection with the Formation Transactions, the Company intends to form
the Investment Management Subsidiary to enable the Company to continue providing
real estate investment management services on a fee basis to certain of AMB's
existing clients who are not participating in the Formation Transactions and to
facilitate takeover opportunities and the Company's co-investment program. Upon
completion of the Offering, the Investment Management Subsidiary expects to
manage approximately $ million of real estate investments for existing
institutional clients of AMB, including industrial properties encompassing
million square feet, retail properties encompassing million square feet and
other property types (managed as part of "takeover" portfolios, where AMB
assumed the management and disposition responsibilities of properties previously
managed by others) encompassing million square feet. In addition, these
clients have unspent capital allocations totaling approximately $ million
which may be invested on behalf of these clients by the Investment Management
Subsidiary. The fee revenues from the assets presently expected to be included
in the Investment Management Subsidiary for each of the calendar years ended
December 31, 1994, 1995 and 1996, and for the six months ended June 30, 1997,
were $ million, $ million, $ million and $ million,
respectively. In accordance with industry practice, most of the Company's
advisory contracts are terminable on 30 days' notice. However, on average, these
investments have been managed by AMB for four years.

43
<PAGE> 50

The following table summarizes, as of June 30, 1997, the properties under
AMB management which are expected to be managed by the Investment Management
Subsidiary following consummation of the Formation Transactions and the
Offering.

INVESTMENT MANAGEMENT SUBSIDIARY
PROPERTIES UNDER MANAGEMENT
AS OF JUNE 30, 1997

<TABLE>
<CAPTION>
INDUSTRIAL RETAIL
PROPERTIES PROPERTIES OTHER PROPERTIES TOTAL
------------------ ---------------- ---------------- ----------------------------
RENTABLE RENTABLE RENTABLE RENTABLE
SQUARE % OF SQUARE % OF SQUARE % OF NUMBER OF SQUARE % OF
REGION FEET TOTAL FEET TOTAL FEET TOTAL PROPERTIES FEET TOTAL
- ----------------------- -------- ----- -------- ----- -------- ----- --------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Western................
Southern...............
Midwestern.............
Eastern................
------- --- ------- --- ------- --- --- ------- ---
Total..................
======= === ======= === ======= === === ======= ===
</TABLE>

Co-investment Program. The Company intends to grow the operations of the
Investment Management Subsidiary exclusively through its co-investment program.
The purposes of the co-investment program will be to generate incremental
revenues for the Company by leveraging AMB's successful track record and
established relationships with institutional investors who currently prefer a
private market format. Capital which is newly-committed to the investment
management business will be invested only on a co-investment basis. The Company
and the institutional client will acquire or develop properties through a
partnership, limited liability company or joint venture. The Company anticipates
using a consistent co-investment formula with each client whereby the Company's
interest in all ventures with that client will be fixed at a level of at least
20%.

The Investment Management Subsidiary's co-investments will be consistent
with the Company's acquisition and development strategies. The Company will
assume day-to-day control over operations and management of the investments and
will earn a return on its pro rata share of the investment plus the fee revenue
generated from the Investment Management Subsidiary. The Investment Management
Subsidiary's base revenues will be generally in the form of an up-front
acquisition fee and an on-going asset management fee. The Company expects to
enhance returns through incentive fee arrangements whereby the Investment
Management Subsidiary participates in performance above target levels.

Benefits of the Investment Management Business. The Company believes that
its investment management business and co-investment program will enable it to
develop new and enhance existing relationships with its institutional investors.
In addition, the Investment Management Subsidiary will earn fee income on assets
under management. Based on experience, management believes that many
institutions who currently own real estate and may become clients of the
Investment Management Subsidiary will, over time, seek to convert a portion, or
all, of their real estate assets into more liquid securities such as shares or
partnership units of publicly traded real estate companies, including the
Company. Management believes that its established relationships and
understanding of the private institutional investor community will provide it
with a competitive advantage in terms of converting managed assets into
wholly-owned assets of the Company. Further, the Company believes that the
ongoing relationships originated and maintained by the Investment Management
Subsidiary will be a source of acquisitions of private investor portfolios and
also provide access to private institutional capital which will permit the
Company to be active when other public companies may be capital constrained.

In addition to the foregoing, the Company believes that the co-investment
program and other activities of its Investment Management Subsidiary will
provide operational and financial benefits to the stockholders of the Company,
such as:

- Enhanced returns on equity investments acquired on a co-investment basis
as a result of earning acquisition, asset management and incentive fees.

44
<PAGE> 51

- Economies of scale and operational synergies resulting from the expansion
of the Company's portfolio.

- An additional source of private equity financing.

- The ability to share the risks associated with development and
value-added projects with co-investment partners.

- A potential source of acquisition opportunities from co-investment
partners who wish to contribute their property interests to the Company.

- The ability to continue to take over assets currently managed by others.

Legal Structure. In order to comply with Federal tax requirements for REIT
status, the Company will own 100% of the non-voting preferred stock of the
Investment Management Subsidiary (representing 95% of its economic value). All
of the outstanding voting common stock of the Investment Management Subsidiary
(representing 5% of its economic value) will be owned by the Company's Executive
Officers. See "Risk Factors -- Investment Management Subsidiary." The
co-investment program will also be subject to the requirements of ERISA with
respect to benefit plan investors which are subject to ERISA.

45
<PAGE> 52

STRATEGIES FOR GROWTH

The Company intends to achieve its growth objectives of long-term
sustainable growth in Funds from Operations ("FFO") per share and maximization
of long-term stockholder value, principally by growth through (i) operations,
resulting from improved operating margins within the portfolio while maintaining
above-average occupancy, (ii) acquisitions, including through the co-investment
program of the Investment Management Subsidiary and (iii) property renovation,
expansion and selected development.

GROWTH THROUGH OPERATIONS

As of June 30, 1997, the Industrial Properties were 94.2% leased and the
Retail Properties were 93.0% leased. The Company will seek to improve operating
margins by taking advantage of the economies of owning, operating and growing a
large-scale national portfolio.

In the first six months of 1997, the Company increased average rental rates
by 11.0% on 172 new and renewing leases totaling 3.1 million rentable square
feet representing 8.6% of the Properties aggregate square footage. Management
believes that it will have an opportunity to increase the average rental rate on
leases expiring during 1998 covering an aggregate of 5.3 million rentable square
feet. In addition, during 1998, leases encompassing an aggregate of 7.1 million
rentable square feet (representing 19.8% of the Company's aggregate rentable
square footage) are subject to contractual rent increases resulting in an
average rent increase per rentable square foot of $0.74, or 5.8%. The Company
expects further rent increases over the next two calendar years as leases
representing 25.0% of the Annualized Base Rents are scheduled to expire in 1998
and 1999. The Company will seek to reduce the potential volatility of the
portfolio's FFO by managing lease expirations so that they occur within
individual properties and across the entire portfolio in a staggered fashion,
and by monitoring the credit and mix of tenants, particularly those in the
Retail Properties.

GROWTH THROUGH ACQUISITIONS

Management believes its significant acquisition experience and its
extensive network of property acquisition sources will continue to provide
opportunities for external growth. Since 1983, AMB's management team has
invested over $3 billion on behalf of its clients in over 160 properties, 75 of
which totaling over $1.4 billion were acquired during the three years ended June
30, 1997. In 1996, AMB acquired on behalf of its clients 28 properties totaling
$585 million in aggregate investment, and in the nine-month period ended
September 30, 1997, it acquired properties encompassing million
rentable square feet totaling $ million in aggregate investment. The
Company believes this pace of acquisitions makes it one of the most active
buyers of industrial properties and community shopping centers in the country.

Management believes that there is a growing trend among large private
institutional holders of real estate assets to shift a portion of their direct
investment in real estate assets to more liquid securities such as common stock
and units in publicly-traded REITs. The Company has relationships with a number
of the nation's leading pension funds and other institutional investors, many of
whom have large portfolios of industrial properties and community shopping
centers. Management believes that the Company's relationship with third-party
local property managers also will create acquisition opportunities as such
managers market properties on behalf of unaffiliated sellers. The Company also
will continue active investment management of a number of portfolios through the
Investment Management Subsidiary. The Company believes that through these
relationships it will have opportunities to acquire portfolios in exchange for
equity interests in the Company, and will be well-positioned to facilitate such
investors' shift from private to public real estate ownership. See "Business and
Operating Strategies -- Investment Management Subsidiary."

The Company's Operating Partnership structure also provides sellers the
opportunity to contribute properties to the Company (through the Operating
Partnership) on a tax-deferred basis in exchange for Units. The Company believes
that its ability to offer tax-deferred transactions to sellers will enhance its
attractiveness to local owners and developers. In addition, local developers can
continue to participate as partners with the Company in local projects.

46
<PAGE> 53

GROWTH THROUGH RENOVATION, EXPANSION AND DEVELOPMENT

Management believes that renovation and expansion of value added
properties, and development of well-located, high quality industrial properties
and community shopping centers, will continue to provide it with attractive
opportunities for increased cash flow and a higher risk-adjusted rate of return
than may be obtained from the purchase of fully leased, renovated properties.
Value added properties are typically characterized as properties with available
space or near-term leasing exposure, properties which are well-located but
require redevelopment or renovation, and occasionally undeveloped land acquired
in connection with another property that provides an opportunity for
development. Such properties require significant management attention and/or
capital to maximize their return. The Company has developed the in-house
expertise to create value through acquiring and managing value added
transactions, having invested over $365 million in such transactions since
January 1993, including investments made through AMB Value Added Fund, Inc.
Because of the Company's expertise with these types of assets, management
believes it has the ability to identify and acquire value added properties and,
on a selective basis, develop new properties. The Company will pursue
development either in conjunction with its local network of development partners
or through its established in-house development capability.

Renovation. Renovation of well-located properties offers the Company the
opportunity to increase demand for space in its properties and add value to the
portfolio. Certain properties acquired by the Company have some element of
obsolescence or deferred maintenance which can be remedied in a cost-effective
manner in order to improve the marketability of the space. Since 1995, the
Company has undertaken five value-enhancing renovation projects totaling over
1.1 million rentable square feet.

Expansion. Certain properties provide opportunities to acquire adjacent
land for nominal or no cost that can subsequently be used for expansion. When
market conditions are favorable and tenant demand is present, the Company may
expand these facilities to create additional value, without incurring additional
land cost. The Company currently has two expansion projects, adding 649,522
rentable square feet for a total of 1,280,800 rentable square feet.

Development. The Company creates value through new development when
opportunities arise through either the acquisition of undeveloped land
(typically parcels acquired adjacent to existing properties) or through tenant
relationships. The Company currently has two properties under development, which
upon completion will total approximately 405,000 rentable square feet.

47
<PAGE> 54

USE OF PROCEEDS

The net proceeds from the Offering are expected to be approximately $215.9
million, after deducting Underwriters' discounts, commissions and offering
expenses of approximately $34.1 million (or net offering proceeds of
approximately $250.8 million if the Underwriters' over-allotment option is
exercised in full), assuming an offering price of $ per share. The
Company intends to use the net proceeds to repay approximately $174.2 million of
indebtedness which was incurred to fund property acquisitions and purchase an
interest from certain investors for approximately $41.7 million. If the
Underwriters' over-allotment option is exercised in full, the Company expects to
use the additional net proceeds of approximately $34.9 million to repay
indebtedness and fund future property acquisitions and for general corporate
purposes. Pending application of the net proceeds, the Company will invest such
portion of the net proceeds in interest-bearing accounts and short-term,
interest-bearing securities, which are consistent with the Company's intention
to qualify for taxation as a REIT.

As of June 30, 1997, the weighted average interest rate on indebtedness
expected to be repaid with the net proceeds of the Offering was approximately
7.1% and the weighted average maturity was approximately two years. All of the
$174.2 million of outstanding borrowings expected to be repaid from the net
proceeds of the Offering was incurred within the 12 months ended June 30, 1997
in connection with property acquisitions.

48
<PAGE> 55

DISTRIBUTIONS

The actual distributions made by the Company will be affected by a number
of factors, including the gross revenues received from its Properties, the
operating expenses of the Company, the interest expense incurred in borrowing
and unanticipated capital expenditures. No assurance can be given that any level
of distributions will be made or sustained. The Company anticipates that
distributions will exceed net income determined in accordance with GAAP due to
non-cash expenses, primarily depreciation and amortization.

The Company anticipates that its distributions will exceed earnings and
profits for Federal income tax reporting purposes due to non-cash expenses,
primarily depreciation and amortization, to be incurred by the Company. Based on
pro forma taxable income for the 12 months ended June 30, 1997 of $91.8 million,
approximately % (or $ per share of Common Stock) of the
distributions anticipated to be paid by the Company for the 12-month period
following the completion of the Offering would have represented a return of
capital for Federal income tax purposes and in such event would not have been
subject to Federal income tax under current law to the extent such distributions
do not exceed a stockholder's basis in his or her shares of Common Stock. The
nontaxable distributions will reduce the stockholder's tax basis in the shares
of Common Stock and, therefore, the gain (or loss) recognized on the sale of
such shares of Common Stock or upon liquidation of the Company will be increased
(or decreased) accordingly. The percentage of stockholder distributions that
represents a nontaxable return of capital may vary substantially from year to
year.

The Code generally requires that a REIT distribute annually at least 95% of
its net taxable income. See "Federal Income Tax Consequences -- Taxation of the
Company." The amount of distributions on an annual basis necessary to maintain
the Company's REIT status based on pro forma taxable income for the 12 months
ended June 30, 1997 would have been approximately $87.2 million. The
distributions are anticipated to be in excess of the annual distribution
requirements applicable to REITs under the Code. Under certain circumstances,
the Company may be required to make distributions in excess of cash available
for distribution in order to meet such distribution requirements. For a
discussion of the tax treatment of distributions to holders of shares of Common
Stock, see "Federal Income Tax Consequences -- Taxation of Taxable U.S.
Stockholders Generally."

The Company intends to maintain its initial distribution rate for the
12-month period following the completion of the Offering unless actual results
of operations, economic conditions or other factors adversely affect its cash
available for distribution. The Company's actual results of operations will be
affected by a number of factors, including the revenue received from its
properties, the operating expenses of the Company, interest expense, the ability
of tenants of the Company's properties to meet their financial obligations and
unanticipated capital expenditures.

The Company also intends to make distributions to investors in the AMB
Predecessors in an amount equal to the net working capital balances of the AMB
Predecessors as of the consummation of the Formation Transactions, approximately
60 days thereafter. See "Formation and Structure of the Company." Such
distributions and contributions are being effected because the allocation of
equity among Continuing Investors in the Formation Transactions, and the pro
forma capitalization, FFO and distribution policy set forth herein, assume a
zero working capital balance as of the consummation of the Offering other than
accounts available from proceeds of the Offering and the Credit Facility.
Accordingly, they are not reflected in the discussion of distribution policy
herein.

49
<PAGE> 56

CAPITALIZATION

The following table sets forth the capitalization of the Company as of June
30, 1997 on a pre-Offering as adjusted basis after giving effect to the
Formation Transactions and Pending Acquisitions, and on a pro forma basis after
giving effect to the Offering and the application of the net proceeds therefrom
as described under the caption "Use of Proceeds." The information set forth in
the following table should be read in conjunction with the AMB financial
statements and notes thereto, the AMB Contributed Properties' combined financial
statements and notes thereto, the pro forma financial information of the Company
and the notes thereto and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1997
---------------------------
PRE-OFFERING
AS ADJUSTED PRO FORMA
------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Indebtedness:
Mortgage loans(1)............................................... $ 465,774 $ 461,241
Secured debt facility(1)........................................ 74,167 74,167
Secured line of credit.......................................... -- --
Credit facility................................................. 180,000 10,333
---------- ----------
Total indebtedness...................................... 719,941 545,741
Minority interests................................................ 67,051 67,051
Stockholders' equity:
Preferred Stock, $.01 par value, 100,000,000 shares authorized,
none issued or outstanding...................................
Common Stock, $.01 par value, 500,000,000 shares authorized,
and shares issued and outstanding(2)..... -- --
Additional paid-in capital...................................... 1,428,578 1,603,278
Retained earnings............................................... -- --
---------- ----------
Total stockholders' equity.............................. 1,428,578 1,603,278
---------- ----------
Total capitalization.................................... $2,215,570 $2,216,070
========== ==========
</TABLE>

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

(1) Includes a debt premium of $12.5 million and $1.2 million on mortgage loans
and the secured debt facility, respectively, recorded in connection with the
Formation Transactions. See Note 6 to the Pro Forma Condensed Consolidated
Balance Sheet of AMB Property Corporation.

(2) Includes shares of Common Stock to be issued in the Offering and the
Formation Transactions. Does not include (i) shares of Common
Stock that may be issued upon the exchange of Units issued in connection
with the Formation Transactions, (ii) shares of Common Stock
subject to the Underwriters' over-allotment option and (iii) approximately
shares of Common Stock available for options that may be granted
under the Company's Stock Incentive Plan, of which approximately
are expected to be granted upon consummation of the Offering.

50
<PAGE> 57

DILUTION

As of June 30, 1997, the Company's pre-Offering as adjusted net tangible
book value was $ per share. After giving effect to the sale of Common
Stock in the Offering at a price of $ per share (assuming that the
Underwriters' over-allotment option is not exercised) and after deducting the
estimated Underwriters' discounts, commissions and offering expenses, the pro
forma net tangible book value at June 30, 1997 was $ per share. This
amount represents an immediate dilution in pro forma net tangible book value of
$ per share of Common Stock to new public investors. The following
table illustrates this dilution:

<TABLE>
<S> <C> <C>
Initial public offering price per share(1)................. $
Pre-Offering as adjusted net book value per share(2).....
-------
Purchase interests from certain Investors................
-------
Increase in net book value per share attributable to new
investors.............................................
-------
Pro forma net book value per share(2)......................
-------
Dilution per share to purchasers in the Offering........... $
=======
</TABLE>

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

(1) Before deducting underwriting discounts and commissions of approximately
$ per share and estimated expenses of the Offering of approximately
$ per share.

(2) See "Financial Information -- Pro Forma Financial Information."

The following table summarizes, on a pro forma basis giving effect to the
Offering and the Formation Transactions, the number of shares of Common Stock to
be sold by the Company in the Offering and the number of Units to be issued to
the Continuing Investors in connection with the Formation Transactions, the net
tangible book value as of June 30, 1997 of the assets contributed in the
Formation Transactions and the net tangible book value of the average
contribution per share based on total contributions (dollars in thousands,
except per share data).

<TABLE>
<CAPTION>
PURCHASE
CASH/BOOK VALUE OF PRICE/BOOK
COMMON STOCK/ CONTRIBUTIONS TO VALUE OF AVG.
UNITS ISSUED THE COMPANY(1) CONTRIBUTION
----------------- ------------------ PER SHARE/
SHARES PERCENT $ PERCENT UNIT(2)
------- ------- -------- ------- -------------
(IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C>
Purchasers in the Offering
Common Stock held by Continuing
Investors..............................
Units issued to Continuing Investors.....
--- --- --- -------
Total.......................... % $ %
=== === === =======
</TABLE>

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

(1) Based on the June 30, 1997 pre-Offering as adjusted net book value of the
assets less net book value of deferred financing and leasing costs to be
contributed in connection with the Formation Transactions, net of
liabilities to be assumed.

(2) Before deducting underwriting discounts, commissions and estimated expenses
of the Offering.

51
<PAGE> 58

SELECTED FINANCIAL AND OTHER DATA FOR
AMB PROPERTY CORPORATION

The following tables set forth selected financial and other data on a pro
forma basis for the Company, on an historical basis for AMB and on an historical
combined basis for the AMB Contributed Properties. The historical financial
information contained in the tables has been derived from and should be read in
conjunction with the financial statements and notes thereto of AMB and the
combined financial statements and notes thereto of the AMB Contributed
Properties included elsewhere in this Prospectus. The AMB Predecessors will
consummate the Formation Transactions immediately prior to the Offering. In
accordance with GAAP, the Formation Transactions will be accounted for as a
purchase business combination with AMB as the "accounting acquirer."

The accompanying unaudited pro forma condensed consolidated balance sheet
data as of June 30, 1997 has been prepared to reflect (i) Pending Acquisitions,
(ii) the disposition or partial disposition of properties subsequent to June 30,
1997, (iii) the Formation Transactions, (iv) the Offering and the application of
net proceeds therefrom and (v) certain other adjustments as if such transactions
and adjustments had occurred on June 30, 1997. The accompanying unaudited pro
forma condensed consolidated operating and other data have been prepared to
reflect (i) the incremental effect of the acquisition of properties during the
six months ended June 30, 1997, and during the year ended December 31, 1996,
(ii) the Pending Acquisitions, (iii) the incremental effect of the disposition
or partial disposition of properties during 1996 and 1997, (iv) the Formation
Transactions, (v) pro forma debt adjustments resulting from repayment of
indebtedness with net proceeds of the Offering and (vi) certain other
adjustments as if such transactions and adjustments had occurred on January 1,
1996.

52
<PAGE> 59

AMB PROPERTY CORPORATION
SELECTED FINANCIAL AND OTHER DATA
(IN THOUSANDS EXCEPT PER SHARE DATA, PERCENTAGES AND NUMBER OF PROPERTIES)
<TABLE>
<CAPTION>
AS OF AND FOR THE SIX
MONTHS
ENDED JUNE 30,
AS OF AND FOR THE YEARS ENDED DECEMBER 31, ------------------------
---------------------------------------------------------------------------
COMPANY AMB
AMB CONTRIBUTED PROPERTIES(1) PRO FORMA CONTRIBUTED PROPERTIES(1)
------------------------------------------------------------- ----------- ------------------------
1992 1993 1994 1995 1996 1996 1996 1997
--------- --------- ---------- ---------- ----------- ----------- ---------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues............ $ 9,644 $ 24,398 $ 52,006 $ 112,487 $ 176,233 $ 249,877 $ 82,560 $ 115,408
Property operating
expenses.......... 1,729 6,245 13,678 31,800 48,084 69,828 22,564 31,442
Interest expense.... 34 4,700 12,068 20,902 27,076 38,134 13,016 22,751
Depreciation and
amortization...... 2,078 4,642 8,845 18,124 29,191 41,676 14,410 18,131
Asset management
fees to
affiliates........ 733 1,746 3,167 6,250 9,508 -- 4,370 6,342
General,
administrative and
other expenses.... 513 194 350 782 838 6,142 335 415
Income from
operations before
disposal of
properties and
minority
interest.......... 4,557 6,871 13,898 34,629 61,536 94,097 27,865 36,327
Net income.......... 4,557 6,871 13,339 34,641 59,600 90,793 27,688 36,046
Pro forma net income
per share(2)......
BALANCE SHEET DATA:
Investment in real
estate (before
accumulated
depreciation)..... $ 196,202 $ 323,230 $ 672,756 $1,101,165 $ 1,698,575 $1,298,225 $1,766,888
Net investment in
real estate....... 193,655 316,041 656,577 1,067,439 1,636,871 1,250,284 1,688,083
Total assets........ 200,004 326,586 727,215 1,199,665 1,705,043 1,314,272 1,759,153
Mortgage loans(3)... 47,500 100,496 205,489 257,597 406,851 326,070 429,047
Secured debt
facility(3)....... -- -- -- -- 73,000 -- 73,000
Secured line of
credit............ -- -- -- -- 46,313 -- 48,613
Credit Facility..... -- -- -- -- 25,500 -- 45,900
Stockholders'
equity............ 150,193 210,597 503,075 916,153 1,106,555 955,099 1,119,466
OTHER DATA:
EBITDA(4)........... $ 6,669 $ 16,213 $ 34,811 $ 73,655 $ 117,803 $ 173,907 $ 55,291 $ 77,209
Funds from
Operations(5)..... 6,635 11,513 22,123 52,498 90,004 135,568 41,919 53,864
Cash flows provided
by (used in):
Operating
activities........ 7,275 12,429 28,700 55,118 96,718 141,578 40,593 52,014
Investing
activities........ (156,126) (121,397) (357,383) (422,315) (572,880) (926,924) (189,315) (74,629)
Financing
activities........ 152,326 110,161 382,311 419,126 398,808 692,567 67,712 20,914
PROPERTY DATA:
INDUSTRIAL
PROPERTIES
Total rentable
square footage of
properties at end
of period......... 1,963 5,638 13,514 21,748 29,743 24,747 30,419
Number of properties
at end of
period............ 5 12 29 45 61(6) 53 61(6)
Occupancy rate at
end of period..... 94.5% 97.4% 97.0% 97.3% 96.9% 94.6% 94.2%
RETAIL PROPERTIES
Total rentable
square footage of
properties at end
of period......... 997 1,074 2,422 3,299 5,282 4,189 5,488
Number of properties
at end of
period............ 8 9 14 19 30 23 31
Occupancy rate at
end of period..... 97.0% 96.5% 93.7% 92.4% 92.4% 88.0% 93.0%

COMPANY
PRO FORMA
-----------
1997
-----------
(UNAUDITED)
<S> <C>
OPERATING DATA:
Revenues............ $ 131,883
Property operating
expenses.......... 36,839
Interest expense.... 19,067
Depreciation and
amortization...... 20,838
Asset management
fees to
affiliates........ --
General,
administrative and
other expenses.... 3,071
Income from
operations before
disposal of
properties and
minority
interest.......... 52,068
Net income.......... 50,081
Pro forma net income
per share(2)......
BALANCE SHEET DATA:
Investment in real
estate (before
accumulated
depreciation)..... $2,215,570
Net investment in
real estate....... 2,215,570
Total assets........ 2,250,410
Mortgage loans(3)... 461,241
Secured debt
facility(3)....... 74,167
Secured line of
credit............ --
Credit Facility..... 10,333
Stockholders'
equity............ 1,603,278
OTHER DATA:
EBITDA(4)........... $ 91,973
Funds from
Operations(5)..... 72,469
Cash flows provided
by (used in):
Operating
activities........ 70,670
Investing
activities........ (2,885)
Financing
activities........ (60,861)
PROPERTY DATA:
INDUSTRIAL
PROPERTIES
Total rentable
square footage of
properties at end
of period......... 34,446
Number of properties
at end of
period............ 70
Occupancy rate at
end of period..... 95.0 %
RETAIL PROPERTIES
Total rentable
square footage of
properties at end
of period......... 6,360
Number of properties
at end of
period............ 33
Occupancy rate at
end of period..... 93.4 %
</TABLE>
<TABLE>
<CAPTION>
AS OF AND FOR THE SIX
AS OF AND FOR THE YEARS ENDED DECEMBER 31, MONTHS ENDED JUNE 30,
------------------------------------------------------------- ------------------------
AMB(7) 1992 1993 1994 1995 1996 1996 1997
- -------------------- --------- --------- ---------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues............ $ 7,040 $ 7,155 $ 12,865 $ 16,826 $ 23,846 $ 9,695 $ 11,083
Expenses............ 5,850 6,357 9,940 13,564 16,843 7,751 8,319
Net income.......... 1,190 798 2,925 3,262 7,003 1,944 2,764
BALANCE SHEET DATA:
Total assets........ $ 3,275 $ 2,739 $ 4,092 $ 4,914 $ 6,948 $ 5,700 $ 7,137
Stockholders'
equity............ 3,029 2,480 3,848 4,241 6,300 4,061 3,673
OTHER DATA:
Cash flows provided
by (used in):
Operating
activities........ $ 1,071 $ 372 $ 2,705 $ 2,062 $ 6,647 $ 3,003 $ 5,816
Investing
activities........ -- 242 -- -- -- -- --
Financing
activities........ (405) (1,325) (1,557) (2,869) (4,944) (2,124) (7,682)

</TABLE>

53
<PAGE> 60

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

(1) Represents historical combined financial and other data for the AMB
Contributed Properties. See Note 1 to Combined Financial Statements of the
AMB Contributed Properties.

(2) Pro forma net income per share equals the pro forma net income divided by
shares.

(7) Represents the historical financial and other data of AMB for periods prior
to the Formation Transactions.

54
<PAGE> 61

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the combined financial condition
and results of operations should be read in conjunction with the combined
financial statements and notes thereto of the AMB Contributed Properties and the
financial statements and notes thereto of AMB. All references to the historical
activities of the AMB Contributed Properties and AMB contained in this
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" refer to the activities of the various contributing entities.
Statements contained in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" which are not historical facts may be
forward-looking statements. Such statements are subject to certain risks and
uncertainties which could cause actual results to differ materially from those
projected. Readers are cautioned not to place undue reliance on these
forward-looking statements which speak only as of the date hereof.

OVERVIEW

The Company generates revenue primarily from rent received from tenants at
the Properties, including reimbursements from tenants for certain operating
costs. In addition, the Company's growth is, in part, dependent upon its ability
to increase occupancy rates and/or increase rental rates of its properties and
its ability to continue the acquisition and development of additional
properties.

The Company has achieved significant growth in its portfolios over the last
five years. The Company's portfolio has increased in size from 6.7 million
rentable square feet at December 31, 1993 to 35.9 million rentable square feet
at June 30, 1997. The table below details the size of the portfolio as of each
of the dates presented.

<TABLE>
<CAPTION>
SQUARE FEET
DATE NUMBER OF PROPERTIES -------------
- ------------------ -------------------- (IN MILLIONS)
<S> <C> <C>
June 30, 1997 92 35.9
December 31, 1996 91 35.0
June 30, 1996 76 28.9
December 31, 1995 64 25.0
December 31, 1994 43 15.9
December 31, 1993 21 6.7
</TABLE>

An additional important element of the Company's historical growth was its
ability to maintain stable levels of occupancy and rents during the last five
years. The following table sets forth historical information relating to the
occupancy rates of the AMB Contributed Properties as of each of the dates
presented.

<TABLE>
<CAPTION>
DATE INDUSTRIAL OCCUPANCY RETAIL OCCUPANCY
- ------------------ -------------------- ----------------
<S> <C> <C>
June 30, 1997 94.2% 93.0%
December 31, 1996 96.9 92.4
June 30, 1996 94.6 88.0
December 31, 1995 97.3 92.4
December 31, 1994 97.0 93.7
December 31, 1993 97.4 96.5
</TABLE>

RESULTS OF OPERATIONS

The historical financial data presented herein show significant increases
in revenues and expenses principally attributable to the Company's substantial
portfolio growth. As a result, the Company does not believe its year-to-year
financial data are comparable. Therefore, the analysis below shows (i) changes
resulting from Properties that were held during the entire period for both years
being compared (the "Core Portfolio") and (ii) changes attributable to
acquisition activity. For the comparison between the years ended December 31,
1996 and 1995, the Core Portfolio consists of the 43 Properties acquired prior
to January 1, 1995, and for the comparison between the years ended December 31,
1995 and 1994, the Core Portfolio consists of the 21 Properties acquired prior
to January 1, 1994.

55
<PAGE> 62

AMB CONTRIBUTED PROPERTIES -- SIX MONTHS ENDED JUNE 30, 1997 AND 1996

Rental revenues. Rental income, including tenant reimbursements and other
property related income, increased by $33.0 million for the six-month period
ended June 30, 1997, or 40.4%, to $114.7 million as compared to $81.7 million
for the six-month period ended June 30, 1996. Approximately $2.8 million, or
8.5% of this increase, was related to the Core Portfolio while the remaining
$30.2 million was attributable to Properties acquired in 1997 and 1996. The 3.9%
growth in rental income in the Core Portfolio resulted primarily from rental
rate increases.

Property operating expenses and real estate taxes. Property operating
expenses and real estate taxes increased by $8.8 million in total, or 38.9%, to
$31.4 million for the six-month period ended June 30, 1997, as compared to $22.6
million for the six-month period ended June 30, 1996. Approximately $1.0 million
of this increase was attributable to the Core Portfolio, with the remaining $7.8
million attributable to Properties acquired in 1997 and 1996. The Core Portfolio
had an increase of approximately $0.3 million in real estate tax and insurance
expense. The other property operating expenses (excluding real estate taxes and
insurance) for the Core Portfolio increased by $0.7 million for the six-month
period ended June 30, 1997 as compared to the same period in 1996.

Interest expense. Interest expense increased by $9.8 million, or 75.4%, to
$22.8 million for the six-month period ended June 30, 1997, compared to $13.0
million for the six-month period ended June 30, 1996. Interest expense related
to the Core Portfolio increased by $5.7 million, while financing related to
Properties acquired during the six-month period ended June 30, 1997 and June 30,
1996 added $4.1 million to interest expense.

Depreciation and amortization expense. Depreciation and amortization
expense increased by $3.7 million, or 25.7%, to $18.1 million for the six-month
period ended June 30, 1997, compared to $14.4 million for the six-month period
ended June 30, 1996. Approximately $0.1 million of this increase was
attributable to the Core Portfolio and $3.6 million was related to Properties
acquired in 1997 and 1996. The increase in these expenses in the Core Portfolio
was related to depreciation of capital and tenant improvements made at the Core
Portfolio Properties in 1997 and 1996 and amortization of leasing commissions
and loan fees paid during that time period.

General, administrative and other expenses. General, administrative and
other expenses increased by $0.1 million or 33.0% to $0.4 million for the
six-month period ended June 30, 1997, compared to $0.3 million for the six-month
period ended June 30, 1996. The increase was attributable to the substantial
growth in the number of properties owned. General, administrative and other
expenses as a percentage of total revenues remained flat at 0.4% for both the
six months ended June 30, 1997 and June 30, 1996.

General, administrative and other expenses as a percentage of total
revenues were 0.7%, 0.7%, 0.5%, 0.4% and 0.4% for the years ended December 31,
1994, 1995 and 1996 and for the six months ended June 30, 1996 and 1997,
respectively. This steady decline is due to increased efficiency and economies
of scale resulting from greater assets under management.

Interest and other income. Interest and other income decreased by $0.1
million, or 12.5%, to $0.7 million for the six-month period ended June 30, 1997,
compared to $0.8 million for the six-month period ended June 30, 1996. This
decrease was primarily due to lower average cash balances.

AMB CONTRIBUTED PROPERTIES -- YEARS ENDED DECEMBER 31, 1996 AND 1995

Rental revenues. Rental income, including tenant reimbursements and other
property related income, increased by $64.3 million for the year ended December
31, 1996, or 58.2%, to $174.7 million as compared to $110.4 million for the year
ended 1995. Approximately $6.9 million, or 10.7% of this increase, was related
to the Core Portfolio with the remaining $57.4 million being attributable to
Properties acquired in 1996 and 1995. The 8.1% growth in rental income in the
Core Portfolio resulted primarily from rental rate increases.

Property operating expenses and real estate taxes. Property operating
expenses and real estate taxes increased by $16.3 million, or 51.3%, to $48.1
million for the year ended December 31, 1996, as compared to $31.8 million for
the year ended December 31, 1995. Approximately $1.5 million of this increase
was attributable to the Core Portfolio, with the remaining $14.8 million
attributable to Properties acquired in 1996

56
<PAGE> 63

and 1995. The Core Portfolio had an increase of approximately $0.9 million in
real estate tax and insurance expense. The other property operating expenses
(excluding real estate taxes and insurance) for the Core Portfolio increased by
$0.6 million from 1995 to 1996.

Interest expense. Interest expense increased by $6.2 million, or 29.7%, to
$27.1 million for the year ended December 31, 1996, compared to $20.9 million
for the year ended December 31, 1995. Interest expense related to the Core
Portfolio increased by $3.3 million, while financing related to Properties
acquired in 1996 and 1995 added $2.9 million to interest expense.

Depreciation and amortization expense. Depreciation and amortization
expense increased by $11.1 million, or 61.3%, to $29.2 million for the year
ended December 31, 1996, compared to $18.1 million for the year ended December
31, 1995. Approximately $1.9 million of this increase related to the Core
Portfolio and $9.2 million related to Properties acquired after January 1, 1995.
The increase in these expenses in the Core Portfolio was related to depreciation
of capital and tenant improvements made at the Core Portfolio Properties in 1996
and 1995 and amortization of leasing commissions paid during that time period.

General, administrative and other expenses. General, administrative and
other expenses remained unchanged at $0.8 million for the years ended December
31, 1996 and December 31, 1995. General, administrative and other expenses as a
percentage of total revenues was 0.5% for the year ended December 31, 1996 and
0.7% for the year ended December 31, 1995.

Interest and other income. Interest income decreased by $0.6 million, or
28.6%, to $1.5 million for the year ended December 31, 1996, compared to $2.1
million for the year ended December 31, 1995. This decrease was primarily due to
lower average cash balances.

AMB CONTRIBUTED PROPERTIES -- YEARS ENDED DECEMBER 31, 1995 AND 1994

Rental revenues. Rental income, including tenant reimbursements and other
property related income, increased by $59.2 million for the year ended December
31, 1995, or 115.6%, to $110.4 million as compared to $51.2 million for the year
ended 1994. Approximately $2.0 million, or 3.4% of this increase, was related to
the Core Portfolio with the remaining $57.2 million being attributable to
Properties acquired in 1995 and 1994. The 5.1% growth in rental income in the
Core Portfolio resulted primarily from rental rate increases.

Property operating expenses and real estate taxes. Property operating
expenses and real estate taxes increased by $18.1 million, or 132.1%, to $31.8
million for the year ended December 31, 1995, as compared to $13.7 million for
the year ended December 31, 1994. Substantially all of this increase was
attributable to Properties acquired in 1995 and 1994. The Core Portfolio had a
decrease of approximately $0.2 million in real estate taxes and insurance
expense. The other property operating expenses (excluding real estate taxes and
insurance) for the Core Portfolio increased by $0.1 million from 1994 to 1995.

Interest expense. Interest expense increased by $8.8 million, or 72.7%, to
$20.9 for the year ended December 31, 1995, compared to $12.1 million for the
year ended December 31, 1994. Interest expense related to the Core Portfolio
increased by $1.7 million due to the incurrence of additional debt on the Core
Portfolio properties, while financing related to Properties acquired in 1995 and
1994 added $7.1 million to interest expense.

Depreciation and amortization expense. Depreciation and amortization
expense increased by $9.3 million, or 105.7%, to $18.1 million for the year
ended December 31, 1995, compared to $8.8 million for the year ended December
31, 1994. Approximately $0.1 million of this increase was attributable to the
Core Portfolio and $9.2 million was related to Properties acquired after January
1, 1994. The increase in depreciation and amortization in the Core Portfolio was
related to additions of capital and tenant improvements and payments of leasing
commissions during 1995 and 1994.

General, administrative and other expenses. General, administrative and
other expenses increased by $0.4 million or 100.0%, to $0.8 million for the year
ended December 31, 1995, compared to $0.4 million for the year ended December
31, 1994. This increase was attributable to the substantial growth in the number
of properties owned by the AMB Predecessors. General, administrative and other
expenses as a percentage of total revenues was 0.7% for each of the years ended
December 31, 1995 and 1996.

57
<PAGE> 64

Interest income. Interest income increased by $1.3 million, or 162.5%, to
$2.1 million for the year ended December 31, 1995, compared to $0.8 million for
the year ended December 31, 1994. This increase was primarily due to higher
average cash balances.

AMB -- SIX MONTHS ENDED JUNE 30, 1996 AND 1997

Investment management income. Investment management income for the six
months ended June 30, 1996 and 1997 was $9.5 million and $11.0 million,
respectively. This $1.5 million increase was due to a growing portfolio which
had an impact on investment management and other income resulting in a net
increase of 15.8% from June 30, 1996 to June 30, 1997.

Interest and other income declined from $0.2 million to $0.1 million due to
reduced earnings passed through a limited partnership in which AMB was a general
partner. Earnings from the limited partnership declined due to substantial
disposal of the partnership's real estate at the end of 1996. AMB provides
professional services in real estate and development for this partnership.

General and administrative expenses. General and administrative expenses
were relatively stable at $7.8 million and $8.3 million for the six months ended
June 30, 1996 and 1997, respectively. This occurred despite the 15.8% revenue
increase due to the growing portfolio during this period.

AMB -- YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

Investment management income. Investment management income increased each
year from 1994 to 1996 primarily due to management fees associated with a
growing portfolio and increased economies of scale from managing this larger
portfolio. Investment management income for the years ended December 31, 1994,
1995 and 1996 was $12.8 million, $16.6 million and $23.4 million, respectively.
Investment management income had a net increase of 29.7% from 1994 to 1995 and
of 41.0% from 1995 to 1996.

Interest and other income was $0.1 million, $0.2 million and $0.4 million
for the years ended December 31, 1994, 1995 and 1996, respectively. This
increase was due to increased earnings on cash, as well as earnings passed
through a limited partnership in which AMB was a general partner.

General and administrative expenses. General and administrative expenses
for the years ended December 31, 1994, 1995 and 1996, respectively, were $9.9
million, $13.6 million and $16.8 million, reflecting the increases in size of
the Company's portfolio.

Net income. Net income was $2.9 million, $3.3 million and $7.0 million for
the years ended December 31, 1994, 1995 and 1996, respectively. In 1995, net
income grew $0.4 million on increased total revenues of $3.9 million. This was
due to the increased staffing in both San Francisco and Boston, as well as an
expansion of AMB's Boston office. In 1996, net income grew $3.7 million on
increased total revenues of $7.0 million. This additional growth was due to
stabilized staffing and no additional office expansion.

LIQUIDITY AND CAPITAL RESOURCES

The principal sources of funding for acquisitions, development, expansion
and renovation of the Properties includes the Credit Facility, permanent secured
debt financing, proceeds from equity offerings and cash flow provided by
operations. Management believes that its liquidity and its ability to access
capital are adequate to continue to meet liquidity requirements for the
foreseeable future.

Capital Resources

On October 25, 1996, CIF entered into a $100 million unsecured line of
credit agreement with MGT. The line of credit has been used to fund
acquisitions. The agreement provides for various variable interest rate options
and payment terms which are determined at the discretion of the Company as
amounts are drawn. As of June 30, 1997 and December 31, 1996, outstanding
balances on the line were $45.9 million and $25.5 million, respectively, and
bore interest at LIBOR plus 1.5%.

On August 8, 1997, CIF entered into a $200 million unsecured line of credit
agreement (the "CIF Facility") with MGT, which matures on August 7, 1999. In
connection with the Formation Transactions, the

58
<PAGE> 65

Company, through the Operating Partnership, will assume the obligations of and
become the obligor under the CIF Facility (as assumed, the "Credit Facility").
Borrowings under the Credit Facility, at the Company's election, bear interest
at a floating rate equal to LIBOR plus 125 to 150 basis points, or MGT's prime
rate of plus 0 to 25 basis points. The Company, through the Operating
Partnership, expects to obtain a commitment to increase the availability under
the Credit Facility to $300 million. However, management can provide no
assurances that such commitment will be obtained. The Credit Facility will be a
recourse obligation of the Operating Partnership. The Company intends to use the
Credit Facility principally for acquisitions and for working capital purposes.
See "Business and Properties -- Debt Financing -- Unsecured Debt."

On December 12, 1996, CIF entered into a 12-year non-recourse secured
financing facility (the "Secured Facility"). As of June 30, 1997, $73.0 million
was outstanding. Payments of interest only are due monthly at a fixed annual
interest rate of 7.53%. The payment of principal is due December 12, 2008. This
facility, which is secured by six of the Properties, will become an obligation
of the Company upon consummation of the Formation Transactions. Under this
facility, the Company may substitute collateral, subject to certain requirements
with respect to the property offered as replacement collateral.

In addition to the Credit Facility and the Secured Facility described
above, 40 of the Properties secure mortgage indebtedness. The aggregate
principal amount of such mortgage indebtedness was $429 million, $407 million
and $258 million at June 30, 1997 and December 31, 1996 and 1995, respectively.
The mortgage indebtedness bears interest at rates varying from 7.01% to 10.38%
per annum (with a weighted average of 7.87%) and final maturity dates ranging
from 1997 to 2008. The mortgage indebtedness will be assumed by the Company
through the Operating Partnership upon completion of the Formation Transactions.
On a pro forma basis at June 30, 1997, after giving effect to the Formation
Transactions and the Offering, the Company expects to have total debt
outstanding of approximately $545.7 million, including debt premiums of
approximately $13.7 million. See "Financial Information -- Pro Forma Financial
Information."

Liquidity

Cash and cash equivalents decreased by approximately $1.7 million, to
approximately $31.4 million at June 30, 1997, compared to $33.1 million at
December 31, 1996. This decrease was the result of $52.0 million of cash
generated by operations and, $20.9 million generated from financing activities
reduced by $74.6 million invested in new acquisitions, capital and tenant
improvements, and payment of leasing commissions.

Net cash provided by operations totaled $96.7 million, $55.1 million and
$28.7 million for the years ended December 31, 1996, 1995 and 1994,
respectively. Net cash provided by operations represents the primary source of
liquidity to fund distributions, service debt and fund recurring capital costs.
Upon completion of the Formation Transactions, the Company and the Operating
Partnership intend to make quarterly distributions to holders of shares of
Common Stock and Units, respectively. The Company and the Operating Partnership
will establish their initial distribution based upon their estimate of
annualized cash flow that will be available after the Formation Transactions.

Net cash provided by financing activities totaled $398.8 million, $419.1
million and $382.3 million for the years ended December 31, 1996, 1995 and 1994,
respectively. Net cash used for investing activities totaled $572.9 million,
$422.3 million and $357.4 million for the years ended December 31, 1996, 1995
and 1994, respectively.

The Company intends to maintain sufficient cash from operations to cover
necessary capital costs. The Company also intends to maintain a minimum amount
of working capital under the Credit Facility to provide for temporary working
capital and unanticipated cash needs.

The anticipated size of the Company's distributions will not allow it,
using only cash from operations, to retire all of its debt as it comes due.
Therefore, the Company intends to repay maturing debt with funds from debt
and/or equity financings.

59
<PAGE> 66

Leasing Activity. During the next 12 months ending ,
leases relating to approximately million rentable square feet of the
Industrial Properties and million rentable square feet of the Retail
Properties will expire. If the expiring square feet were not renewed or
re-tenanted, annual contractual rents would be reduced by approximately $
million and $ million for the Industrial Properties and for the Retail
Properties, respectively. Such amounts are based upon the contractual rent from
such expiring leases at the time of expiration for the period from the
expiration date to . Although no assurances can be given, the
Company expects that it will be able to renew or re-tenant the expiring square
feet at then-prevailing market rates. The table below sets forth the Company's
historical (i) tenant retention rates for each of the periods presented and (ii)
contractual rental rate increases (decreases) on renewed and re-tenanted space:

<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED
------------------------ JUNE 30, WEIGHTED
RETENTION RATES 1994 1995 1996 1997 AVERAGE
------------------------------------- ---- ---- ---- ---------- --------
<S> <C> <C> <C> <C> <C>
Industrial Properties................ 64.0% 67.9% 77.6% 61.5% 69.5%
Retail Properties.................... 82.4 59.8 88.4 81.6 79.1
Rent Increases (Decreases)
Industrial Properties.............. (5.9)% 4.8% 4.7% 11.9%
Retail Properties.................. 9.1 3.2 5.4 8.5
</TABLE>

Recurring Capital Expenditures. The Company classifies building
improvements which are not related to property expansions or renovations made
after the first three years of ownership as recurring building improvements. The
Company estimates that recurring building improvements will amount to $0.08 per
square foot per year for Industrial Properties and $0.12 per square foot per
year for Retail Properties, after the effect of excluding such costs during the
first three years after acquisition of the property. For the 12-month period
ending , the Company expects to incur recurring building
improvements of approximately $ million for the Industrial Properties and
approximately $ million for the Retail Properties. The actual amount of
recurring building improvements is subject to a number of factors beyond the
control of the Company; therefore, no assurances can be given that the actual
amount expended will not vary from such estimate.

The Company classifies tenant improvements and leasing commissions incurred
to lease space after the initial term of the initial tenant (excluding costs
incurred to relocate tenants as part of a re-tenanting strategy) as recurring
tenant improvements and leasing commissions. The table below sets forth the
Company's estimated recurring tenant improvements and leasing costs for the
12-month period ending .

<TABLE>
<CAPTION>
WEIGHTED AVERAGE EXPECTED
SQUARE FEET COSTS PER COSTS
EXPIRING(1) SQUARE FOOT(2) (000'S)(3)
----------- ---------------- ---------
<S> <C> <C> <C>
Industrial Properties:
Square feet estimated to be renewed............. $ 0.85 $
Square feet estimated to be re-tenanted......... 1.92
----------- ---------
Total................................... $
========= =======

Retail Properties:
Square feet estimated to be renewed............. $ 5.16 $
Square feet estimated to be re-tenanted......... 5.94
----------- ---------
Total................................... $
========= =======
</TABLE>

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

(1) The classification of square feet expiring is based upon the Company's
historical weighted average tenant retention rates during the period from
January 1, 1994 to June 30, 1997 of approximately 79.1% for the Retail
Properties and approximately 69.5% for the Industrial Properties.

(2) Represents historical weighted average tenant improvements and leasing
commissions per square foot of leased space during the period from January
1, 1994 to June 30, 1997.

60
<PAGE> 67

(3) The actual amount of tenant improvements and leasing commissions is subject
to a number of factors beyond the control of the Company; therefore, no
assurances can be given that the actual amount expended will not vary
significantly from such estimate.

NEW ACCOUNTING PRONOUNCEMENTS

In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share," effective for financial statements issued after December 15, 1997. SFAS
128 requires public business enterprises to disclose basic earnings per share if
the entity has a simple capital structure with no potential common shares from
convertible securities, options or warrants. If the entity does have potential
common shares, it is considered to have a complex capital structure and must
disclose basic and diluted earnings per share. This statement is not applicable
to the AMB Predecessors, as they are not public business enterprises. The
Company intends to adopt SFAS 128 in fiscal year 1997 and will include the
appropriate disclosure of earnings per share in accordance with SFAS 128 in the
1997 year-end financial statements.

In February 1997, the FASB issued SFAS No. 129, "Disclosure of Information
about Capital Structure," effective for periods ending after December 15, 1997.
This statement establishes standards for disclosing information about an
entity's capital structure. The financial statements of AMB are prepared in
accordance with the requirements of SFAS 129. This statement has no effect on
the financial statements of the AMB Contributed Properties, as they are not a
legal entity. The Company intends to adopt SFAS 129 in fiscal year 1997 and will
include the appropriate disclosures in accordance with SFAS 129 in the 1997
year-end financial statements.

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This statement, effective for fiscal years beginning after December 15,
1997, would require the entity to report components of comprehensive income in a
financial statement that is displayed with the same prominence as other
financial statements. Comprehensive income is defined by Concepts Statement No.
6, "Elements of Financial Statements," as the change in the equity of a business
enterprise during a period from transactions and other events and circumstances
from nonowner sources. This statement has no impact on the AMB Predecessors as
their net income and comprehensive income are equal. The impact on the Company
is unknown as its comprehensive income has not yet been determined.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." This statement, effective for financial
statements for periods beginning after December 15, 1997, requires that a public
business enterprise report financial and descriptive information about its
reportable operating segments. Generally, information is required to be reported
on the basis that it is used internally for evaluating segment performance and
deciding how to allocate resources to segments. This statement is not applicable
to the AMB Predecessors, as they are not public business enterprises. The
Company has not yet determined the impact of this statement on its financial
statements.

INFLATION

Substantially all of the industrial and retail leases require the tenant to
pay, as additional rent, a portion of any increases in real estate taxes and
operating expenses over a base amount. In addition, many of the industrial and
retail leases provide for fixed increases in base rent or indexed escalations
(based on the Consumer Price Index or other measures). Management believes that
inflationary increases in operating expenses will be offset, in part, by the
expense reimbursements and contractual rent increases described above. See
"Business and Properties -- Industrial Properties -- Lease Terms" and "-- Retail
Properties -- Lease Terms."

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,

61
<PAGE> 68

and it should not be considered as an alternative to those indicators in
evaluating liquidity or operating performance.

The following table reflects the calculation of the AMB Contributed
Properties' FFO on a historical combined basis for the years ended December 31,
1994, 1995 and 1996 and the six months ended June 30, 1996 and 1997, and on a
pro forma basis for the Company for the year ended December 31, 1996 and the six
months ended June 30, 1997:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
--------------------------------------------- --------------------------------
PRO FORMA PRO FORMA
1994 1995 1996 1996(4) 1996 1997 1997(4)
--------- --------- --------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Income from operations before
disposal of real estate and
minority interests.......... $ 13,898 $ 34,629 $ 61,536 $ 94,097 $ 27,865 $ 36,327 $ 52,068
Real estate depreciation and
amortization................ 8,845 18,124 29,191 41,542 14,410 18,131 20,771
FFO attributable to minority
interests(1)(2)............. (620) (255) (723) (1,125) (356) (594) (897)
Adjustment to reflect
Company's share of real
estate related depreciation
and amortization of
unconsolidated joint
venture(3).................. -- -- -- 1,054 -- -- 527
--------- --------- --------- --------- --------- -------- --------
FFO(1)........................ $ 22,123 $ 52,498 $ 90,004 $135,568 $ 41,919 $ 53,864 $ 72,469
========= ========= ========= ========= ========= ======== ========
Cash flows provided by (used
in):
Operating Activities........ $ 28,700 $ 55,118 $ 96,718 141,578 $ 40,593 $ 52,014 $ 70,670
Investing Activities........ (357,383) (422,315) (572,880) (926,924) (189,315) (74,629) (2,885)
Financing Activities........ 382,311 419,126 398,808 692,567 67,712 20,914 (60,861)
</TABLE>

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

(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 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 the AMB Contributed Properties' financial performance or to
cash flow from operating activities (determined in accordance with GAAP) as
a measure of the AMB Contributed Properties' liquidity, nor is it indicative
of funds available to fund the AMB Contributed Properties' cash needs,
including its ability to make distributions.

(2) Represents FFO attributable to minority interests in consolidated joint
ventures for the periods presented, which has been computed as minority
interests' share of net income before disposal of properties 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.

(3) Represents an adjustment to reflect the Company's share of real estate
related depreciation and amortization of an unconsolidated joint venture on
a pro forma basis.

(4) See the Pro Forma Financial Statements of AMB Property Corporation and the
notes thereto included elsewhere in this Prospectus.

62
<PAGE> 69

BUSINESS AND PROPERTIES

Upon consummation of the Offering, the Company will own one of the largest
portfolios of industrial and retail real estate in the United States, comprised
of 103 properties, aggregating 40.8 million rentable square feet located in 24
markets nationwide. The graph below shows the geographic distribution of the
Company's properties. All of the statistical data with respect to the Properties
presented in this section, including, without limitation, the population of
properties represented in this graph and the other graphs and tables in this
section reflect only the properties owned by the Company as of June 30, 1997 and
do not include the Pending Acquisitions. In addition to the Properties it owns,
the Company expects to manage investments in an additional properties
aggregating million rentable square feet under investment management
agreements with institutional investors, resulting in a combined portfolio under
management, including Pending Acquisitions, of properties, totaling
million rentable square feet.

Geographic Diversification of
the Properties(1)
As of June 30, 1997

[Geographic Diversification Graph]

(1) Based on square footage. Includes only those Properties owned by the
Company.

The following table summarizes the diversification of the Industrial and
Retail Properties by region:

INDUSTRIAL AND RETAIL PROPERTIES BY REGION

<TABLE>
<CAPTION>
INDUSTRIAL PROPERTIES RETAIL PROPERTIES TOTAL
------------------------------------------- ------------------------------ -------------------------------
RENTABLE RENTABLE RENTABLE
NUMBER OF NUMBER OF SQUARE % OF NUMBER OF SQUARE % OF NUMBER OF SQUARE % OF
REGION PROPERTIES BUILDINGS FEET TOTAL PROPERTIES FEET TOTAL PROPERTIES FEET TOTAL
- -------------- ---------- --------- ---------- ----- ---------- --------- ----- ---------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Western....... 24 128 10,690,015 35.1% 15 2,192,446 39.9% 39 12,882,461 35.9%
Southern...... 15 78 7,610,919 25.0 9 1,400,718 25.5 24 9,011,637 25.1
Midwestern.... 16 80 9,790,994 32.2 4 710,523 13.0 20 10,501,517 29.2
Eastern....... 6 20 2,327,351 7.7 3 1,184,462 21.6 9 3,511,813 9.8
-- -- --
--- ---------- ----- --------- ----- ---------- -----
Total......... 61 306 30,419,279 100.0% 31 5,488,149 100.0% 92 35,907,428 100.0%
== === ========== ===== == ========= ===== == ========== =====
</TABLE>

INDUSTRIAL PROPERTIES

The Company owns 61 Industrial Properties (containing 306 buildings)
aggregating approximately 30.4 million rentable square feet, located in 18
markets nationwide (not including the Pending Acquisitions). The Industrial
Properties generated $121.1 million, or 67% of the Company's Annualized Base
Rent as of June 30, 1997. The Industrial Properties were 94.2% leased to over
700 tenants as of the same date, the largest of which accounted for no more than
1.4% of Annualized Base Rent from its Industrial Properties as of

63
<PAGE> 70

June 30, 1997. The Company's ability to attract and retain a diverse base of
quality tenants is partly responsible for this high occupancy rate. The
historical weighted average retention rate for the Industrial Properties for the
period beginning January 1, 1994 through June 30, 1997 was approximately 69.5%,
based on 10.2 million rentable square feet of expiring leases.

Property Characteristics. The Industrial Properties consist primarily of
warehouse distribution facilities suitable for single or multiple tenants. The
Industrial Properties are typically comprised of multiple buildings and
generally range between 300,000 and 600,000 rentable square feet, averaging
499,000 rentable square feet per Property.

On average, each Industrial Property is comprised of five buildings. The
following table identifies characteristics of the Company's typical industrial
buildings:

INDUSTRIAL BUILDING PROFILE

<TABLE>
<CAPTION>
TYPICAL BUILDING RANGE
---------------- ---------------------
<S> <C> <C>
Rentable Square Feet................... 100,000 70,000 - 150,000
Clear Height........................... 24 ft. 18 - 32 ft.
Building Depth......................... 200 ft. 150 - 300 ft.
Truck Court Depth...................... 110 ft. 90 - 130 ft.
Loading................................ Dock & Grade Dock or Dock & Grade
Parking Spaces per 1,000 Square Feet... 1.0 0.5 - 2.0
Square Footage Per Tenant.............. 35,000 5,000 - 100,000
Office Finish.......................... 8% 3% - 15%
Site Coverage.......................... 40% 35% - 55%
</TABLE>

Lease Terms. The Industrial Properties are typically leased on a triple net
basis, with tenants paying their proportionate share of real estate taxes,
operating costs and utility costs, or a modified gross basis, with tenants
responsible for expenses over certain threshold levels. Lease terms typically
range from three to 10 years, with an average of five years, excluding renewal
options. The majority of the industrial leases do not include renewal options.
Contractual base rent, excluding reimbursements, for the Industrial Properties
for the years ended December 31, 1994, 1995 and 1996, and for the six months
ended June 30, 1997 was $25.8 million, $57.0 million, $90.2 million and $59.3
million, respectively, which amounted to 65%, 68%, 68% and 67%, respectively, of
the Company's total contractual base rent excluding reimbursements for
Industrial and Retail Properties during such periods.

Overview of Major Target Markets. The Company owns and manages industrial
properties which are located principally in national and regional hub
distribution markets, characterized by a large consumer base and a superior
transportation network (sea, air, rail, highway, intermodal) with infrastructure
to support the resulting flow of goods. Of the Industrial Properties, 69% are
located in the six national hub distribution markets listed below.

<TABLE>
<CAPTION>
TOTAL U.S.
WAREHOUSE PERCENTAGE OF
INDUSTRIAL PERCENTAGE OF PROPERTY U.S. WAREHOUSE
NATIONAL HUB PROPERTIES INDUSTRIAL INVENTORY PROPERTY
DISTRIBUTION MARKETS (SQ. FT., 000S) PROPERTIES (SQ. FT., 000S) INVENTORY
- -------------------------------------------- --------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Chicago..................................... 6,290 20.7% 289,803 6.3%
San Francisco Bay Area...................... 4,415 14.5 248,355 5.4
Los Angeles................................. 3,785 12.4 339,036 7.4
Dallas/Fort Worth........................... 2,596 8.5 257,987 5.6
Atlanta..................................... 2,405 7.9 249,516 5.4
Northern New Jersey......................... 1,418 4.7 359,223 7.8
------- ---- --------- ----
Total............................. 20,909 68.7% 1,743,920 37.9%
======= ==== ========= ====
</TABLE>

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

Source: CB Commercial/Torto Wheaton Research

64
<PAGE> 71

The Company has focused its investment and acquisition strategies in
24 major target markets based on the belief that there are significant
opportunities for growth in these strategically-located markets. Among
these markets, the Company has acquired a significant share (26.9%,
excluding the Pending Acquisitions) of its Properties in California,
particularly in Los Angeles and the San Francisco Bay Area. The Company
believes these markets possess diverse and vibrant economies with strong
prospects for future growth due to their Pacific Rim location, quality of
life, well-developed transportation infrastructures, concentration high
technology industries and well-educated employee base. Within California,
the Company focuses its activities on the major metropolitan areas of San
Francisco, San Jose, Sacramento, Los Angeles and San Diego, which have
shown to be desired locations of a large number of businesses.

The graph below sets forth the projected growth for California as compared
to the projected growth for the U.S. for the period from 1996 to 2005:

[Projected Growth Graph]

65
<PAGE> 72

The table below details the regional diversification of the Industrial
Properties by listing the individual markets in which the Company owns and
operates its Industrial Properties.

INDUSTRIAL PROPERTIES BY MARKET
AT JUNE 30, 1997
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
OF TOTAL ANNUALIZED OF NUMBER
NUMBER OF NUMBER OF RENTABLE RENTABLE PERCENTAGE BASE RENT ANNUALIZED OF
REGION/MARKET PROPERTIES BUILDINGS SQUARE FEET SQUARE FEET LEASED (000S) BASE RENT LEASES
- -------------------- ---------- --------- ----------- ----------- ---------- ---------- ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WESTERN
Los Angeles....... 5 36 3,665,726 12.1% 92.0% $ 13,926 11.6% 41
Orange County..... 2 12 563,437 1.8 99.1 2,891 2.3 35
San Francisco Bay
Area............ 11 59 4,415,232 14.5 94.6 24,775 20.5 161
Sacramento........ 1 1 182,437 0.6 100.0 630 0.5 1
San Diego......... 1 4 252,318 0.8 100.0 1,356 1.1 15
Seattle........... 4 16 1,610,865 5.3 94.5 5,372 4.4 44
--
--- ---------- ----- -------- ----- ---
Western
Total/Weighted
Average........... 24 128 10,690,015 35.1 94.1 48,950 40.4 297
SOUTHERN
Atlanta........... 4 25 2,405,149 7.9 96.2 9,792 8.0 99
Miami............. 3 11 1,208,313 4.0 92.7 7,087 5.9 38
Orlando........... 1 1 201,600 0.7 100.0 579 0.5 1
Austin............ 1 6 735,240 2.4 100.0 4,793 4.0 22
Dallas/Fort
Worth........... 5 30 2,595,921 8.5 97.5 7,694 6.3 89
Houston........... 1 5 464,696 1.5 96.7 1,416 1.2 18
--
--- ---------- ----- -------- ----- ---
Southern
Total/Weighted
Average........... 15 78 7,610,919 25.0 96.6 31,361 25.9 267
MIDWESTERN
Chicago........... 10 54 6,290,110 20.7 91.8 20,960 17.3 90
Minneapolis....... 6 26 3,500,884 11.5 98.4 11,893 9.8 119
--
--- ---------- ----- -------- ----- ---
Midwestern
Total/Weighted
Average........... 16 80 9,790,994 32.2 94.1 32,853 27.1 209
EASTERN
Philadelphia...... 1 13 779,594 2.6 90.9 2,264 1.9 24
Baltimore/Washington,
D.C............. 2 2 509,477 1.7 72.6 1,908 1.6 4
Wilmington........ 1 3 265,671 0.9 100.0 1,040 0.9 5
No. New Jersey.... 2 2 772,609 2.5 88.6 2,675 2.2 4
--
--- ---------- ----- -------- ----- ---
Eastern
Total/Weighted
Average........... 6 20 2,327,351 7.7 87.2 7,887 6.6 37
--
--- ---------- ----- -------- ----- ---
Total/Weighted
Average........... 61 306 30,419,279 100.0% 94.2% $121,051 100.0% 810
== === ========== ===== ======== ===== ===

<CAPTION>
ANNUALIZED
BASE RENT PER
LEASED SQUARE
REGION/MARKET FOOT(1)
- -------------------- --------------
<S> <<C>
WESTERN
Los Angeles....... $ 4.13
Orange County..... 5.18
San Francisco Bay
Area............ 5.93
Sacramento........ 3.45
San Diego......... 5.37
Seattle........... 3.53
Western
Total/Weighted
Average........... 4.87
SOUTHERN
Atlanta........... 4.23
Miami............. 6.33
Orlando........... 2.87
Austin............ 6.52
Dallas/Fort
Worth........... 3.04
Houston........... 3.15
Southern
Total/Weighted
Average........... 4.27
MIDWESTERN
Chicago........... 3.63
Minneapolis....... 3.45
Midwestern
Total/Weighted
Average........... 3.56
EASTERN
Philadelphia...... 3.19
Baltimore/Washingt
D.C............. 5.16
Wilmington........ 3.91
No. New Jersey.... 3.91
Eastern
Total/Weighted
Average........... 3.89
Total/Weighted
Average........... $ 4.22
======
</TABLE>

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

(1) Calculated as total Annualized Base Rent divided by total rentable square
feet actually leased as of June 30, 1997.

66
<PAGE> 73

INDUSTRIAL PROPERTY SUMMARY

The Industrial Properties' 306 buildings are diversified across 18 markets
nationwide as of June 30, 1997. All but five of the Industrial Properties
represent individually less than 3.5% of the Annualized Base Rent of the
Industrial Properties as of such date. Additionally, the average age of the
Industrial Properties is eight years (since the time the property was built or
substantially renovated), which the Company believes should result in lower
operating costs and increased earnings over the long term. Ownership of each
Property is fee simple unless otherwise noted.
<TABLE>
<CAPTION>
PERCENTAGE
LEASED OF TOTAL
RENTABLE RENTABLE
NUMBER OF YEAR BUILT/ SQUARE SQUARE PERCENTAGE
REGION/MARKET/PROPERTY LOCATION BUILDINGS RENOVATED(1) FEET FEET LEASED
- --------------------------------------- -------------------- --------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
WESTERN
LOS ANGELES
Artesia Industrial Portfolio....... Compton 27 1984 2,496,465 8.2% 90.9%
International Multifoods........... La Mirada 1 1995R 144,259 0.5 100.0
L.A. County Industrial Portfolio... Carson, 7 1980 958,615 3.2 92.2
Norwalk,
City of Industry
Systematics........................ Walnut 1 1981 66,387 0.2 100.0
Orange County
Anaheim Industrial................. Anaheim 1 1980 161,500 0.5 100.0
Northpointe Commerce............... Fullerton 2 1992 119,445 0.4 100.0
Stadium Business Park.............. Anaheim 9 1995R 282,492 0.9 98.3
San Francisco Bay Area
Alvarado Business Center........... San Leandro 10 1986 694,598 2.3 82.3
Ardenwood Corporate Park........... Fremont 4 1986 295,657 1.0 100.0
Dowe Industrial.................... Union City 2 1985R 326,080 1.1 100.0
Fairway Drive Industrial(3)........ San Leandro 2 1997D 175,325 0.6 100.0
Milmont Page....................... Fremont 3 1982 199,862 0.7 100.0
Moffett Business Center............ Sunnyvale 4 1994R 285,480 0.9 100.0
Moffett Park R&D Port.............. Sunnyvale 14 1994R 462,245 1.5 97.7
Pacific Business Center............ Fremont 2 1991 375,912 1.2 97.6
Silicon Valley Portfolio........... San Jose, 5 1982 287,228 0.9 100.0
Sunnyvale,
Milpitas
Southbay Industrial................ Fremont 8 1990 1,011,781 3.3 96.8
Zanker/Charcot Industrial.......... San Jose 5 1993R 301,064 1.0 78.7
Sacramento
Hewlett Packard Distribution....... Roseville 1 1994 182,437 0.6 100.0
San Diego
Activity Distribution Center....... San Diego 4 1991 252,318 0.8 100.0

<CAPTION>
ANNUALIZED
PERCENTAGE BASE RENT
ANNUALIZED OF PER LEASED
BASE RENT ANNUALIZED NUMBER OF SQUARE
REGION/MARKET/PROPERTY (000S) BASE RENT LEASES FOOT(2)
- --------------------------------------- ------------- ------------ --------- ----------
<S> <C> <C> <C> <C>
WESTERN
LOS ANGELES
Artesia Industrial Portfolio....... $ 8,803 7.3% 27 $ 3.88
International Multifoods........... 721 0.6 2 5.00
L.A. County Industrial Portfolio... 3,951 3.3 11 4.47

Systematics........................ 451 0.4 1 6.79
Orange County
Anaheim Industrial................. 576 0.5 2 3.57
Northpointe Commerce............... 800 0.6 2 6.70
Stadium Business Park.............. 1,515 1.2 31 5.46
San Francisco Bay Area
Alvarado Business Center........... 2,947 2.4 32 5.15
Ardenwood Corporate Park........... 2,303 1.9 10 7.79
Dowe Industrial.................... 1,112 0.9 4 3.41
Fairway Drive Industrial(3)........ 748 0.6 2 4.27
Milmont Page....................... 1,106 0.9 11 5.53
Moffett Business Center............ 2,110 1.8 5 7.39
Moffett Park R&D Port.............. 4,324 3.6 30 9.58
Pacific Business Center............ 1,920 1.6 11 5.23
Silicon Valley Portfolio........... 2,200 1.8 9 7.66

Southbay Industrial................ 4,710 3.9 30 4.81
Zanker/Charcot Industrial.......... 1,295 1.1 17 5.47
Sacramento
Hewlett Packard Distribution....... 630 0.5 1 3.45
San Diego
Activity Distribution Center....... 1,356 1.1 15 5.37
</TABLE>

67
<PAGE> 74
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL
RENTABLE RENTABLE
NUMBER OF YEAR BUILT/ SQUARE SQUARE PERCENTAGE
REGION/MARKET/PROPERTY LOCATION BUILDINGS RENOVATED(1) FEET FEET LEASED
- -------------------------------------- -------------------- --------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Seattle
Harvest Business Park............. Kent 3 1986 191,841 0.6% 100.0%
Kent Centre....................... Kent 4 1993 267,967 0.9 76.2
Kingsport Industrial Park......... Kent 7 1994R 951,056 3.1 97.4
Northwest Distribution Center..... Kent 2 1980 200,001 0.7 100.0

--- --------- --- -----
Western Region Total.................. 128 10,690,015 35.1 94.1
SOUTHERN
Atlanta
Atlanta South..................... Clayton County 4 1994 509,441 1.7 94.0
Amwiler-Gwinnett Ind. Portfolio... Gwinnett County 9 1996 792,686 2.6 100.0
Norcross/Brookhollow Portfolio.... Gwinnett County 4 1996 322,399 1.0 94.1
Southfield........................ Gwinnett County 8 1990 780,623 2.6 94.6
Miami
Beacon Industrial Park............ Miami 7 1995 624,124 2.1 89.0
Blue Lagoon....................... Miami 2 1994 325,611 1.1 100.0
Brittania Business Park........... Riviera Beach 2 1988 258,578 0.8 92.5
Orlando
Chancellor(3)..................... Orlando 1 1996R 201,600 0.7 100.0
Austin
Metric Center(3).................. Austin 6 1996 735,240 2.4 100.0
Dallas/Ft. Worth
Dallas Industrial Portfolio....... Farmers Branch 18 1986 1,066,098 3.5 96.5
Lincoln Industrial Center......... Carrollton 2 1980 93,718 0.3 100.0
Lonestar.......................... Dallas, Irving, 7 1993 911,375 3.0 100.0
Grand Prairie
Valwood........................... Carrollton 2 1984 275,994 0.9 90.5
West North Carrier................ Grand Prairie 1 1993R 248,736 0.8 100.0
Houston
Houston Industrial Portfolio...... Houston 5 1986 464,696 1.5 96.7
--- --------- --- -----
Southern Region Total................. 78 7,610,919 25.0 96.6

<CAPTION>
ANNUALIZED
PERCENTAGE BASE RENT
ANNUALIZED OF PER LEASED
BASE RENT ANNUALIZED NUMBER OF SQUARE
REGION/MARKET/PROPERTY (000S) BASE RENT LEASES FOOT(2)
- -------------------------------------- ------------- ------------ --------- ----------
<S> <C> <C> <C> <C>
Seattle
Harvest Business Park............. $ 872 0.7% 10 $ 4.55
Kent Centre....................... 917 0.8 14 4.49
Kingsport Industrial Park......... 2,903 2.3 17 3.14
Northwest Distribution Center..... 680 0.6 3 3.40

------ ---- --- ----
Western Region Total.................. 48,950 40.4 297 4.87
SOUTHERN
Atlanta
Atlanta South..................... 2,358 1.9 18 4.93
Amwiler-Gwinnett Ind. Portfolio... 2,881 2.4 26 3.63
Norcross/Brookhollow Portfolio.... 1,637 1.4 21 5.40
Southfield........................ 2,916 2.4 34 3.95
Miami
Beacon Industrial Park............ 3,636 3.0 15 6.55
Blue Lagoon....................... 2,234 1.8 14 6.86
Brittania Business Park........... 1,217 1.0 9 5.09
Orlando
Chancellor(3)..................... 579 0.5 1 2.87
Austin
Metric Center(3).................. 4,793 4.0 22 6.52
Dallas/Ft. Worth
Dallas Industrial Portfolio....... 3,059 2.5 66 2.97
Lincoln Industrial Center......... 335 0.3 3 3.57
Lonestar.......................... 3,037 2.5 12 3.33

Valwood........................... 765 0.6 6 3.06
West North Carrier................ 498 0.4 2 2.00
Houston
Houston Industrial Portfolio...... 1,416 1.2 18 3.15

------ ---- --- ----
Southern Region Total................. 31,361 25.9 267 4.27
</TABLE>

68
<PAGE> 75
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL
RENTABLE RENTABLE
NUMBER OF YEAR BUILT/ SQUARE SQUARE PERCENTAGE
REGION/MARKET/PROPERTY LOCATION BUILDINGS RENOVATED(1) FEET FEET LEASED
- ----------------------------------- -------------------- --------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
MIDWESTERN
Chicago
Bensenville.................... Bensenville 13 1994R 2,137,370 7.0% 92.3%
Chicago Industrial............. Bensenville 2 1974 184,360 0.6 100.0
Crossroads Industrial.......... Bollingbrook 1 1990 260,890 0.9 100.0
Elk Grove Village Industrial... Northbrook, 10 1980 693,459 2.3 100.0
Mundelein,
Itasca
Itasca Industrial Portfolio.... Itasca, 6 1996R 769,070 2.6 66.6
Wood Dale
Lake Michigan Industrial
Portfolio(3)................... Itasca 2 1994 310,681 1.0 100.0
Bridgeview
Linder Skokie.................. Skokie 2 1991R 484,370 1.6 100.0
Lisle Industrial............... Lisle 1 1985R 360,000 1.2 100.0
Melrose Park................... Melrose Park 1 1982 346,538 1.1 100.0
O'Hare Industrial Portfolio.... Itasca, 16 1975 743,372 2.4 87.2
Naperville
Minneapolis
Corporate Square............... Eagan 6 1992R 526,490 1.7 98.6
Minneapolis Distribution
Portfolio...................... Minneapolis, 5 1997R 1,029,837 3.4 99.4
Edina, St. Louis
Minneapolis Industrial......... Brooklyn Center 7 1997R 613,941 2.0 93.1
Minneapolis Industrial
Portfolio IV................... Plymouth 4 1985R 514,546 1.7 100.0
Penn James Office Warehouse.... Bloomington 2 1974 215,606 0.7 100.0
Twin Cities.................... New Hope, 2 1980 600,464 2.0 100.0
Mendota Heights
-- --------- ---
Midwestern Region Total............ 80 9,790,994 32.2 94.1
EASTERN
Philadelphia
Mid-Atlantic Business Center... West Deptford 13 1979R 779,594 2.6 90.9
Baltimore/Washington, D.C.
Crysen Corridor................ Howard County 1 1986 150,000 0.5 100.0
Toys 'R Us..................... Landover 1 1985R 359,477 1.2 61.1
Wilmington
Boulden........................ Wilmington 3 1986 265,671 0.9 100.0

<CAPTION>
ANNUALIZED
PERCENTAGE BASE RENT
ANNUALIZED OF PER LEASED
BASE RENT ANNUALIZED NUMBER OF SQUARE
REGION/MARKET/PROPERTY (000S) BASE RENT LEASES FOOT(2)
- ----------------------------------- ------------- ------------ --------- ----------
<S> <C> <C> <C> <C>
MIDWESTERN
Chicago
Bensenville.................... $ 7,527 6.2% 31 $ 3.82
Chicago Industrial............. 649 0.5 4 3.52
Crossroads Industrial.......... 1,044 0.9 4 4.00
Elk Grove Village Industrial... 2,904 2.4 16 4.19

Itasca Industrial Portfolio.... 1,748 1.4 9 3.41

Lake Michigan Industrial
Portfolio(3)................... 1,091 0.9 3 3.51

Linder Skokie.................. 1,454 1.2 6 3.00
Lisle Industrial............... 756 0.6 1 2.10
Melrose Park................... 988 0.8 1 2.85
O'Hare Industrial Portfolio.... 2,799 2.3 15 4.32

Minneapolis
Corporate Square............... 1,744 1.4 24 3.36
Minneapolis Distribution
Portfolio...................... 3,709 3.1 28 3.62

Minneapolis Industrial......... 1,856 1.5 19 3.25
Minneapolis Industrial
Portfolio IV................... 1,861 1.6 17 3.62
Penn James Office Warehouse.... 807 0.7 23 3.74
Twin Cities.................... 1,916 1.6 8 3.19

------ ---- --- ----
Midwestern Region Total............ 32,853 27.1 209 3.56
EASTERN
Philadelphia
Mid-Atlantic Business Center... 2,264 1.9 24 3.19
Baltimore/Washington, D.C.
Crysen Corridor................ 408 0.3 3 2.72
Toys 'R Us..................... 1,500 1.3 1 6.83
Wilmington
Boulden........................ 1,040 0.9 5 3.91
</TABLE>

69
<PAGE> 76
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL
RENTABLE RENTABLE
NUMBER OF YEAR BUILT/ SQUARE SQUARE PERCENTAGE
REGION/MARKET/PROPERTY LOCATION BUILDINGS RENOVATED(1) FEET FEET LEASED
- -------------------------------------- -------------------- --------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
No. New Jersey
Dock's Corner..................... South Brunswick 1 1996E 554,521 1.8% 84.1%
Two South Middlesex............... Monroe 1 1995R 218,088 0.7 100.0
--- ---------- ----- -----
Eastern Region Total.................. 20 1987 2,327,351 7.7 87.2
--- ---------- ----- -----
Total................................. 306 30,419,279 100.0% 94.2%
=== ========== ===== =====

<CAPTION>
ANNUALIZED
PERCENTAGE BASE RENT
ANNUALIZED OF PER LEASED
BASE RENT ANNUALIZED NUMBER OF SQUARE
REGION/MARKET/PROPERTY (000S) BASE RENT LEASES FOOT(2)
- -------------------------------------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C>
No. New Jersey
Dock's Corner..................... $ 1,819 1.5% 2 $ 3.90
Two South Middlesex............... 856 0.7 2 3.93
-------- ----- ---- -----
Eastern Region Total.................. 7,887 6.6 37 3.89
-------- ----- ---- -----
Total................................. $121,051 100.0% 810 $ 4.22
======== ===== ==== =====
</TABLE>

- ---------------
(1) Industrial Properties denoted with an "R," "E" or "D" indicate the date of
most recent renovation, expansion or development. All other dates reference
the year such Property was developed. An "R" denotes renovation which means
properties in which capital improvements have totaled 20% or more of total
cost within a 24-month period or have resulted in a material improvement of
the physical condition. An "E" denotes expansion which means construction
resulting in an increase in the rentable square footage of an existing
structure or the development of additional buildings on a property on which
existing buildings are located. A "D" denotes development which means new
construction on a previously undeveloped location.

(2) Calculated as Annualized Base Rent divided by total rentable square feet
actually leased as of June 30, 1997.

(3) The Company holds an interest in this Property through a joint venture
interest in a limited partnership. See "-- Properties Held Through Joint
Ventures, Limited Liability Companies and Partnerships."

70
<PAGE> 77

INDUSTRIAL PROPERTY TENANT INFORMATION

Twenty-five Largest Industrial Property Tenants. The following table lists
the 25 largest tenants based on Annualized Base Rent of the Industrial
Properties as of June 30, 1997 of which 12 lease space in more than one of the
Industrial Properties. Other companies that are also tenants in the Industrial
Properties include General Electric Company, International Business Machines,
Inc., Sears Roebuck & Co., Hewlett Packard Company, Federal Express Corporation,
Lucent Technologies, Inc. and The Home Depot, Inc.

<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
AGGREGATE OF AGGREGATE ANNUALIZED OF AGGREGATE
NUMBER OF RENTABLE OCCUPIED BASE RENT ANNUALIZED
INDUSTRIAL TENANT NAME(1) PROPERTIES SQUARE FEET SQUARE FEET (000S) BASE RENT
------------------------------------------- --------- ----------- ------------ ---------- ------------
<C> <S> <C> <C> <C> <C> <C>
Dell USA L.P............................... 1 290,400 1.0% $ 1,723 1.4%
AEI........................................ 4 255,211 0.8 1,715 1.4
United States Postal Service............... 2 347,202 1.1 1,616 1.3
Toys 'R Us, Inc............................ 1 219,665 0.7 1,500 1.2
Sage Enterprises........................... 3 199,877 0.7 1,350 1.1
Cosmair.................................... 1 303,843 1.0 1,291 1.1
Schmalbach-Lubeca AG....................... 1 222,224 0.7 1,232 1.0
Mylex Corporation.......................... 2 133,182 0.4 1,165 1.0
Harmonic Lightwaves........................ 1 110,160 0.4 1,124 0.9
Ciba Vision................................ 4 245,616 0.8 1,067 0.9
Melrose Distribution....................... 1 346,538 1.1 988 0.8
Holman Distribution Center of Washington,
Inc........................................ 2 371,440 1.2 981 0.8
Mitsubishi................................. 1 253,584 0.8 959 0.8
Hexcel Corporation......................... 6 261,134 0.9 945 0.8
Superior Coffee and Foods.................. 1 201,011 0.7 905 0.8
Rollerblade................................ 2 278,840 0.9 872 0.7
Pragmatech, Inc............................ 3 102,157 0.3 861 0.7
Best Buy Company........................... 1 243,193 0.8 824 0.7
Logitech International, S.A................ 2 95,632 0.3 818 0.7
Belkin Components.......................... 1 219,028 0.7 815 0.6
AT&T Resource Management Corporation....... 1 360,000 1.4 766 0.6
Bridgestone Firestone, Inc................. 1 296,800 1.0 760 0.6
Vidco International........................ 2 146,460 0.5 756 0.6
Nippon Express U.S.A....................... 2 209,700 0.7 697 0.6
Humphrey Instruments....................... 1 123,000 0.4 691 0.6
--------- ---- ------- ----
Total...................................... 5,835,897 19.3% $ 26,421 21.7%
========= ==== ======= ====
</TABLE>

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

(1) Tenant(s) may be a subsidiary of or an entity affiliated with the named
tenant.

71
<PAGE> 78

INDUSTRIAL PROPERTY LEASE EXPIRATIONS

By December 31, 1999, leases representing approximately 30% of total leased
square footage of the Industrial Properties will expire. According to CB
Commercial/Torto Wheaton Research, industrial market rents have increased
approximately 14% on average over the two-year period ended December 31, 1996.
As a result of this trend, the Company believes it should have an opportunity to
re-lease such space at higher contractual base rents. The following table
summarizes the lease expirations for the Industrial Properties for leases in
place as of June 30, 1997, without giving effect to the exercise of renewal
options or termination rights, if any, at or prior to the scheduled expirations.

<TABLE>
<CAPTION>
ANNUALIZED
RENTABLE PERCENTAGE BASE RENT OF
SQUARE PERCENTAGE ANNUALIZED OF ANNUALIZED EXPIRING
NUMBER OF FOOTAGE OF OF TOTAL BASE RENT OF BASE RENT LEASES
YEAR OF LEASE LEASES EXPIRING RENTABLE SQUARE EXPIRING LEASES OF EXPIRING PER SQUARE
EXPIRATION EXPIRING LEASES FOOTAGE (000S) LEASES FOOT
- ---------------------- --------- ---------- --------------- --------------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
1997(1)............. 98 3,206,394 10.5% $ 13,489 11.0% $ 4.21
1998................ 173 4,918,447 16.2 19,529 16.1 3.97
1999................ 148 4,177,782 13.7 17,387 14.4 4.16
2000................ 144 4,586,467 15.1 19,739 16.3 4.30
2001................ 109 3,131,502 10.3 15,476 12.8 4.94
2002................ 68 2,941,126 9.7 11,586 9.6 3.94
2003................ 22 1,034,162 3.4 4,572 3.8 4.42
2004................ 15 1,413,851 4.6 5,765 4.8 4.08
2005................ 13 1,248,595 4.1 5,532 4.6 4.43
2006................ 10 904,061 3.0 4,487 3.7 4.96
2007 and beyond..... 10 1,089,692 3.6 3,489 2.9 3.20
--- ---------- ----- --------------- ------ ------
Total/Weighted
Average.......... 810 28,652,079 94.2% $ 121,051 100.0% $ 4.22
======== ========= ============ =========== ========== =========
</TABLE>

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

(1) Represents lease expirations from July 1, 1997 to December 31, 1997 and
month-to-month leases.

(2) Calculated as Annualized Base Rent divided by the square footage of expiring
leases.

72
<PAGE> 79

INDUSTRIAL PROPERTY LEASE EXPIRATIONS BY REGION

For the six-month period ended June 30, 1997, the Company renewed 135
industrial leases representing a retention rate of 72.3% of the expiring
industrial space. The following table details the Industrial Property lease
expirations by region. The table summarizes leases in effect as of June 30,
1997, and the year in which they expire for each of the ten years beginning with
1997, on an aggregate basis, without giving effect to the exercise of renewal
options and excluding an aggregate of approximately 1.8 million rentable square
feet of unleased space. As shown below, the Company has an average of over 1.5
million rentable square feet of leases expiring in each of the years ending
1998, 1999 and 2000 in the Western and Midwestern regions. The Company believes
that these expiring leases represent an opportunity to increase contractual base
rent with respect to such Properties.
<TABLE>
<CAPTION>
REGION 1997 1998 1999 2000 2001 2002 2003 2004
- ----------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WESTERN
Rentable Square Feet(1).......... 571,996 2,022,531 1,339,088 1,226,935 1,285,063 980,534 652,445 1,293,499
% Rentable Square Feet(2)........ 5.4% 18.9% 12.5% 11.5% 12.0% 9.2% 6.1% 12.1%
Annualized Base Rent (000s)...... $3,162 $9,082 $6,757 $6,369 $6,584 $4,720 $2,944 $5,266
Number of Leases Expiring........ 34 66 61 37 40 24 13 12
Expiring Rent Per Sq. Ft.(3)..... $5.53 $4.49 $5.05 $5.19 $5.12 $4.81 $4.51 $4.07
SOUTHERN
Rentable Square Feet(1).......... 879,945 869,746 738,333 1,143,979 1,104,813 1,352,497 145,191 0
% Rentable Square Feet(2)........ 11.6% 11.4% 9.7% 15.0% 14.5% 17.8% 1.9% 0.0%
Annualized Base Rent (000s)...... $3,003 $3,070 $3,060 $5,419 $5,790 $4,708 $646 $0
Number of Leases Expiring........ 27 44 37 60 52 31 4 --
Expiring Rent Per Sq. Ft.(3)..... $3.41 $3.53 $4.14 $4.74 $5.24 $3.48 $4.45 $0
MIDWESTERN
Rentable Square Feet(1).......... 1,524,778 1,813,953 1,590,418 1,364,476 654,405 508,879 197,328 120,352
% Rentable Square Feet(2)........ 15.6% 18.5% 16.2% 13.9% 6.7% 5.2% 2.0% 1.2%
Annualized Base Rent (000s)...... $5,785 $6,668 $5,707 $4,797 $2,853 $1,929 $838 $499
Number of Leases Expiring........ 35 55 41 35 15 11 3 3
Expiring Rent Per Sq. Ft.(3)..... $3.79 $3.68 $3.59 $3.52 $4.36 $3.79 $4.25 $4.15
EASTERN
Rentable Square Feet(1).......... 229,675 212,217 509,943 851,077 87,221 99,216 39,198 0
% Rentable Square Feet(2)........ 9.9% 9.1% 21.9% 36.6% 3.7% 4.3% 1.7% 0.0%
Annualized Base Rent (000s)...... $1,539 $709 $1,863 $3,154 $249 $229 $144 $0
Number of Leases Expiring........ 2 8 9 12 2 2 2 --
Expiring Rent Per Sq. Ft.(3)..... $6.70 $3.34 $3.65 $3.71 $2.85 $2.31 $3.67 $0
TOTAL/WEIGHTED AVERAGE RENTABLE
SQUARE FEET(1)................... 3,206,394 4,918,447 4,177,782 4,586,467 3,131,502 2,941,126 1,034,162 1,413,851
% Rentable Square Feet(2)........ 10.5% 16.2% 13.7% 15.1% 10.3% 9.7% 3.4% 4.6%
Annualized Base Rent (000s)...... $13,489 $19,529 $17,387 $19,739 $15,476 $11,586 $4,572 $5,765
Number of Leases Expiring........ 98 173 148 144 109 68 22 15
Expiring Rent Per Sq. Ft.(3)..... $4.21 $3.97 $4.16 $4.30 $4.94 $3.94 $4.42 $4.08

<CAPTION>
2007 AND TOTAL/WEIGHTED
REGION 2005 2006 BEYOND AVERAGE
- ----------------------------------- --------- ------- --------- --------------
<S> <C> <C> <C> <C>
WESTERN
Rentable Square Feet(1).......... 86,200 439,520 157,325 10,055,136
% Rentable Square Feet(2)........ 0.8% 4.1% 1.5% 94.1%
Annualized Base Rent (000s)...... $574 $2,924 $568 $48,950
Number of Leases Expiring........ 3 5 2 297
Expiring Rent Per Sq. Ft.(3)..... $6.66 $6.65 $3.61 $4.87
SOUTHERN
Rentable Square Feet(1).......... 649,124 140,801 327,106 7,351,535
% Rentable Square Feet(2)........ 8.5% 1.8% 4.4% 96.6%
Annualized Base Rent (000s)...... $3,679 $782 $1,204 $31,361
Number of Leases Expiring........ 7 2 3 267
Expiring Rent Per Sq. Ft.(3)..... $5.67 $5.55 $3.68 $4.27
MIDWESTERN
Rentable Square Feet(1).......... 513,271 323,740 605,261 9,216,861
% Rentable Square Feet(2)........ 5.2% 3.3% 6.3% 94.1%
Annualized Base Rent (000s)...... $1,279 $781 $1,717 $32,853
Number of Leases Expiring........ 3 3 5 209
Expiring Rent Per Sq. Ft.(3)..... $2.49 $2.41 $2.84 $3.56
EASTERN
Rentable Square Feet(1).......... 0 0 0 2,028,547
% Rentable Square Feet(2)........ 0.0% 0.0% 0.0% 87.2%
Annualized Base Rent (000s)...... $0 $0 $0 $7,887
Number of Leases Expiring........ -- -- -- 37
Expiring Rent Per Sq. Ft.(3)..... $0 $0 $0 $3.89
TOTAL/WEIGHTED AVERAGE RENTABLE
SQUARE FEET(1)................... 1,248,595 904,061 1,089,692 28,652,079
% Rentable Square Feet(2)........ 4.1% 3.0% 3.6% 94.2%
Annualized Base Rent (000s)...... $5,532 $4,487 $3,489 $121,051
Number of Leases Expiring........ 13 10 10 810
Expiring Rent Per Sq. Ft.(3)..... $4.43 $4.96 $3.20 $4.22
</TABLE>

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

(1) Reflects total rentable square footage of expiring leases from July 1
through December 31 for 1997 and for the calendar year for each year
thereafter.

(2) Reflects total rentable square footage of expiring leases as a percentage of
the total leased square footage for the respective region and in total.

(3) Expiring rent per square foot is calculated by dividing the Annualized Base
Rent of leases expiring by the square footage expiring in any given year.

73
<PAGE> 80

INDUSTRIAL PROPERTY LEASE DISTRIBUTIONS

The following table sets forth information relating to the distribution of
the Industrial Property leases, based on leased rentable square footage, as of
June 30, 1997:

<TABLE>
<CAPTION>
TOTAL PERCENTAGE
LEASED OF AGGREGATE ANNUALIZED PERCENTAGE
DISTRIBUTION OF PERCENT RENTABLE LEASED ANNUALIZED BASE RENT OF AGGREGATE
LEASED RENTABLE NUMBER OF ALL SQUARE RENTABLE BASE RENT PER SQUARE ANNUALIZED
SQUARE FEET OF LEASES LEASES FEET SQUARE FEET (000S) FOOT(1) BASE RENT
- ------------------- --------- ------- ---------- --------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ground leases...... 7 0.9% N/A N/A $ 92 N/A 0.1%
10,000 or Less..... 244 30.1 1,278,309 4.5% 7,120 $ 5.57 5.9
10,001 - 25,000.... 225 27.8 3,616,204 12.6 18,189 5.03 15.0
25,001 - 50,000.... 168 20.7 6,088,754 21.3 27,467 4.51 22.7
50,001 - 100,000... 99 12.2 7,000,222 24.4 30,203 4.31 24.9
100,001 or
greater.......... 67 8.3 10,668,590 37.2 37,980 3.56 31.4
--- ----- ---------- ---- -------- ----- -----
Total/Weighted
Average.......... 810 100.0% 28,652,079 100.0% $121,051 $ 4.22 100.0%
=== ===== ========== ==== ======== ===== =====
</TABLE>

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

(1) Calculated as Annualized Base Rent divided by the corresponding square
footage in each tenant size range.

RETAIL PROPERTIES

The Company owns 31 Retail Properties aggregating approximately 5.5 million
rentable square feet (not including the Pending Acquisitions). As of June 30,
1997, the Retail Properties were 93.0% leased to over 600 tenants, the largest
of which accounted for approximately 4.9% of the Company's Annualized Base Rent
from its Retail Properties as of June 30, 1997. The Retail Properties have an
average age of four years (since built or substantially renovated). The
Company's historical weighted average retention rate for the Retail Properties
for the period beginning January 1, 1994 through June 30, 1997 was approximately
79%, based on 0.6 million rentable square feet of expiring leases.

Property Characteristics. The Retail Properties generally contain between
80,000 and 350,000 rentable square feet. On average, 68% of the rentable square
feet for each of the Retail Properties is leased to one or more Anchor Tenants.
"Anchor Tenants" are defined as those retail tenants occupying more than 10,000
rentable square feet and all grocery stores and drugstores. The following table
identifies characteristics of a typical Retail Property.

RETAIL PROPERTY PROFILE

<TABLE>
<CAPTION>
TYPICAL PROPERTY TYPICAL RANGE
---------------- ------------------
<S> <C> <C>
Rentable Square Feet....................... 180,000 80,000 - 350,000
Percentage Leased by Anchor Tenants........ 68% 60% - 85%
Number of Tenants.......................... 25 10 - 50
Parking Spaces per 1,000 Square Feet....... 5.0 4.0 - 6.0
Square Footage Per Anchor Tenant........... 25,000 10,000 - 100,000
Average Square Footage Per Non-Anchor
Tenant................................... 1,500 750 - 5,000
</TABLE>

Lease Terms. The Retail Properties are typically leased on a triple net
basis, with tenants paying their proportionate share of real estate taxes,
operating costs and utility costs. In addition, some leases, including some
Anchor Tenant leases, require tenants to pay percentage rents based on gross
retail sales above predetermined thresholds. Typical Anchor Tenant leases also
provide for payment of a percentage administrative fee in lieu of a management
fee (calculated as a percentage of common area maintenance) which ranges between
5% and 15%. Lease terms typical for Anchor Tenants range from 10 to 20 years,
with an average of 19 years, with renewal options for an additional 10 to 20
years at fixed rents. Tenant improvement allowances are standard and the amounts
vary by submarket.

Typical Non-Anchor Tenants have lease terms ranging between three and 10
years with an average of seven years and they typically receive options for an
additional five-year term at market rents. Contractual

74
<PAGE> 81

base rent excluding reimbursements and percentage rent for the Retail Properties
for the years ended December 31, 1994, 1995 and 1996, and for the six months
ended June 30, 1997 was $14.0 million, $27.2 million, $43.0 million and $29.2
million, respectively, which amounted to 35%, 32%, 32% and 33%, respectively, of
the Company's contractual base rent, excluding reimbursements and percentage
rents, from industrial and retail properties during such periods.

75
<PAGE> 82

The table below shows the distribution of the Retail Properties by region.

RETAIL PROPERTIES BY REGION
AT JUNE 30, 1997
<TABLE>
<CAPTION>
LEASED
LEASED NON-ANCHOR PERCENTAGE
ANCHOR RENTABLE AVAILABLE TOTAL OF TOTAL
NUMBER OF RENTABLE SQUARE RENTABLE RENTABLE RENTABLE PERCENTAGE
REGION CENTERS SQUARE FEET FEET SQUARE FEET SQUARE FEET SQUARE FEET LEASED
- ------------------------------ --------- ----------- ---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Western....................... 15 1,315,910 800,412 76,124 2,192,446 39.9% 96.5%
Southern...................... 9 881,640 293,050 226,028 1,400,718 25.5 83.9
Midwestern.................... 4 552,577 125,404 32,542 710,523 13.0 95.4
Eastern....................... 3 1,001,323 134,660 48,479 1,184,462 21.6 95.9
--
--------- --------- ------- --------- ----- ----
Total/Weighted Average........ 31 3,751,450 1,353,526 383,173 5,488,149 100.0% 93.0%
== ========= ========= ======= ========= ===== ====

<CAPTION>
ANNUALIZED
PERCENTAGE BASE RENT
ANNUALIZED OF PER OCCUPIED
BASE RENT ANNUALIZED SQUARE
REGION (000S) BASE RENT FOOT(1)
- ------------------------------ ---------- ------------- ------------
<S> <C> <C> <C>
Western....................... $ 26,815 45.2% $12.67
Southern...................... 12,830 21.6 10.92
Midwestern.................... 6,628 11.2 9.78
Eastern....................... 13,034 22.0 11.47

------- ----- ------
Total/Weighted Average........ $ 59,307 100.0% $11.62
======= ===== ======
</TABLE>

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

(1) Calculated as total Annualized Base Rent divided by rentable square feet
actually leased as of June 30, 1997.

76
<PAGE> 83

Two-thirds of the Retail Properties are located in markets in the Western
and Southern regions, which according to Regional Financial Associates, are
forecast to have above-average population and income growth through 2001.

<TABLE>
<CAPTION>
POPULATION GROWTH INCOME GROWTH
1996 - 2001 1996 - 2001
----------------- -------------
<S> <C> <C>
Weighted Average for Company's Western and
Southern region retail markets.............. 5.5% 30.1%
U.S. Average.................................. 4.5% 28.0%
</TABLE>

The table below further details the regional diversification of the Retail
Properties by listing the individual markets in which the Company owns and
operates its Retail Properties.

RETAIL PROPERTIES BY MARKET
AT JUNE 30, 1997

<TABLE>
<CAPTION>
TOTAL ANCHOR
NUMBER OF LAND RENTABLE PERCENTAGE RENTABLE
REGION/MARKET CENTERS AREA (ACRES) SQUARE FEET LEASED SQUARE FEET
- ------------------------------------------ --------- ------------ ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
WESTERN
Denver.................................. 2 44 512,342 95.7% 342,854
Los Angeles............................. 2 31 324,977 97.1 183,113
Reno.................................... 1 7 76,757 92.5 47,140
San Diego............................... 2 31 277,049 94.6 107,017
San Francisco Bay Area.................. 5 53 673,032 97.9 419,118
Santa Barbara........................... 1 11 144,775 94.2 92,980
Seattle................................. 2 16 183,514 99.3 123,688
--
--- --------- ----- ---------
Western Region Total/Weighted Average..... 15 193 2,192,446 96.5 1,315,910
SOUTHERN
Atlanta................................. 1 11 97,899 100.0 68,499
Houston................................. 4 43 467,349 96.8 346,807
Miami................................... 4 86 835,470 74.7 466,334
--
--- --------- ----- ---------
Southern Region Total/Weighted Average.... 9 140 1,400,718 83.9 881,640
MIDWESTERN
Chicago................................. 3 43 504,736 93.8 400,950
Minneapolis............................. 1 25 205,787 99.3 151,627
--
--- --------- ----- ---------
Midwestern Region Total/Weighted
Average................................. 4 68 710,523 95.4 552,577
EASTERN
Albany.................................. 1 91 602,477 96.4 510,694
Baltimore/Washington, D.C. ............. 1 42 404,669 94.4 373,669
Hartford................................ 1 20 177,316 97.5 116,960
--
--- --------- ----- ---------
Eastern Region Total/Weighted Average..... 3 153 1,184,462 95.9 1,001,323
--
--- --------- ----- ---------
Total/Weighted Average.................... 31 554 5,488,149 93.0% 3,751,450
== === ========= ===== =========
</TABLE>

77
<PAGE> 84

RETAIL PROPERTY SUMMARY
Anchor Tenants account for 68% of the aggregate square footage of the
Retail Properties. As of June 30, 1997, Annualized Base Rent for the Company's
25 largest Anchor Tenants was approximately $25.7 million, representing
approximately 43.3% of Annualized Base Rent for all Retail Properties.
Annualized Base Rent for the remaining retail tenants was approximately $33.6
million as of the same date, representing approximately 56.7% of the Annualized
Base Rent for all Retail Properties. The following table sets forth, on a
property-by-property basis, the rentable square footage leased to Anchor Tenants
and Non-Anchor Tenants as of June 30, 1997. Ownership of each Property is in fee
simple unless otherwise noted.
<TABLE>
<CAPTION>
LEASED LEASED NON-
YEAR BUILT/ ANCHOR ANCHOR AVAILABLE TOTAL
RENOVATED RENTABLE RENTABLE RENTABLE RENTABLE PERCENT
REGION/MARKET/PROPERTY LOCATION (1) SQUARE FEET SQUARE FEET SQUARE FEET SQUARE FEET LEASED
- --------------------------------- -------------- ------------ ----------- ----------- ----------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
WESTERN
Denver
Arapahoe Village S.C.......... Boulder 1989R 84,316 68,753 6,017 159,086 96.2%
Applewood Village S.C......... Wheat Ridge 1994R 258,538 78,765 15,953 353,256 95.5
Los Angeles
Granada Village............... Granada Hills 1996R 124,638 90,565 9,580 224,783 95.7
Twin Oaks S.C................. Agoura Hills 1996R 58,475 41,719 -- 100,194 100.0
Reno
Southwest Pavilion............ Reno 1997E 47,140 23,883 5,734 76,757 92.5
San Diego
La Jolla Village.............. La Jolla 1989R 67,238 98,049 -- 165,287 100.0
Rancho San Diego Village
S.C......................... La Mesa 1994R 39,779 56,896 15,087 111,762 86.5
San Francisco Bay Area
Silverado Plaza S.C........... Napa 1994R 58,328 24,676 2,019 85,023 97.6
Bayhill S.C................... San Bruno 1997R 59,221 57,178 5,642 122,041 95.4
Lakeshore Plaza S.C........... San Francisco 1993 38,837 82,775 1,250 122,862 99.0
Pleasant Hill S.C................ Pleasant Hill 1990R 210,614 23,063 -- 233,677 100.0
Ygnacio Plaza................. Walnut Creek 1990R 52,118 52,069 5,242 109,429 95.2
Five Points Shopping Center... Santa Barbara 1996 92,980 43,395 8,400 144,775 94.2
Seattle
Eastgate Plaza................ Bellevue 1995R 49,575 26,989 -- 76,564 100.0
Aurora Marketplace............ Edmonds 1991 74,113 31,637 1,200 106,950 98.9
--------- ------- ------- --------- -----
Western Region Total............. 1,315,910 800,412 76,124 2,192,446 96.5

<CAPTION>
AVERAGE
ANNUALIZED BASE RENT
BASE RENT NUMBER OF PER SQUARE
REGION/MARKET/PROPERTY (000S) LEASES FOOT(2) PRIMARY TENANTS(3)

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

<S> <C> <C> <C> <C>
WESTERN
Denver
Arapahoe Village S.C.......... $ 1,715 24 $11.20 Safeway, SoFro Fabrics

Applewood Village S.C......... 3,055 38 9.06 Wal-Mart, King Soopers

Los Angeles
Granada Village............... 2,920 40 13.57 Hughes Market, TJ Maxx

Twin Oaks S.C................. 1,057 24 10.55 Ralphs, Thrifty Drug

Reno
Southwest Pavilion............ 701 14 9.87 Scolari's Market, Payless

Drugs

San Diego
La Jolla Village.............. 3,147 41 19.04 Whole Foods Market, Savon

Drugs

Rancho San Diego Village
S.C......................... 1,244 40 12.87 Lucky, Thrifty Drug

San Francisco Bay Area
Silverado Plaza S.C........... 773 16 9.31 Nob Hill Foods, Payless Drugs

Bayhill S.C................... 1,145 27 9.84 Mollie Stone's Markets, Longs

Drugs

Lakeshore Plaza S.C........... 3,226 35 26.53 Lucky, Ross

Pleasant Hill S.C................ 2,296 12 9.83 Target, Toys 'R Us

Ygnacio Plaza................. 1,197 24 11.49 Lucky, Thrifty Drug

Five Points Shopping Center... 2,117 24 15.52 Lucky, Ross

Seattle
Eastgate Plaza................ 773 16 10.10 Albertson's, Payless Drugs

Aurora Marketplace............ 1,449 17 13.70 Safeway, Drug Emporium

------- --- ------
Western Region Total............. 26,815 392 12.67
</TABLE>

78
<PAGE> 85
<TABLE>
<CAPTION>
YEAR LEASED LEASED NON-
BUILT/ ANCHOR ANCHOR AVAILABLE TOTAL
RENOVATED RENTABLE RENTABLE RENTABLE RENTABLE PERCENT
REGION/MARKET/PROPERTY LOCATION (1) SQUARE FEET SQUARE FEET SQUARE FEET SQUARE FEET LEASED
- --------------------------------- -------------- --------- ----------- ----------- ----------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
SOUTHERN
Atlanta
Woodlawn Point S.C............ Cobb County 1993 68,499 29,400 -- 97,899 100.0%
Houston
Randall's Woodway
Collection.................. Houston 1993 65,108 32,627 11,809 109,544 89.2
Randall's Austin Parkway...... Sugarland 1993 90,650 21,025 -- 111,675 100.0
Randall's Commons Memorial.... Houston 1993 75,689 34,506 -- 110,195 100.0
Randall's Dairy Ashford....... Houston 1993 115,360 17,375 3,200 135,935 97.6
Miami
Shoppes at Lago Mar........... Miami 1995 42,323 28,330 11,877 82,530 85.6
The Plaza at Delray(4)........ Delray Beach 1996R 196,297 36,980 76,171 309,448 75.4
Kendall Mall(4)............... Miami 1995R 194,550 77,549 27,406 299,505 90.8
Palm Aire(4).................. Pompano Beach 1997R 33,164 15,258 95,565 143,987 33.6
--------- ------- ------- --------- -----
Southern Region Total............ 881,640 293,050 226,028 1,400,718 83.9
MIDWESTERN
Chicago
Brentwood Commons............. Bensenville 1990R 61,621 31,344 9,165 102,130 91.0
Civic Center Plaza............ Niles 1989 238,655 18,944 5,735 263,334 97.8
Riverview Plaza S.C........... Chicago 1981 100,674 22,405 16,193 139,272 88.4

<CAPTION>
AVERAGE
ANNUALIZED BASE RENT
BASE RENT NUMBER OF PER SQUARE
REGION/MARKET/PROPERTY (000S) LEASES FOOT (2) PRIMARY TENANTS(3)

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

<S> <C> <C> <C> <C>
SOUTHERN
Atlanta
Woodlawn Point S.C............ 1,188 18 12.13 Publix Supermarket, Zany Brainy

Houston
Randall's Woodway
Collection.................. 1,200 15 12.28 Randall's, Eckerd Drug

Randall's Austin Parkway...... 1,091 12 9.77 Sears Hardware, Randall's

Randall's Commons Memorial.... 1,015 16 9.21 Randall's Walgreen's

Randall's Dairy Ashford....... 1,251 10 9.42 Randall's Petsmart

Miami
Shoppes at Lago Mar........... 805 15 11.39 Publix Supermarket

The Plaza at Delray(4)........ 2,530 27 10.85 Regal Cinema, Home Place

Kendall Mall(4)............... 3,447 39 12.67 Byrons, J.C. Penney Home Store

Palm Aire(4).................. 303 11 6.26 Winn-Dixie, Eckerd Drug

------- --- ------
Southern Region Total............ 12,830 163 10.92
MIDWESTERN
Chicago
Brentwood Commons............. 955 19 10.27 Dominick's, Super Trak

Civic Center Plaza............ 2,489 15 9.66 Dominick's, Home Depot

Riverview Plaza S.C........... 1,075 12 8.73 Dominick's, Toys 'R Us

</TABLE>

79
<PAGE> 86
<TABLE>
<CAPTION>
YEAR LEASED LEASED NON-
BUILT/ ANCHOR ANCHOR AVAILABLE TOTAL
RENOVATED RENTABLE RENTABLE RENTABLE RENTABLE PERCENT
REGION/MARKET/PROPERTY LOCATION (1) SQUARE FEET SQUARE FEET SQUARE FEET SQUARE FEET LEASED
- --------------------------------- -------------- --------- ----------- ----------- ----------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Minneapolis
Rockford Road Plaza........... Plymouth 1991 151,627 52,711 1,449 205,787 99.3%
--------- ------- ------- --------- -----
Midwestern Region Total.......... 552,577 125,404 32,542 710,523 95.4
EASTERN
Albany
Latham Farms.................. Albany 1993 510,694 70,233 21,550 602,477 96.4
Baltimore
Long Gate S.C................. Ellicott City 1996 373,669 8,468 22,532 404,669 94.4
Hartford
Corbins Corner S.C............ Hartford 1988R 116,960 55,959 4,397 177,316 97.5
--------- ------- ------- --------- -----
Eastern Region Total............. 1,001,323 134,660 48,479 1,184,462 95.9
--------- ------- ------- --------- -----
Total/Weighted Average........... 3,751,450 1,353,526 383,173 5,488,149 93.0%
========= ======= ======= ========= =====

<CAPTION>
AVERAGE
ANNUALIZED BASE RENT
BASE RENT NUMBER OF PER SQUARE
REGION/MARKET/PROPERTY (000S) LEASES FOOT (2) PRIMARY TENANTS(3)

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

<S> <C> <C> <C> <C>
Minneapolis
Rockford Road Plaza........... 2,109 26 $10.32 Rainbow Foods, PetsMart

------- --- ------
Midwestern Region Total.......... 6,628 72 9.78
EASTERN
Albany
Latham Farms.................. 5,951 25 10.24 Wal-Mart, Sam's Wholesale

Baltimore
Long Gate S.C................. 4,189 9 10.96 Target, Kohl's

Hartford
Corbins Corner S.C............ 2,894 23 16.74 Toys 'R Us, Filene's Basement

------- --- ------
Eastern Region Total............. 13,034 57 11.47
------- --- ------
Total/Weighted Average........... $ 59,307 684 $11.62
======= === ======
</TABLE>

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

(1) Retail Properties denoted with an "R," "E" or "D" indicate the date of most
recent renovation, expansion or development, respectively. All other dates
reference the year such Property was developed. Renovation means properties
in which capital improvements have totaled 20% or more of total cost within
a 24-month period or have resulted in a material improvement of the physical
condition. Expansion means construction resulting in an increase in the
rentable square footage of an existing structure or the development of
additional buildings on a property on which existing buildings are located.
Development means new construction on a previously undeveloped location.

(2) Calculated as total Annualized Base Rent divided by rentable square feet
actually leased as of June 30, 1997.

(3) Primary tenants are defined as the two largest Anchor Tenants as measured by
rentable square footage.

(4) The Company holds an interest in this Property through a joint venture
interest in a limited partnership. See "-- Properties Held Through Joint
Ventures, Limited Liability Companies and Partnerships."

80
<PAGE> 87

RETAIL PROPERTY TENANT INFORMATION

Twenty-five Largest Retail Property Tenants. The Company's 25 largest
Retail Property tenants by Annualized Base Rent are set forth in the table
below. These tenants have an average of approximately 14 years remaining on
their lease terms, which the Company believes should provide a balance to the
typically shorter remaining lease terms of the Industrial Portfolio tenants.

<TABLE>
<CAPTION>
AGGREGATE PERCENTAGE OF PERCENTAGE OF
NUMBER RENTABLE AGGREGATE ANNUALIZED AGGREGATE
OF SQUARE OCCUPIED BASE RENT ANNUALIZED
RETAIL TENANT NAME(1)(2) CENTERS FEET SQUARE FEET (000S) BASE RENT
- ------------------------------------------ ------- --------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Wal-Mart Stores, Inc. and Sam's Club...... 3 388,866 10.8% $ 2,891 4.9%
Randall's Food & Drugs, Inc............... 4 246,589 4.2 1,989 3.4
Safeway Stores, Inc....................... 4 187,334 3.2 1,860 3.1
Home Place................................ 2 109,104 0.9 1,447 2.4
Dominick's................................ 3 175,229 3.0 1,430 2.4
Target Stores Corp........................ 2 232,140 3.9 1,251 2.1
Toys 'R Us, Inc........................... 4 135,332 2.3 1,247 2.1
Blockbuster Videos, Inc................... 10 58,785 0.5 1,230 2.1
Home Quarters............................. 1 101,783 1.7 1,167 2.0
Publix.................................... 4 178,644 2.3 1,142 1.9
Home Depot................................ 1 116,095 2.0 1,016 1.7
Kohl's.................................... 1 86,889 2.7 949 1.6
PetsMart, Inc............................. 4 102,100 1.7 875 1.5
Barnes & Noble Super Stores, Inc.......... 2 46,180 0.8 840 1.4
Super Shop and Save....................... 1 63,664 1.1 828 1.4
Ross Stores, Inc.......................... 2 56,911 0.5 769 1.3
J.C. Penney............................... 1 45,000 0.8 626 1.1
Bally Total Fitness....................... 1 31,460 0.8 578 1.0
Eckerd Corporation........................ 4 40,206 0.6 537 0.9
Gateway Foods............................. 1 65,608 1.1 535 0.9
Regal Cinemas............................. 1 55,000 1.0 531 0.9
Hughes Market............................. 1 40,198 1.0 502 0.8
Filene's Basement......................... 1 26,750 1.0 495 0.8
The TJX Operating Companies............... 2 60,200 1.0 485 0.8
Whole Foods Market........................ 1 31,733 1.0 480 0.8
--------- ---- ------- ----
Total........................... 2,681,800 49.9% $ 25,700 43.3%
========= ==== ======= ====
</TABLE>

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

(1) Tenant(s) may be a subsidiary of or an entity affiliated with the named
tenant.

(2) Of the top 25 Retail Property tenants, eight are grocers. Of the 31 Retail
Properties, 29 are grocer-anchored.

81
<PAGE> 88

RETAIL PROPERTY LEASE EXPIRATIONS

The following table sets forth a summary schedule of the Retail Property
lease expirations for leases in place as of June 30, 1997 without giving effect
to the exercise of renewal options or termination rights, if any, at or prior to
the scheduled expirations.

<TABLE>
<CAPTION>
RENTABLE PERCENTAGE ANNUALIZED
SQUARE OF TOTAL BASE RENT PERCENTAGE OF ANNUALIZED
YEAR OF NUMBER OF FOOTAGE OF RENTABLE OF EXPIRING ANNUALIZED BASE RENT OF
LEASE LEASES EXPIRING SQUARE LEASES RENT OF EXPIRING LEASES
EXPIRATION EXPIRING LEASES FOOTAGE (000S) EXPIRING LEASES PER SQUARE FOOT(2)
- ----------------- --------- ---------- ----------- ----------- --------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
1997(1).......... 72 217,751 3.9% $ 3,257 5.5% $14.96
1998............. 97 360,753 6.6 4,300 7.3 11.92
1999............. 97 250,969 4.6 3,956 6.7 15.76
2000............. 82 366,299 6.7 4,082 6.9 11.14
2001............. 77 230,185 4.2 3,450 5.8 14.99
2002............. 57 248,702 4.5 3,227 5.4 12.98
2003............. 22 190,263 3.5 2,461 4.1 12.93
2004............. 22 125,901 2.3 1,602 2.7 12.72
2005............. 25 97,832 1.8 1,978 3.3 20.22
2006............. 41 284,839 5.2 3,945 6.7 13.85
2007 and
beyond......... 92 2,731,482 49.7 27,049 45.6 9.90
--- --------- ---- ------- ----- ------
Total/Weighted
Average........ 684 5,104,976 93.0% $59,307 100.0% $11.62
=== ========= ==== ======= ===== ======
</TABLE>

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

(1) Represents lease expirations from July 1, 1997 to December 31, 1997 and
month-to-month leases.

(2) Calculated as Annualized Base Rent divided by the square footage of expiring
leases.

82
<PAGE> 89

RETAIL PROPERTY LEASE EXPIRATIONS BY REGION

For the period ending June 30, 1997, the Company renewed 69 retail leases
representing a retention rate of 88.2% of the expiring retail space. During the
period from July 1, 1997 through December 31, 2000, 348 leases covering an
aggregate of 1.2 million rentable square feet of retail space are scheduled to
expire. As of June 30, 1997, the average rent for this retail space was $11.62
per rentable square foot. The following table sets forth a schedule of lease
expirations by region for Retail Property leases in place as of June 30, 1997
for each of the 10 years beginning with the year ending December 31, 1997, on an
aggregate basis, without giving effect to the exercise of renewal options or
termination rights, if any, at or prior to scheduled expirations, and also
excludes an aggregate of approximately 383,173 square feet of unleased space.
<TABLE>
<CAPTION>
1997 1998 1999 2000 2001 2002 2003 2004
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REGION
Western
Rentable Square Feet(1).............. 128,669 260,412 175,286 253,735 134,193 154,294 72,162 86,853
% Rentable Square Feet(2)............ 5.9% 11.9% 8.0% 11.6% 6.1% 7.0% 3.3% 4.0%
Annualized Base Rent (000s).......... $2,270 $2,968 $2,821 $2,533 $2,156 $2,140 $1,220 $924
Number of Leases Expiring............ 53 61 65 49 48 36 12 12
Expiring Rent Per Sq. Ft.(3)......... $17.64 $11.40 $16.09 $9.98 $16.07 $13.87 $16.91 $10.64
SOUTHERN
Rentable Square Feet(1).............. 42,291 70,868 24,537 52,003 18,878 37,841 50,625 25,670
% Rentable Square Feet(2)............ 3.0% 5.1% 1.8% 3.7% 1.3% 2.7% 3.6% 1.8%
Annualized Base Rent (000s).......... $399 $884 $423 $905 $315 $307 $467 $463
Number of Leases Expiring............ 10 24 13 24 10 8 4 7
Expiring Rent Per Sq. Ft.(3)......... $9.43 $12.47 $17.24 $17.40 $16.69 $8.11 $9.22 $18.04
MIDWESTERN
Rentable Square Feet(1).............. 10,891 22,473 14,078 60,561 68,394 41,173 0 0
% Rentable Square Feet(2)............ 1.5% 3.2% 2.0% 8.5% 9.6% 5.8% 0.0% 0.0%
Annualized Base Rent (000s).......... $174 $295 $233 $644 $778 $464 $0 $0
Number of Leases Expiring............ 6 10 8 9 16 9 0 0
Expiring Rent Per Sq. Ft.(3)......... $15.98 $13.13 $16.55 $10.63 $11.38 $11.27 $0 $0
EASTERN
Rentable Square Feet(1).............. 35,900 7,000 37,068 0 8,720 15,394 67,476 13,378
% Rentable Square Feet(2)............ 3.0% 0.6% 3.1% 0.0% 0.7% 1.3% 5.7% 1.1%
Annualized Base Rent (000s).......... $414 $153 $479 $0 $201 $316 $774 $215
Number of Leases Expiring............ 3 2 11 0 3 4 6 3
Expiring Rent Per Sq. Ft.(3)......... $11.53 $21.86 $12.92 $0 $23.05 $20.53 $11.47 $16.07
TOTAL/WEIGHTED AVERAGE
Rentable Square Feet(1).............. 217,751 360,753 250,969 366,299 230,185 248,702 190,263 125,901
% Rentable Square Feet(2)............ 3.9% 6.6% 4.6% 6.7% 4.2% 4.5% 3.5% 2.3%
Annualized Base Rent (000s).......... $3,257 $4,300 $3,956 $4,082 $3,450 $3,227 $2,461 $1,602
Number of Leases Expiring............ 72 97 97 82 77 57 22 22
Expiring Rent Per Sq. Ft.(3)......... $14.96 $11.92 $15.76 $11.14 $14.99 $12.98 $12.93 $12.72

<CAPTION>
TOTAL
2007 AND WEIGHTED
2005 2006 BEYOND AVERAGE
------ ------- --------- ---------
<S> <C<C> <C> <C> <C>
REGION
Western
Rentable Square Feet(1).............. 13,844 83,931 752,942 2,116,321
% Rentable Square Feet(2)............ 0.6% 3.8% 34.3% 96.5%
Annualized Base Rent (000s).......... $234 $1,721 $7,828 $26,815
Number of Leases Expiring............ 4 18 34 392
Expiring Rent Per Sq. Ft.(3)......... $16.90 $20.50 $10.40 $12.67
SOUTHERN
Rentable Square Feet(1).............. 46,761 147,690 657,527 1,174,691
% Rentable Square Feet(2)............ 3.3% 10.5% 47.1% 83.9%
Annualized Base Rent (000s).......... $979 $1,832 $5,856 $12,830
Number of Leases Expiring............ 16 20 27 163
Expiring Rent Per Sq. Ft.(3)......... $20.94 $12.40 $8.91 $10.92
MIDWESTERN
Rentable Square Feet(1).............. 1,340 53,218 405,853 677,981
% Rentable Square Feet(2)............ 0.2% 7.5% 57.1% 95.4%
Annualized Base Rent (000s).......... $17 $392 $3,631 $6,628
Number of Leases Expiring............ 1 3 10 72
Expiring Rent Per Sq. Ft.(3)......... $12.69 $7.37 $8.95 $9.78
EASTERN
Rentable Square Feet(1).............. 35,887 0 915,160 1,135,983
% Rentable Square Feet(2)............ 3.0% 0.0% 77.4% 95.9%
Annualized Base Rent (000s).......... $748 $0 $9,734 $13,034
Number of Leases Expiring............ 4 0 21 57
Expiring Rent Per Sq. Ft.(3)......... $20.84 $0 $10.64 $11.47
TOTAL/WEIGHTED AVERAGE
Rentable Square Feet(1).............. 97,832 284,839 2,731,482 5,104,976
% Rentable Square Feet(2)............ 1.8% 5.2% 49.7% 93.0%
Annualized Base Rent (000s).......... $1,978 $3,945 $27,049 $59,307
Number of Leases Expiring............ 25 41 92 684
Expiring Rent Per Sq. Ft.(3)......... $20.22 $13.85 $9.90 $11.62
</TABLE>

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

(1) Reflects total square footage of expiring leases from July 1 through
December 31 for 1997 and for the calendar year for each year thereafter.

(2) Reflects total square footage of expiring leases as a percentage of the
total leased square footage for the respective region and in total.

(3) Rent per square foot is calculated by dividing the Annualized Base Rent of
expiring leases by the square footage expiring in any given year.

83
<PAGE> 90

RETAIL PROPERTY LEASE DISTRIBUTIONS

The following table sets forth information relating to the distribution of
the Retail Property leases, based on leased rentable square feet, as of June 30,
1997.

<TABLE>
<CAPTION>
PERCENTAGE
TOTAL OF AGGREGATE
LEASED LEASED ANNUALIZED PERCENTAGE
PERCENT RENTABLE RENTABLE ANNUALIZED BASE RENT OF AGGREGATE
DISTRIBUTION OF LEASED NUMBER OF ALL SQUARE SQUARE BASE RENT PER SQUARE ANNUALIZED
RENTABLE SQUARE FEET OF LEASES LEASES FEET FEET (000S) FOOT(1) BASE RENT
- ----------------------- --------- ------- --------- -------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ground Leases.......... 26 3.8% N/A N/A $ 1,344 N/A 2.2%
1,000 or Less.......... 93 13.6 70,102 1.4% 1,644 $23.45 2.8
1,001-2,500............ 279 40.9 444,296 8.7 8,579 19.31 14.5
2,501-5,000............ 128 18.7 441,196 8.6 8,058 18.26 13.6
5,001-10,000........... 65 9.5 463,494 9.1 7,434 16.04 12.5
10,001-20,000.......... 20 2.9 288,606 5.7 3,437 11.91 5.8
20,001-50,000.......... 50 7.3 1,577,583 30.9 13,309 8.44 22.4
50,001-100,000......... 16 2.3 980,820 19.2 9,177 9.36 15.5
100,001 or Greater..... 7 1.0 838,879 16.4 6,325 7.54 10.7
--- ----- --------- ----- ------- ------ -----
Total/Weighted
Average.............. 684 100.0% 5,104,976 100.0% $ 59,307 $11.62 100.0%
=== ===== ========= ===== ======= ====== =====
</TABLE>

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

(1) Calculated as Annualized Base Rent divided by the corresponding square
footage in each tenant size range.

HISTORICAL LEASE RENEWALS AND RETENTION RATES

The following table sets forth information relating to the historical lease
renewals for the Properties (excluding the Pending Acquisitions) for each of the
periods presented.

<TABLE>
<CAPTION>
SIX
MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------------------- JUNE 30, TOTAL/WEIGHTED
1994 1995 1996 1997 AVERAGE
--------- --------- --------- --------- --------------
<S> <C> <C> <C> <C> <C>
Retail Properties
Square feet renewed........ 97,641 89,368 213,185 71,222 471,416
Total square feet
expired................. 118,439 149,372 241,093 87,276 596,180
Retention rate............. 82.4% 59.8% 88.4% 81.6% 79.1%
Industrial Properties
Square feet renewed........ 783,901 1,592,905 3,027,639 1,667,387 7,071,832
Total square feet
expired................. 1,224,779 2,345,338 3,901,807 2,710,485 10,182,409
Retention rate............. 64.0% 67.9% 77.6% 61.5% 69.5%
</TABLE>

RECURRING BUILDING IMPROVEMENTS

The Company considers recurring building improvements to be expenditures
that (i) are incurred subsequent to the first three years of ownership of the
Property, during which the initial capital improvement plan is completed and
(ii) prevent deterioration or maintain the building in an efficient operating
condition. The table below summarizes building improvements for the years ended
December 31, 1994, 1995 and 1996 and the six months ended June 30, 1997. The
amounts set forth below are not necessarily indicative of future levels of
building improvements.

84
<PAGE> 91

INDUSTRIAL PROPERTIES

<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEARS ENDED ENDED
----------------------------- JUNE 30,
1994 1995 1996 1997
------- ------- ------- ----------
<S> <C> <C> <C> <C>
Number of Industrial Properties(1)................... 28 41 57 57
Rentable square feet (in millions)................... 13.26 20.16 28.15 28.83(2)
Annual building improvements per square foot......... $ 0.00 $ 0.01 $ 0.01 $ 0.01
</TABLE>

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

(1) Includes the Properties owned by the Company and managed by AMB as of June
30, 1997 and excludes one property as of December 31, 1994 and four
properties as of December 31, 1995 and 1996 and June 30, 1997 not managed by
AMB but expected to be contributed as part of the Formation Transactions.

(2) The increase in rentable square feet is attributable to the acquisition of
buildings which were combined with Properties owned as of December 31, 1996.

RETAIL PROPERTIES

<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEARS ENDED ENDED
----------------------------- JUNE 30,
1994 1995 1996 1997
------- ------- ------- ----------
<S> <C> <C> <C> <C>
Number of Retail Properties.......................... 14 19 30 31
Rentable square feet (in millions)................... 2.42 3.30 5.28 5.49
Annual building improvements per square foot......... $ 0.01 $ 0.03 $ 0.04 $ 0.06
</TABLE>

RECURRING TENANT IMPROVEMENTS AND LEASING COMMISSIONS

The tables below summarize for Industrial Properties and Retail Properties,
separately, the recurring tenant improvements and leasing commissions for the
three years ended December 31, 1994, 1995 and 1996, and the six months ended
June 30, 1997. 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.

<TABLE>
<CAPTION>
SIX MONTHS
FISCAL YEARS ENDED ENDED
----------------------------------- JUNE 30, WEIGHTED
1994 1995 1996 1997 AVERAGE
--------- --------- --------- ---------- --------
<S> <C> <C> <C> <C> <C>
Industrial Properties:
Renewal space:
Expenditures (in thousands)...... $ 719 $1,319 $2,392 $ 890
Square feet leased (in
thousands)..................... 869 1,454 2,586 1,358
Per square foot leased........... $ 0.83 $ 0.91 $ 0.93 $ 0.66 $ 0.85
Re-tenanted space:
Expenditures (in thousands)...... $2,719 $2,442 $2,767 $ 1,576
Square feet leased (in
thousands)..................... 1,268 1,399 1,404 813
Per square foot leased........... $ 2.14 $ 1.75 $ 1.97 $ 1.94 $ 1.92
Retail Properties:
Renewal space:
Expenditures (in thousands)...... $ 158 $ 439 $ 493 $ 189
Square feet leased (in
thousands)..................... 32 79 104 32
Per square foot leased........... $ 4.95 $ 5.53 $ 4.72 $ 5.90 $ 5.16
Re-tenanted space:
Expenditures (in thousands)...... $ 252 $ 304 $ 634 $ 348
Square feet leased (in
thousands)..................... 42 57 97 63
Per square foot leased........... $ 6.11 $ 5.37 $ 6.53 $ 5.53 $ 5.94
</TABLE>

85
<PAGE> 92

OCCUPANCY

The table below sets forth weighted average occupancy rates, based on
square feet leased, of the Properties as of December 31, 1994, 1995, 1996 and
June 30, 1997.

<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED
---------------------------- JUNE 30,
1994 1995 1996 1997
------ ------ ------ ----------
<S> <C> <C> <C> <C>
INDUSTRIAL PROPERTIES:
Number of Industrial Properties at period end...... 29 45 61 61
Total industrial rentable square footage of
properties at period end (in thousands)......... 13,514 21,748 29,743 30,419(1)
Industrial occupancy rate at period end............ 97.0% 97.3% 96.9% 94.2%
Average base rent per square foot.................. $ 3.48 $ 3.44 $ 3.81 $ 4.01(2)
RETAIL PROPERTIES:
Number of Retail Properties at period end.......... 14 19 30 31
Total retail rentable square footage of properties
at period end (in thousands).................... 2,422 3,299 5,282 5,488
Retail occupancy rate at period end................ 93.7% 92.4% 92.4% 93.0%
Average base rent per square foot.................. $ 9.45 $10.46 $11.32 $11.67(2)
</TABLE>

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

(1) The increase in rentable square feet is attributable to the acquisition of
buildings which were combined with Properties owned as of December 31, 1996.

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

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<PAGE> 93

PENDING ACQUISITIONS

PROPERTY ADDITIONS AFTER JUNE 30, 1997

<TABLE>
<CAPTION>
CLOSING DATE/
RENTABLE EXPECTED
PROPERTY NAME LOCATION SQUARE FEET CLOSING DATE
- ----------------------------------------------- -------------------- ----------- -------------
<S> <C> <C> <C>
INDUSTRIAL PROPERTIES:
Elk Grove Village,
Elk Grove Industrial Portfolio(1)............ IL 2,054,520 Oct. 97
Cabot Business Park.......................... Mansfield, MA 1,071,517 Sept. 97
Beacon Building 8............................ Miami, FL 269,881 Sept. 97
Acer Distribution............................ San Jose, CA 196,643 Sept. 97
Patuxent..................................... Jessup, MD 147,383 Closed
Shady Oak.................................... Eden Prairie, MN 104,243 Closed
Executive Drive.............................. Addison, IL 75,020 Sept. 97
Windsor...................................... Addison, IL 56,640 Closed
Elk Grove Village,
Greenleaf.................................... IL 50,695 Sept. 97
Fairway Land (Phase III)(2).................. San Leandro, CA N/A Closed
-----------
Subtotal -- Industrial......................... 4,026,542
RETAIL PROPERTIES:
Manhattan Village Shopping Center(3)......... Manhattan Beach, CA 469,466 Closed
Weslayan Plaza(4)............................ Houston, TX 356,309 Sept. 97
Manhattan Village -- Phase II(5)............. Manhattan Beach, CA 46,200 Sept. 97
-----------
Subtotal -- Retail............................. 871,975
-----------
Subtotal -- Pending Acquisitions............... 4,898,517
Square footage at June 30, 1997................ 35,907,428
-----------
Total square footage........................... 40,805,945
=========
</TABLE>

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

(3) This Property is held in a joint venture partnership in which the Company
holds a 90% interest.

(4) The Company acquired the Property subject to a $4.7 million mortgage loan
which the Company expects to repay with a portion of the net proceeds of the
Offering. See "Use of Proceeds."

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<PAGE> 94

RENOVATION, EXPANSION AND DEVELOPMENT PROJECTS IN PROGRESS

The following table sets forth the Properties owned by the Company which
are currently undergoing renovation, expansion, or, in one case, new
development. Data with respect to completed portions of renovation, expansion
and development projects are included in the geographic diversification,
occupancy and Annualized Base Rent information presented elsewhere in this
Prospectus as such Properties were acquired prior to June 30, 1997.

<TABLE>
<CAPTION>
DEVELOPMENT ACTIVITY
------------------------------------------------------
INITIAL SQUARE FEET ESTIMATED TOTAL SQUARE FEET
PROPERTY DATE ACQUISITION AT COMPLETION ESTIMATED AT
NAME LOCATION ACQUIRED PRICE ACQUISITION TYPE(2) DATE(3) INVESTMENT(4) COMPLETION
- ---------- -------------------- -------- ----------- ----------- ------------ ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Industrial
Properties
Dock's
Corner... South Brunswick, NJ May-96 $21,000 554,521 Expansion June-98 $ 46,900 1,200,000
Fairway
Drive
Phase
II.... San Leandro, CA Aug-96 5,400 175,325 Development Jan-98 10,400 255,300
Mendota
Heights... Mendota Heights, MN Jun-97 1,100 --(1) Development Nov-97 6,900 150,400
----------- ----------- ------------- -----------
Subtotal-Industrial... 27,500 729,846 64,200 1,605,700
Retail
Properties
Plaza at
Delray... Miami, FL July-95 10,800 309,448 Renovation July-97 29,000 314,700
Palm
Aire... Miami, FL May-96 3,100 143,987 Renovation Feb-98 11,900 144,300
Southwest
Pavilion... Reno, NV Sep-90 8,600 76,757 Expansion Jan-98 9,000 80,800
----------- ----------- ------------- -----------
Subtotal-Retail... 22,500 530,192 49,900 539,800
Total..... $50,000 1,260,088 $ 114,100 2,145,500
========= ========= =========== =========
</TABLE>

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

(1) Represents the development of a building on 10.3 acres of land.

(2) Renovation means properties in which capital improvements have totaled 20%
or more of total cost within a 24-month period or have resulted in a
material improvement of physical condition. Expansion means construction
resulting in an increase in the rentable square footage of an existing
structure or the development of additional buildings on a property on which
existing buildings are located. Development means new construction on a
previously undeveloped location.

(3) Represents expected date of shell completion.

(4) Represents total estimated cost of renovation, expansion or development,
including initial acquisition.

PROPERTIES HELD THROUGH JOINT VENTURES, LIMITED LIABILITY COMPANIES AND
PARTNERSHIPS

At June 30, 1997, the Company held interests in eight joint ventures,
limited liability companies and partnerships (collectively, the "Joint
Ventures") with certain unaffiliated third parties (the "Joint Venture
Participants"). Pursuant to the existing agreements with respect to each Joint
Venture, the Company holds a greater than 50% interest in seven of the Joint
Ventures and a 50% interest in the eighth Joint Venture, but in certain cases
such agreements provide that the Company will be a limited partner or that the
Joint Venture Participant will be principally responsible for management control
of the Property. Under the agreements governing the Joint Ventures, the Company
and the Joint Venture Participant may be required to make additional capital
contributions, and subject to certain limitations, the Joint Ventures may incur
additional debt. Such agreements also impose certain restrictions on the
transfer of the interest in the Joint Venture by the Company or the Joint
Venture Participant, and provide certain rights to the Company or the Joint
Venture Participant to sell its interest to the Joint Venture or to the other
participant on terms specified in the agreement. Other than the joint venture
relating to the Chancellor property, the terms of all of the Joint Ventures end
in the year 2024 or later, but the Joint Ventures may end earlier if the
respective Joint Venture ceases to hold any interest in or have any obligations
relating to the property held by such Joint Venture.

88
<PAGE> 95

The following table sets forth certain information regarding the Joint
Ventures:

<TABLE>
<CAPTION>
PARTICIPANT WITH PRIMARY
PROPERTY ENTITY FORM COMPANY INTEREST OPERATIONAL RESPONSIBILITY
- --------------------------- -------------------- ------------------------ --------------------------
<S> <C> <C> <C>
Palm Aire.................. General Partnership 50.0001% general Joint Venture Participant
partnership interest
Chancellor................. Joint Venture 90% general partnership Shared
(General interest
Partnership)
Kendall Mall............... Limited Partnership 50.0001% limited Joint Venture Participant
partnership interest
Fairway Drive Industrial... Limited Liability 70% member interest Company
Company
Lake Michigan.............. Limited Partnership 50% limited partnership Joint Venture Participant
Industrial Portfolio interest
(Nippon Express Building)
Metric Center Phase I...... Limited Partnership 87.15% limited Joint Venture Participant
partnership interest
The Plaza at Delray........ Limited Partnership 50.0001% limited Joint Venture Participant
partnership interest
Metric Center (4 & 12)..... Limited Partnership 87.15% limited Joint Venture Participant
partnership interest
</TABLE>

DEBT FINANCING

The Company's financing policies and objectives are determined by the Board
of Directors and may be altered without the consent of the Company's
stockholders. The Company's organizational documents do not limit the amount of
indebtedness that it may incur. The Company presently intends to limit the
Debt-to-Total Market Capitalization Ratio to approximately 45%. As of June 30,
1997, on a pro forma basis after giving effect to the Formation Transactions and
Offering and the application of the net proceeds therefrom as described in "Use
of Proceeds," the Company's Debt-to-Total Market Capitalization Ratio was %
( % if the Underwriters' over-allotment option is exercised in full). The
Company believes that the Debt-to-Total Market Capitalization Ratio is a useful
indicator of a company's ability to incur indebtedness and has gained acceptance
as an indicator of leverage for real estate companies. The Company intends to
utilize one or more sources of capital for future acquisitions, including
development and capital improvements, which may include undistributed cash flow,
borrowings under the Credit Facility, issuance of debt or equity securities,
funds from its co-investment partners and other bank and/or institutional
borrowings. There can be no assurance, however, that the Company will be able to
obtain capital for any such acquisitions, developments or improvements on terms
favorable to the Company. See "Strategies for Growth -- Growth Through
Acquisition."

Unsecured Debt. On August 8, 1997, CIF obtained a $200 million unsecured
line of credit (the "CIF Facility") with MGT, which matures on August 7, 1999.
In connection with the Formation Transactions, the Company, through the
Operating Partnership, will assume the obligations of and become the obligor
under the CIF Facility (as assumed, the "Credit Facility"). Borrowings under the
Credit Facility, at the Company's election, bear interest at a floating rate
equal to LIBOR plus 125 to 150 basis points, or MGT's prime rate plus 0 to 25
basis points. The Company, through the Operating Partnership, expects to obtain
a commitment to increase the availability under the Credit Facility to $300
million. The Company intends to use the Credit Facility principally for
acquisitions and for working capital purposes.

The Company's ability to borrow under the Credit Facility will be subject
to the Company's ongoing compliance with a number of financial and other
covenants. The Credit Facility requires that: (i) the Company maintain a ratio
of unencumbered property value to unsecured indebtedness of at least 2 to 1;
(ii) the unencumbered properties generate sufficient net operating income to
maintain a debt service coverage ratio of at least 2 to 1; (iii) the Company
maintain a total indebtedness to total asset value ratio of not more than 0.5 to
1; (iv) the ratio of net operating cash flow to debt service plus estimated
capital expenditures and preferred dividends be at least 2 to 1; and (v) certain
other customary covenants and performance

89
<PAGE> 96

requirements. The Credit Facility will, except under certain circumstances,
limit the Company's ability to make distributions to no more than 95% of its
annual FFO.

The ability of the Operating Partnership to assume the existing CIF
Facility in connection with the Formation Transactions is subject to final
approval of the lenders holding two-thirds of the aggregate obligations under
the CIF Facility, satisfactory completion of the Offering and certain due
diligence and other review rights of the agent.

Secured Debt. On December 12, 1996, CIF entered into a 12-year non-recourse
secured financing facility (the "Secured Facility"). As of June 30, 1997, $73.0
million was outstanding. Payments of interest only are due monthly at a fixed
annual interest rate of 7.53%. The payment of principal is due December 12,
2008. The Secured Facility, which is secured by six of the Properties, will
become an obligation of the Company upon consummation of the Formation
Transactions. Under the Secured Facility, the Company may substitute collateral,
subject to certain requirements with respect to the property offered as
replacement collateral.

Mortgage Debt. In addition to the Credit Facility and the Secured Facility
described above, 40 of the Properties secure mortgage indebtedness. The
aggregate principal amount of such mortgage indebtedness was $429 million, $407
million and $258 million at June 30, 1997 and December 31, 1996 and 1995,
respectively. The mortgage indebtedness bears interest at rates varying from
7.01% to 10.38% per annum (with a weighted average of 7.87%) and final maturity
dates ranging from 1997 to 2008. The mortgage indebtedness will be assumed by
the Company, through the Operating Partnership, upon completion of the Formation
Transactions.

The following table sets forth scheduled principal payments under the
Secured Facility and a mortgage debt for the Properties on a historical combined
basis as of June 30, 1997 for each of the years beginning with the year ending
December 31, 1997. All of the Company's mortgage debt is fixed-rate except for
the debt underlying the Crysen Corridor and The Plaza at Delray properties. The
Company's mortgage debt has generally been arranged by the Company directly with
lenders such as Principal Financial Group, Northwestern Mutual Life, Prudential
Insurance and Nationwide Insurance.

<TABLE>
<CAPTION>
WEIGHTED
SCHEDULED PRINCIPAL TOTAL AVERAGE
PRINCIPAL DUE AT PRINCIPAL YEAR-END
YEAR AMORTIZATION MATURITY PAYMENTS INTEREST RATE
- ------------------------------------------- ------------ -------- -------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
1997 (six months).......................... $ 2,945 $ -- $ 2,945 7.87%
1998....................................... 6,104 13,076 19,180 7.88
1999....................................... 5,865 19,234 25,099 7.83
2000....................................... 7,098 -- 7,098 7.83
2001....................................... 7,550 27,814 35,364 7.83
2002....................................... 7,565 14,330 21,895 7.82
2003....................................... 6,992 114,982 121,974 7.72
2004....................................... 5,082 36,085 41,167 7.60
2005....................................... 1,944 35,816 37,760 7.47
2006....................................... 5,473 103,922 109,395 7.58
2007....................................... 919 5,247 6,166 7.55
2008....................................... 1,004 73,000 74,004 0.00
------------ -------- -------- -----
Total/Weighted Average..................... $ 58,541 $443,506 $502,047 7.79%
========= ======== ======== =========
</TABLE>

90
<PAGE> 97

The following table sets forth scheduled maturities of the Secured Facility
and mortgage debt on an historical combined basis as of June 30, 1997 on a
property-by-property basis. The data exclude properties not owned by the AMB
Predecessors and managed by AMB at June 30, 1997.

<TABLE>
<CAPTION>
NOTE BALANCE AT ANNUAL DEBT
INTEREST RATE AT JUNE 30, 1997 SERVICE
PROPERTY JUNE 30, 1997 (000S) (000S) MATURITY DATE
- ------------------------------------------------- ---------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
INDUSTRIAL PROPERTIES:
Harvest Business Park.......................... 10.38% $ 3,675 $ 438 04/01/99
Chancellor..................................... 7.45 2,979 273 01/15/03
Blue Lagoon.................................... 7.15 11,942 1,032 02/01/03
Kingsport Industrial Park...................... 7.81 17,635 1,582 08/01/03
Moffett Business Center........................ 7.20 12,905 1,123 12/15/03
Bensenville.................................... 8.53 20,224 2,034 08/01/04
Bensenville.................................... 8.53 6,758 678 08/01/04
Bensenville.................................... 8.35 2,731 267 08/01/04
Bensenville.................................... 8.35 7,135 691 08/01/04
Bensenville.................................... 8.35 5,160 499 08/01/04
South Bay Industrial........................... 8.31 19,571 1,843 04/05/05
Crysen Corridor(1)............................. 3.76 3,550 233 06/27/05
Lonestar....................................... 8.23 17,000 1,399 08/01/05
Activity Distribution Center................... 7.27 5,384 478 01/01/06
Stadium Business Park.......................... 7.27 4,894 434 01/01/06
Hewlett Packard Distribution................... 7.27 3,426 304 01/01/06
Minneapolis Industrial Portfolio............... 7.27 8,321 739 01/01/06
Amwiler-Gwinnett Ind. Portfolio................ 7.01 8,749 838 04/01/06
Pacific Business Center........................ 8.59 9,935 1,003 08/01/06
Chicago Industrial............................. 8.59 3,280 331 08/01/06
Valwood........................................ 8.59 4,051 409 08/01/06
West North Carrier............................. 8.59 3,280 331 08/01/06
Artesia Industrial Center...................... 7.29 54,100 3,944 11/15/06
Amwiler-Gwinnett Ind. Portfolio................ 7.68 5,668 514 01/01/07
Mendota Heights................................ 8.50 668 57 06/18/07
Minneapolis Industrial......................... 8.88 7,574 1,053 12/01/08
CIF Debt Facility-Industrial(2)................ 7.53 47,450 3,573 12/01/08
-------- -------
Subtotal/Weighted Average (rate/number of
years)....................................... 7.76 298,045 26,100 8.5
RETAIL PROPERTIES:
Lakeshore Plaza................................ 7.68 14,166 1,867 11/10/98
The Plaza at Delray(3)......................... 8.68 15,667 1,410 03/26/99
Woodlawn Point................................. 8.50 4,678 474 01/01/01
Kendall Mall................................... 7.65 24,848 2,169 11/15/01
Silverado Plaza................................ 9.02 4,929 534 04/10/02
Arapahoe Village............................... 7.81 10,877 1,002 08/01/02
Brentwood Commons.............................. 8.74 5,123 502 06/01/03
Granada Village................................ 8.74 14,708 1,441 06/01/03
Ygnacio Plaza.................................. 8.74 7,847 769 06/01/03
La Jolla Village............................... 8.74 18,054 1,768 06/01/03
Latham Farms................................... 7.88 37,932 3,665 12/01/03
Civic Center Plaza............................. 7.27 13,723 1,216 02/01/06
Shoppes at Lago Mar............................ 7.50 5,900 532 04/01/06
CIF Debt Facility-Retail(2).................... 7.53 25,550 1,924 12/01/08
----- -------- ------- --------
Subtotal/Weighted Average (rate/number of
years)....................................... 8.03 204,002 19,273 6.0
----- -------- ------- --------
Totals/Weighted Averages (rate/number of
years)....................................... 7.87% $ 502,047 $45,373 7.5
===== ======== ======= ========
</TABLE>

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

(1) The indebtedness related to Crysen Corridor is variable-rate which currently
bears interest at 3.76%

91
<PAGE> 98

(2) The CIF Facility is a $73 million nonrecourse secured facility which has
been cross collateralized, with the following properties as collateral: L.A.
County Industrial Portfolio, Southfield, Corbins Corner Shopping Center, Elk
Grove Village Industrial, Pleasant Hill Shopping Center and Milmont Page.

(3) The indebtedness related to The Plaza at Delray property is a construction
loan with a variable interest rate in an amount equal to LIBOR plus 3.00%
(8.69% at June 30, 1997).

INSURANCE

The Company carries blanket coverage for owned and managed properties.
Management believes that the Properties are covered adequately by commercial
general liability insurance, including excess liability coverage, and commercial
"all risks" property insurance, including loss of rents coverage, with
commercially reasonable deductibles, limits and policy terms and conditions
customarily carried for similar properties. There are, however, certain types of
losses which may be uninsurable or not economically insurable, such as losses
due to loss of rents caused by strikes, nuclear events or acts of war. Should an
uninsured loss occur, the Company could lose both its invested capital in and
anticipated profits from the property.

The Company insures the Properties for earthquake or earth movement. A
number of both the Industrial and Retail Properties are located in areas that
are known to be subject to earthquake activity. This is focused in California
where as of June 30, 1997, there are 20 Industrial Properties and 10 Retail
Properties. Through an annual analysis prepared by outside consultants, the
Company determines appropriate limits of earthquake coverage to secure. Coverage
is on a replacement cost basis, subject to the maximum limit purchased which the
Company believes is adequate and appropriate given both exposure and cost
considerations. Therefore, no assurance can be given that material losses in
excess of insurance proceeds will not occur in the future.

The Company has insurance for loss in the event of damage to the Properties
for earthquake activity, which consists of a sublimit of $10,000,000 per
occurrence for earthquake coverage provided as part of the "All Risk Property
Policy" with a primary insurer, with $65,000,000 per occurrence for losses in
excess of the $10,000,000 sublimit. The per occurrence deductible for this
coverage in California is 5% of the values applied separately to each building
subject to a minimum deductible of $100,000 (to the extent that such amount is
greater than 5% of the values at each location), and the deductible for
Properties outside of California is $25,000.

GOVERNMENT REGULATIONS

Many laws and governmental regulations are applicable to the Properties and
changes in these laws and regulations, or their interpretation by agencies and
the courts, occur frequently.

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<PAGE> 99

Some of the Properties are leased or have been leased, in part, to owners
and operators of dry cleaners that operate on-site dry cleaning plants, to
owners and operators of gas stations or to owners or operators of other
businesses that use, store or otherwise handle petroleum products or other
hazardous or toxic substances. Some of these Properties contain, or may have
contained, underground storage tanks for the storage of petroleum products and
other hazardous or toxic substances. These operations create a potential for the
release of petroleum products or other hazardous or toxic substances. Some of
the Properties are adjacent to or near other properties that have contained or
currently contain underground storage tanks used to store petroleum products or
other hazardous or toxic substances. In addition, certain of the Properties are
on or are adjacent to or near other properties upon which others, including
former owners or tenants of the Properties, have engaged or may in the future
engage in activities that may release petroleum products or other hazardous or
toxic substances.

All of the Properties were subject to a Phase I or similar environmental
assessments by independent environmental consultants at the time of acquisition
or shortly after acquisition. Phase I assessments are intended to discover and
evaluate information regarding the environmental condition of, the surveyed
property and surrounding properties. Phase I assessments generally include an
historical review, a public records review, an investigation of the surveyed
site and surrounding properties, and preparation and issuance of a written
report, but do not include soil sampling or subsurface investigations and
typically do not include an asbestos survey. Some of the Company's environmental
assessments of the Properties do not contain a comprehensive review of the past
uses of the Properties and/or the surrounding properties.

Other Regulations. The Properties are also subject to various Federal,
state and local regulatory requirements such as state and local fire and life
safety requirements. Failure to comply with these requirements could result in
the imposition of fines by governmental authorities or awards of damages to
private litigants. The Company believes that the Properties are currently in
substantial compliance with all such regulatory requirements. However, there can
be no assurance that these requirements will not be changed or that new
requirements will not be imposed which would require significant unanticipated
expenditures by the Company, which expenditure could have an adverse effect on
the Company's results of operations and financial condition.

93
<PAGE> 100

value of any appreciation that has occurred during the AMB Predecessors' period
of ownership. Where appropriate, the Company would contest vigorously any such
reassessment. Subject to market conditions, current leases may permit the
Company to pass through to tenants a portion of the effect of any increases in
real estate taxes resulting from any such reassessment.

Except as described in this Prospectus, there are no other laws or
regulations which have a material effect on the Company's operations, other than
typical state and local laws affecting the development and operation of real
property, such as zoning laws. See "Risk Factors -- Government Regulations,"
"Certain Provisions of Maryland Law and of the Articles of Incorporation and
Bylaws," "Partnership Agreement of Operating Partnership," "Federal Income Tax
Consequences" and "ERISA Considerations."

MANAGEMENT AND EMPLOYEES

The Company conducts substantially all of its operations through the
Operating Partnership and conducts substantially all of its third party
portfolio management activities and related operations through the Investment
Management Subsidiary. The Company generally has full, exclusive and complete
responsibility and discretion in the management and control of the Operating
Partnership. See "Risk Factors -- Investment Management Subsidiary."

The Company (primarily through the Operating Partnership and the Investment
Management Subsidiary) employs 104 persons, 88 of whom are located at the
Company's headquarters in San Francisco, and 16 of whom are located in the
Company's Boston office.

LEGAL PROCEEDINGS

Neither the Company nor any of the Properties is subject to any material
litigation nor, to the Company's knowledge, is any material litigation
threatened against any of them, other than routine litigation arising in the
ordinary course of business, which is generally expected to be covered by
liability insurance, or to have an immaterial effect on financial results.

94
<PAGE> 101

POLICIES WITH RESPECT TO CERTAIN ACTIVITIES

The following is a discussion of the anticipated policies with respect to
investments, financing and certain other activities of the Operating Partnership
and the Company. Upon consummation of the Offering, these policies will be
determined by the Board of Directors of the Company and may be amended or
revised from time to time at the discretion of the Board of Directors without
notice to or a vote of the stockholders of the Company or the limited partners
of the Operating Partnership, except that changes in certain policies with
respect to conflicts of interest must be consistent with legal requirements.

INVESTMENT POLICIES

Investments in Real Estate or Interests in Real Estate. The Company
currently plans to conduct all of its investment activities through the
Operating Partnership. The Company's investment objectives are to increase FFO
per share and the value of the Properties, and to acquire established
income-producing industrial properties and community shopping centers with FFO
growth potential. Additionally, where prudent and possible, the Company may
develop new properties and seek to renovate or reposition the existing
Properties and any newly-acquired properties. The Company's business will be
focused on industrial properties and community shopping centers, but the Company
may invest in other types of properties which represent investment opportunities
at the discretion of management. Where appropriate, and subject to REIT
qualification rules, the Operating Partnership may sell certain of the
Properties.

The Company expects to pursue its investment objectives through the direct
and indirect ownership of properties and ownership interests in other entities.
The Company will focus on properties in those markets where the Company
currently has operations and in new markets selectively targeted by management.
See "The Company -- General." However, future investments, including the
activities described below, will not be limited to any geographic area or to a
specified percentage of the Company's assets.

The Company also may participate with other entities in property ownership
through joint ventures or other types of co-ownership. Equity investments may be
subject to existing mortgage financing and other indebtedness or such financing
or indebtedness may be incurred in connection with acquiring investments. Any
such financing or indebtedness will have priority over the Company's equity
interest in such property. See "Business and Operating Strategies -- Investment
Management Subsidiary."

Investments in Real Estate Mortgages. While the Company will emphasize
equity real estate investments, it may, in its discretion, invest in mortgages,
deeds of trust and other similar interests. The Company does not intend to
invest significantly in mortgages or deeds of trust, but may acquire such
interests as a strategy for acquiring ownership of a property or the economic
equivalent thereof, subject to the investment restrictions applicable to REITs.
See "Federal Income Tax Consequences -- Taxation of the Company -- Income Tests"
and "-- Asset Tests." In addition, the Company may invest in mortgage-related
securities and/or may seek to issue securities representing interests in such
mortgage-related securities as a method of raising additional funds.

Securities of or Interests in Persons Primarily Engaged in Real Estate
Activities and Other Issuers. Subject to the gross income and asset tests
necessary for REIT qualification, the Company also may invest in securities of
entities engaged in real estate activities or securities of other issuers,
including for the purpose of exercising control over such entities. The Company
may acquire all or substantially all of the securities or assets of other REITs
or similar entities where such investments would be consistent with the
Company's investment policies. In any event, the Company does not intend that
its investments in securities will require it or the Operating Partnership to
register as an "investment company" under the Investment Company Act of 1940, as
amended.

FINANCING POLICIES

In addition to the limitations on indebtedness which are likely to be
imposed on the Company under the Credit Facility, upon the consummation of the
Offering, the Company intends to maintain a Debt-to-Total Market Capitalization
Ratio of approximately 45% or less. This policy differs from conventional
mortgage debt-to-equity ratios which are asset-based ratios. The Company,
however, may from time to time re-evaluate

95
<PAGE> 102

this policy and decrease or increase such ratio in light of then current
economic conditions, relative costs to the Company of debt and equity capital,
market values of its properties, growth and acquisition opportunities and other
factors. There is no limit on the Debt-to-Total Market Capitalization Ratio
imposed by either the Articles of Incorporation or Bylaws or the Partnership
Agreement. To the extent the Board of Directors of the Company determines to
obtain additional capital, the Company may issue equity securities, or cause the
Operating Partnership to issue additional Units or debt securities, or retain
earnings (subject to provisions in the Code requiring distributions of taxable
income to maintain REIT status), or a combination of these methods. As long as
the Operating Partnership is in existence, the net proceeds of all equity
capital raised by the Company will be contributed to the Operating Partnership
in exchange for additional interests in the Operating Partnership.

To the extent that the Board of Directors determines to obtain debt
financing in addition to the existing mortgage indebtedness, the Company intends
to do so generally through mortgages on its properties and the Credit Facility;
however, the Company may also issue or cause the Operating Partnership to issue
additional debt securities in the future. Such indebtedness may be recourse,
non-recourse or cross-collateralized and may contain cross-default provisions.
The net proceeds of any debt securities issued by the Company will be lent to
the Operating Partnership on substantially the same terms and conditions as are
incurred by the Company. The Company does not have a policy limiting the number
or amount of mortgages that may be placed on any particular property, but
mortgage financing instruments usually limit additional indebtedness on such
properties. In the future, the Company may seek to extend, expand, reduce or
renew the Credit Facility, or obtain new credit facilities or lines of credit,
subject to its general policy on debt capitalization, for the purpose of making
acquisitions or capital improvements or providing working capital or meeting the
taxable income distribution requirements for REITs under the Code.

LENDING POLICIES

The Company may consider offering purchase money financing in connection
with the sale of Properties where the provision of such financing will increase
the value received by the Company for the property sold. The Operating
Partnership also may make loans to joint ventures in which it may participate in
the future. The Company may also make loans to the Operating Partnership, the
Investment Management Subsidiary, and joint ventures and other entities in which
it or the Operating Partnership have an equity interest.

CONFLICT OF INTEREST POLICIES

Officers and Directors of the Company. Without the unanimous approval of
the disinterested directors, the Company and its subsidiaries will not, for a
period of two years upon consummation of the Formation Transactions and the
Offering (i) acquire from or sell to any director, officer or employee of the
Company, or any entity in which a director, officer or employee of the Company
owns more than a 1% interest, or acquire from or sell to any affiliate of any of
the foregoing, any assets or other property, (ii) make any loan to or borrow
from any of the foregoing persons or (iii) engage in any other material
transaction with any of the foregoing persons. Each transaction of the type
described above will be in all respects on such terms as are, at the time of the
transaction and under the circumstances then prevailing, fair and reasonable to
the Company and its subsidiaries in the opinion of the disinterested directors.

Policies Applicable to All Directors. Under Maryland law, each director
will be obligated to offer to the Company any opportunity (with certain limited
exceptions) which comes to such director and which the Company could reasonably
be expected to have an interest in developing or acquiring. The Company has
adopted certain policies relating to such matters applicable to Independent
Directors actively engaged in industrial and retail real estate which will
generally limit directly competitive activities by such directors. In addition,
under Maryland law, any contract or other transaction between a corporation and
any director or any other corporation, firm or other entity in which the
director is a director or has a material financial interest may be void or
voidable. However, the MGCL provides that any such contract or transaction will
not be void or voidable if (i) it is authorized, approved or ratified, after
disclosure of, or with knowledge of, the common directorship or interest, by the
affirmative vote of a majority of disinterested directors (even if the
disinterested directors constitute less than a quorum) or by the affirmative
vote of a majority of the votes cast by disinterested stockholders or (ii) it is
fair and reasonable to the corporation.

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POLICIES WITH RESPECT TO OTHER ACTIVITIES

The Company may, but does not presently intend to, make investments other
than as previously described. The Company will make real property investments
only through the Company and the Operating Partnership, except to the extent
necessary to establish the Investment Management Subsidiary, financing
partnerships or similar vehicles established substantially for the benefit of
the Company or the Operating Partnership. The Company will have authority to
offer its shares of Common Stock or other equity or debt securities of the
Operating Partnership in exchange for property and to repurchase or otherwise
reacquire its shares of Common Stock or any other securities and may engage in
such activities in the future. Similarly, the Operating Partnership may offer
additional Units or other equity interests in the Operating Partnership that are
exchangeable for shares of Common Stock, or Preferred Stock in exchange for
property. The Operating Partnership also may make loans to joint ventures in
which it may participate in the future. Neither the Company nor the Operating
Partnership will engage in trading, underwriting or the agency distribution or
sale of securities of other issuers.

POLICIES WITH RESPECT TO INVESTMENT ADVISORY SERVICES

Uninvested commitments of clients of the Investment Management Subsidiary
existing upon consummation of the Offering will be invested on a "separate
account" basis as such investments have been made in the past pursuant to
existing advisory agreements (generally, direct investment in the entire
ownership interest in properties or in joint ventures or partnerships with third
parties). Any additional amounts committed by these clients and any amounts
committed by investors which become clients of the Investment Management
Subsidiary following the consummation of the Offering will be invested only in
properties in which the Company also invests, on a "co-investment" basis. See
"Business and Operating Strategies -- Investment Management Subsidiary." The
Investment Management Subsidiary may also take over management of assets already
owned by existing or new clients and manage such assets on a "separate account"
basis.

OTHER POLICIES

The Company operates in a manner that does not subject it to regulation
under the Investment Company Act of 1940. The Board of Directors has the
authority, without stockholder approval, to issue additional shares of Common
Stock or other securities and to repurchase or otherwise reacquire shares of
Common Stock or any other securities in the open market or otherwise and may
engage in such activities in the future. The Company may, under certain
circumstances, purchase shares of Common Stock in the open market, if such
purchases are approved by the Board of Directors. The Board of Directors has no
present intention of causing the Company to repurchase any of the shares of
Common Stock, and any such action would be taken only in conformity with
applicable Federal and state laws and the requirements for qualifying as a REIT
under the Code and the Treasury Regulations. The Company expects to issue shares
of Common Stock to holders of Units upon exercise of their exchange rights set
forth in the Partnership Agreement. Upon consummation of the Offering, the
Company will not have any outstanding loans to its officers and directors. The
Company may in the future make loans to joint ventures in which it participates
in order to meet working capital needs. The Company has not engaged in trading,
underwriting or agency distribution or sale of securities of other issuers other
than the Operating Partnership, nor has the Company invested in the securities
of other issuers other than the Operating Partnership and the Investment
Management Subsidiary for the purposes of exercising control, and does not
intend to do so.

At all times, the Company intends to make investments in such a manner as
to be consistent with the requirements of the Code for the Company to qualify as
a REIT unless, because of changing circumstances or changes in the Code (or in
Treasury Regulations), the Board of Directors determines that it is no longer in
the best interests of the Company to qualify as a REIT and such determination is
approved by the affirmative vote of holders owning at least two-thirds of the
shares of the Company's capital stock outstanding and entitled to vote thereon.

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MANAGEMENT

Upon consummation of the Offering, the Company's Board of Directors will
include the directors named below. Directors of the Company will be elected on
an annual basis. The collective background and experience of the directors
provide the Company with advice and guidance in a number of areas, including
corporate governance, strategic planning, capital markets expertise and property
acquisition and management.

The Company believes that an independent Board of Directors, whose
interests are aligned with those of the stockholders, is essential to the
creation of long-term stockholder value. Therefore, it is expected that upon
consummation of the Offering, seven of 10 of the Company's directors will not be
employed by, or otherwise affiliated with, the Company ("Independent
Directors"). To demonstrate the alignment of their interests with those of
stockholders, the Independent Directors have waived cash retainers and instead
will receive options to purchase shares of Common Stock at current market prices
on the date of grant.

The following table sets forth information with respect to the directors,
executive officers and other officers of the Company:

<TABLE>
<CAPTION>
DIRECTORS NAME AGE POSITION AND BACKGROUND
- ----------------------- --- ------------------------------------------------------------
<S> <C> <C>
Douglas D. Abbey 48 Mr. Abbey, one of the founders of AMB, will be appointed a
Director of the Company upon completion of the Offering and
will be Chairman of the Company's Investment Management
Subsidiary. He has been Chairman of the Investment Committee
since 1994 and is responsible for directing the economic
research used to determine the Company's investment
strategy, as well as the market research for property
acquisitions. Mr. Abbey has 22 years of experience in asset
management, acquisitions and real estate research. He is a
graduate of Amherst College and has a master's degree in
city planning from the University of California at Berkeley.
He is the chair of the Urban Land Institute's Commercial
Retail Council and Research Committee, serves on the Policy
Advisory Board for the Center for Real Estate and Urban
Economics at the University of California at Berkeley, is on
the Editorial Board for the Journal of Real Estate
Investment Trusts and is a Trustee of Golden Gate
University.
Hamid R. Moghadam 41 Mr. Moghadam, one of the founders of AMB, will be appointed
a Director of the Company upon completion of the Offering
and is the President and Chief Executive Officer of the
Company. Mr. Moghadam has 17 years of experience in real
estate acquisitions, dispositions, investment analysis,
finance and development, and is a member of the Investment
Committee. He has been on the board of directors of CIF
since April 1994 and of VAF since March 1996. Mr. Moghadam
holds bachelor's and master's degrees in civil engineering
and construction management, respectively, from the
Massachusetts Institute of Technology and an M.B.A. degree
from the Graduate School of Business at Stanford University.
He is a member of the board of directors of the National
Realty Committee, a member of the Young Presidents'
Organization, has served on the Advisory Committee of the
Massachusetts Institute of Technology Center for Real
Estate, and is a Trustee of the Bay Area Discovery Museum.
</TABLE>

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<TABLE>
<CAPTION>
DIRECTORS NAME AGE POSITION AND BACKGROUND
- ----------------------- --- ------------------------------------------------------------
<S> <C> <C>
T. Robert Burke 54 Mr. Burke, one of the founders of AMB, will be appointed a
Director of the Company upon completion of the Offering and
has been the Chairman of the Board of AMB since 1994. He has
28 years of experience in real estate and is a member of the
Investment Committee. Mr. Burke has been on the board of
directors of CIF since April 1994 and of VAF since March
1996. He was formerly a senior real estate partner with
Morrison & Foerster LLP and for two years, served as that
firm's Managing Partner for Operations. Mr. Burke graduated
from Stanford University and holds a J.D. degree from
Stanford Law School. He is a member of the Board of
Directors of the National Association of Real Estate
Investment Trusts, is on the Board of the Stanford
Management Company and is a Trustee of Stanford University.
He is also a member of the Urban Land Institute, and is the
former Chairman of the Board of Directors of the Pension
Real Estate Association.
INDEPENDENT DIRECTORS
Daniel H. Case, III 40 Mr. Case will be appointed a Director of the Company upon
completion of the Offering and is President and Chief
Executive Officer of the Hambrecht & Quist Group. After
joining Hambrecht & Quist in 1981, he co-founded the
business which became Hambrecht & Quist Guaranty Finance in
1983. Mr. Case was named co-director of mergers and
acquisitions of Corporate Finance in 1986, and became a
managing director and head of Investment Banking in December
1987. In October 1991, he was elected to the board of
directors of Hambrecht & Quist. In April 1992, he was
elected President and Co-Chief Executive Officer. He became
Chief Executive Officer in October 1994. Mr. Case also
serves as a director of Rational Software Corporation,
Electronic Arts, the Securities Industry Association, and
the Bay Area Council. Mr. Case was named as one of the "100
Global Leaders for Tomorrow" by the World Economics Forum
and one of the "Top 50 Innovators in Technology" by Time
Magazine. He has a bachelor's degree in economics and public
policy from Princeton University and studied management at
the University of Oxford as a Rhodes Scholar.
</TABLE>

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<TABLE>
<CAPTION>
DIRECTORS NAME AGE POSITION AND BACKGROUND
- ----------------------- --- ------------------------------------------------------------
<S> <C> <C>
Robert H. Edelstein, 54 Dr. Edelstein will be appointed a Director of the Company
Ph.D. upon completion of the Offering and has been an independent
director of CIF since April 1994. He has been a director of
TIS Mortgage Investment Company, a NYSE-listed mortgage
REIT, since 1988, and has been the Chairholder of
Professorship of Real Estate Development and Co-Chairman of
the Fisher Center for Real Estate and Urban Economics at the
Haas School of Business, University of California at
Berkeley since 1985. Prior to joining the faculty at
Berkeley in 1985, Dr. Edelstein was a Professor of Finance
at The Wharton School and Director of the Real Estate Center
for 15 years. He is active in research and consulting in
urban real estate economics, real estate finance, real
estate property taxation, environmental economics, energy
economics, public finance and urban financial problems. Dr.
Edelstein received his bachelor's, master's and Ph.D.
degrees in economics, with specialization fields in
statistics and econometrics, from Harvard University. He is
President of The American Real Estate and Urban Economics
Association, an ex officio member of Lambda Alpha (honorary
real estate association), the Urban Land Institute and The
Society for Real Estate Finance.
Lynn M. Sedway 55 Ms. Sedway will be appointed a Director of the Company upon
completion of the Offering and has been an independent
director of CIF since April 1994. She is principal and
founder of the Sedway Group, a 19-year old real estate
economics firm headquartered in San Francisco. Ms. Sedway is
recognized throughout the real estate investment industry as
an expert in urban and real estate economics. She currently
directs and has ultimate responsibility for the activities
of her firm, including market analysis, property valuation,
development and redevelopment analysis, acquisition and
disposition strategies, and public policy issues. Ms. Sedway
received her bachelor's degree in economics at the
University of Michigan and an M.B.A. degree from the
University of California at Berkeley, Graduate School of
Business, where she is also a guest lecturer. She is a
trustee of the Urban Land Institute, the Policy Advisory
Board of the Fisher Center for Real Estate and Urban
Economics, and the San Francisco Chamber of Commerce. Ms.
Sedway is a member of The International Council of Shopping
Centers and the American Society of Real Estate Counselors.
Paul P. Shepherd 65 Mr. Shepherd will be appointed a Director of the Company
upon completion of the Offering and has been an independent
director of CIF since April 1994. He is also on the board of
directors of the SWA Group, an organization that provides
management services to segments of the real estate industry.
For the last 13 years, Mr. Shepherd has been Land Manager
for Cargill Salt, a large multi-national company. He is also
a general partner for three development partnerships, and
President of two real estate consulting companies, Paul
Shepherd & Associates and Land Use Technologies, Inc. Mr.
Shepherd holds a bachelor's degree in civil engineering from
the Massachusetts Institute of Technology and completed
tours with the U.S. Navy Civil Engineering Corps. He has
served two terms as President of the National Association of
Industrial and Office Parks ("NAIOP"), and was a member of
the Visiting Committee for the School of Architecture and
Planning, M.I.T.
</TABLE>

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<TABLE>
<CAPTION>
DIRECTORS NAME AGE POSITION AND BACKGROUND
- ----------------------- --- ------------------------------------------------------------
<S> <C> <C>
Jeffrey L. Skelton, 47 Dr. Skelton will be appointed a Director of the Company upon
Ph.D. completion of the Offering and has been an independent
director of VAF since March 1996. He is President and Chief
Executive Officer of Symphony Asset Management, the asset
management subsidiary of BARRA, Inc., a financial software
company. Prior to joining BARRA, Inc. in 1994, he was with
Wells Fargo Nikko Investment Advisors from January 1991 to
December 1993, where he served in a variety of capacities,
including Chief Research Officer, Vice Chairman, Co-Chief
Investment Officer and Chief Executive of Wells Fargo Nikko
Investment Advisors Limited in London. Dr. Skelton has a
Ph.D. in Mathematical Economics and Finance and an M.B.A.
degree from the University of Chicago, and was an Assistant
Professor of Finance at the University of California at
Berkeley, Graduate School of Business. He is a frequent
speaker in professional forums and is the author of a number
of works published in academic and professional journals.
Thomas W. Tusher 56 Mr. Tusher will be appointed a Director of the Company upon
completion of the Offering and has been an independent
director of VAF since March 1996. He was President and Chief
Operating Officer of Levi Strauss & Co. from 1984 through
1996. Previously, he was President of Levi Strauss
International from 1976 to 1984. Mr. Tusher began his career
at Levi Strauss in 1969. He was a director of the
publicly-held Levi Strauss & Co. from 1978 to 1985, and was
named a director of the privately-controlled Levi Strauss &
Co. in 1989. Prior to joining Levi Strauss & Co., Mr. Tusher
was with Colgate Palmolive from 1965 to 1969. Mr. Tusher has
a bachelor's degree from the University of California at
Berkeley and an M.B.A. degree from the Graduate School of
Business at Stanford University. He is a director of
Cakebread Cellars and Dash America. He has been a director
of Pearl Izumi since 1996, and a former director of Great
Western Financial Corporation and the San Francisco Chamber
of Commerce. He is also Chairman Emeritus and a member of
the advisory board of the Walter A. Haas School of Business
at the University of California at Berkeley.
Caryl B. Welborn, Esq. 46 Ms. Welborn will be appointed a Director of the Company upon
completion of the Offering and has been an independent
director of VAF since March 1996. She is a commercial real
estate attorney in San Francisco, and prior to starting her
own firm in 1995, she was a partner with Morrison & Foerster
LLP for 13 years. Ms. Welborn has a bachelor's degree from
Stanford University and a J.D. degree from the Law School at
the University of California at Los Angeles. She is a
program chair and frequent lecturer on real estate issues
nationally, and has published numerous articles in
professional publications. Ms. Welborn is an officer and
board member of the American College of Real Estate Lawyers.
She has held leadership positions in the American Bar
Association's Real Property, Probate and Trust Section. In
addition, Ms. Welborn has acted as an American Bar
Association advisor regarding revision of the Uniform
Partnership Act.
</TABLE>

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EXECUTIVE OFFICERS

In addition to Messrs. Abbey, Moghadam and Burke whose biographies are set
forth above, the following are the Executive Officers of the Company:

<TABLE>
<S> <C> <C>
Luis A. Belmonte 56 Mr. Belmonte is a Managing Director of the Company and
co-head of the Industrial Division. He specializes in
industrial property development and redevelopment, and is a
member of the Investment Committee. He joined AMB in 1990
and has over 29 years of experience in development,
redevelopment, finance, construction, and management of
commercial and industrial projects. He was a partner with
Lincoln Property Company, where he built a portfolio of 18
million square feet of buildings. Mr. Belmonte received his
bachelor's degree from the University of Santa Clara. He is
a member of the Urban Land Institute, an associate member of
the Society of Industrial Realtors, former President of the
San Francisco chapter of NAIOP, The Association for
Commercial Real Estate, and serves as Chairman of the
California Commercial Council.
S. Davis Carniglia 46 Mr. Carniglia is a Managing Director, Chief Financial
Officer and General Counsel of the Company and is a member
of the Investment Committee. He joined AMB in 1992 and has
22 years of experience in real estate accounting, taxation,
forecasting and financing. Mr. Carniglia was formerly a tax
and real estate consulting partner with KPMG/Peat Marwick,
where he was responsible for that firm's San Francisco Bay
Area real estate practice, and was an appraisal/ valuation
partner. Mr. Carniglia has a bachelor's degree in economics
from Pomona College and a J.D. degree from Hastings College
of Law. He is a Certified Public Accountant, and a member of
the State Bar of California, Financial Executives Institute,
Urban Land Institute, National Association of Real Estate
Investment Trusts, and Bay Area Mortgage Association.
John H. Diserens 43 Mr. Diserens is a Managing Director and head of the Retail
Division of the Company and is a member of the Investment
Committee. He has over 20 years of experience in asset and
property management for institutional investors. In his
eight years at AMB, he has been responsible for the asset
management of all properties, including over 40 community
shopping centers. Prior to joining AMB, Mr. Diserens was a
Vice President and a divisional manager with Property
Management Systems, one of the nation's largest asset and
property management firms, responsible for a diversified
portfolio in excess of 10 million square feet. Mr. Diserens
holds a bachelor's degree in economics and accounting from
Macquarie University of Sydney, Australia, and has completed
the Executive Program at the Graduate School of Business,
Stanford University. He is a member of the International
Council of Shopping Centers, Association of Foreign
Investors in U.S. Real Estate, National Association of Real
Estate Investment Managers ("NAREIM"), Institute of Real
Estate Management, and is on the board of NAREIM.
</TABLE>

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<TABLE>
<S> <C> <C>
Bruce H. Freedman 49 Mr. Freedman is a Managing Director and co-head of the
Industrial Division of the Company and is a member of the
Investment Committee. He joined AMB in 1995 and has over 27
years of experience in real estate finance and investment.
Before joining the Company, he served as a Principal and
President of Allmerica Realty Advisors from 1993 to 1995 and
as Principal for Aldrich, Eastman & Waltch (AEW) from 1986
to 1992. At Allmerica, he was responsible for business
operation and management of a $250 million equity real
estate portfolio, and at AEW he managed a team of 20 people
which invested, managed, and accounted for over $1 billion
of institutional client assets. Mr. Freedman is a cum laude
graduate of Babson College. He is a member of the Urban Land
Institute, Real Estate Finance Association and the National
Association of Real Estate Investment Managers, and holds
the CRE designation from the American Society of Real Estate
Counselors.
Jean Collier Hurley 57 Ms. Hurley is a Managing Director responsible for Investor
Relations, and joined AMB in 1990. Ms. Hurley has structured
and raised $1.8 billion of equity capital for AMB from
clients, including investors in CIF and VAF, two existing
private REITs and several separate account relationships.
Prior to joining AMB, Ms. Hurley was a Vice President with
Crocker National Bank where she provided financing for major
national and international corporations. Ms. Hurley holds a
bachelor's degree in business management and a master of
science in marketing and design from San Diego State
University, and holds an M.B.A. degree in Finance from the
University of California at Berkeley, Graduate School of
Business. Ms. Hurley serves on the Editorial Board of the
Pension Real Estate Association Quarterly, and is a member
of the National Association of Real Estate Investment Trusts
and the National Investor Relations Institute.
Barbara J. Linn 44 Ms. Linn is a Managing Director and President of the
Investment Management Division of the Company, and is the
Vice Chairman of the Investment Committee. She joined AMB in
1990 and has taken primary responsibility for portfolio
management of private investment client portfolios,
including developing and overseeing the execution of
investment strategies, performance analysis and valuations,
reporting, review meetings, and relationships with clients.
Prior to joining AMB, she spent eight years with RREEF as
Vice President, Director of Property Management and Finance.
Ms. Linn holds a bachelor's degree in accounting from the
University of Arizona and is a Certified Public Accountant
and Certified Financial Planner. She is President of the
National Council of Real Estate Investment Fiduciaries
("NCREIF") and formerly NCREIF Research Committee Chairper-
son.
</TABLE>

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<TABLE>
<S> <C> <C>
Craig A. Severance 45 Mr. Severance is a Managing Director and a member of the
Investment Committee, and has been responsible for property
acquisitions and information technology. He has managed the
screening of all property submissions and has developed the
Company's proprietary property submissions database. Before
joining AMB in 1986, he was a Vice President with the
investment real estate group at Bank of America, where he
represented domestic and foreign institutional investors in
major commercial property acquisitions. Mr. Severance has a
bachelor's degree in economics from Middlebury College, and
holds an M.B.A. degree from the Graduate School of Business
at Stanford University. He is a member of the International
Council of Shopping Centers.
OTHER OFFICERS
Mohammad Barzegar 35 Mr. Barzegar is a Vice President of the Company and has
specialized in property acquisitions in the Midwest region
since 1993. Prior to joining AMB, he spent two years as a
principal at Arcadia Capital, a real estate investment firm,
and four years disposing and acquiring commercial properties
in the Midwest and the West with Prudential Real Estate
Investors. Mr. Barzegar holds a bachelor's degree in
economics from the University of California at Berkeley and
an M.B.A. degree in Real Estate and Finance from The Wharton
School. He is an associate of the Urban Land Institute.
Michael A. Coke 29 Mr. Coke is the Company's Vice President of Financial
Management and Reporting. Mr. Coke joined AMB in 1997 after
seven years at Arthur Andersen LLP where he was most
recently an audit manager. At Arthur Andersen, he primarily
served public and private real estate companies, including
several public REITs, and specialized in real estate
auditing and accounting, mergers, initial public offerings
and business acquisition due diligence. Mr. Coke received a
bachelor's degree in business administration and accounting
from California State University at Hayward. He is a
Certified Public Accountant and a member of the American
Institute of Certified Public Accountants and NAREIT.
Martin J. Coyne 41 Mr. Coyne is a Vice President of the Company and has
specialized in the management of properties in the West and
Midwest since 1990. He joined AMB after five years with the
investment real estate group at Bank of America where, as
Vice President and Senior Asset Manager, he was responsible
for developing, managing and leasing industrial, retail, and
office properties in the Western U.S. Prior to that time, he
was with an international real estate investment firm. Mr.
Coyne holds a bachelor's degree in real estate management
from Thames College in London, is a Fellow of the Royal
Institution of Chartered Surveyors, and a Certified
Commercial Investment Member.
Kent D. Greenawalt 38 Mr. Greenawalt is a Vice President of the Company and has
specialized in the management of properties in the Southeast
since 1995. He joined AMB after three years as Senior
Investment Manager at Allmerica Realty Advisors. Prior to
Allmerica, he was a manager in the real estate group of
Aldrich, Eastman & Waltch where he originated investments
for pension fund clients. Mr. Greenawalt is a graduate of
Lehigh University and earned an M.B.A. degree from The
Wharton School. Mr. Greenawalt is a member of the
International Council of Shopping Centers and the Real
Estate Finance Association.
</TABLE>

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<TABLE>
<S> <C> <C>
Jane L. Harris 37 Ms. Harris is a Vice President of the Company and Director
of Research and Strategic Planning. She joined AMB in 1989
and has been responsible for real estate research since
1996, and is a member of the Investment Committee. Ms.
Harris was previously in the AMB Acquisition Group from 1992
to 1996, where she acquired 17 retail and industrial
properties in seven markets across the nation on behalf of
institutional clients. Prior to joining AMB, she was a city
planner in Denver. Her planning work included retail and
other market research and regional planning. Ms. Harris
holds a bachelor's degree in Design and Planning from the
University of Colorado at Boulder and a master's degree from
the Massachusetts Institute of Technology Center for Real
Estate. While at M.I.T., she was awarded the Urban Land
Institute's Miller Fellowship.
Carlie P. Headapohl 34 Ms. Headapohl is a Vice President of the Company and
specializes in portfolio management, client reporting, and
client relations. She joined AMB in 1994 with responsibility
for the Portfolio Management of CIF. Before joining AMB, Ms.
Headapohl was Vice President of Expansion and Acquisitions
at Supercuts, Inc. from 1993 to 1994. Prior to that time,
she was a Vice President in Corporate Finance at Dean Witter
Reynolds, Inc. She holds a bachelor's degree in finance and
accounting from the University of California at Berkeley.
Tyler W. Higgins 33 Mr. Higgins is a Vice President of the Company and has
specialized in property acquisitions in the Southwest and
Northern California, and has been responsible for the
Acquisition Group's proactive marketing program since 1990.
Prior to joining AMB, Mr. Higgins served as a Finance and
Acquisition Associate at The Shidler Group. He also worked
in the Income Property Division at a major mortgage company.
Mr. Higgins holds a bachelor's degree in economics with
concentrations in real estate and finance from the
University of California at Berkeley. He is a member of both
the Urban Land Institute and the International Council of
Shopping Centers. Mr. Higgins is a director of the National
Association of Industrial and Office Parks.
William G. Marino 42 Mr. Marino is a Vice President of the Company and
specializes in property acquisitions in Southern California.
Prior to joining AMB in 1994, he spent four years with J&S
Development, a development and management company in New
York, where he was responsible for acquisitions and
dispositions of a $450 million portfolio. He has 15 years of
experience in real estate acquisitions, dispositions and
financing. Mr. Marino holds a bachelor's degree in economics
and an M.B.A. degree with a concentration in finance from
Cornell University.
John T. Roberts, Jr. 34 Mr. Roberts is the Vice President of Capital Markets and has
over 11 years of experience in real estate finance and
investment. Mr. Roberts joined AMB after spending six years
at Ameritech Pension Trust, where he most recently held the
position of Director-Real Estate Investments. His
responsibilities included managing a $1.6 billion real
estate portfolio and developing and implementing the trust's
real estate program. Prior to that, he worked for Richard
Ellis, Inc. and has experience in leasing and sales. Mr.
Roberts received a bachelor's degree from Tulane University
in New Orleans and an M.B.A. degree in finance and
accounting from the Graduate School of Business at the
University of Chicago. He currently serves on the board of
directors of the Pension Real Estate Association.
</TABLE>

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<TABLE>
<S> <C> <C>
John L. Rossi 45 Mr. Rossi is a Vice President of the Company, where he has
specialized in the management of properties in Northern
California and the Southwest since 1992. He joined AMB after
seven years with RREEF where he was a District Manager,
responsible for the operation, accounting, and leasing of
office, industrial, retail and residential properties. Prior
to that time, he was the Director of Properties with Western
Savings and Loan. Mr. Rossi has a bachelor's degree from
Loyola University, holds the designation Real Property
Administrator (RPA) from the Building Owners and Managers
Institute, and is a Certified Commercial Investment Member.
Cynthia J. Sarver 44 Ms. Sarver is a Vice President of the Company and has
specialized in the management of properties in the
mid-Atlantic and mid-Western regions since July 1995. Prior
to joining AMB, she was a Vice President with Allmerica
Realty Advisors, Inc. from 1993 to 1995 where she
specialized in the management of properties and was a voting
member of the investment committee. Prior to that time, she
was a principal of Bay Square Associates, Inc., where she
consulted on acquisitions, management and REIT underwriting.
Ms. Sarver holds a bachelor of science degree in
environmental studies, a bachelor of arts degree from
Michigan State University, and an M.B.A. degree from the
University of California at Berkeley. She is a registered
Landscape Architect in the State of Massachusetts, a member
of the Real Estate Finance Association, and an Associate of
the Urban Land Institute.
Michael J. Scandalios 34 Mr. Scandalios is a Vice President of the Company and has
specialized in private equity capital and investor relations
since 1991. He was formerly with Copley Real Estate Advisors
where he focused on portfolio management and business
development, and prior to that was a financial analyst with
CB Investment Banking Services in San Francisco. Mr.
Scandalios holds a bachelor's degree from the University of
California at Los Angeles, and an M.B.A. degree in finance
and accounting from the Graduate School of Business at the
University of Chicago. He is a member of the Pension Real
Estate Association and the National Investor Relations
Institute.
Christine G. Schadlich 35 Ms. Schadlich is a Vice President of the Company and has
specialized in portfolio management since 1991. Before
joining AMB, Ms. Schadlich had seven years of institutional
real estate experience, including leasing, dispositions,
valuations and analytical work at Jones Lang Wootton and CB
Investment Banking Services. Her experience at AMB includes
portfolio management, performance reporting, asset
management and property valuations. Ms. Schadlich holds a
bachelor's degree in economics from the University of
California at Berkeley.
Gary C. Scheier 41 Mr. Scheier is the Company's Vice President of Corporate
Finance and Accounting. He has overseen the financial
forecasting process for AMB and supervised financial
operations activities since 1994. Mr. Scheier joined the
Company after three years as Vice President and Controller
at Oewel Partnership, Inc., a real estate firm. He has also
worked as a Senior Tax Manager at KPMG Peat Marwick and as a
Senior Staff Accountant with Arthur Andersen & Co. Mr.
Scheier received his bachelor's degree from California State
University in Sacramento. Mr. Scheier is a former member of
the Board of Directors of the Builder's Industry Association
Commercial Industrial Council and is a Certified Public
Accountant.
</TABLE>

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<TABLE>
<S> <C> <C>
Lindsey K. Schubel 39 Ms. Schubel is a Vice President of the Company and has
specialized in portfolio management since 1994. Before
joining AMB, Ms. Schubel was Manager of Institutional Client
Services at Metric Realty Advisors, and supervised $600
million of real estate assets for 42 clients. In addition,
she has also worked as a financial manager. Ms. Schubel
holds a bachelor's degree in mechanical engineering from
Carnegie-Mellon University and an M.B.A. degree from the
University of California at Berkeley.
Andrew N. Singer 37 Mr. Singer is a Vice President of the Company and has
specialized in dispositions and management of assets in the
Mountain and Pacific Northwest regions since 1989. He joined
AMB after four years with Bank of America where he was
responsible for asset management, dispositions, loan
workouts, and portfolio analysis for major commercial real
estate assets throughout the U.S. Mr. Singer holds a
bachelor's degree and an M.B.A. degree with a concentration
in real estate and finance from the University of Denver,
and is a Certified Commercial Investment Member.
Gayle P. Starr 42 Ms. Starr is a Vice President of the Company and has
specialized in the management of partnerships, debt
instruments, and assets in the San Francisco Bay Area since
1992. Prior to joining AMB, she was Vice President of
Financial Asset Management for Lincoln Property Company,
where for eight years, she was responsible for real estate
development, major lease negotiations, financing and
dispositions. Ms. Starr holds a bachelor's degree from the
University of California at San Diego, a J.D. degree from
the University of California at Davis, and is a lecturer
with the University of California at Berkeley. She is a
member of the State Bar of California.
William Steinberg 42 Mr. Steinberg is a Vice President of the Company and has
specialized in property acquisitions in the Eastern United
States since 1994. Prior to joining AMB, he was a partner
with Trammell Crow Company where for nine years, he
developed and renovated major commercial properties in the
Southwest. Mr. Steinberg has been a director of NYSE-listed
Continental Homes Holding Co. since 1992. Mr. Steinberg
received his bachelor's degree from Amherst College, and his
Master's of Management degree from the Kellogg Graduate
School of Management at Northwestern University.
K.C. Swartzel 45 Mr. Swartzel is a Vice President of the Company and has
specialized in property acquisitions in the Southeast since
1995. Prior to joining AMB, he was a Senior Vice President
with TCW Realty Advisors and a senior Vice President with
Metric Realty, where he disposed of more than 120 commercial
properties nationwide. Mr. Swartzel holds a bachelor's
degree from the University of California, a master's degree
from Stanford University, and a J.D. degree from Peninsula
University College of Law. He is a licensed real estate
broker, and is a member of the International Council of
Shopping Centers, the National Association of Real Estate
Investment Managers, and the Real Estate Investment Advisory
Council.
</TABLE>

COMMITTEES OF THE BOARD OF DIRECTORS

Audit Committee. The Audit Committee, which will be comprised solely of
Independent Directors, will make recommendations concerning the engagement of
independent public accountants, review with the independent public accountants
the plans and results of the audit engagement, approve professional services

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provided by the independent public accountants, review the independence of the
independent public accountants, consider the range of audit and non-audit fees
and review the adequacy of the Company's internal accounting controls.

Executive Committee. The Executive Committee will have the authority within
certain parameters to acquire, dispose of and finance investments for the
Company (including the issuance by the Operating Partnership of additional Units
or other equity interests) and approve the execution of contracts and
agreements, including those related to the borrowing of money by the Company,
and generally exercise all other powers of the Board of Directors except as
prohibited by law.

Compensation Committee. The Compensation Committee, which will be comprised
solely of Independent Directors, will determine compensation for the Company's
Executive Officers, and will review and make recommendations concerning
proposals by management with respect to compensation, bonus, employment
agreements and other benefits and policies respecting such matters for the
Executive Officers of the Company.

The Board of Directors will not have a nominating committee; rather, the
entire Board of Directors will perform the function of such a committee.

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COMPENSATION OF THE BOARD OF DIRECTORS

In lieu of cash compensation, each Independent Director will receive, upon
initial election to the Board of Directors and upon each election thereafter,
options to purchase Common Stock, at an exercise price equal to the fair market
value at the date of grant (in the case of options granted upon consummation of
the Offering, at the price to the public in the Offering). All of such options
will vest immediately upon grant. The initial grant of such options upon initial
election will cover 20,000 shares of Common Stock, and each subsequent grant
will cover 15,000 shares of Common Stock for each Independent Director. The
Company expects that the initial grant for each Independent Director appointed
to serve following the consummation of the Offering will cover 26,250 shares of
Common Stock representing the grant to each Independent Director with respect to
their initial election to the Board of Directors (expected to occur in 1998)
plus an additional grant of options to purchase 6,250 shares of Common Stock
with respect to the period from the date of the Offering through the date of
their initial election, but such Independent Directors will not be granted
options upon re-election in 1998. In addition, Independent Directors will be
paid $1,250 for each meeting in excess of six meetings of the Board of Directors
attended during each annual term and will be reimbursed for reasonable expenses
incurred to attend director and committee meetings. Officers of the Company who
are directors will not be paid any compensation in respect of their service as
directors. Independent Directors who are currently directors of CIF and VAF are
being paid $20,000 as compensation for services rendered in connection with the
Formation Transactions, which amount may be received in the form of restricted
shares of Common Stock at the election of each such Independent Director. Such
compensation is not contingent upon consummation of the Formation Transactions
and the Offering.

EXECUTIVE COMPENSATION

The following table sets forth the annual base salary to be paid and
options expected to be granted upon consummation of the Offering to the
Company's Chairman of the Board, Chief Executive Officer and its four other most
highly compensated executive officers (collectively, the "Named Executive
Officers").

<TABLE>
<CAPTION>
ANNUAL BASE
NAME AND PRINCIPAL POSITION COMPENSATION OPTIONS
- --------------------------------------------------------------------- ------------ -------
<S> <C> <C>
T. Robert Burke...................................................... $150,000 225,000
Chairman of the Board
Hamid R. Moghadam.................................................... $400,000 500,000
President and Chief Executive Officer
Douglas D. Abbey..................................................... $200,000 250,000
Chairman of Investment Committee
S. Davis Carniglia................................................... $200,000 130,000
Chief Financial Officer and General Counsel
Craig A. Severance................................................... $200,000 130,000
Managing Director, Acquisitions
John H. Diserens..................................................... $200,000 130,000
Managing Director, Retail Division
</TABLE>

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OPTION GRANTS IN 1997

<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE OF
ASSUMED ANNUAL RATE
NUMBER OF PERCENT OF TOTAL OF COMMON SHARE
SECURITIES OPTIONS TO BE PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE PRICE FOR OPTION TERM(3)
OPTIONS TO BE EMPLOYEES IN PER COMMON EXPIRATION -------------------
NAME GRANTED(1) 1997 SHARE(2) DATE 5%(4) 10%(5)
- -------------------------- ------------- ---------------- -------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
T. Robert Burke...........
Hamid R. Moghadam.........
Douglas D. Abbey..........
S. Davis Carniglia........
Craig A. Severance........
John H. Diserens..........
</TABLE>

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

(1) All options are granted at the fair market value of the Common Stock at the
date of grant. Options granted are for a term of not more than 10 years from
the date of grant and vest in four equal installments (rounded to the
nearest whole share of Common Stock) over four years.

(2) Based on the assumed initial public offering price. The exercise price per
share will be the actual initial public offering price.

(3) In accordance with the rules of the SEC, these amounts are the hypothetical
gains or "option spreads" that would exist for the respective options based
on assumed rates of annual compound share price appreciation of 5% and 10%
from the date the options were granted over the full option term. No gain to
the optionee is possible without an increase in the price of Common Stock,
which would benefit all stockholders.

(4) An annual compound share price appreciation of 5% from the assumed Offering
price of $ per share of Common Stock yields a price of $ per
share of Common Stock.

(5) An annual compound share price appreciation of 10% from the assumed Offering
price of $ per share of Common Stock yields a price of $ per
share of Common Stock.

EMPLOYMENT AGREEMENTS

Upon consummation of the Offering, each of the Executive Officers will
enter into an employment agreement with the Company pursuant to which each will
agree to devote their entire business time to the Company. The employment
agreements will have an initial term of one year (three years in the case of Mr.
Moghadam) and will be subject to automatic one-year extensions following the
expiration of the initial term. The employment agreements provide for annual
base compensation (in the amounts set forth in the Executive Compensation table
with respect to the Named Executive Officers identified therein) with the amount
of any bonus to be determined by the Compensation Committee, based on certain
performance targets, up to 150% of the applicable annual base compensation in
the case of Messrs. Burke, Abbey and Moghadam, and 100% of the applicable annual
base compensation in the case of Messrs. Carniglia, Diserens and Severance. The
employment agreements also will provide that the executive will receive certain
insurance benefits, will be able to participate in the Company's employee
benefit plans, including the Stock Incentive Plan (as defined below), and that,
in the event of the executive's death, the executive's estate will receive
certain compensation payments. The executive also will be entitled to receive
severance during the term of the employment agreement and for one year
thereafter in the event of a termination of the executive's employment resulting
from a disability, by the Company without "cause" or by the executive for "good
reason." "Cause" means (i) gross negligence or willful misconduct, (ii) an
uncured breach of any of the employee's material duties under the employment
agreement, (iii) fraud or other conduct against the material best interests of
the Company or (iv) a conviction of a felony if such conviction has a material
adverse effect on the Company. "Good reason" means (a) a substantial adverse
change in the nature or scope of the employee's responsibilities and authority
under the employment agreement or (b) an uncured breach by the Company of any of
its material obligations under the employment agreement. Severance benefits will
include base compensation at the amounts provided in the employment agreement
and bonus based on the most recent amount paid, as well as certain continuing
insurance and other benefits.

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Such employment agreements will also contain a non-competition agreement
pursuant to which each executive will agree that he or she will not engage in
any activities, directly or indirectly, in respect of commercial real estate,
and will not make any investment in respect of industrial or retail real estate,
other than through ownership of not more than 5% of the outstanding shares of a
public company engaged in such activities and through existing investments as
described under "Risk Factors -- Conflicts of Interest." Such restrictions will
apply during the term of the employment agreements and for a one year period
thereafter.

STOCK INCENTIVE PLAN

The Company will establish the Stock Option and Incentive Plan (the "Stock
Incentive Plan") to (i) enable executive officers, key employees and directors
of the Company, the Operating Partnership and the Investment Management
Subsidiary to participate in the ownership of the Company, (ii) attract and
retain executive officers, other key employees and directors of the Company, the
Operating Partnership and the Investment Management Subsidiary and (iii) provide
incentives to such persons to maximize the Company's performance and its cash
flow available for distribution. The Stock Incentive Plan provides for the award
to such officers and employees (subject to the Ownership Limit, or such other
limit as provided in the Company's Articles of Incorporation or as otherwise
permitted by the Board of Directors) of a broad variety of stock-based
compensation alternatives such as non-qualified stock options, incentive stock
options, restricted stock and stock appreciation rights, and provides for the
grant to Independent Directors and directors of the Investment Management
Subsidiary of non-qualified stock options.

The Compensation Committee, which will be comprised solely of Independent
Directors, will have the authority to determine the terms of options and
restricted shares of common stock granted under the Stock Incentive Plan,
including, among other things, the individuals who shall receive such grants,
the times when they shall receive them, whether an incentive stock option or
non-qualified option shall be granted and the number of shares to be subject to
each grant.

An additional shares of Common Stock will be reserved for
issuance under the Stock Incentive Plan. The Company presently expects, upon
consummation of the Offering, to issue to certain officers and employees options
to purchase shares of Common Stock, at an exercise price equal to the
price to the public in the Offering. It is expected that such options will have
a ten-year term and vest pro rata in annual installments over a four-year period
with respect to initial grants. There is no limit on the number of awards that
may be granted to any one individual so long as the (i) aggregate fair market
value (determined at the time of grant) of shares with respect to which an
incentive stock option is first exercisable by an optionee during any calendar
year cannot exceed $100,000, (ii) grant does not violate the Ownership Limit or
cause the Company to fail to qualify as a REIT for Federal income tax purposes
and (iii) maximum number of shares of Common Stock for which stock options and
stock appreciation rights may be issued during any fiscal year to any
participant in the Stock Incentive Plan shall not exceed 1,000,000. See
"Description of Capital Stock -- Restrictions on Ownership and Transfer." The
Company plans to limit future grants under the Stock Incentive Plan to the
Company's directors and officers and a limited number of other employees.

Restricted Stock. Restricted stock may be sold to participants at various
prices (but not below par value) and is subject to such restrictions as may be
determined by the Compensation Committee. Restricted stock typically may be
repurchased by the Company at the original purchase price if certain conditions
or restrictions are not met. In general, restricted stock may not be sold, or
otherwise transferred or hypothecated, until restrictions are removed or expire.
Purchasers of restricted stock will have voting rights and receive distributions
prior to the time when the restrictions lapse. The Company has no present plans
to grant restricted shares of Common Stock other than with respect to (i) the
restricted shares of Common Stock issuable to certain Independent Directors as
described above under the caption "-- Compensation of the Board of Directors,"
and (ii) shares which may be issued to, and at the option of, certain employees
in lieu of annual cash bonus compensation.

Administration of the Stock Incentive Plan. The Stock Incentive Plan will
be administered by the Board of Directors and/or the Compensation Committee. No
person is eligible to serve on the Compensation Committee unless such person is
an Independent Director. The Committee has complete discretion to determine
(subject to (i) the Ownership Limit contained in the Articles of Incorporation
of the Company and

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(ii) a limit against granting options or stock appreciation rights for more than
1,000,000 shares to any person in any year) which eligible individuals are to
receive option or other stock grants, the number of shares subject to each such
grant, the status of any granted option as either an incentive option or a
non-qualified stock option under the Federal tax laws, the exercise schedule to
be in effect for the grant, the maximum term for which any granted option is to
remain outstanding and, subject to the specific terms of the Stock Incentive
Plan, any other terms of the grant.

Eligibility. All employees of the Company may, at the discretion of the
Compensation Committee, be granted incentive and non-qualified stock options to
purchase shares of Common Stock at an exercise price not less than 100% of the
fair market value of such shares on the grant date. Directors of the Company,
employees of the Operating Partnership, employees and directors of the
Investment Management Subsidiary, consultants and other persons who are not
regular salaried employees of the Company are not eligible to receive incentive
stock options, but are eligible to receive non-qualified stock options. In
addition, all employees and consultants of the Company, the Operating
Partnership and the Investment Management Subsidiary are eligible for awards of
restricted stock and grants of stock appreciation rights.

Purchase Price of Shares Subject to Options. The price of the shares of
Common Stock subject to each option shall be set by the Compensation Committee;
provided, however, that the price per share of an option shall be not less than
100% of the fair market value of such shares on the date such option is granted;
provided, further, that, in the case of an incentive stock option, the price per
share shall not be less than 110% of the fair market value of such shares on the
date such option is granted to an individual then owning (within the meaning of
Section 424(d) of the Code) more than of the total combined voting power of
all classes of stock of the Company, any subsidiary or any parent corporation
("greater than 10% stockholders").

Non-Assignability. Options may be transferred only by will or by the laws
of descent and distribution. During a participant's lifetime, options are
exercisable only by the participant.

Terms and Exercisability of Options. Unless otherwise determined by the
Board of Directors or the Compensation Committee, all options granted under the
Stock Incentive Plan are subject to the following conditions: (i) options will
be exercisable in installments, on a cumulative basis, at the rate of
thirty-three and one-third percent (33 1/3%) each year beginning on the first
anniversary of the date of the grant of the option, until the options expire or
are terminated (other than options granted at the time of the Offering, which
will vest ratably over four years) and (ii) following an optionee's termination
of employment, the optionee shall have the right to exercise any outstanding
vested options for a specified period.

To the extent the aggregate fair market value of stock with respect to
which "incentive stock options" (within the meaning of Section 422 of the Code,
but without regard to Section 422(d) of the Code) are exercisable for the first
time by an optionee during any calendar year exceeds $100,000, such options
shall be taxed as non-qualified stock options. The rule set forth in the
preceding sentence shall be applied by taking options into account in the order
in which they were granted. For this purpose, the fair market value of stock
shall be determined as of the time that the option with respect to such stock is
granted.

Options are exercisable in whole or in part by written notice to the
Company, specifying the number of shares being purchased and accompanied by
payment of the purchase price for such shares. The option price may be paid: (i)
in cash or by certified or cashier's check payable to the order of the Company,
(ii) by delivery of shares of Common Stock already owned by, and in the
possession of, the optionee or (iii) if authorized by the Board of Directors or
the Compensation Committee or if specified in the option agreement for the
option being exercised, by a recourse promissory note made by the optionee in
favor of the Company or through installment payments to the Company.

On the date the option price is to be paid, the optionee must make full
payment to the Company of all amounts that must be withheld by the Company for
Federal, state or local tax purposes.

Termination of Employment; Death or Permanent Disability. If an option
holder ceases to be employed by the Company for any reason other than the
optionee's death or permanent disability, such optionee's stock option shall
expire three months after the date of such cessation of employment unless by its
terms it expires sooner; provided, however, that during such period after
cessation of employment, such stock option may be exercised only to the extent
it was exercisable according to such option's terms on the date of cessation of

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employment. If an optionee dies or becomes permanently disabled while the
optionee is employed by the Company, such optionee's option shall expire twelve
months after the date of such optionee's death or permanent disability unless by
its terms it expires sooner. During such period after death, such stock option
may, to the extent it remains unexercised upon the date of such death, be
exercised by the person or persons to whom the optionee's rights under such
stock option are transferred under the laws of descent and distribution.

Acceleration of Exercisability. In the event the Company is acquired by
merger, consolidation or asset sale, each outstanding option which is not to be
assumed by the successor corporation or replaced with a comparable option to
purchase shares of the capital stock of the successor corporation will, at the
election of the Board of Directors (or if so provided in an option or other
agreement with an optionee), automatically accelerate in full.

Adjustments. In the event any change is made to the Common Stock issuable
under the Stock Incentive Plan by reason of any recapitalization, stock
dividend, stock split, combination of shares, exchange of shares or other change
in corporate structure effected without the Company's receipt of consideration,
appropriate adjustment will be made to (i) the maximum number and class of
shares issuable under the Stock Incentive Plan and (ii) the number and/or class
of shares and price per share in effect under each outstanding option.

Amendments to the Stock Incentive Plan. The Board of Directors may at any
time suspend or terminate the Stock Incentive Plan. The Board of Directors or
Compensation Committee may also at any time amend or revise the terms of the
Stock Incentive Plan; provided that no such amendment or revision shall, unless
appropriate stockholder approval of such amendment or revision is obtained, (i)
increase the maximum number of shares which may be acquired pursuant to options
granted under the Stock Incentive Plan (except for adjustments as described in
the foregoing paragraph) or (ii) change the minimum purchase price required
under the Stock Incentive Plan.

Termination. The Stock Incentive Plan will terminate on December , 2007,
unless sooner terminated by the Board of Directors.

Registration Statement on Form S-8. The Company will file with the
Securities and Exchange Commission a Registration Statement on Form S-8 covering
the shares of Common Stock underlying options granted under the Stock Incentive
Plan and restricted shares of Common Stock.

401(K) PLAN

Effective upon the consummation of the Offering, the Company intends to
establish its Section 401(k) Savings/Retirement Plan (the "Section 401(k) Plan")
to cover eligible employees of the Company and any designated affiliate. The
Section 401(k) Plan, which is expected to succeed to the Section 401(k) Plan
currently maintained by AMBI, will permit eligible employees of the Company to
defer up to 10% of their annual compensation, subject to certain limitations
imposed by the Code. The employees' elective deferrals will be immediately
vested and non-forfeitable upon contribution to the Section 401(k) Plan. The
Company currently intends to make matching contributions to the Section 401(k)
Plan in an amount equal to 50% of the first 3.5% of annual compensation deferred
by each employee; however, it reserves the right to make greater matching
contributions or discretionary profit sharing contributions in the future.

LIMITATION OF DIRECTORS' AND OFFICERS' LIABILITY

The Company's officers and directors will be indemnified under Maryland
law, its Articles of Incorporation and the Partnership Agreement against certain
liabilities. The Articles of Incorporation and Bylaws will require the Company
to indemnify its directors and officers to the fullest extent permitted from
time to time by the MGCL. See "Certain Provisions of Maryland Law and of the
Company's Articles of Incorporation and Bylaws."

INDEMNIFICATION AGREEMENTS

The Company will enter into indemnification agreements with each of its
executive officers and directors. The indemnification agreements will require,
among other matters, that the Company indemnify its executive officers and
directors to the fullest extent permitted by law and reimburse the executive
officers and directors

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for all related expenses as incurred, subject to return if it is subsequently
determined that indemnification is not permitted. Under the agreements, the
Company must also indemnify and reimburse all expenses as incurred by executive
officers and directors seeking to enforce their rights under the indemnification
agreements and may cover executive officers and directors under the Company's
directors' and officers' liability insurance. Although the form of
indemnification agreement offers substantially the same scope of coverage
afforded by law, it provides greater assurance to directors and executive
officers that indemnification will be available, because, as a contract, it
cannot be modified unilaterally in the future by the Board of Directors or the
stockholders to eliminate the rights it provides.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In addition to the Formation Transactions described under "Formation and
Structure of the Company -- Formation Transactions," the Company has engaged in
the following transactions and relationships with certain of its executive
officers, directors and director nominees, and persons who will hold more than
5% of the outstanding shares of Common Stock upon consummation of the Offering.

During 1990, 1991, 1994, 1995 and 1996, Craig A. Severance, John H.
Diserens, S. Davis Carniglia, Barbara J. Linn, Jean C. Hurley and Bruce H.
Freedman issued notes to AMB in consideration of the acquisition of shares of
AMB common stock in the principal amounts of $189,472, $243,866, $132,237,
$132,237, $342,806 and $307,071, respectively. The notes bore interest at an
annual rate of prime plus 1.0%. The principal amount of the notes and accrued
interest thereon were repaid in full by Mr. Severance, Mr. Diserens, Mr.
Carniglia and Ms. Linn. The notes issued by Ms. Hurley and Mr. Freedman are
expected to be repaid prior to consummation of the Formation Transactions.

In January 1993, AMBI, AMB, AMBCREA, AMB Properties L.P., AMB Development,
Inc. and AMB Institutional Housing Partners entered into an agreement for the
purpose of the parties thereto to work together to accomplish separate business
purposes while sharing certain support and other resources. The Intercompany
Agreement was amended in August 1994 to add AMB Mortgage Advisors, Inc. (now
dormant) as a party thereto and amended in February 1995 to add AMB Rosen
Partners (now dormant) as a party thereto. Under the Intercompany Agreement,
each party to the agreement (each, an "AMB Intercompany Party") is permitted to
use the term "AMB" as a part of its name. Each AMB Intercompany Party also
agreed, among other things, to do business in a specified aspect of real estate
and finance; to use its best efforts to refer business opportunities outside of
its own line of business to other AMB Intercompany Parties; to provide
intercompany loans; and to utilize personnel of another AMB Intercompany Party
for a fee. In addition, under the Intercompany Agreement, AMBI agreed to: (i)
provide common business services, resources and support, including employees,
benefits, services contracts and financial management and reporting to each AMB
Intercompany Party; (ii) purchase all fixed assets and rent them to the AMB
Intercompany Parties for a fee; act as lessee for office space for each AMB
Intercompany Party; (iii) employ all employees of each AMB Intercompany Party,
fix such employees' salaries, bonuses and benefits, and charge such costs to the
appropriate AMB Intercompany Party; and (iv) pay for the direct and indirect
costs of operation of each AMB Intercompany Party and charge each AMB
Intercompany Party its allocated share. The total amount paid to AMBI by AMB
during the years ended December 31, 1994, 1995 and 1996 and the six months ended
June 30, 1997 was $9,940,762, $13,564,178, $16,842,615 and $8,318,692,
respectively, which equaled the expenses incurred by AMBI allocable to AMB for
each such period. Messrs. Abbey, Moghadam and Burke each own one-third of the
stock of AMBI. As part of the Formation Transactions, the Company will acquire
AMBI's assets and employ the employees utilized in its business, and all other
AMBI employees will be transferred to AMBCREA.

The Intercompany Agreement will be terminated upon consummation of the
Offering. However, it is anticipated that following the Offering, AMBCREA, AMB
Institutional Housing Partners, AMB Development Inc. and AMB Properties L.P.
will continue to use the name "AMB" pursuant to royalty-free license
arrangements with the Company. In addition, AMBCREA, which is in the process of
winding down operations, will continue to sublease space from the Company at a
rental rate equal to the Company's average cost for space in its headquarters
location, and the Company may continue to provide certain administrative
services to AMBCREA for arm's-length charges. It is presently anticipated that
AMBCREA will cease operations during the first six months of 1998. See "Risk
Factors -- Conflicts of Interest -- Continued Involvement in Other Real Estate
Activities and Investments."

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PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of shares of Common Stock (or shares of Common Stock for which Units
are exchangeable) by (i) each director and director nominee, (ii) each Named
Executive Officer, (iii) all directors (including director nominees) and
executive officers of the Company as a group and (iv) each person or entity
which is expected to be the beneficial owner of 5% or more of the outstanding
shares of Common Stock immediately following the completion of the Offering.
Except as indicated below, all of such shares of Common Stock (or Units) are
owned directly, and the indicated person or entity has sole voting and
investment power. The table reflects the ownership interests each of the
following persons would have if such person exchanged all of his Units for
shares of Common Stock at an initial exchange ratio of one share of Common Stock
for each Unit (without regard to the Ownership Limit and the prohibition on
redemption or exchange of Units until one year after the date of the Offering),
but it does not reflect the effect of any Performance Units. See "Description of
Certain Provisions of the Partnership Agreement of the Operating Partnership
Redemption/Exchange Rights." The extent to which a person will hold Units as
opposed to shares of Common Stock is set forth in the footnotes below.

<TABLE>
<CAPTION>
PERCENTAGE
OF
COMMON STOCK
NUMBER OF SHARES OF FOLLOWING
COMMON STOCK PERCENTAGE OF COMPLETION
NAME AND ADDRESS OF BENEFICIAL BENEFICIALLY NUMBER OF UNITS COMMON STOCK OF
OWNER(1) OWNED(2) BENEFICIALLY OWNED PRIOR TO OFFERING(3) OFFERING(3)(4)
- ------------------------------- ------------------- ------------------ -------------------- ------------
<S> <C> <C> <C> <C>
T. Robert Burke................
Hamid R. Moghadam..............
Douglas D. Abbey...............
S. Davis Carniglia.............
Craig A. Severance.............
John H. Diserens...............
Daniel H. Case III.............
Robert H. Edelstein, Ph.D......
Lynn M. Sedway.................
Paul P. Shepherd...............
Jeffrey L. Skelton, Ph.D.......
Thomas W. Tusher...............
Caryl B. Welborn, Esq..........
Ameritech Corporation(5).......
City and County of San
Francisco Employees'
Retirement System(6).........
Southern Company Services,
Inc.(7)......................
All directors, nominated
directors and executive
officers as a group(
persons).....................
</TABLE>

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

* Less than 1%.

(1) Unless otherwise indicated, the address of each named person is c/o AMB
Property Corporation, 505 Montgomery Street, San Francisco, California
94111.

(2) Excludes (i) the grants to each of the Executive Officers and directors of
options to purchase Common Stock upon consummation of the Offering and (ii)
shares of Common Stock to be purchased, if any, by such Executive Officers
and directors at the initial offering price in the Offering. See
"Management -- Compensation of the Board of Directors" and "-- Executive
Compensation."

(3) Assumes that all Units beneficially held by the identified person (and no
other person) are exchanged for shares of Common Stock. See "Description of
Certain Provisions of the Partnership Agreement of the Operating
Partnership -- Redemption/Exchange Rights" and "Shares Available for Future
Sale."

(4) Assumes shares of Common Stock outstanding immediately following completion
of the Offering.

(5) The address of Ameritech Corporation is 225 W. Randolph, Chicago, Illinois
60606.

(6) The address of the City and County of San Francisco Employees' Retirement
System is 1155 Market Street, San Francisco, California 94103.

(7) The address of Southern Company Services, Inc. is 64 Perimeter Center East,
Atlanta, Georgia 06831.

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<PAGE> 122

FORMATION AND STRUCTURE OF THE COMPANY

OPERATING ENTITIES OF THE COMPANY

The Operating Partnership is the principal vehicle through which the
Company will own the Properties. See "Policies with Respect to Certain
Activities -- Policies with Respect to Other Activities." The ownership and
management structure of the Company is intended to (i) enable the Company to
continue and grow the real estate operations of AMB and the Continuing
Investors, (ii) facilitate the Offering, (iii) enable the Company to acquire
assets in transactions that may defer some or all of the sellers' tax
consequences, including in connection with the Company's formation and (iv)
enable the Company to comply with certain technical and complex requirements
under the Federal tax rules and regulations relating to the assets and income
permitted for a REIT.

The Investment Management Subsidiary will continue to provide real estate
investment management services to certain of AMB's current clients which are not
participating in the Formation Transactions to certain other clients. In order
to comply with Federal tax requirements for REIT status, the Investment
Management Subsidiary will be a taxable corporation, in which the Company will
own 100% of the non-voting preferred stock (representing 95% of its economic
interest) and former stockholders of AMB will own all of the outstanding voting
common stock (representing 5% of its economic interest). The amount of such
advisory fees otherwise available for distribution to the Operating Partnership
and the Company will be substantially reduced due to the payment of income taxes
thereon. See "Risk Factors -- Investment Management Subsidiary."

The Joint Ventures are held through joint ventures, limited liability
companies and partnerships. Pursuant to the existing agreements with respect to
each Joint Venture, the Company will hold a greater than 50% interest in seven
of the Joint Ventures and a 50% interest in the eighth Joint Venture, but in
certain cases such agreements provide that the Company is a limited partner or
that the non-affiliated participant will be principally responsible for
management control of the property.

FORMATION TRANSACTIONS

Background. The Company will be formed in connection with the consolidation
of the Properties owned by CIF, VAF, WPF and the Individual Account Investors
and the investment management business owned by AMB. CIF and VAF are each
private REITs and WPF is a limited partnership.

The Formation Transactions include the following:

- (i) CIF, VAF and the Company's predecessor, AMB, will effect a series of
mergers pursuant to which such entities will merge into the Company, with
the institutional stockholders of CIF and VAF and the current
stockholders of AMB receiving shares of Common Stock, or, in the case of
CIF stockholders and VAF stockholders, to a limited extent, cash; (ii)
WPF Interests will be contributed to the Company in exchange for shares
of Common Stock, or, to a limited extent, cash; (iii) the real property
interests of the Individual Account Investors will be contributed to
either the Company in exchange for shares of Common Stock or to the
Operating Partnership in exchange for Units, or, to a limited extent,
cash; (iv) the interests of certain current owners of joint venture
interests in the properties will be contributed to the Operating
Partnership in exchange for Units; (v) the Company will contribute
substantially all of its assets, subject to its liabilities, to the
Operating Partnership, in exchange for the general partnership interest
therein; and (vi) the Operating Partnership and the Executive Officers
will contribute certain assets and cash to the Investment Management
Subsidiary in exchange for its stock. A portion of the cash available to
CIF stockholders, VAF stockholders and holders of WPF interests will be
provided by three institutional accredited investors who have irrevocably
committed to acquire certain interests of such persons in respect to the
Formation Transactions.

- The Company will sell shares of Common Stock in the Offering.

- The Company will contribute the Properties and the net proceeds of the
Offering to the Operating Partnership in exchange for a % interest
therein represented by a number of units of general

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<PAGE> 123

partnership interest ("GP Units") equal to the total number of shares of
Common Stock to be outstanding after the Offering.

- The Executive Officers during the second year following the Offering may
receive a profits interest in the Operating Partnership in the form of
units ("Performance Units"), depending on the trading price of and
dividends on the shares of Common Stock. The issuance of any Performance
Units is subject to a share escrow agreement with certain Continuing
Investors and will not dilute the interests of purchasers of Common Stock
in the Offering. The maximum number of Performance Units which may be
issued is expected to be .

- Cash in an amount equal to the net working capital balances of the AMB
Predecessors as of the consummation of the Formation Transactions will be
distributed to the applicable investors in the AMB Predecessors
approximately 60 days thereafter.

All persons and entities receiving shares of Common Stock or Units in the
Formation Transactions (i.e., the Continuing Investors), and all persons who may
receive Performance Units are "accredited investors" as defined in Regulation D
under the Securities Act. Irrevocable consent of the Continuing Investors to the
Formation Transactions was received before September 18, 1997 pursuant to a
private solicitation thereof in compliance with Regulation D.

Consequences of the Offering and Formation Transactions. Following the
consummation of the Offering, the Operating Partnership will directly or
indirectly own interests in all of the Properties. All of the outstanding shares
of Common Stock will be owned by the purchasers of the Common Stock in the
Offering and the Continuing Investors. As a consequence of the Formation
Transactions, the Company will be the general partner of, and will own % of
the ownership interests in, the Operating Partnership. The remaining %
ownership interest in the Operating Partnership will be owned by Individual
Account Investors which elected to receive Units in lieu of shares of Common
Stock and certain owners of joint venture interests in the Properties which have
agreed to contribute their interests in the joint ventures to the Operating
Partnership in the Formation Transactions.

ESCROWS OF SHARES; PERFORMANCE UNITS AND PERFORMANCE SHARES

Performance Units and Performance Shares. Certain Continuing Investors (the
"Performance Investors") own assets (either directly or through CIF, VAF or WPF)
which are subject to advisory agreements with AMB that include "incentive fee"
provisions or in the case of WPF, a "catch-up adjustment." An aggregate of
shares of Common Stock and Units (the "Performance Shares") issuable
to the Performance Investors in the Formation Transactions will be escrowed for
possible transfer to the Company or the Operating Partnership (as applicable),
depending on the trading price of the shares of Common Stock as of the 15th,
18th, 21st and 24th month anniversaries of the consummation of the Offering
(each a "Measurement Date"). The Executive Officers, in their capacity as
limited partners of the Operating Partnership, may receive a profits interest in
the Operating Partnership expressed as a number of units (the "Performance
Units"). The Performance Units will be similar to Units in many respects,
including (i) the right to share in operating distributions and allocations of
operating income and loss of the Operating Partnership on a pro rata basis with
Units and (ii) certain redemption or exchange rights, including limited rights
to cause the Operating Partnership to redeem such Performance Units for cash or,
at the Company's option, to exchange such units for shares of Common Stock.
Depending on the trading price of, and accumulated dividends on, the shares of
Common Stock on each Measurement Date, the Executive Officers, in their capacity
as limited partners of the Operating Partnership, may be entitled to receive
Performance Units.

If any Performance Units are issued to the Executive Officers, in their
capacity as limited partners of the Operating Partnership, an equal number of GP
Units allocable to the Company, and Units allocable to Performance Investors who
are limited partners in the Operating Partnership, will be transferred to the
Operating Partnership. In addition, if any of the Company's Units are
transferred to the Operating Partnership as a result of the issuance of
Performance Units, an equal number of Performance Shares will be transferred by
Company stockholders to the Company from the applicable escrow. Accordingly, no
Company stockholder or limited partner in the Operating Partnership (other than
the Performance Investors, to the extent of their

117
<PAGE> 124

obligations to transfer Performance Shares to the Company or the Operating
Partnership (as applicable)) will be diluted as a result of the issuance of
Performance Units to the Executive Officers.

While Performance Shares are held in escrow, each Performance Investor will
receive all distributions with respect to its Performance Shares and will be
permitted to vote such shares unless and until such shares are required to be
transferred to the Company. Within 15 days following the determination of the
number of Performance Shares, if any, to be transferred to the Company or
Operating Partnership, as applicable, with respect to the final Measurement
Date, any Performance Shares not required to be transferred to the Company or
the Operating Partnership will be released from escrow and distributed to the
applicable Performance Investor, free of any future obligation to transfer such
shares to the Company or the Operating Partnership.

Indemnity Escrow. In connection with the Formation Transactions, each of
CIF, VAF, AMB and WPF and each Individual Account Investor has made certain
representations and warranties regarding its Properties and business. These
representations and warranties include such matters as compliance with laws, the
existence of material leases and other contracts with respect to the Properties
and certain other matters. CIF, VAF, WPF and AMB have also made certain
representations and warranties as to certain corporate and tax matters in
connection with the Formation Transactions. Each of CIF, VAF, WPF and AMB and
each Individual Account Investor will indemnify the Company and the Operating
Partnership for any breach of such representations and warranties subject to a
maximum liability equal to 1% of the value of the shares of Common Stock, Units
and cash received in the Formation Transactions by the Investors in the entity
responsible for the indemnification, or the applicable Individual Account
Investor. To assure that any indemnification obligation is borne only by
investors in an entity, or the Individual Account Investor, which made the
applicable representations and warranties, rather than other stockholders of the
Company or limited partners of the Operating Partnership, 1% of the shares of
Common Stock or Units issued, or cash paid (the "Indemnity Consideration"), to
each investor upon consummation of the Formation Transactions will be deposited
in an escrow available to provide for this indemnification commitment (the
"Indemnity Escrow"). Dividends, distributions and interest on Common Stock,
Units or cash deposited in the escrow will be paid as received to the applicable
investor. The representations and warranties will survive for a period ending on
the later of the first anniversary of the consummation of the Offering or the
sixtieth day following the completion of the audited financial statements of the
Company of the year ending December 31, 1998. If any claim of a breach of any
such representation or warranty has been made within such period, all or a
portion of the Indemnity Consideration will be held in the Indemnity Escrow
until resolution of such claim, at which time any Indemnity Consideration not
utilized in connection with satisfaction of any such claims will be returned to
the investors which would have received such consideration at the time of the
Offering. Any shares of Common Stock or Units used to satisfy claims through the
Indemnity Escrow shall be valued at the value per share or unit at the time of
the Offering, irrespective of the Common Stock or Unit value when such shares
are transferred out of the Indemnity Escrow.

BENEFITS OF THE FORMATION TRANSACTIONS AND THE OFFERING TO THE EXECUTIVE
OFFICERS AND AFFILIATES OF THE COMPANY

Certain Executive Officers and affiliates of the Company will realize
certain material benefits in connection with the Formation Transactions,
including the following:

- The current stockholders of AMB, who are comprised entirely of the
Executive Officers and certain of their affiliated trusts, will be the
beneficial owners of an aggregate of shares of Common Stock,
with a total value of $ million (based on the assumed initial public
offering price of $
per share). Such shares will be issued in respect of the shares of AMB in
the Formation Transactions. The aggregate net book value of such shares
of AMB common stock as of June 30, 1997, was approximately $3.7 million.
The Company does not believe that the net book value of such shares of
AMB common stock (which reflects the historical cost of such interests
and assets of AMB and does not reflect the value of its client base,
management portfolio business systems or employees) is equivalent to the
fair market value of such shares, but the fair market value of such
shares may vary from the value of the shares of Common Stock issued in
exchange therefor.

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<PAGE> 125

- The Executive Officers, in their capacity as limited partners of the
Operating Partnership, may during the second year following the Offering
become the beneficial owners of Performance Units which under the
applicable arrangements will not exceed . Any issuance of these
Performance Units will not dilute the interests of the purchasers of
Common Stock in the Offering. The maximum number of Performance Units
which may be issued is expected to be .

- The Continuing Investors will realize an immediate accretion in the net
tangible book value of their investment in the Company of $ per
share, representing an aggregate accretion amount of $ .

- The former AMB stockholders will serve as the Executive Officers of the
Company, will enter into employment agreements and receive the
compensation and will participate in the Stock Incentive Plan, including
receiving grants of options to purchase an aggregate of shares
of Common Stock at the initial offering price, all as set forth under
"Management -- Executive Compensation."

- Commencing on the first anniversary of the Offering, Continuing Investors
who received Units in the Formation Transactions, and officers and
employees who receive Performance Units, will have certain registration
rights with respect to shares of Common Stock that may be issued in
exchange for such Units and Performance Units.

- The Company will assume a line of credit balance of AMB of not more than
$1.1 million in connection with AMB's purchase of furniture, fixtures and
equipment, leasehold interests, and other assets historically used in
connection with the Company's business from AMBI, a corporation owned
entirely by certain executive officers. The total purchase price of the
assets (equal to the approximate net book value) will be paid partly with
the proceeds of the above indebtedness and partly through the reduction
of an inter-company debt owed by AMBI to AMB. The Company will also
assume a note payable of AMBI to WPF in the amount of $790,329 as
consideration for the transfer to the Company of AMBI's general partner
interest in WPF (which the Company believes has a value equal to or
greater than the amount of the note).

- Certain Executive Officers will be relieved of their respective
guarantees of a portion of a $4.0 million revolving line of credit of
AMB.

- A portion of the incentive fees earned and paid to the Investment
Management Subsidiary after the consummation of the Offering, in respect
of assets subject to such arrangements at the time of the Formation
Transactions, will be allocated to certain officers and employees of the
Company as follows. At the time that such fees are actually earned and
paid to the Investment Management Subsidiary, certain officers and
employees of the Company will be allocated an amount equal to such fees,
subject to an aggregate cap equal to the amount which would have been
paid had all of such assets for all such clients been sold for the "net
asset value" thereof as of the consummation of the Formation
Transactions.

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DESCRIPTION OF CAPITAL STOCK

The following summary of the terms of the Company's capital stock does not
purport to be complete and is subject to and qualified in its entirety by
reference to the Articles of Incorporation and Bylaws, copies of which are filed
as exhibits to the Registration Statement of which this Prospectus is a part.
See "Additional Information."

GENERAL

Under the Articles of Incorporation, the authorized capital stock of the
Company consists of 500,000,000 shares of common stock, par value $.01 per share
("Common Stock"), and 100,000,000 shares of preferred stock, par value $.01 per
share ("Preferred Stock"). No shares of Preferred Stock will be issued and
outstanding.

COMMON STOCK

Each outstanding share of Common Stock will entitle the holder to one vote
on all matters presented to stockholders for a vote, including the election of
directors, and, except as otherwise required by law and except as provided in
any resolution adopted by the Board of Directors with respect to any other class
or series of stock establishing the designation, powers, preferences and
relative, participating, optional or other special rights and powers of such
series, the holders of such shares will possess the exclusive voting power,
subject to the provisions of the Company's Articles of Incorporation regarding
the ownership of shares of Common Stock in excess of the Ownership Limit or such
other limit as provided in the Company's Articles of Incorporation or as
otherwise permitted by the Board of Directors. Holders of shares of Common Stock
will not have any conversion, exchange, sinking fund, redemption or appraisal
rights or any preemptive rights to subscribe for any securities of the Company
or cumulative voting rights in the election of directors. All shares of Common
Stock to be issued and outstanding following the consummation of the Offering
will be duly authorized, fully paid and nonassessable. Subject to the
preferential rights of any other shares or series of stock and to the provisions
of the Articles of Incorporation regarding ownership of shares of Common Stock
in excess of the Ownership Limit, or such other limit as provided in the
Company's Articles of Incorporation or as otherwise permitted by the Board of
Directors, distributions may be paid to the holders of shares of Common Stock if
and when authorized and declared by the Board of Directors of the Company out of
funds legally available therefor. The Company intends to make quarterly
distributions, beginning with distributions for the portion of the quarter from
the consummation of the Offering. See "Distributions."

Under the Maryland General Corporation Law ("MGCL"), stockholders are
generally not liable for the Company's debts or obligations. If the Company is
liquidated, subject to the right of any holders of Preferred Stock to receive
preferential distributions, each outstanding share of Common Stock will be
entitled to participate pro rata in the assets remaining after payment of, or
adequate provision for, all known debts and liabilities of the Company,
including debts and liabilities arising out of its status as general partner of
the Operating Partnership.

Subject to the provisions of the Articles of Incorporation regarding the
ownership of shares of Common Stock in excess of the Ownership Limit, or such
other limit as provided in the Company's Articles of Incorporation or as
otherwise permitted by the Board of Directors described below, all shares of
Common Stock will have equal distribution, liquidation and voting rights, and
will have no preference or exchange rights. See "-- Restrictions on Ownership
and Transfer."

Under the MGCL, a Maryland corporation generally cannot dissolve, amend its
charter, merge, sell all or substantially all of its assets, engage in a share
exchange or engage in similar transactions outside the ordinary course of
business unless approved by the affirmative vote of stockholders holding at
least two-thirds of the shares entitled to vote on the matter unless a lesser
percentage (but not less than a majority of all of the votes entitled to be cast
on the matter) is set forth in the corporation's charter. Under the MGCL, the
term "substantially all of the Company's assets" is not defined and is,
therefore, subject to Maryland common law and to judicial interpretation and
review in the context of the unique facts and circumstances of any particular
transaction. The Articles of Incorporation do not provide for a lesser
percentage in any such situation.

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<PAGE> 127

The Articles of Incorporation authorize the Board of Directors to
reclassify any unissued shares of Common Stock into other classes or series of
classes of stock and to establish the number of shares in each class or series
and to set the preferences, conversion and other rights, voting powers,
restrictions, limitations and restrictions on ownership, limitations as to
dividends or other distributions, qualifications and terms or conditions of
redemption for each such class or series.

PREFERRED STOCK

Preferred Stock may be issued from time to time, in one or more classes or
series, as authorized by the Board of Directors. No Preferred Stock is currently
issued or outstanding. Prior to the issuance of shares of each class or series,
the Board of Directors is required by the MGCL and the Company's Articles of
Incorporation to fix for each class or series the terms, preferences, conversion
or other rights, voting powers, restrictions, limitations as to distributions,
qualifications and terms or conditions of redemption, as permitted by Maryland
law. Because the Board of Directors has the power to establish the preferences,
powers and rights of each class or series of Preferred Stock, it may afford the
holders of any class or series of Preferred Stock preferences, powers and
rights, voting or otherwise, senior to the rights of holders of shares of Common
Stock. The issuance of Preferred Stock could have the effect of delaying or
preventing a change of control of the Company that might involve a premium price
for holders of shares of Common Stock or otherwise be in their best interest.
The Board of Directors has no present plans to issue any Preferred Stock.

RESTRICTIONS ON OWNERSHIP AND TRANSFER

For the Company to qualify as a REIT under the Code, no more than 50% in
value of its outstanding shares of stock may be owned, actually or
constructively, by five or fewer individuals (as defined in the Code to include
certain entities) during the last half of a taxable year (other than the first
year for which an election to be treated as a REIT has been made). In addition,
if the Company, or an owner of 10% or more of the Company, actually or
constructively owns 10% or more of a tenant of the Company (or a tenant of any
partnership in which the Company is a partner), the rent received by the Company
(either directly or through any such partnership) from such tenant will not be
qualifying income for purposes of the gross income tests for REITs contained in
the Code. A REIT's stock must also be beneficially owned by 100 or more persons
during at least 335 days of a taxable year of twelve months or during a
proportionate part of a shorter taxable year (other than the first year for
which an election to be treated as a REIT has been made).

Because the Company expects to qualify as a REIT, the Articles of
Incorporation contain restrictions on the ownership and transfer of shares of
Common Stock which are intended to assist the Company in complying with these
requirements. The Ownership Limit set forth in the Company's Articles of
Incorporation provides that, subject to certain specified exceptions, no person
or entity may own, or be deemed to own by virtue of the applicable constructive
ownership provisions of the Code, more than 9.8% (by number or value, whichever
is more restrictive) of the outstanding shares of Common Stock. The constructive
ownership rules are complex, and may cause shares of Common Stock owned actually
or constructively by a group of related individuals and/or entities to be
constructively owned by one individual or entity. As a result, the acquisition
of less than 9.8% of the shares of Common Stock (or the acquisition of an
interest in an entity that owns, actually or constructively, shares of Common
Stock) by the individual or entity, could, nevertheless cause that individual or
entity, or another individual or entity, to own constructively in excess of 9.8%
of the outstanding shares of Common Stock and thus violate the Ownership Limit,
or such other limit permitted by the Board of Directors. The Board of Directors
may, but in no event will be required to, waive the Ownership Limit with respect
to a particular stockholder if it determines that such ownership will not
jeopardize the Company's status as a REIT and the Board of Directors otherwise
decides such action would be in the best interest of the Company. As a condition
of such waiver, the Board of Directors may require an opinion of counsel
satisfactory to it and/or undertakings or representations from the applicant
with respect to preserving the REIT status of the Company. The Board of
Directors currently expects to waive the Ownership Limit with respect to
, allowing to own up to % of the Common Stock. However,
such waiver will be conditioned upon the receipt of undertakings or
representations from requested by the Board of Directors which are
reasonably necessary to conclude that such ownership will not cause the Company
to fail to qualify as a REIT.

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<PAGE> 128

The Company's Articles of Incorporation further prohibit any person from
(i) actually or constructively owning shares of stock of the Company that would
result in the Company being "closely held" under Section 856(h) of the Code or
otherwise cause the Company to fail to qualify as a REIT or (ii) transferring
shares of stock of the Company if such transfer would result in shares of stock
of the Company being owned by fewer than 100 persons. Any person who acquires or
attempts or intends to acquire actual or constructive ownership of shares of
stock of the Company that will or may violate any of the foregoing restrictions
on transferability and ownership is required to give notice immediately to the
Company and provide the Company with such other information as the Company may
request in order to determine the effect of such transfer on the Company's
status as a REIT. The foregoing restrictions on transferability and ownership
will not apply if the Board of Directors determines that it is no longer in the
best interest of the Company to attempt to qualify, or to continue to qualify,
as a REIT. Except as otherwise described above, any change in the Ownership
Limit would require an amendment to the Articles of Incorporation which requires
the affirmative vote of holders owning at least two-thirds of the shares of the
Company's capital stock outstanding and entitled to vote thereon.

Pursuant to the Articles of Incorporation, if any purported transfer of
shares of Common Stock of the Company or any other event would otherwise result
in any person violating the Ownership Limit or such other limit as permitted by
the Board of Directors, then any such purported transfer will be void and of no
force or effect with respect to the purported transferee (the "Prohibited
Transferee") as to that number of shares of Common Stock in excess of the
Ownership Limit or such other limit, and the Prohibited Transferee shall acquire
no right or interest (or, in the case of any event other than a purported
transfer, the person or entity holding record title to any such excess shares of
Common Stock (the "Prohibited Owner") shall cease to own any right or interest)
in such excess shares. Any such excess shares described above will be
transferred automatically, by operation of law, to a trust, the beneficiary of
which will be a qualified charitable organization selected by the Company (the
"Beneficiary"). Such automatic transfer shall be deemed to be effective as of
the close of business on the business day prior to the date of such violative
transfer. Within 20 days of receiving notice from the Company of the transfer of
shares of Common Stock to the trust, the trustee of the trust (who shall be
designated by the Company and be unaffiliated with the Company and any
Prohibited Transferee or Prohibited Owner) will be required to sell such excess
shares of Common Stock to a person or entity who could own such shares without
violating the Ownership Limit, or such other limit as permitted by the Board of
Directors, and distribute to the Prohibited Transferee or Prohibited Owner, as
applicable, an amount equal to the lesser of the price paid by the Prohibited
Transferee or Prohibited Owner for such excess shares or the sales proceeds
received by the trust for such excess shares. In the case of any excess shares
of Common Stock resulting from any event other than a transfer, or from a
transfer for no consideration (such as a gift), the trustee will be required to
sell such excess shares to a qualified person or entity and distribute to the
Prohibited Owner or Prohibited Transferee, as applicable, an amount equal to the
lesser of the Market Price (as defined in the Company's Articles of
Incorporation) of such excess shares of Common Stock as of the date of such
event or the sales proceeds received by the trust for such excess shares. In
either case, any proceeds in excess of the amount distributable to the
Prohibited Transferee or Prohibited Owner, as applicable, will be distributed to
the Beneficiary. Prior to a sale of any such excess shares of Common Stock by
the trust, the trustee will be entitled to receive, in trust for the
Beneficiary, all dividends and other distributions paid by the Company with
respect to such excess shares, and also will be entitled to exercise all voting
rights with respect to such excess shares. Subject to Maryland law, effective as
of the date that such shares of Common Stock have been transferred to the trust,
the trustee shall have the authority (at the trustee's sole discretion) (i) to
rescind as void any vote cast by a Prohibited Transferee or Prohibited Owner, as
applicable, prior to the discovery by the Company that such shares of Common
Stock should have been automatically transferred to the trust and (ii) to recast
such vote in accordance with the desires of the trustee acting for the benefit
of the Beneficiary. However, if the Company has already taken irreversible
corporate action, then the trustee shall not have the authority to rescind and
recast such vote. Any dividend or other distribution paid to the Prohibited
Transferee or Prohibited Owner (prior to the discovery by the Company that such
shares of Common Stock had been automatically transferred to a trust as
described above) will be required to be repaid to the trustee upon demand for
distribution to the Beneficiary. In the event that the transfer to the trust as
described above is not automatically effective (for any reason) to prevent
violation of the Ownership Limit or such other limit as provided in the
Company's Articles of Incorporation or

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as otherwise permitted by the Board of Directors, then the Articles of
Incorporation provide that the transfer of the excess shares will be void ab
initio.

In addition, shares of Common Stock held in the trust shall be deemed to
have been offered for sale to the Company, or its designee, at a price per share
equal to the lesser of (i) the price per share in the transaction that resulted
in such transfer to the trust (or, in the case of a devise or gift, the market
price at the time of such devise or gift) and (ii) the market price on the date
the Company, or its designee, accepts such offer. The Company shall have the
right to accept such offer until the trustee has sold the shares held in the
trust. Upon such a sale to the Company, the interest of the Beneficiary in the
shares sold shall terminate and the trustee shall distribute the net proceeds of
the sale to the Prohibited Transferee or Prohibited Owner.

If any purported transfer of shares would cause the Company to be
beneficially owned by fewer than 100 persons, such transfer will be null and
void in its entirety and the intended transferee will acquire no rights to the
stock.

All certificates representing shares will bear a legend referring to the
restrictions described above. The foregoing ownership limitations could delay,
defer or prevent a transaction or a change in control of the Company that might
involve a premium price for the shares or otherwise be in the best interest of
stockholders.

Under the Articles of Incorporation, every owner of at least a specified
percentage of the outstanding shares must file a completed questionnaire with
the Company containing information regarding ownership of such shares, as set
forth in the Treasury Regulations. Under current Treasury Regulations, the
percentage will be set between 0.5% and 5.0%, depending upon the number of
record holders of the Common Stock. In addition, each stockholder shall upon
demand be required to disclose to the Company in writing such information as the
Company may request in order to determine the effect, if any, of such
stockholder's actual and constructive ownership of shares of Common Stock on the
Company's status as a REIT and to ensure compliance with the Ownership Limit, or
such other limit as provided in the Articles of Incorporation or as otherwise
permitted by the Board of Directors.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is .

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CERTAIN PROVISIONS OF MARYLAND LAW AND OF
THE COMPANY'S ARTICLES OF INCORPORATION AND BYLAWS

The following paragraphs summarize certain provisions of the MGCL and the
Company's Articles of Incorporation and Bylaws. Such paragraphs do not, however,
purport to be complete and are subject to and qualified in their entirety by
reference to the MGCL and the Articles of Incorporation and Bylaws.

BOARD OF DIRECTORS

The Articles of Incorporation provide that the number of directors of the
Company shall be established by the Bylaws but shall not be less than the
minimum number required by the MGCL, which in the case of the Company is three.
The Bylaws currently provide that the Board of Directors will consist of not
fewer than five nor more than 13 members and will be elected to a one-year term
at each annual meeting of the Company's stockholders. Any vacancy (except for a
vacancy caused by removal) will be filled by a majority of the entire Board of
Directors. The Bylaws provide that a majority of the Board must be "Independent
Directors." An "Independent Director" is a director who is not an employee,
officer or affiliate of the Company or a subsidiary or division thereof, or a
relative of a principal executive officer, or who is not an individual member of
an organization acting as advisor, consultant or legal counsel, receiving
compensation on a continuing basis from the Company in addition to director's
fees.

REMOVAL OF DIRECTORS

While the Articles of Incorporation and the MGCL empower the stockholders
to fill vacancies in the Board of Directors that are caused by the removal of a
director, the Articles of Incorporation preclude stockholders from removing
incumbent directors except upon a substantial affirmative vote. Specifically,
the Articles of Incorporation provide that a director may be removed only for
cause and only by the affirmative vote of at least two-thirds of the votes
entitled to be cast in the election of directors. Under the MGCL, the term
"cause" is not defined and is, therefore, subject to Maryland common law and to
judicial interpretation and review in the context of the unique facts and
circumstances of any particular situation. This provision, when coupled with the
provision in the Bylaws authorizing the Board of Directors to fill vacant
directorships, precludes stockholders from removing incumbent directors except
upon a substantial affirmative vote and filling the vacancies created by such
removal with their own nominees.

OPT OUT OF BUSINESS COMBINATIONS AND CONTROL SHARE ACQUISITION STATUTES

The Company will elect in its Bylaws not to be governed by the "control
share acquisition" provisions of the MGCL (Sections 3-701 through 3-709), and
the Board of Directors will adopt, by irrevocable resolution of the Board of
Directors, not to be governed by the "business combination" provision of the
MGCL (Section 3-602), each of which could have the effect of delaying or
preventing a change of control of the Company. The Bylaws will provide that the
Company cannot at a future date determine to be governed by either such
provision without the approval of a majority of the outstanding shares entitled
to vote. In addition, such irrevocable resolution adopted by the Board of
Directors may only be changed by the approval of a majority of the outstanding
shares entitled to vote.

AMENDMENT TO THE ARTICLES OF INCORPORATION AND BYLAWS

The Articles of Incorporation may not be amended without the affirmative
vote of at least two-thirds of the shares of capital stock outstanding and
entitled to vote thereon voting together as a single class. Other than
provisions of the Bylaws (i) opting out of the control share acquisition
statute, (ii) requiring approval by the Independent Directors of transactions
involving executive officers, directors or any limited partners of the Operating
Partnership and their affiliates and (iii) those governing amendment of the
Bylaws, each of which may be amended only with the approval of a majority of the
shares of capital stock entitled to vote, the Bylaws may be amended by the vote
of a majority of the Board of Directors or the shares of the Company's capital
stock entitled to vote thereon.

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MEETINGS OF STOCKHOLDERS

The Bylaws provide for annual meetings of stockholders, commencing in 1998,
to elect the Board of Directors and transact such other business as may properly
be brought before the meeting. Special meetings of stockholders may be called by
the President, the Board of Directors, the Chairman of the Board and/or at the
request in writing of the holders of 50% or more of the outstanding stock of the
Company entitled to vote.

The MGCL provides that any action required or permitted to be taken at a
meeting of stockholders may be taken without a meeting by unanimous written
consent, if such consent sets forth such action and is signed by each
stockholder entitled to vote on the matter and a written waiver of any right to
dissent is signed by each stockholder entitled to notice of the meeting but not
entitled to vote at it.

ADVANCE NOTICE OF DIRECTOR NOMINATIONS AND NEW BUSINESS

The Bylaws provide that (i) with respect to an annual meeting of
stockholders, nominations of persons for election to the Board of Directors and
the proposal of business to be considered by stockholders may be made only (a)
pursuant to the Company's notice of the meeting, (b) by or at the direction of
the Board of Directors or (c) by a stockholder who is entitled to vote at the
meeting and has complied with the advance notice procedures set forth in the
Bylaws, and (ii) with respect to special meetings of stockholders, only the
business specified in the Company's notice of meeting may be brought before the
meeting of stockholders.

The provisions in the Articles of Incorporation on amendments to the
Articles of Incorporation and the advance notice provisions of the Bylaws could
have the effect of discouraging a takeover or other transaction in which holders
of some, or a majority, of the shares of Common Stock might receive a premium
for their shares of Common Stock over the then prevailing market price or which
such holders might believe to be otherwise in their best interests.

DISSOLUTION OF THE COMPANY

Under the MGCL, the Company may be dissolved by (i) the affirmative vote of
a majority of the entire Board of Directors declaring such dissolution to be
advisable and directing that the proposed dissolution be submitted for
consideration at any annual or special meeting of stockholders and (ii) upon
proper notice, stockholder approval by the affirmative vote of the holders of
two-thirds of the total number of shares of capital stock outstanding and
entitled to vote thereon voting as a single class.

LIMITATION OF DIRECTORS' AND OFFICERS' LIABILITY

The Company's officers and directors will be indemnified under the MGCL,
the Articles of Incorporation and the Partnership Agreement against certain
liabilities. The Articles of Incorporation and Bylaws require the Company to
indemnify its directors and officers to the fullest extent permitted from time
to time by the MGCL.

The MGCL permits a corporation to indemnify its directors and officers and
certain other parties against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with any proceeding
to which they may be made a party by reason of their service in those or other
capacities unless it is established that (i) the act or omission of the director
or officer was material to the matter giving rise to the proceeding and was
committed in bad faith or was the result of active and deliberate dishonesty,
(ii) the director or officer actually received an improper personal benefit in
money, property or services or (iii) in the case of any criminal proceeding, the
director or officer had reasonable cause to believe that the act or omission was
unlawful. Indemnification may be made against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by the director or officer
in connection with the proceeding; provided, however, that if the proceeding is
one by or in the right of the corporation, indemnification may not be made with
respect to any proceeding in which the director or officer has been adjudged to
be liable to the corporation. In addition, a director or officer may not be
indemnified with respect to any proceeding charging improper personal benefit to
the director or officer in which the director or officer was adjudged to be
liable on the basis that personal benefit was received. The termination of any
proceeding by conviction, or upon a plea of nolo contendere or its

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equivalent, or an entry of any order of probation prior to judgment, creates a
rebuttable presumption that the director or officer did not meet the requisite
standard of conduct required for indemnification to be permitted.

The MGCL permits the articles of incorporation of a Maryland corporation to
include a provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages, subject to specified
restrictions, and the Articles of Incorporation of the Company contain this
provision. The MGCL does not, however, permit the liability of directors and
officers to the corporation or its stockholders to be limited to the extent that
(i) it is proved that the person actually received an improper personal benefit
in money, property or services, (ii) a judgment or other final adjudication is
entered in a proceeding based on a finding that the person's action, or failure
to act, was committed in bad faith or was the result of active and deliberate
dishonesty and was material to the cause of action adjudicated in the proceeding
or (iii) in the case of any criminal proceeding, the director had reasonable
cause to believe that the act or failure to act was unlawful. This provision
does not limit the ability of the Company or its stockholders to obtain other
relief, such as an injunction or rescission.

The Partnership Agreement also provides for indemnification of the Company,
as general partner, and its officers and directors to the same extent
indemnification is provided to officers and directors of the Company in its
Articles of Incorporation, and limits the liability of the Company and its
officers and directors to the Operating Partnership and the partners of the
Operating Partnership to the same extent liability of officers and directors of
the Company to the Company and its stockholders is limited under the Articles of
Incorporation. See "Description of Certain Provisions of the Partnership
Agreement of the Operating Partnership -- Exculpation and Indemnification of the
Company."

Insofar as indemnification for liability arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the SEC, such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.

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DESCRIPTION OF CERTAIN PROVISIONS OF THE
PARTNERSHIP AGREEMENT OF THE OPERATING PARTNERSHIP

Substantially all of the Company's assets will be held, and all of its
operations will be conducted, by or through the Operating Partnership. The
Company is the general partner of the Operating Partnership and expects at all
times to own a majority interest in the Operating Partnership. The right and
power to manage the Operating Partnership will be vested exclusively in the
Company, as general partner. The interests in the Operating Partnership
allocated to the Company will be designated as a general partner interest.
Except with respect to distributions of cash and allocations of income and loss,
and except as otherwise noted herein and elsewhere in this Prospectus, the
description herein of Units is applicable also to Performance Units, and holders
of Performance Units will be treated as limited partners. The following summary
of the Amended and Restated Agreement of Limited Partnership of the Operating
Partnership (the "Partnership Agreement") and the descriptions of certain
provisions set forth elsewhere in this Prospectus are qualified in their
entirety by reference to the Partnership Agreement, which is filed as an exhibit
to the Registration Statement of which this Prospectus is a part.

GENERAL

Holders of Units will hold limited partnership interests in the Operating
Partnership, and all holders of partnership interests (including the Company in
its capacity as general partner) will be entitled to share in cash distributions
from, and in the profits and losses of, the Operating Partnership. The number of
GP Units held by the Company will be equal to the total number of shares of
Common Stock outstanding. Accordingly, the distributions paid by the Company per
share outstanding are expected to be equal to the distributions per Unit paid on
the outstanding Units. At the time of the Offering, the Units will not be
registered pursuant to Federal or state securities laws, and they will not be
listed on the NYSE or any other exchange or quoted on any national market
system. However, the shares of Common Stock that may be issued by the Company
upon redemption of the Units may be sold in registered transactions, or
transactions exempt from registration under the Securities Act. The limited
partners of the Operating Partnership will have the rights to which limited
partners are entitled under the Partnership Agreement and the Partnership Act.
The Partnership Agreement imposes certain restrictions on the transfer of Units,
as described below.

PURPOSE, BUSINESS AND MANAGEMENT

The Operating Partnership is organized as a Delaware limited partnership
pursuant to the terms of the Partnership Agreement. The Company will be the sole
general partner of the Operating Partnership and will conduct substantially all
of its business through the Operating Partnership, except for investment
advisory services (which will be conducted through the Investment Management
Subsidiary). The Operating Partnership will own 100% of the nonvoting preferred
stock of the Investment Management Subsidiary (representing 95% of its economic
interest) and former stockholders of AMB will own all of the outstanding voting
common stock of the Investment Management Subsidiary (representing 5% of its
economic interest).

The primary purpose of the Operating Partnership is, in general, to
acquire, purchase, own, operate, manage, develop, redevelop, invest in, finance,
refinance, sell, lease and otherwise deal with industrial and retail properties
and assets related thereto, and interests therein. The Operating Partnership is
authorized to conduct any business that may be lawfully conducted by a limited
partnership formed under the Partnership Act, except that the Partnership
Agreement requires the business of the Operating Partnership to be conducted in
such a manner that will permit the Company to be classified as a REIT under
Section 856 of the Code, unless the Company ceases to qualify as a REIT for
reasons other than the conduct of the business of the Operating Partnership.
Subject to the foregoing limitation, the Operating Partnership may enter into
partnerships, joint ventures or similar arrangements and may own interests
directly or indirectly in any other entity.

The Company, as the general partner of the Operating Partnership, has the
exclusive power and authority to conduct the business of the Operating
Partnership, subject to the consent of the limited partners in certain limited
circumstances (as discussed below) and except as expressly limited in the
Partnership Agreement. The Company has the right to make all decisions and take
all actions with respect to the Operating

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Partnership's acquisition and operation of the Properties and all other assets
and businesses of or related to the Partnership. No limited partner may take
part in the conduct or control of the business or affairs of the Operating
Partnership by virtue of being a holder of Units. In particular, each limited
partner expressly acknowledges in the Partnership Agreement that the Company, as
general partner, is acting on behalf of the Operating Partnership's limited
partners and the Company's stockholders collectively, and is under no obligation
to consider the tax consequences to limited partners when making decisions for
the benefit of the Operating Partnership. The Company intends to make decisions
in its capacity as general partner of the Operating Partnership so as to
maximize the profitability of the Company and the Operating Partnership as a
whole, independent of the tax effects on the limited partners. The Company and
the Operating Partnership will have no liability to a limited partner as a
result of any liabilities or damages incurred or suffered by, or benefits not
derived by, a limited partner as a result of an action or inaction of the
Company as general partner of the Operating Partnership as long as the Company
acted in good faith. Limited partners will have no right or authority to act for
or to bind the Operating Partnership.

Investors who receive Units in connection with the Formation Transactions,
as limited partners of the Operating Partnership, will have no authority to
transact business for, or participate in the management activities or decisions
of, the Operating Partnership, except as provided in the Partnership Agreement
and as required by applicable law.

ENGAGING IN OTHER BUSINESSES; CONFLICTS OF INTEREST

The Company may not conduct any business other than in connection with the
ownership, acquisition and disposition of Operating Partnership interests as a
general partner and the management of the business of the Operating Partnership,
its operation as a public reporting company with a class (or classes) of
securities registered under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), its operation as a REIT and such activities as are incidental
to such activities (including, without limitation, ownership of any interest in
the Investment Management Subsidiary or a management or finance subsidiary
organized as a partnership, limited liability company or corporation) without
the consent of the holders of a majority of the limited partnership interests.
Except as may otherwise be agreed to in writing, each limited partner, and its
affiliates, is free to engage in any business or activity, even if such business
or activity competes with or is enhanced by the business of the Operating
Partnership. The Partnership Agreement does not prevent another person or entity
that acquires control of the Company in the future from conducting other
businesses or owning other assets, even though such businesses or assets may be
ones that it would be in the best interests of the limited partners for the
Operating Partnership to own. The Company, in the exercise of its power and
authority under the Partnership Agreement, may contract and otherwise deal with
or otherwise obligate the Operating Partnership to entities in which the Company
or any one or more of the officers, directors or stockholders of the Company may
have an ownership or other financial interest, whether direct or indirect.

REIMBURSEMENT OF THE COMPANY; TRANSACTIONS WITH THE COMPANY AND ITS AFFILIATES

The Company will not receive any compensation for its services as general
partner of the Operating Partnership. The Company, however, as a partner in the
Operating Partnership, has the same right to allocations and distributions as
other partners of the Operating Partnership. In addition, the Operating
Partnership will reimburse the Company for all expenses it incurs relating to
its activities as general partner, its continued existence and qualification as
a REIT and all other liabilities incurred by the Company in connection with the
pursuit of its business and affairs. The Company may retain such persons or
entities as it shall determine (including itself, any entity in which the
Company has an interest, or any entity with which it is affiliated) to provide
services to or on behalf of the Operating Partnership. The Company will be
entitled to reimbursement from the Operating Partnership for its out of pocket
expenses (other than amounts paid or payable to the Company or any entity in
which the Company has an interest or with which it is affiliated) incurred in
connection with Operating Partnership business. Such expenses include those
incurred in connection with the administration and activities of the Operating
Partnership, such as the maintenance of the Operating Partnership books and
records, management of the Operating Partnership property and assets, and
preparation of information regarding the Operating Partnership provided to the
partners in the preparation of their individual tax returns. Except as expressly
permitted by the Operating Partnership Agreement, however,

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affiliates of the Company will not engage in any transactions with the Operating
Partnership except on terms that are fair and reasonable and no less favorable
to the Operating Partnership than would be obtained from an unaffiliated third
party.

EXCULPATION AND INDEMNIFICATION OF THE COMPANY

The Partnership Agreement generally provides that the Company, as general
partner of the Operating Partnership, will incur no liability to the Operating
Partnership or any limited partner for losses sustained, liabilities incurred,
or benefits not derived as a result of errors in judgment or for any mistakes of
fact or law or for anything which it may do or refrain from doing in connection
with the business and affairs of the Operating Partnership if the Company
carried out its duties in good faith. The Company's liability in any event is
limited to its interest in the Operating Partnership. Without limiting the
foregoing, the Company has no liability for the loss of any limited partner's
capital. In addition, the Company is not responsible for any misconduct,
negligent act or omission of any consultant, contractor or agent of the
Operating Partnership or of the Company and has no obligation other than to use
good faith in the selection of all such contractors, consultants and agents. The
Company may consult with counsel, accountants, appraisers, management
consultants, investment bankers, and other consultants and advisors selected by
it. An opinion by any such consultant on a matter which the Company believes to
be within such consultant's professional or expert competence is deemed to be
complete protection as to any action taken or omitted to be taken by the Company
based on such opinion and in good faith.

The Partnership Agreement also requires the Operating Partnership to
indemnify the Company, the directors and officers of the Company, and such other
persons as the Company may from time to time designate against any loss or
damage, including reasonable legal fees and court costs incurred by such person
by reason of anything it may do or refrain from doing for or on behalf of the
Operating Partnership or in connection with its business or affairs unless it is
established that: (i) the act or omission of the indemnified person was material
to the matter giving rise to the proceeding and either was committed in bad
faith or was the result of active and deliberate dishonesty; (ii) the
indemnified person actually received an improper personal benefit in money,
property or services; or (iii) in the case of any criminal proceeding, the
indemnified person had reasonable cause to believe that the act or omission was
unlawful. Any such indemnification claims must be satisfied solely out of the
assets of the Operating Partnership.

SALES OF ASSETS; LIQUIDATION

Under the Partnership Agreement, the Company, as general partner, generally
has the exclusive authority to determine whether, when and on what terms the
assets of the Operating Partnership (including the Properties) will be sold.
However, the Company anticipates that it will agree, in connection with the
contribution of Properties from taxable Investors in the Formation Transactions
(with an estimated aggregate of approximately $34 million), not to dispose of
such assets in a taxable sale or exchange prior to the fourth anniversary of the
consummation of the Formation Transactions and, thereafter, to use commercially
reasonable efforts to minimize the adverse tax consequences of any such sale.
The Company may enter into similar agreements in connection with other
acquisitions of properties for Units.

A merger of the Operating Partnership with another entity generally
requires an affirmative vote of the holders of a majority of the outstanding
percentage interest (including that held directly or indirectly by the Company),
subject to certain consent rights of holders of Units as described below under
"Amendment of the Partnership Agreement." A dissolution or liquidation of the
Operating Partnership, including a sale or disposition of all or substantially
all of the Operating Partnership's assets and properties, also requires the
consent of a majority of all Units held by limited partners, including
Performance Units.

CAPITAL CONTRIBUTION

The Partnership Agreement provides that if the Operating Partnership
requires additional funds at any time or from time to time in excess of funds
available to the Operating Partnership from borrowings or capital contributions,
the Company may borrow such funds from a financial institution or other lender
or through public or private debt offerings and lend such funds to the Operating
Partnership on the same terms and conditions as are applicable to the Company's
borrowing of such funds. As an alternative to borrowing funds

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required by the Operating Partnership, the Company may contribute the amount of
such required funds as an additional capital contribution to the Operating
Partnership. If the Company so contributes additional capital to the Operating
Partnership, the Company's partnership interest in the Operating Partnership
will be increased on a proportionate basis. Conversely, the partnership
interests of the limited partners will be decreased on a proportionate basis in
the event of additional capital contributions by the Company. See "Policies With
Respect to Certain Activities -- Financing Policies."

REMOVAL OF THE GENERAL PARTNER; TRANSFERABILITY OF THE COMPANY'S INTERESTS;
TREATMENT OF UNITS IN SIGNIFICANT TRANSACTIONS

The general partner may not be removed by the limited partners, with or
without cause, other than with the consent of the general partner. The
Partnership Agreement provides that the Company may voluntarily withdraw from
the Operating Partnership, without the consent of the limited partners. However,
except as set forth below, the Company may transfer or assign its general
partner interest in connection with a merger, consolidation or sale of
substantially all the assets of the Company without limited partner consent.

Neither the Company nor the Operating Partnership may engage in any merger,
consolidation or other combination with or into another person, or effect any
reclassification, recapitalization or change of its outstanding equity
interests, and the Company may not sell all or substantially all of its assets
(each a "Termination Transaction") unless in connection with the Termination
Transaction all holders of Units either will receive, or will have the right to
elect to receive, for each Unit an amount of cash, securities or other property
equal to the product of the number of shares of Common Stock into which each
Unit is then exchangeable and the greatest amount of cash, securities or other
property paid to the holder of one Share in consideration of one Share pursuant
to the Termination Transaction. If, in connection with the Termination
Transaction, a purchase, tender or exchange offer shall have been made to and
accepted by the holders of the outstanding shares of Common Stock, each holder
of Units will receive, or will have the right to elect to receive, the greatest
amount of cash, securities or other property which such holder would have
received had it exercised its right to redemption and received shares of Common
Stock in exchange for its Units immediately prior to the expiration of such
purchase, tender or exchange offer and had thereupon accepted such purchase,
tender or exchange offer. Performance Units issued or to be issued will also
have the benefit of such provisions, irrespective of the capital account then
applicable thereto.

A Termination Transaction may also occur if the following conditions are
met: (i) substantially all of the assets directly or indirectly owned by the
surviving entity are held directly or indirectly by the Operating Partnership or
another limited partnership or limited liability company which is the survivor
of a merger, consolidation or combination of assets with the Operating
Partnership (in each case, the "Surviving Partnership"); (ii) the holders of
Units, including the holders of Performance Units issued or to be issued, own a
percentage interest of the Surviving Partnership based on the relative fair
market value of the net assets of the Operating Partnership and the other net
assets of the Surviving Partnership immediately prior to the consummation of
such transaction; (iii) the rights, preferences and privileges of such holders
in the Surviving Partnership, including the holders of Performance Units issued
or to be issued, are at least as favorable as those in effect immediately prior
to the consummation of such transaction and as those applicable to any other
limited partners or non-managing members of the Surviving Partnership (except,
as to Performance Units, for such differences with Units regarding liquidation,
redemption or exchange as are described herein); and (iv) such rights of the
limited partners, including the holders of Performance Units issued or to be
issued, include at least one of the following: (a) the right to redeem their
interests in the Surviving Partnership for the consideration available to such
persons pursuant to the preceding paragraph; or (b) the right to redeem their
Units for cash on terms equivalent to those in effect immediately prior to the
consummation of such transaction, or, if the ultimate controlling person of the
Surviving Partnership has publicly traded common equity securities, such common
equity securities, with an exchange ratio based on the relative fair market
value of such securities and the Common Stock. For purposes of this paragraph,
the determination of relative fair market values and rights, preferences and
privileges of the limited partners shall be reasonably determined by the
Company's Board of Directors as of the time of the Termination Transaction and,
to the extent applicable, the values shall be no less favorable to the holders
of Units than the relative values reflected in the terms of the Termination
Transaction.

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The foregoing provisions may not be amended or waived without the consent
of a majority of all Units held by limited partners including Performance Units.

In addition, in the event of a Termination Transaction, the arrangements
with respect to Performance Units and Performance Shares will be equitably
adjusted to reflect the terms of the transaction, including, to the extent that
the shares are exchanged for consideration other than publicly traded common
equity, the transfer or release of remaining Performance Shares, and resulting
issuance of any Performance Units, as of the consummation of the Termination
Transaction or set forth in the applicable Supplement.

RESTRICTIONS ON TRANSFER OF UNITS BY LIMITED PARTNERS

The Partnership Agreement provides that no limited partner shall, without
the prior written consent of the Company as general partner (which may be
withheld in the sole discretion of the Company), sell, assign, distribute or
otherwise transfer all or any part of his or its interest in the Operating
Partnership except by operation of law, gift (outright or in trust) or by sale,
in each case to or for the benefit of his spouse or descendants, except for
pledges or other collateral transfers effected by a limited partner to secure
the repayment of a loan, or the redemption of Units in accordance with the
Partnership Agreement. All other transfers are subject to the general partner's
right of first refusal. All transfers must also be in compliance with certain
provisions relating to legal, tax and regulatory matters.

An assignee, legatee, distributee or other transferee ("Transferee") of all
or any portion of a partner's interest in the Operating Partnership shall be
entitled to receive profits, losses and distributions under the Partnership
Agreement attributable to such interest, from and after the effective date of
the transfer of such interest; provided, however, (i) no transfer by a limited
partner shall be effective until such transfer has been consented to by the
Company, (ii) no Transferee shall be considered a substituted limited partner
unless the Company, in its sole and absolute discretion, shall consent to the
admission of such Transferee as a substituted limited partner and (iii) the
Operating Partnership and the Company shall be entitled to treat the transferor
of such interest as the absolute owner thereof in all respects, and shall incur
no liability for the allocation of profits, losses or distributions which are
made to such transferor until such time as the written instrument of transfer
has been received by the Company and the effective date of the transfer is
passed. The "effective date" of any transfer shall be the last day of the month
set forth on the written instrument of transfer or such other date consented to
in writing by the Company as the "effective date." Notwithstanding the
foregoing, no transfer shall be effective to the extent it would, by treating
the Units so transferred as if they had been exchanged for shares of Common
Stock, violate the limitations on ownership set forth in the Articles of
Incorporation in order to protect and preserve the Company's status as a REIT.

NO WITHDRAWAL BY LIMITED PARTNERS

No limited partner has the right to withdraw from or reduce his or its
capital contribution to the Operating Partnership, except as a result of the
redemption, exchange, or transfer of Units in accordance with the Partnership
Agreement.

ISSUANCE OF ADDITIONAL UNITS AND/OR PREFERENCE UNITS

The Company is authorized at any time, without the consent of the limited
partners, to cause the Operating Partnership to issue additional partnership
interests to the Company, to the limited partners or to other persons for such
consideration and upon such terms and conditions as the Company deems
appropriate. If interests are issued to the Company, then the Company must issue
a corresponding number of shares of Common Stock and must contribute to the
Operating Partnership the proceeds, if any, received by the Company from such
issuance. Upon the issuance of additional interests, the percentage interest of
all the partners in the Operating Partnership would be diluted. In addition, the
Partnership Agreement provides that the Operating Partnership may also issue
preferred units and other partnership interests of different classes and series
(collectively, "Preference Units") having such rights, preferences and other
privileges, variations and designations as may be determined by the Company. Any
such Preference Units may have terms, provisions and rights which are
preferential to the terms, provisions and rights of the Units. Preference Units,
however, may be issued to the Company only in connection with an offering of
securities of the Company having substantially similar rights and the
contribution of the proceeds therefrom to the Operating Partnership.
Consideration for partnership interests may be cash or any property or other
assets permitted by

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the Partnership Act. No limited partner has preemptive, preferential or similar
rights with respect to capital contributions to the Operating Partnership or the
issuance or sale of any partnership interests therein.

AWARDS UNDER STOCK INCENTIVE PLAN

If options granted in connection with the Stock Incentive Plan are
exercised at any time or from time to time, or restricted shares of Common Stock
are issued under the Stock Incentive Plan, the Partnership Agreement requires
the Company to contribute to the Operating Partnership as an additional
contribution the exercise price received by the Company in connection with the
issuance of shares of Common Stock to such exercising participant or the
proceeds received by the Company upon issuance of such shares of Common Stock.
Upon such contribution the Company will be issued a number of Units in the
Operating Partnership equal to the number of shares of Common Stock so issued.

REDEMPTION/EXCHANGE RIGHTS

Holders of Units will have the right, commencing on the first anniversary
of becoming a limited partner of the Operating Partnership, to require the
Operating Partnership to redeem part or all of their Units for cash (based upon
the fair market value of an equivalent number of shares of Common Stock at the
time of such redemption) or the Company may elect to exchange such Units for
shares of Common Stock (on a one-for-one basis, subject to adjustment in the
event of stock splits, stock dividends, issuance of certain rights, certain
extraordinary distributions and similar events). The Company presently
anticipates that it will elect to issue shares of Common Stock in exchange for
Units in connection with each such redemption request, rather than having the
Operating Partnership pay cash. With each such redemption or exchange, the
Company's percentage ownership interest in the Operating Partnership will
increase. This redemption/exchange right may be exercised by limited partners
from time to time, in whole or in part, subject to the limitations that such
right may not be exercised at any time to the extent such exercise would result
in any person actually or constructively owning shares of Common Stock in excess
of the Ownership Limit or such other amount as permitted by the Board of
Directors, as applicable, assuming common stock was issued in such exchange. See
"Description of Capital Stock -- Restrictions on Ownership and Transfer."
Holders of Performance Units also have limited redemption/exchange rights, as
discussed in "-- Performance Units" below.

PERFORMANCE UNITS

Notwithstanding the foregoing discussion of distributions and allocations
of income or loss of the Operating Partnership, depending on the trading price
of the Common Stock after the first anniversary of the Offering, the Executive
Officers, in their capacity as limited partners of the Operating Partnership,
may receive Performance Units. The Performance Units will be similar to Units in
many respects, including (i) the right to share in operating distributions, and
allocations of operating income and loss, of the Operating Partnership on a pro
rata basis with Units; and (ii) certain redemption and exchange rights,
including limited rights to cause the Operating Partnership to redeem such
Performance Units for cash or, at the Company's option, to exchange such units
for shares of Common Stock. Any such redemption rights, however, will be
dependent upon an increase in the value of the assets of the Operating
Partnership (in some cases measured by reference to the trading price of the
shares of Common Stock) subsequent to the issuance of such Performance Units.
Without such an increase, the holders of Performance Units will not be entitled
to receive any proceeds upon the liquidation of the Operating Partnership or the
redemption of their Performance Units.

If any Performance Units are issued to the Executive Officers, in their
capacity as limited partners of the Operating Partnership, an equal number of GP
Units allocable to the Company and Units allocable to Performance Investors who
are limited partners in the Operating Partnership will be transferred to the
Operating Partnership. In addition, if any of the Company's GP Units are
transferred to the Operating Partnership as a result of the issuance of
Performance Units, an equal number of Performance Shares will be transferred by
Company stockholders to the Company from the applicable Performance Investors.
Accordingly, no Company stockholder or limited partner in the Operating
Partnership (other than Performance Investors, to the extent of their
obligations to transfer Performance Shares to the Company or the Operating
Partnership, as applicable) will be diluted as a result of the issuance of
Performance Units to the Executive Officers. See "Formation and Structure of the
Company -- Escrow Shares; Performance Units and Performance Shares."

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REGISTRATION RIGHTS

The Company will grant to Investors receiving Units in connection with the
Formation Transactions certain registration rights (collectively, the
"Registration Rights") with respect to the shares of Common Stock issuable upon
exchange of Units or otherwise (the "Registrable Shares"). The Company has
agreed to file and generally keep continuously effective beginning one year
after the completion of the Offering a registration statement covering the
issuance of shares of Common Stock upon exchange of Units and the resale
thereof. Pursuant to the terms and conditions of such Registration Rights, prior
to the date upon which shares of Common Stock issued as of the date of the
consummation of the Offering would be eligible for resale under Rule 144(k)
under the Securities Act, as such rule may be amended from time to time (or any
similar rule or regulation hereafter adopted by the SEC), each Investor will be
limited to resales of Registrable Shares to the number of Registrable Shares
which otherwise would be eligible for resale by such Investor pursuant to Rule
144, assuming such Registrable Shares were issued as of the date of the
consummation of the Offering. The shelf registration statement will also cover
Shares issuable upon exchange of Performance Units. The Company may also agree
to provide the Registration Rights to any other person who may become an owner
of Units, provided such person provides the Company with satisfactory
undertakings. The Company will bear expenses incident to its registration
obligations upon exercise of the Registration Rights, including the payment of
Federal securities law and state Blue Sky registration fees, except that it will
not bear any underwriting discounts or commissions or transfer taxes relating to
registration of Registrable Shares.

OTHER TAX MATTERS

Pursuant to the Partnership Agreement, the Company will be the tax matters
partner of the Operating Partnership and, as such, will have authority to make
tax elections under the Code on behalf of the Operating Partnership.

The Partnership Agreement requires that the Operating Partnership be
operated in a manner that will enable the Company to satisfy the requirements
for being classified as a REIT and to avoid any Federal income tax liability.
Pursuant to the Partnership Agreement, the Operating Partnership will assume and
pay when due, or reimburse the Company for payment of, all expenses it incurs
relating to the ownership and operation of, or for the benefit of, the Operating
Partnership and all costs and expenses relating to the operations of the
Company.

DUTIES AND CONFLICTS

Except as otherwise set forth in "Policies with Respect to Certain
Activities -- Conflicts of Interest Policies" and "Management -- Employment
Agreements," any limited partner of the Operating Partnership may engage in
other business activities outside the Operating Partnership, including business
activities that directly compete with the Operating Partnership.

MEETINGS; VOTING

Meetings of the limited partners may be called by the Company, on its own
motion, or upon written request of limited partners owning at least 25% of the
then outstanding Units. Limited partners may vote either in person or by proxy
at meetings. Any action that is required or permitted to be taken by the limited
partners may be taken either at a meeting of the limited partners or without a
meeting if consents in writing setting forth the action so taken are signed by
limited partners owning not less than the minimum number of Units that would be
necessary to authorize or take such action at a meeting of the limited partners
at which all limited partners entitled to vote on such action were present. On
matters for which limited partners are entitled to vote, each limited partner
will have a vote equal to the number of Units the limited partner holds. A
transferee of Units who has not been admitted as a substituted limited partner
with respect to such Units will have no voting rights with respect to such
Units, even if such transferee holds other Units as to which it has been
admitted as a limited partner. The Partnership Agreement does not provide for
annual meetings of the limited partners, and the Company does not anticipate
calling such meetings.

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AMENDMENT OF THE PARTNERSHIP AGREEMENT

Amendments to the Partnership Agreement may be proposed by the Company or
by limited partners owning at least 25% of the then outstanding Units.
Generally, the Partnership Agreement may be amended with the approval of the
Company, as general partner, and partners (including the Company) holding a
majority of the percentage interest of the partnership. Certain provisions
regarding, among other things, the rights and duties of the Company as general
partner (e.g., restrictions on the Company's power to conduct businesses other
than as denoted herein) or the dissolution of the Operating Partnership, may not
be amended without the approval of a majority of the percentage interests of the
partnership. Notwithstanding the foregoing, the Company, as general partner,
will have the power, without the consent of the limited partners, to amend the
Partnership Agreement as may be required to, among other things, (i) add to the
obligations of the Company as general partner or surrender any right or power
granted to the Company as general partner, (ii) reflect the admission,
substitution, termination or withdrawal of partners in accordance with the terms
of the Partnership Agreement, (iii) establish the rights, powers, duties and
preferences of any additional partnership interests issued in accordance with
the terms of the Partnership Agreement, (iv) reflect a change of an
inconsequential nature that does not materially adversely affect any limited
partner, or cure any ambiguity, correct or supplement any provisions of the
Partnership Agreement not inconsistent with law or with other provisions of the
Partnership Agreement, or make other changes concerning matters under the
Partnership Agreement that are not otherwise inconsistent with the Partnership
Agreement or applicable law or (v) satisfy any requirements of Federal, state or
local law.

Certain amendments, including amendments effected directly or indirectly
through a merger or sale of assets of the Operating Partnership or otherwise,
that would, among other things, (i) convert a limited partner's interest into a
general partner's interest, (ii) modify the limited liability of a limited
partner, (iii) alter the interest of a partner in profits or losses, or the
rights to receive any distributions (except as permitted under the Partnership
Agreement with respect to the admission of new partners or the issuance of
additional Units, either of which actions will have the effect of changing the
percentage interests of the partners and thus altering their interests in
profits, losses and distributions) or (iv) alter the limited partner's
redemption right, must be approved by the Company and each limited partner that
would be adversely affected by such amendment. Such protections apply to both
holders of Units and holders of Performance Units. In addition, no amendment may
be effected, directly or indirectly, through a merger or sale of assets of the
Operating Partnership or otherwise, which would adversely affect the rights of
former stockholders of AMBIRA to receive Performance Units as described herein.

BOOKS AND REPORTS

The Operating Partnership's books and records are maintained at the
principal office of the Operating Partnership, which is located at 505
Montgomery Street, San Francisco, California 94111. All elections and options
available to the Operating Partnership for Federal or state income tax purposes
may be taken or rejected by the Operating Partnership in the sole discretion of
the Company. The limited partners will have the right, subject to certain
limitations, to receive copies of the most recent SEC filings by the Company,
the Operating Partnership's Federal, state and local income tax returns, a list
of limited partners, the Partnership Agreement, the partnership certificate and
all amendments thereto and certain information about the capital contributions
of the partners. The Company may keep confidential from the limited partners any
information that the Company believes to be in the nature of trade secrets or
other information the disclosure of which the Company in good faith believes is
not in the best interests of the Operating Partnership or which the Operating
Partnership is required by law or by agreements with unaffiliated third parties
to keep confidential.

The Company will use reasonable efforts to furnish to each limited partner,
within 90 days after the close of each taxable year, the tax information
reasonably required by the limited partners for Federal and state income tax
reporting purposes.

TERM

The Operating Partnership will continue in full force and effect for
approximately 99 years or until sooner dissolved pursuant to the terms of the
Partnership Agreement.

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SHARES AVAILABLE FOR FUTURE SALE

Upon the completion of the Offering, the Company will have outstanding
shares of Common Stock ( shares if the Underwriters'
over-allotment option is exercised in full). In addition, shares of
Common Stock are reserved for issuance upon exchange of Units. The
shares of Common Stock issued in the Offering will be freely tradeable
by persons other than "affiliates" of the Company without restriction under the
Securities Act, subject to the limitations on ownership set forth in this
Prospectus. The shares of Common Stock received by the Investors in the
Formation Transactions and any shares of Common Stock acquired in redemption of
Units (the "Restricted Shares") will be "restricted" securities under the
meaning of Rule 144 promulgated under the Securities Act ("Rule 144") and may
not be sold in the absence of registration under the Securities Act unless an
exemption from registration is available, including exemptions contained in Rule
144. As described below under " Registration Rights," the Company has granted
certain holders registration rights with respect to their shares of Common
Stock.

In general, under Rule 144 as currently in effect, if one year has elapsed
since the later of the date of acquisition of Restricted Shares from the Company
or from any "affiliate" of the Company, as that term is defined under the
Securities Act, the acquiror or subsequent holder thereof is entitled to sell
within any three-month period a number of shares that does not exceed the
greater of 1% of the then outstanding shares of Common Stock or the average
weekly trading volume of the shares of Common Stock during the four calendar
weeks immediately preceding the date on which notice of the sale is filed with
the SEC. Sales under Rule 144 also are subject to certain manner of sales
provisions, notice requirements and the availability of current public
information about the Company. If two years have elapsed since the date of
acquisition of Restricted Shares from the Company or from any "affiliate" of the
Company, and the acquiror or subsequent holder thereof is deemed not to have
been an affiliate of the Company at any time during the 90 days immediately
preceding a sale, such person is entitled to sell such shares in the public
market under Rule 144(k) without regard to the volume limitations, manner of
sale provisions, public information requirements or notice requirements.

Each of the Executive Officers of the Company has agreed that, during the
period ending two years after the date of this Prospectus, and the Company and
the Independent Directors have agreed that, during the period ending one year
after the date of this Prospectus, without the prior written consent of Morgan
Stanley & Co. Incorporated, on behalf of the Underwriters, they will not (i)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of, directly or indirectly, any shares
of Common Stock or any securities convertible into or exercisable or
exchangeable for shares of Common Stock (provided that such shares or securities
are either now owned by such party or are hereafter acquired prior to or in
connection with the offering of the Common Stock offered hereby) or (ii) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise, other
than (x) the shares of Common Stock to be purchased by the Underwriters under
the Underwriting Agreement, (y) the issuance by the Company of shares of Common
Stock upon the exercise of an option or a warrant or the conversion of a
security outstanding on the date of this Prospectus of which the Underwriters
have been advised in writing and (z) the issuance of shares of Common Stock by
the Company upon conversion or redemption of Units.

The Company will adopt the Stock Incentive Plan for the purpose of
attracting and retaining highly qualified directors, executive officers and
other key employees. See "Management -- Stock Incentive Plan" and
"-- Compensation of Board of Directors." The Company intends to issue options to
purchase approximately shares of Common Stock to its directors,
executive officers, certain key employees concurrent with the Offering and has
reserved additional shares for future issuance under the Stock Incentive Plan.
Following completion of the Offering, the Company expects to file a registration
statement with the SEC with respect to the shares of Common Stock issuable under
the Stock Incentive Plan, which shares may be resold without restriction, unless
held by affiliates, subject to the above contractual restrictions.

Prior to the Offering, there has been no public market for the shares of
Common Stock. Trading of the shares of Common Stock on the New York Stock
Exchange is expected to commence immediately following

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the completion of the Offering. No prediction can be made as to the effect, if
any, that future sales of shares or the availability of shares for future sale,
will have on the market price prevailing from time to time. Sales of substantial
amounts of shares of Common Stock (including shares of Common Stock issued upon
the exercise of options), or the perception that such sales could occur, could
adversely affect prevailing market prices of the shares of Common Stock. See
"Risk Factors -- Risks of Ownership of Common Stock" and "Partnership
Agreement -- Transfer of Interests."

REDEMPTION/EXCHANGE RIGHTS/REGISTRATION RIGHTS

Each limited partner of the Operating Partnership has the right, commencing
on the first anniversary of becoming a limited partner, to require the Operating
Partnership to redeem part or all of such limited partner's Units for cash
(based on the fair market value of an equivalent number of shares of Common
Stock at the time of such redemption) or, at the election of the Company, to
exchange such Units for shares of Common Stock. See "Formation and Structure of
the Company -- Formation Transactions." If the Company elects to exchange Units
for Common Stock, each Unit will be exchangeable for one share of Common Stock,
subject to adjustment in the event of stock splits, distribution of rights,
extraordinary dividends and similar events.

In order to protect the Company's status as a REIT, a holder of Units is
prohibited from exchanging such Units for shares of Common Stock, to the extent
that as a result of such exchange any person would own or would be deemed to
own, actually or constructively, more than 9.8% of the Common Stock, except to
the extent such holder has been granted an exception to the Ownership Limit. See
"Description of Capital Stock -- Restrictions on Ownership and Transfer."

The Company has granted the Unitholders certain registration rights
(collectively, the "Registration Rights") with respect to the shares of Common
Stock acquired upon exchange of Units or otherwise (the "Registrable Shares").
The Company has agreed to file and generally keep continuously effective
beginning on the first anniversary of the Offering a registration statement
covering the issuance of shares of Common Stock upon exchange of Units and the
resale thereof, provided that such resale complies with the volume and manner of
sale limitations of Rule 144 as if the shares had been held beginning on the
date of the Offering. Such registration rights will also apply with respect to
Performance Units. The Company also has agreed to provide the Registration
Rights to any other person who may become an owner of Units, provided such
person provides the Company with satisfactory undertakings. The Company will
bear expenses incident to its registration obligations upon exercise of the
Registration Rights, including the payment of Federal securities law and state
Blue Sky registration fees, except that it will not bear any underwriting
discounts or commissions or transfer taxes relating to registration of
Registrable Shares.

REINVESTMENT AND SHARE PURCHASE PLAN

The Company is considering the adoption of a Dividend Reinvestment and
Share Purchase Plan that would allow stockholders to automatically reinvest cash
distributions on their outstanding shares of Common Stock and/or Units to
purchase additional shares of Common Stock at a discounted price and without the
payment of any brokerage commission or service charge. Stockholders would also
have the option of investing limited additional amounts by making cash payments.
No decision has been made yet by the Company whether or not to adopt such a plan
and there can be no assurance that such a plan will ever be adopted by the
Company.

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CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following summary of certain material Federal income tax considerations
regarding the Company and the Offering is based on current law, is for general
information only and is not tax advice. The information set forth below, to the
extent that it constitutes matters of law, summaries of legal matters or legal
conclusions, is the opinion of Latham & Watkins, tax counsel to the Company, as
to the material Federal income tax considerations relevant to purchasers of the
Common Stock. This discussion does not purport to deal with all aspects of
taxation that may be relevant to particular stockholders in light of their
personal investment or tax circumstances, or to certain types of stockholders
subject to special treatment under the Federal income tax laws, including,
without limitation, certain financial institutions, life insurance companies,
dealers in securities or currencies, stockholders holding Common Stock as part
of a conversion transaction, as part of a hedge or hedging transaction, or as a
position in a straddle for tax purposes, tax-exempt organizations (except to the
extent discussed under the heading "-- Taxation of Tax-Exempt Stockholders") or
foreign corporations, foreign partnerships and persons who are not citizens or
residents of the United States (except to the extent discussed under the heading
"-- Taxation of Non-U.S. Stockholders"). In addition, the summary below does not
consider the effect of any foreign, state, local or other tax laws that may be
applicable to prospective stockholders.

EACH PROSPECTIVE PURCHASER IS ADVISED TO CONSULT HIS OR HER OWN TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF THE PURCHASE, OWNERSHIP
AND SALE OF THE COMMON STOCK, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND
OTHER TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP AND SALE AND OF POTENTIAL
CHANGES IN APPLICABLE TAX LAWS.

TAXATION OF THE COMPANY

General. The Company intends to make an election to be taxed as a REIT
under Sections 856 through 860 of the Code, commencing with its taxable year
ending December 31, 1997. The Company believes that, commencing with its taxable
year ending December 31, 1997, it will be organized and will operate in such a
manner as to qualify for taxation as a REIT under the Code, and the Company
intends to continue to operate in such a manner, but no assurance can be given
that it will operate in a manner so as to qualify or remain qualified. Depending
on the timing of the closing of the Formation Transactions, it is possible that
the Company will not attempt to qualify as a REIT until 1998. In such case, (i)
the Company would intend to make an election to be taxed as a REIT commencing
with its taxable year ending December 31, 1998 and (ii) the tax opinion
regarding the Company's status as a REIT discussed below would be effective for
the Company's taxable year ending on December 31, 1998 (rather than on December
31, 1997) .

These sections of the Code and the corresponding Treasury Regulations are
highly technical and complex. The following sets forth the material aspects of
the rules that govern the Federal income tax treatment of a REIT and its
stockholders. This summary is qualified in its entirety by the applicable Code
provisions, rules and regulations promulgated thereunder, and administrative and
judicial interpretations thereof.

Latham & Watkins has acted as tax counsel to the Company in connection with
the Formation Transactions, the Offering and the Company's election to be taxed
as a REIT. The Company expects that Latham & Watkins will provide to the Company
at the consummation of the Formation Transactions and the Offering an opinion to
the effect that, commencing with the Company's taxable year ending December 31,
1997, the Company will be organized in conformity with the requirements for
qualification as a REIT, and its proposed method of operation will enable it to
meet the requirements for qualification and taxation as a REIT under the Code.
It must be emphasized that this opinion will be based on various assumptions and
will be conditioned upon certain representations made by the Company, AMBIRA,
the Private REITs and certain other persons as to factual matters. In addition,
this opinion will be based upon the factual representations of the Company
concerning its business and properties as set forth in this Prospectus, and will
assume that the actions described in this Prospectus are completed in a timely
fashion. Moreover, such qualification and taxation as a REIT will depend upon
the Company's ability to meet (through actual annual operating results,
distribution levels and diversity of share ownership) the various qualification
tests imposed under the Code

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discussed below, the results of which will not be reviewed by Latham & Watkins.
Accordingly, no assurance can be given that the actual results of the Company's
operations for any particular taxable year will satisfy such requirements.
Further, the anticipated income tax treatment described in this Prospectus may
be changed, perhaps retroactively, by legislative, administrative or judicial
action at any time. See "-- Failure of the Company to Qualify as a REIT."

If the Company qualifies for taxation as a REIT, it generally will not be
subject to Federal corporate income taxes on its net income that is currently
distributed to stockholders. This treatment substantially eliminates the "double
taxation" (at the corporate and stockholder levels) that generally results from
investment in a regular corporation. However, the Company will be subject to
Federal income tax as follows. First, the Company will be taxed at regular
corporate rates on any undistributed "REIT taxable income," including
undistributed net capital gains. Second, under certain circumstances, the
Company may be subject to the "alternative minimum tax" on its items of tax
preference. Third, if the Company has (i) net income from the sale or other
disposition of "foreclosure property" (defined generally as property acquired by
the Company through foreclosure or otherwise after a default on a loan secured
by the property or a lease of the property) which is held primarily for sale to
customers in the ordinary course of business or (ii) other nonqualifying income
from foreclosure property, it will be subject to tax at the highest corporate
rate on such income. Fourth, if the Company has net income from prohibited
transactions (which are, in general, certain sales or other dispositions of
property held primarily for sale to customers in the ordinary course of business
other than foreclosure property), such income will be subject to a 100% tax.
Fifth, if the Company should fail to satisfy the 75% gross income test or the
95% gross income test (as discussed below), but has nonetheless maintained its
qualification as a REIT because certain other requirements have been met, it
will be subject to a 100% tax on an amount equal to (a) the gross income
attributable to the greater of the amount by which the Company fails the 75% or
95% test multiplied by (b) a fraction intended to reflect the Company's
profitability. Sixth, if the Company should fail to distribute during each
calendar year at least the sum of (i) 85% of its REIT ordinary income for such
year, (ii) 95% of its REIT capital gain net income for such year and (iii) any
undistributed taxable income from prior periods, the Company would be subject to
a 4% excise tax on the excess of such required distribution over the amounts
actually distributed. Seventh, with respect to any asset (a "Built-In Gain
Asset") acquired by the Company from a corporation which is or has been a C
corporation (i.e., generally a corporation subject to full corporate-level tax)
in a transaction in which the basis of the Built-In Gain Asset in the hands of
the Company is determined by reference to the basis of the asset in the hands of
the C corporation, if the Company recognizes gain on the disposition of such
asset during the ten-year period (the "Recognition Period") beginning on the
date on which such asset was acquired by the Company, then, to the extent of the
Built-In Gain (i.e., the excess of (a) the fair market value of such asset over
(b) the Company's adjusted basis in such asset, determined as of the beginning
of the Recognition Period), such gain will be subject to tax at the highest
regular corporate rate pursuant to Treasury Regulations that have not yet been
promulgated. The results described above with respect to the recognition of
Built-In Gain assume that the Company will make an election pursuant to IRS
Notice 88-19.

Requirements for Qualification. The Code defines a REIT as a corporation,
trust or association (i) which is managed by one or more trustees or directors;
(ii) the beneficial ownership of which is evidenced by transferable shares, or
by transferable certificates of beneficial interest; (iii) which would be
taxable as a domestic corporation, but for Sections 856 through 859 of the Code;
(iv) which is neither a financial institution nor an insurance company subject
to certain provisions of the Code; (v) the beneficial ownership of which is held
by 100 or more persons; (vi) during the last half of each taxable year not more
than 50% in value of the outstanding stock of which is owned, actually or
constructively, by five or fewer individuals (as defined in the Code to include
certain entities); and (vii) which meets certain other tests, described below,
regarding the nature of its income and assets and the amount of its
distributions. The Code provides that conditions (i) to (iv), inclusive, must be
met during the entire taxable year and that condition (v) must be met during at
least 335 days of a taxable year of twelve months, or during a proportionate
part of a taxable year of less than twelve months. Conditions (v) and (vi) will
not apply until after the first taxable year for which an election is made to be
taxed as a REIT. For purposes of conditions (v) and (vi), pension funds and
certain other tax-exempt entities are treated as individuals, subject to a
"look-through" exception in the case of condition (vi).

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The Company believes that it will issue sufficient shares of Common Stock
with sufficient diversity of ownership pursuant to the Formation Transactions
and the Offering to allow it to satisfy conditions (v) and (vi). In addition,
the Articles of Incorporation provide for restrictions regarding the transfer
and ownership of shares, which restrictions are intended to assist the Company
in continuing to satisfy the share ownership requirements described in (v) and
(vi) above. Such ownership and transfer restrictions are described in
"Description of Capital Stock -- Restrictions on Ownership and Transfer." These
restrictions, however, may not ensure that the Company will, in all cases, be
able to satisfy the share ownership requirements described above. If the Company
fails to satisfy share ownership requirements, the Company's status as a REIT
will terminate; provided, however, if the Company complies with the rules
contained in the applicable Treasury Regulations requiring the Company to
ascertain the actual ownership of its Shares but the Company does not know, or
would not have known through the exercise of reasonable diligence, whether it
failed to meet the requirement in condition (vi) above, the Company will be
treated as having met such requirement. See "-- Failure of the Company to
Qualify as a REIT." In addition, a corporation may not elect to become a REIT
unless its taxable year is the calendar year. The Company will have a calendar
taxable year.

Termination of S Status. AMB believes that it validly elected to be taxed
as an S corporation beginning with its 1989 taxable year and that such election
has not been revoked and has not otherwise terminated since such year. In order
to become a REIT, AMB must revoke its S election. Under Section 1362(d) of the
Code, AMB may voluntarily revoke its S election as of a specified date, provided
that stockholders of AMB owning more than one-half of its issued and outstanding
shares on the day of the revocation consent to such revocation. It is expected
that AMB will revoke its S election shortly before the consummation of the
Formation Transactions. In such event, AMB will qualify as an S corporation for
the period (the "Short S Year") beginning on January 1 of such year and ending
on the day before the revocation is effective, and will be taxable as a C
corporation (and eligible to elect to be taxed as a REIT) for the period
beginning with its short taxable year (the "Short C Year") beginning on the
effective date of the revocation and ending on the following December 31. It is
expected that AMB's books will be closed at the end of its Short S Year, which
will allow AMB's income and loss attributable to its Short S Year and Short C
Year to be allocated solely to the short year to which it is attributable. This
treatment requires the unanimous approval of the persons who are AMB's
stockholders on the first day of the Short C Year (i.e., the historic AMB
stockholders). If AMB is not an S corporation in the calendar year in which the
Formation Transactions occur, AMB would not be permitted to have a Short S Year
and a Short C Year, as described above. In such case, the Company likely would
not qualify as a REIT for its year including the Formation Transactions and
perhaps subsequent years. See "Failure of the Company to Qualify as a REIT."

The Company expects that Latham & Watkins will provide to the Company at
the consummation of the Formation Transactions and the Offering an opinion to
the effect that, commencing with AMB's 1989 taxable year and through the
termination of its S status as a part of the Formation Transactions, AMB has
been an S corporation for Federal income tax purposes. This opinion will be
based on certain representations made by AMB as to factual matters.

Ownership of a Partnership Interest. In the case of a REIT which is a
partner in a partnership, Treasury Regulations provide that the REIT will be
deemed to own its proportionate share of the assets of the partnership and will
be deemed to be entitled to the income of the partnership attributable to such
share. In addition, the character of the assets and gross income of the
partnership shall retain the same character in the hands of the REIT for
purposes of Section 856 of the Code, including satisfying the gross income tests
and the asset tests. Thus, the Company's proportionate share of the assets and
items of income of the Operating Partnership (including the Operating
Partnership's share of such items of any subsidiary partnerships including the
Joint Ventures) will be treated as assets and items of income of the Company for
purposes of applying the requirements described herein. A summary of the rules
governing the Federal income taxation of partnerships and their partners is
provided below in "-- Tax Aspects of the Operating Partnership." The Company
will have direct control of the Operating Partnership and will operate it
consistent with the requirements for qualification as a REIT. The Company,
however, will not have control of certain of the Joint Ventures. If a Joint
Venture takes or expects to take actions which could jeopardize the Company's
status as a REIT or subject the Company to tax, the Company may be forced to
dispose of its interest in such Joint Venture, if possible.

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Income Tests. In order to maintain qualification as a REIT, the Company
annually must satisfy two gross income requirements. First, at least 75% of the
Company's gross income (excluding gross income from prohibited transactions) for
each taxable year must be derived directly or indirectly from investments
relating to real property or mortgages on real property (including "rents from
real property" and, in certain circumstances, interest) or from certain types of
temporary investments. Second, at least 95% of the Company's gross income
(excluding gross income from prohibited transactions) for each taxable year must
be derived from such real property investments, dividends, interest and gain
from the sale or disposition of stock or securities (or from any combination of
the foregoing).

Rents received by the Company will qualify as "rents from real property" in
satisfying the gross income requirements for a REIT described above only if
several conditions are met. First, the amount of rent must not be based in whole
or in part on the income or profits of any person. However, an amount received
or accrued generally will not be excluded from the term "rents from real
property" solely by reason of being based on a fixed percentage or percentages
of receipts or sales. Second, the Code provides that rents received from a
tenant will not qualify as "rents from real property" in satisfying the gross
income tests if the REIT, or an owner of 10% or more of the REIT, actually or
constructively owns 10% or more of such tenant (a "Related Party Tenant").
Third, if rent attributable to personal property leased in connection with a
lease of real property is greater than 15% of the total rent received under the
lease, then the portion of rent attributable to such personal property will not
qualify as "rents from real property." Finally, for rents received to qualify as
"rents from real property," the REIT generally must not operate or manage the
property or furnish or render services to the tenants of such property, other
than through an independent contractor from whom the REIT derives no revenue
(subject to a 1% de minimis exception); provided, however, the Company may
directly perform certain services that are "usually or customarily rendered" in
connection with the rental of space for occupancy only and are not otherwise
considered "rendered to the occupant" of the property. The Company will not,
and, as general partner of the Operating Partnership, will not, permit the
Operating Partnership (or any subsidiary partnerships) to (i) charge rent for
any property that is based in whole or in part on the income or profits of any
person (except by reason of being based on a percentage of receipts or sales, as
described above), (ii) rent any property to a Related Party Tenant, (iii) derive
rental income attributable to personal property (other than personal property
leased in connection with the lease of real property, the amount of which is
less than 15% of the total rent received under the lease), or (iv) perform
services considered to be rendered to the occupant of the property, other than
through an independent contractor from whom the Company derives no revenue.
Notwithstanding the foregoing, the Company may take certain of the actions set
forth in (i) through (iv) above to the extent such actions will not, based on
the advice of tax counsel to the Company, jeopardize the Company's status as a
REIT.

The term "interest" generally does not include any amount received or
accrued (directly or indirectly) if the determination of such amount depends in
whole or in part on the income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term "interest"
solely by reason of being based on a fixed percentage or percentages of receipts
or sales. The Company does not expect to derive significant amounts of interest
that will not qualify under the 75% and 95% gross income tests.

The Investment Management Subsidiary will conduct the asset management
business and receive fees (including incentive fees) in exchange for the
provision of certain services to continuing asset management clients. Such fees
will not accrue to the Company, but the Company will derive its allocable share
of dividend income from the Investment Management Subsidiary through its
interest in the Operating Partnership. Such dividend income will qualify under
the 95%, but not the 75%, REIT gross income test. The Operating Partnership may
provide certain management or administrative services to the Investment
Management Subsidiary. The fees derived by the Operating Partnership as a result
of the provision of such services will be nonqualifying income to the Company
under both the 95% and 75% REIT income tests. The amount of such income will
depend on a number of factors which cannot be determined with certainty,
including the level of services provided. The Company will monitor the amount of
this fee income and take actions intended to keep this income (and any other
nonqualifying income) within the limitations of the REIT income tests. However,
there can be no assurance that such actions will in all cases prevent the
Company from violating a REIT income test.

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If the Company fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may nevertheless qualify as a REIT for such year
if it is entitled to relief under certain provisions of the Code. These relief
provisions will be generally available if the Company's failure to meet such
tests was due to reasonable cause and not due to willful neglect, the Company
attaches a schedule of the sources of its income to its Federal income tax
return, and any incorrect information on the schedule was not due to fraud with
intent to evade tax. It is not possible, however, to state whether in all
circumstances the Company would be entitled to the benefit of these relief
provisions. For example, if the Company fails to satisfy the gross income tests
because nonqualifying income that the Company intentionally incurs exceeds the
limits on such income, the IRS could conclude that the Company's failure to
satisfy the tests was not due to reasonable cause. If these relief provisions
are inapplicable to a particular set of circumstances involving the Company, the
Company would not qualify as a REIT. As discussed above in "Federal Income Tax
Consequences -- Taxation of the Company -- General," even if these relief
provisions apply, a 100% tax would be imposed on an amount equal to (a) the
gross income attributable to the greater of the amount by which the Company
failed the 75% or 95% test multiplied by (b) a fraction intended to reflect the
Company's profitability.

Any gain realized by the Company on the sale of any property held as
inventory or other property held primarily for sale to customers in the ordinary
course of business (including the Company's share of any such gain realized by
the Operating Partnership) will be treated as income from a prohibited
transaction that is subject to a 100% penalty tax. Such prohibited transaction
income may also have an adverse effect upon the Company's ability to satisfy the
income tests for qualification as a REIT. Under existing law, whether property
is held as inventory or primarily for sale to customers in the ordinary course
of a trade or business is a question of fact that depends on all the facts and
circumstances with respect to the particular transaction. The Operating
Partnership expects to hold the Properties for investment with a view to
long-term appreciation, engage in the business of acquiring, developing, owning,
and operating the Properties (and other properties) and make such occasional
sales of the Properties as are consistent with the Operating Partnership's
investment objectives. There can be no assurance, however, that the IRS might
not contend that one or more of such sales is subject to the 100% penalty tax.

Asset Tests. The Company, at the close of each quarter of its taxable year,
must also satisfy three tests relating to the nature of its assets. First, at
least 75% of the value of the Company's total assets must be represented by real
estate assets (including (i) its allocable share of real estate assets held by
partnerships in which the Company owns an interest and (ii) stock or debt
instruments held for not more than one year purchased with the proceeds of a
stock offering or long-term (at least five years) debt offering of the Company),
cash, cash items and government securities. Second, not more than 25% of the
Company's total assets may be represented by securities other than those in the
75% asset class. Third, of the investments included in the 25% asset class, the
value of any one issuer's securities owned by the Company may not exceed 5% of
the value of the Company's total assets and the Company may not own more than
10% of any one issuer's outstanding voting securities.

As described above, the Operating Partnership will own 100% of the non
voting preferred stock of the Investment Management Subsidiary, and by virtue of
its ownership of interests in the Operating Partnership, the Company will be
considered to own its pro rata share of such stock. See "Formation and Structure
of the Company." The stock of the Investment Management Subsidiary held by the
Operating Partnership will not be a qualifying real estate asset. The Operating
Partnership will not own any of the voting securities of the Investment
Management Subsidiary, and therefore the Company (through the Operating
Partnership) will not be considered to own more than 10% of the voting
securities of the Investment Management Subsidiary. However, the value of the
Investment Management Subsidiary stock held by the Company (through the
Operating Partnership) also could not exceed 5% of the value of the Company's
total assets. Latham & Watkins will rely on the Company's representation as to
the value of the stock of such corporation. There can be no assurance, however,
that the IRS would not take a contrary position. The 5% value test must be
satisfied not only on the date that the Company (directly or through the
Operating Partnership) acquires securities in the Investment Management
Subsidiary, but also each time the Company increases its ownership of securities
of the Investment Management Subsidiary (including as a result of increasing its
interest in the Operating Partnership as a result of Company capital
contributions to the Operating Partnership or as limited partners exercise their
redemption/exchange rights). Although the Company will take steps to ensure that
it satisfies

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the 5% value test for any quarter with respect to which retesting is to occur,
there can be no assurance that such steps will always be successful, or will not
require a reduction in the Operating Partnership's overall interest in the
Investment Management Subsidiary.

After initially meeting the asset tests at the close of any quarter, the
Company will not lose its status as a REIT for failure to satisfy the asset
tests at the end of a later quarter solely by reason of changes in asset values.
If the failure to satisfy the asset tests results from an acquisition of
securities or other property during a quarter (including as a result of the
Company increasing its interest in the Operating Partnership), the failure can
be cured by the disposition of sufficient nonqualifying assets within 30 days
after the close of that quarter. The Company intends to maintain adequate
records of the value of its assets to ensure compliance with the asset tests and
to take such other actions within 30 days after the close of any quarter as may
be required to cure any noncompliance. If the Company fails to cure
noncompliance with the asset tests within such time period, the Company would
cease to qualify as a REIT.

Annual Distribution Requirements. The Company, in order to qualify as a
REIT, is required to distribute dividends (other than capital gain dividends) to
its stockholders in an amount at least equal to (i) the sum of (a) 95% of the
Company's "REIT taxable income" (computed without regard to the dividends paid
deduction and by excluding the Company's net capital gain) and (b) 95% of the
excess of the net income, if any, from foreclosure property over the tax imposed
on such income, minus (ii) the excess of the sum of certain items of non-cash
income over 5% of "REIT taxable income." In addition, if the Company disposes of
any Built-In Gain Asset during its Recognition Period, the Company will be
required, pursuant to Treasury Regulations which have not yet been promulgated,
to distribute at least 95% of the Built-in Gain (after tax), if any, recognized
on the disposition of such asset. Such distributions must be paid in the taxable
year to which they relate, or in the following taxable year if declared before
the Company timely files its tax return for such year and if paid on or before
the first regular dividend payment after such declaration. Such distributions
are taxable to holders of Common Stock (other than tax-exempt entities, as
discussed below) in the year in which paid, even though such distributions
relate to the prior year for purposes of the Company's 95% distribution
requirement. The amount distributed must not be preferential -- i.e., each
holder of shares of Common Stock must receive the same distribution per share.
To the extent that the Company does not distribute all of its net capital gain
or distributes at least 95%, but less than 100%, of its "REIT taxable income,"
as adjusted, it will be subject to tax thereon at regular ordinary and capital
gain corporate tax rates. The Company expects to make timely distributions
sufficient to satisfy these annual distribution requirements. In this regard,
the Partnership Agreement authorizes the Company, as general partner, to take
such steps as may be necessary to cause the Operating Partnership to distribute
to its partners an amount sufficient to permit the Company to meet these
distribution requirements.

It is expected that the Company's REIT taxable income will be less than its
cash flow due to the allowance of depreciation and other non-cash charges in
computing REIT taxable income. Accordingly, the Company anticipates that it will
generally have sufficient cash or liquid assets to enable it to satisfy the
distribution requirements described above. It is possible, however, that the
Company, from time to time, may not have sufficient cash or other liquid assets
to meet these distribution requirements due to timing differences between (i)
the actual receipt of income and actual payment of deductible expenses and (ii)
the inclusion of such income and deduction of such expenses in arriving at
taxable income of the Company. In the event that such timing differences occur,
in order to meet the distribution requirements, the Company may find it
necessary to arrange for short-term, or possibly long-term, borrowings or to pay
dividends in the form of taxable stock dividends.

Under certain circumstances, the Company may be able to rectify a failure
to meet the distribution requirement described above for a year by paying
"deficiency dividends" to stockholders in a later year, which may be included in
the Company's deduction for dividends paid for the earlier year. Thus, the
Company may be able to avoid being taxed on amounts distributed as deficiency
dividends; however, the Company will be required to pay interest based upon the
amount of any deduction taken for deficiency dividends.

Furthermore, if the Company should fail to distribute during each calendar
year (or in the case of distributors with declaration and record dates falling
in the last three months of the calendar year, by the end of January immediately
following such year) at least the sum of (i) 85% of its REIT ordinary income for
such

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year, (ii) 95% of its REIT capital gain income for such year and (iii) any
undistributed taxable income from prior periods, the Company would be subject to
a 4% excise tax on the excess of such required distribution over the amounts
actually distributed. Any REIT taxable income and net capital gain on which this
excise tax is imposed for any year is treated as an amount distributed during
that year for purposes of calculating such tax.

Earnings and Profits Distribution Requirement. In order to qualify as a
REIT, the Company cannot have at the end of any taxable year any undistributed
"earnings and profits" that are attributable to a "C corporation" taxable year.
In the Mergers, the Company will succeed to various tax attributes of AMB and
the Private REITs (if the Private REIT Mergers are treated as tax-free
reorganizations under the Code), including any undistributed C corporation
earnings and profits of such corporations. If AMB has qualified as an S
corporation for each year in which its activities would have created C
corporation earnings and profits, and each of the Private REITs has qualified as
a REIT during its existence and its Merger into the Company was treated as a
tax-free reorganization under the Code, then such corporations would not have
any undistributed C corporation earnings and profits. If, however, (i) one or
more of the Private REITs has failed to qualify as a REIT throughout the
duration of its existence, or (ii) AMB failed to qualify as an S corporation for
any year in which its activities would have created C corporation earnings and
profits, then the Company would acquire undistributed C corporation earnings and
profits that, if not distributed by the Company prior to the end of its first
taxable year, would prevent the Company from qualifying as a REIT.

The Company and the Private REITs believe that each of the Private REITs
has qualified as a REIT throughout the duration of its existence and that, in
any event, neither Private REIT should be considered to have any undistributed C
corporation earnings and profits at the time of the applicable Private REIT
Merger. The Company and AMB believe that AMB has qualified as an S corporation
since its 1989 taxable year and that its activities prior to such year did not
create any C corporation earnings and profits. There can be no assurance,
however, that the IRS would not contend otherwise on a subsequent audit of one
or more of AMB or the Private REITs. Although not free from doubt, it appears
pursuant to Treasury Regulations that the Company may be able to use certain
"deficiency dividend" procedures to distribute any earnings and profits deemed
to have been acquired in the Mergers. In order to use this procedure, the
Company would have to make an additional dividend distribution to its
stockholders (in addition to distributions made for purposes of satisfying the
normal REIT distribution requirements) within 90 days of the IRS determination.
In addition, the Company would have to pay to the IRS an interest charge on 50%
of the acquired earnings and profits that were not distributed prior to the end
of the taxable year in which the Formation Transactions occurred. The
availability of this deficiency dividend procedure under these circumstances is
not entirely clear, and there can be no assurance that this procedure would be
available (in which case the Company would fail to qualify as a REIT for each
year in which it failed to satisfy the earnings and profits distribution
requirement). In addition, even if the procedure is available, if the Company
had C corporation earnings and profits at the end of the taxable year in which
the Formation Transactions occur, such a distribution may only allow the Company
to qualify as a REIT for subsequent years (and it may not be permitted to
qualify as a REIT in the year of the Formation Transactions).

Finally, in the event that either Private REIT were determined not to
qualify as a REIT, the Company would not be eligible to elect REIT status for up
to five years after the year in which such Private REIT failed to qualify as a
REIT, if the Company were considered a "successor" to such Private REIT. The
Company would be considered a "successor" for these purposes, however, only if
(i) persons who own 50 percent or more of the shares of Common Stock of the
Company at any time during the taxable year ending after the Formation
Transactions occur owned, directly or indirectly, 50% or more in value of the
shares of such Private REIT during the first year in which it ceased to qualify
as a REIT, and (ii) a significant portion of the Company's assets were assets
owned by such Private REIT. The Company does not believe that the ownership
portion of this test will be met.

Morrison & Foerster has acted as tax counsel to each of CIF and VAF in
connection with their formation and operation prior to the Formation
Transactions. The Company expects that Morrison & Foerster will provide to each
of CIF and VAF at the consummation of the Formation Transactions and the
Offering an opinion to the effect that, commencing with each of CIF's and VAF's
first taxable year and through the closing of the Formation Transactions, each
of such corporations has been organized in conformity with the

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requirements for qualification as a REIT, and its method of operation as set
forth in certain representations has enabled each such corporation to qualify as
a REIT under the Code. It is anticipated that these opinions will be subject to
limitations which are similar to the limitations described above with respect to
the opinion of Latham & Watkins regarding the Company's tax status as a REIT.
See "-- General."

As set forth under the caption "-- Taxation of the Company -- Termination
of S Status" above, the Company expects that Latham & Watkins will provide to
the Company at the consummation of the Formation Transactions and the Offering
an opinion regarding AMB's tax status as an S corporation.

FAILURE OF THE COMPANY TO QUALIFY AS A REIT

If the Company fails to qualify for taxation as a REIT in any taxable year,
and the relief provisions do not apply, the Company will be subject to tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates. Distributions to stockholders in any year in which the
Company fails to qualify will not be deductible by the Company nor will they be
required to be made. As a result, the Company's failure to qualify as a REIT
would substantially reduce the cash available for distribution to stockholders.
In addition, if the Company fails to qualify as a REIT, all distributions to
stockholders will be taxable as ordinary income to the extent of current and
accumulated earnings and profits, and, subject to certain limitations of the
Code, corporate distributees may be eligible for the dividends received
deduction. Unless entitled to relief under specific statutory provisions, the
Company would also be disqualified from taxation as a REIT for the four taxable
years following the year during which qualification was lost. It is not possible
to state whether in all circumstances the Company would be entitled to such
statutory relief.

TAXATION OF TAXABLE U.S. STOCKHOLDERS GENERALLY

As used herein, the term "U.S. Stockholder" means a holder of shares of
Common Stock who (for United States Federal income tax purposes) (i) is a
citizen or resident of the United States, (ii) is a corporation, partnership, or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof, (iii) is an estate, the income of which is
subject to United States Federal income taxation regardless of its source or
(iv) is a trust, if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
fiduciaries have the authority to control all substantial decisions of the
trust.

As long as the Company qualifies as a REIT, distributions made by the
Company out of its current or accumulated earnings and profits (and not
designated as capital gain dividends) will constitute dividends taxable to its
taxable U.S. Stockholders as ordinary income. Such distributions will not be
eligible for the dividends received deduction otherwise available with respect
to dividends received by U.S. Stockholders that are corporations. Distributions
made by the Company that are properly designated by the Company as capital gain
dividends will be taxable to taxable U.S. Stockholders as gains (to the extent
that they do not exceed the Company's actual net capital gain for the taxable
year) from the sale or disposition of a capital asset held for more than one
year without regard to the period for which a U.S. Stockholder has held his
shares of Common Stock. U.S. Stockholders that are corporations may, however, be
required to treat up to 20% of certain capital gain dividends as ordinary
income. To the extent that the Company makes distributions (not designated as
capital gain dividends) in excess of its current and accumulated earnings and
profits, such distributions will be treated first as a tax-free return of
capital to each U.S. Stockholder, reducing the adjusted basis which such U.S.
Stockholder has in his shares of Common Stock for tax purposes by the amount of
such distribution (but not below zero), with distributions in excess of a U.S.
Stockholder's adjusted basis in his shares taxable as capital gain, provided
that the shares have been held as a capital asset (which, with respect to a
non-corporate U.S. Stockholder, will be taxable as long-term capital gain if the
shares have been held for more than eighteen months, mid-term capital gain if
the shares have been held for more than one year but not more than eighteen
months, or short-term capital gain if the shares have been held for one year or
less). Dividends declared by the Company in October, November, or December of
any year and payable to a stockholder of record on a specified date in any such
month shall be treated as both paid by the Company and received by the
stockholder on December 31st of such year; provided that the dividend is
actually paid by the Company on or before January 31st of the following calendar
year. Stockholders may not include in their own income tax returns any net
operating losses or capital losses of the Company.

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Distributions made by the Company and gain arising from the sale or
exchange by a U.S. Stockholder of shares of Common Stock will not be treated as
passive activity income, and, as a result, U.S. Stockholders generally will not
be able to apply any "passive losses" against such income or gain. Distributions
made by the Company (to the extent they do not constitute a return of capital)
generally will be treated as investment income for purposes of computing the
investment income limitation. Gain arising from the sale or other disposition of
Common Stock (or distributions treated as such), however, will not be treated as
investment income under certain circumstances.

The Company may elect to retain, rather than distribute as a capital gain
dividend, its net long-term capital gains. In such event, the Company would pay
tax on such retained net long-term capital gains. In addition to the extent
designated to the Company, a U.S. Stockholder generally would (i) include its
proportionate share of such undistributed long-term capital gains in computing
its long-term capital gains in its return for its taxable year in which the last
day of the Company's taxable year falls (subject to certain limitations as to
the amount so includable), (ii) be deemed to have paid the capital gains tax
imposed on the Company on the designated amounts included in such U.S.
Stockholder's long-term capital gains, (iii) receive a credit or refund for such
amount of tax deemed paid by it, (iv) increase the adjusted basis of its Shares
by the difference between the amount of such includable gains and the tax deemed
to have been paid by it, and (v), in the case of a U.S. Stockholder that is a
corporation, appropriately adjust its earnings and profits for the retained
capital gains in accordance with Treasury Regulations to be prescribed by the
IRS.

Upon any sale or other disposition of Common Stock, a U.S. Stockholder will
recognize gain or loss for Federal income tax purposes in an amount equal to the
difference between (i) the amount of cash and the fair market value of any
property received on such sale or other disposition and (ii) the holder's
adjusted basis in such shares of Common Stock for tax purposes. Such gain or
loss will be capital gain or loss if the shares have been held by the U.S.
Stockholder as a capital asset and, with respect to a non-corporate U.S.
Stockholder, will be mid-term or long-term gain or loss if such shares have been
held for more than one year or eighteen months, respectively. In general, any
loss recognized by a U.S. Stockholder upon the sale or other disposition of
shares of Common Stock that have been held for six months or less (after
applying certain holding period rules) will be treated as a long-term capital
loss, to the extent of capital gain dividends received by such U.S. Stockholder
from the Company which were required to be treated as long-term capital gains.

BACKUP WITHHOLDING

The Company reports to its U.S. Stockholders and the IRS the amount of
dividends paid during each calendar year, and the amount of tax withheld, if
any. Under the backup withholding rules, a stockholder may be subject to backup
withholding at the rate of 31% with respect to dividends paid unless such holder
(i) is a corporation or comes within certain other exempt categories and, when
required, demonstrates this fact, or (ii) provides a taxpayer identification
number, certifies as to no loss of exemption from backup withholding, and
otherwise complies with applicable requirements of the backup withholding rules.
A U.S. Stockholder that does not provide the Company with his correct taxpayer
identification number may also be subject to penalties imposed by the IRS. Any
amount paid as backup withholding will be creditable against the stockholder's
income tax liability. In addition, the Company may be required to withhold a
portion of capital gain distributions to any stockholders who fail to certify
their non-foreign status to the Company. See "-- Taxation of Non-U.S.
Stockholders."

TAXATION OF TAX-EXEMPT STOCKHOLDERS

The IRS has ruled that amounts distributed as dividends by a qualified REIT
do not constitute unrelated business taxable income ("UBTI") when received by a
tax-exempt entity. Based on that ruling, provided that a tax-exempt stockholder
(except certain tax-exempt stockholders described below) has not held its shares
of Common Stock as "debt financed property" within the meaning of the Code and
such shares are not otherwise used in a trade or business, the dividend income
from the Company will not be UBTI to a tax-exempt stockholder. Similarly, income
from the sale of Common Stock will not constitute UBTI unless such tax-exempt
stockholder has held such shares as "debt financed property" within the meaning
of the Code or has used the shares in a trade or business.

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For tax-exempt stockholders which are social clubs, voluntary employee
benefit associations, supplemental unemployment benefit trusts, and qualified
group legal services plans exempt from Federal income taxation under Code
Sections 501(c)(7), (c)(9), (c)(17) and (c)(20), respectively, income from an
investment in the Company will constitute UBTI unless the organization is able
to properly deduct amounts set aside or placed in reserve for certain purposes
so as to offset the income generated by its investment in the Company. Such
prospective investors should consult their own tax advisors concerning these
"set aside" and reserve requirements.

Notwithstanding the above, however, a portion of the dividends paid by a
"pension held REIT" shall be treated as UBTI as to any trust which (i) is
described in Section 401(a) of the Code, (ii) is tax-exempt under Section 501(a)
of the Code and (iii) holds more than 10% (by value) of the interests in the
REIT. Tax-exempt pension funds that are described in Section 401(a) of the Code
are referred to below as "qualified trusts."

A REIT is a "pension held REIT" if (i) it would not have qualified as a
REIT but for the fact that Section 856(h)(3) of the Code provides that stock
owned by qualified trusts shall be treated, for purposes of the "not closely
held" requirement, as owned by the beneficiaries of the trust (rather than by
the trust itself), and (ii) either (a) at least one such qualified trust holds
more than 25% (by value) of the interests in the REIT, or (b) one or more such
qualified trusts, each of which owns more than 10% (by value) of the interests
in the REIT, hold in the aggregate more than 50% (by value) of the interests in
the REIT. The percentage of any REIT dividend treated as UBTI is equal to the
ratio of (i) the UBTI earned by the REIT (treating the REIT as if it were a
qualified trust and therefore subject to tax on UBTI) to (ii) the total gross
income of the REIT. A de minimis exception applies where the percentage is less
than 5% for any year. The provisions requiring qualified trusts to treat a
portion of REIT distributions as UBTI will not apply if the REIT is able to
satisfy the "not closely held" requirement without relying upon the
"look-through" exception with respect to qualified trusts. As a result of
certain limitations on transfer and ownership of Common Stock contained in the
Articles of Incorporation, the Company does not expect to be classified as a
"pension held REIT."

TAXATION OF NON-U.S. STOCKHOLDERS

The rules governing United States Federal income taxation of the ownership
and disposition of stock by persons that are, for purposes of such taxation,
nonresident alien individuals, foreign corporations, foreign partnerships or
foreign estates or trusts (collectively, "Non-U.S. Stockholders") are complex,
and no attempt is made herein to provide more than a brief summary of such
rules. Accordingly, the discussion does not address all aspects of United States
Federal income tax and does not address state, local or foreign tax consequences
that may be relevant to a Non-U.S. Stockholder in light of its particular
circumstances, including, for example, if the investment in the Company is
connected to the conduct by a Non-U.S. Stockholder of a U.S. trade or business.
In addition, this discussion is based on current law, which is subject to
change, and assumes that the Company qualifies for taxation as a REIT.
Prospective Non-U.S. Stockholders should consult with their own tax advisers to
determine the impact of Federal, state, local and foreign income tax laws with
regard to an investment in Common Stock, including any reporting requirements.

Distributions. Distributions by the Company to a Non-U.S. Stockholder that
are neither attributable to gain from sales or exchanges by the Company of
United States real property interests nor designated by the Company as capital
gains dividends will be treated as dividends of ordinary income to the extent
that they are made out of current or accumulated earnings and profits of the
Company. Such distributions ordinarily will be subject to withholding of United
States Federal income tax on a gross basis (that is, without allowance of
deductions) at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty, unless the dividends are treated as effectively
connected with the conduct by the Non-U.S. Stockholder of a United States trade
or business. Dividends that are effectively connected with such a trade or
business will be subject to tax on a net basis (that is, after allowance of
deductions) at graduated rates, in the same manner as domestic stockholders are
taxed with respect to such dividends and are generally not subject to
withholding. Any such dividends received by a Non-U.S. Stockholder that is a
corporation may also be subject to an additional branch profits tax at a 30%
rate or such lower rate as may be specified by an applicable income tax treaty.

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Pursuant to current Treasury Regulations, dividends paid to an address in a
country outside the United States are generally presumed to be paid to a
resident of such country for purposes of determining the applicability of
withholding discussed above and the applicability of a tax treaty rate. Under
proposed Treasury Regulations, not currently in effect, however, a Non-U.S.
Stockholder who wished to claim the benefit of an applicable treaty rate would
be required to satisfy certain certification and other requirements. Under
certain treaties, lower withholding rates generally applicable to dividends do
not apply to dividends from a REIT, such as the Company. Certain certification
and disclosure requirements must be satisfied to be exempt from withholding
under the effectively connected income exemption discussed above.

Distributions in excess of current or accumulated earnings and profits of
the Company will not be taxable to a Non-U.S. Stockholder to the extent that
they do not exceed the adjusted basis of the stockholder's Common Stock, but
rather will reduce the adjusted basis of such stock. For FIRPTA withholding
purposes (discussed below), such distributions (i.e., distributions that are not
made out of earnings and profits) will be treated as consideration for the sale
or exchange of shares of Common Stock. To the extent that such distributions
exceed the adjusted basis of a Non-U.S. Stockholder's Common Stock, they will
give rise to gain from the sale or exchange of his stock, the tax treatment of
which is described below. If it cannot be determined at the time a distribution
is made whether or not such distribution will be in excess of current or
accumulated earnings and profits, the distribution will generally be treated as
a dividend for withholding purposes. However, amounts thus withheld are
generally refundable if it is subsequently determined that such distribution
was, in fact, in excess of current or accumulated earnings and profits of the
Company.

Distributions to a Non-U.S. Stockholder that are designated by the Company
at the time of distribution as capital gains dividends (other than those arising
from the disposition of a United States real property interest) generally will
not be subject to United States Federal income taxation, unless (i) investment
in the Common Stock is effectively connected with the Non-U.S. Stockholder's
United States trade or business, in which case the Non-U.S. Stockholder will be
subject to the same treatment as domestic stockholders with respect to such gain
(except that a stockholder that is a foreign corporation may also be subject to
the 30% branch profits tax, as discussed above) or (ii) the Non-U.S. Stockholder
is a nonresident alien individual who is present in the United States for 183
days or more during the taxable year and has a "tax home" in the United States,
in which case the nonresident alien individual will be subject to a 30% tax on
the individual's capital gains.

Distributions to a Non-U.S. Stockholder that are attributable to gain from
sales or exchanges by the Company of United States real property interests will
cause the Non-U.S. Stockholder to be treated as recognizing such gain as income
effectively connected with a United States trade or business. Non-U.S.
Stockholders would thus generally be entitled to offset its gross income by
allowable deductions and would pay tax on the resulting taxable income at the
same rates applicable to domestic stockholders (subject to a special alternative
minimum tax in the case of nonresident alien individuals). Also, such gain may
be subject to a 30% branch profits tax in the hands of a Non-U.S. Stockholder
that is a corporation and is not entitled to treaty relief or exemption, as
discussed above. The Company is required to withhold 35% of any such
distribution. That amount is creditable against the Non-U.S. Stockholder's
United States Federal income tax liability. To the extent that such withholding
exceeds the actual tax owed by the Non-U.S. Stockholder, the Non-U.S.
Stockholder may claim a refund from the IRS.

The Company or any nominee (e.g., a broker holding shares in street name)
may rely on a certificate of non-foreign status on Form W-8 or Form W-9 to
determine whether withholding is required on gains realized from the disposition
of United States real property interests. A domestic person who holds shares of
Common Stock on behalf of a Non-U.S. Stockholder will bear the burden of
withholding, provided that the Company has properly designated the appropriate
portion of a distribution as a capital gain dividend.

Sale of Common Stock. Gain recognized by a Non-U.S. Stockholder upon the
sale or exchange of shares of Common Stock generally will not be subject to
United States taxation unless such shares constitute a "United States real
property interest" within the meaning of the Foreign Investment in Real Property
Tax Act of 1980 ("FIRPTA"). The Common Stock will not constitute a "United
States real property interest" so long as the Company is a "domestically
controlled REIT." A "domestically controlled REIT" is a REIT in which at all
times during a specified testing period less than 50% in value of its stock is
held directly or indirectly by

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Non-U.S. Stockholders. The Company believes that is a "domestically controlled
REIT," and therefore that the sale of shares of Common Stock are not subject to
taxation under FIRPTA. However, because the shares of Common Stock are publicly
traded, no assurance can be given that the Company will continue to be a
"domestically-controlled REIT." Notwithstanding the foregoing, gain from the
sale or exchange of shares of Common Stock not otherwise subject to FIRPTA will
be taxable to a Non-U.S. Stockholder if the Non-U.S. Stockholder is a
nonresident alien individual who is present in the United States for 183 days or
more during the taxable year and has a "tax home" in the United States. In such
case, the nonresident alien individual will be subject to a 30% tax on the
amount of such individual's gain.

If the Company does not qualify as or ceases to be a
"domestically-controlled REIT," gain arising from the sale or exchange by a
Non-U.S. Stockholder of shares of Common Stock would be subject to United States
taxation under FIRPTA as a sale of a "United States real property interest"
unless the shares are "regularly traded" (as defined by applicable Treasury
Regulations) on an established securities market (e.g., the New York Stock
Exchange) and the selling Non-U.S. Stockholder held no more than 5% (after
applying certain constructive ownership rules) of the shares of Common Stock
during the shorter of (i) the period during which the taxpayer held such shares
or (ii) the 5-year period ending on the date of the disposition of such shares.
If gain on the sale or exchange of shares of Common Stock were subject to
taxation under FIRPTA, the Non-U.S. Stockholder would be subject to regular
United States income tax with respect to such gain in the same manner as a U.S.
Stockholder (subject to any applicable alternative minimum tax, a special
alternative minimum tax in the case of nonresident alien individuals and the
possible application of the 30% branch profits tax in the case of foreign
corporations), and the purchaser of the stock would be required to withhold and
remit to the IRS 10% of the purchase price. The 10% withholding tax will not
apply if the shares are "resale traded" in an established securities market.

Backup Withholding Tax and Information Reporting. Backup withholding tax
(which generally is a withholding tax imposed at the rate of 31% on certain
payments to persons that fail to furnish certain information under the United
States information reporting requirements) and information reporting will
generally not apply to distributions paid to Non-U.S. Stockholders outside the
United States that are treated as (i) dividends subject to the 30% (or lower
treaty rate) withholding tax discussed above, (ii) capital gains dividends or
(iii) distributions attributable to gain from the sale or exchange by the
Company of United States real property interests. As a general matter, backup
withholding and information reporting will not apply to a payment of the
proceeds of a sale of Common Stock by or through a foreign office of a foreign
broker. Information reporting (but not backup withholding) will apply, however,
to a payment of the proceeds of a sale of Common Stock by a foreign office of a
broker that (a) is a United States person, (b) derives 50% or more of its gross
income for certain periods from the conduct of a trade or business in the United
States or (c) is a "controlled foreign corporation" (generally, a foreign
corporation controlled by United States stockholders) for United States tax
purposes, unless the broker has documentary evidence in its records that the
holder is a Non-U.S. Stockholder and certain other conditions are met, or the
stockholder otherwise establishes an exemption. Payment to or through a United
States office of a broker of the proceeds of a sale of Common Stock is subject
to both backup withholding and information reporting unless the stockholder
certifies under penalty of perjury that the stockholder is a Non-U.S.
Stockholder, or otherwise establishes an exemption. A Non-U.S. Stockholder may
obtain a refund of any amounts withheld under the backup withholding rules by
filing the appropriate claim for refund with the IRS.

New Proposed Regulations. The United States Treasury has recently issued
proposed Treasury Regulations regarding the withholding and information
reporting rules discussed above. In general, the proposed Treasury Regulations
do not alter the substantive withholding and information reporting requirements
but unify current certification procedures and forms and clarify and modify
reliance standards. If finalized in their current form, the proposed Treasury
Regulations would generally be effective for payments made after December 31,
1998, subject to certain transition rules.

TAX ASPECTS OF THE OPERATING PARTNERSHIP AND THE JOINT VENTURES

General. Substantially all of the Company's investments will be held
indirectly through the Operating Partnership. In addition, the Operating
Partnership will hold certain of its investments indirectly through the Joint
Ventures. In general, partnerships are "pass-through" entities which are not
subject to Federal income

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tax. Rather, partners are allocated their proportionate shares of the items of
income, gain, loss, deduction and credit of a partnership, and are potentially
subject to tax thereon, without regard to whether the partners receive a
distribution from the partnership. The Company will include in its income its
proportionate share of the foregoing partnership items for purposes of the
various REIT income tests and in the computation of its REIT taxable income.
Moreover, for purposes of the REIT asset tests, the Company will include its
proportionate share of assets held through the Operating Partnership and the
Joint Ventures. See "-- Taxation of the Company -- Ownership of Partnership
Interests by a REIT."

Entity Classification. The Company's interests in the Operating Partnership
and the Joint Ventures involve special tax considerations, including the
possibility of a challenge by the IRS of the status of any of such partnerships
as a partnership (as opposed to an association taxable as a corporation) for
Federal income tax purposes. If the Operating Partnership or any of the Joint
Ventures were treated as an association, it would be taxable as a corporation
and therefore be subject to an entity-level tax on its income. In such a
situation, the character of the Company's assets and items of gross income would
change and preclude the Company from satisfying the asset tests and possibly the
income tests (see "Taxation of the Company -- Requirements for Qualification"
and "-- Asset Tests" and "-- Income Tests"), and, in turn, would prevent the
Company from qualifying as a REIT. See "-- Taxation of the Company -- Failure of
the Company to Qualify as a REIT" above for a discussion of the effect of the
Company's failure to meet such tests for a taxable year. In addition, a change
in the status of the Operating Partnership or any of the Joint Ventures for tax
purposes might be treated as a taxable event, in which case the Company might
incur a tax liability without any related cash distributions.

The IRS recently finalized and published certain Treasury Regulations (the
"Final Regulations") which provide that a domestic business entity not otherwise
classified as a corporation and which has at least two members (an "Eligible
Entity") may elect to be taxed as a partnership for Federal income tax purposes.
The Final Regulations apply for tax periods beginning on or after January 1,
1997 (the "Effective Date"). The Company has not requested, and does not intend
to request, a ruling from the IRS that the Operating Partnership or any of the
Joint Ventures will be treated as a partnership for Federal income tax purposes.
However, the Company believes that the Operating Partnership and each of the
Joint Ventures will be so treated. In addition, in connection with the closing
of the Formation Transactions and the Offering, the Company expects that Latham
& Watkins will deliver an opinion to the Company stating that based on the
provisions of the Partnership Agreement, certain factual assumptions and
representations described in the opinion and the Final Regulations, the
Operating Partnership will be treated as a partnership for Federal income tax
purposes (and not as an association or a publicly traded partnership taxable as
a corporation). Unlike a private letter ruling, an opinion of counsel is not
binding on the IRS, and no assurance can be given that the IRS will not
challenge the status of the Operating Partnership as a partnership for Federal
income tax purposes. If such a challenge were sustained by a court, the
Operating Partnership could be treated as a corporation for Federal income tax
purposes.

Allocations of Operating Partnership Income, Gain, Loss and Deduction. The
Operating Partnership Agreement generally provides that all items of operating
income and loss shall be allocated to its partners in proportion to the number
of Units or Performance Units held by each Unitholder. The allocation of gain or
loss relating to the disposition of the Operating Partnership's assets upon
liquidation is allocated first to the partners in the amounts necessary, in
general, to equalize the Company's and the limited partners' per unit capital
accounts, with any special allocation of gain to the PLPs being offset by a
reduction in the gain allocation to the Company and Unitholders which were
Performance Investors. Although a partnership agreement will generally determine
the allocation of income and loss among partners, such allocations will be
disregarded for tax purposes if they do not comply with the provisions of
Section 704(b) of the Code and the Treasury Regulations promulgated thereunder.
Generally, Section 704(b) and the Treasury Regulations promulgated thereunder
require that partnership allocations respect the economic arrangement of the
partners. Accordingly, as required by Section 704(b) of the Code, the
Partnership Agreement provides for certain "regulatory" allocations which, among
other things, may defer the allocation of losses to the limited partners of the
Operating Partnership. If an allocation is not respected under Section 704(b) of
the Code for Federal income tax purposes, the item subject to the allocation
will be reallocated in accordance with the partners' interests in the
partnership, which will be determined by taking into account all of the facts
and

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circumstances relating to the economic arrangement of the partners with respect
to such item. The allocations of taxable income and loss provided for in the
Partnership Agreement of the Operating Partnership are intended to comply with
the requirements of Section 704(b) of the Code and the Treasury Regulations
promulgated thereunder.

Pursuant to Section 704(c) of the Code, income, gain, loss and deduction
attributable to appreciated or depreciated property that is contributed to a
partnership in exchange for an interest in the partnership, must be allocated in
a manner such that the contributing partner is charged with, or benefits from,
respectively, the unrealized gain or unrealized loss associated with the
property at the time of the contribution. The amount of such unrealized gain or
unrealized loss is generally equal to the difference between the fair market
value of contributed property at the time of contribution and the adjusted tax
basis of such property at such time (a "Book-Tax Difference"). Such allocations
are solely for Federal income tax purposes and do not affect the book capital
accounts or other economic or legal arrangements among the partners. The
Operating Partnership will be formed by way of contributions of property (such
as the property contributed by certain Individual Account Investors and property
contributed by the Company, which the Company acquired as successor to the
Private REITs, if the Private REIT Mergers qualify as tax-free reorganizations)
which may have a fair market value which differs from its adjusted tax basis at
the time of contribution. Consequently, the Partnership Agreement of the
Operating Partnership requires that such allocations be made in a manner
consistent with Section 704(c) of the Code.

In general, the partners of the Operating Partnership who contributed
assets having an adjusted tax basis less than their fair market value at the
time of contribution will be allocated depreciation deductions for tax purposes
which are lower than such deductions would be if determined on a pro-rata basis.
In addition, in the event of the disposition of any of the contributed assets
which have such a Book-Tax Difference, all income attributable to such Book-Tax
Difference generally will be allocated to such contributing partners. These
allocations will tend to eliminate the Book-Tax Difference over the life of the
Operating Partnership. However, the special allocation rules of Section 704(c)
do not always entirely eliminate the Book-Tax Difference on an annual basis or
with respect to a specific taxable transaction such as a sale. Thus, the
carryover basis of the contributed assets in the hands of the Operating
Partnership may cause the Company or other partners to be allocated lower
depreciation and other deductions, and possibly an amount of taxable income in
the event of a sale of such contributed assets in excess of the economic or book
income allocated to it as a result of such sale. Such an allocation might cause
the Company or other partners to recognize taxable income in excess of cash
proceeds, which might adversely affect the Company's ability to comply with the
REIT distribution requirements. See "-- Taxation of the Company -- Requirements
for Qualification" and "-- Annual Distribution Requirements."

Treasury Regulations under Section 704(c) of the Code provide a partnership
with a choice of several methods of accounting for Book-Tax Differences,
including retention of the "traditional method" or the election of certain
methods which would permit any distortions caused by a Book-Tax Difference to be
entirely rectified on an annual basis or a specific taxable transaction such as
a sale. The Operating Partnership and the Company intend to use the "traditional
method" to account for Book-Tax Differences with respect to the Properties
initially contributed to the Operating Partnership in connection with the
Formation Transactions, but they have not yet determined which method they will
use to account for Book-Tax Differences with respect to other properties to be
contributed to the Operating Partnership.

With respect to any property purchased for cash by the Operating
Partnership subsequent to the Formation Transactions and Offering, such property
will initially have a tax basis equal to its fair market value, and Section
704(c) of the Code will not apply.

Basis in Operating Partnership Interest. The Company's adjusted tax basis
in its interest in the Operating Partnership generally (i) will be equal to the
amount of cash and the basis of any other property contributed to the Operating
Partnership by the Company, (ii) will be increased by (a) its allocable share of
the Operating Partnership's income and (b) its allocable share of indebtedness
of the Operating Partnership

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and (iii) will be reduced, but not below zero, by the Company's allocable share
of (a) losses suffered by the Operating Partnership, (b) the amount of cash
distributed to the Company and (c) by constructive distributions resulting from
a reduction in the Company's share of indebtedness of the Operating Partnership.

If the allocation of the Company's distributive share of the Operating
Partnership's loss exceeds the adjusted tax basis of the Company's partnership
interest in the Operating Partnership, the recognition of such excess loss will
be deferred until such time and to the extent that the Company has sufficient
adjusted tax basis in its interest in the Operating Partnership to offset the
loss. To the extent that the Operating Partnership's distributions, or any
decrease in the Company's share of the indebtedness of the Operating Partnership
(such decreases being considered a constructive cash distribution to the
partners), exceeds the Company's adjusted tax basis in the Operating
Partnership, such excess distributions (including such constructive
distributions) will constitute taxable income to the Company.

TAX LIABILITIES AND ATTRIBUTES INHERITED FROM PREDECESSORS

Pursuant to the Formation Transactions, the Company will succeed to certain
of the assets and liabilities of the entities included in the Formation
Transactions, including potential tax liabilities of such entities. For
instance, as a result of the Private REIT Mergers and the Reincorporation
Merger, the Company will acquire all of the assets and liabilities of CIF, VAF,
and AMB, including any tax liabilities of such corporations. The tax treatment
of the Private REIT Mergers is the subject of certain proposed regulations
which, as presently drafted, would not be effective for transfers occurring, or
transfers pursuant to a written agreement which is binding, on or before the
date final regulations on such subject are published. Therefore, the tax
treatment of the Private REIT Mergers may depend, among other things, upon the
timing of such mergers, the date on which the agreements regarding such mergers
become binding and the timing of the publication of the final regulations (if,
and in whatever form, ultimately issued) on this subject. If either of the
Private REIT Mergers does not qualify as a tax-free reorganization under the
Code, the Private REIT Merger would be treated as a taxable sale by the
corresponding Private REIT of its assets to the Company in exchange for shares
of Common Stock of the Company, followed by the Private REIT's distribution to
its stockholders of such shares in a taxable liquidation of the Private REIT. In
this case, such Private REIT would recognize gain on this deemed taxable sale.
However, assuming each Private REIT has at all times qualified for taxation as a
REIT, in calculating its taxable income, it should be entitled to a deduction in
an amount equal to the lesser of (i) its earnings and profits for its taxable
year ending with the Private REIT Merger (including the earnings and profits
arising from the deemed sale of the assets to the Company) or (ii) the fair
market value of the Private REIT Merger consideration it was deemed to
distribute to its stockholders as a result of the Private REIT Merger. As a
result of such deduction, it is expected that neither CIF nor VAF would be
taxable on a material amount of gain for Federal income tax purposes as a result
of such transactions. If either or both of CIF and VAF recognized any such gain
or failed to qualify as a REIT, or if AMB failed to qualify as an S corporation,
for any year prior to the Formation Transactions, the Company could assume a
material Federal income tax liability. In addition, because many of the
properties owned by CIF and VAF have fair market values in excess of their
bases, if the Private REIT Mergers are treated as tax-free reorganizations under
Section 368(a) of the Code, the Company's basis in the assets received pursuant
to the applicable Private REIT Merger will be lower than it would have been had
such Private REIT Merger not been so treated. This lower basis would cause the
Company to have lower depreciation deductions and higher gain on sale with
respect to such properties than would be the case if such properties had been
acquired in a taxable transaction.

The Built-in Gain rules described under the caption "-- Taxation of the
Company -- General" above would apply (i) with respect to any assets acquired by
the Company from a Private REIT in connection with the Private REIT Mergers if
such Private REIT Mergers qualified as tax-free reorganizations under the Code
and if a Private REIT failed to qualify, for any reason, as a REIT at any time
during its existence, and/or (ii) with respect to AMB's assets on the Company's
election to be taxed as a REIT, if AMB failed to qualify, for any reason, as an
S corporation at any time after its acquisition of any of its assets and prior
to its revocation of such election in connection with the Formation
Transactions. In such case, if the Company were not to make an election pursuant
to Notice 88-19, a Private REIT would recognize taxable gain on the Private REIT
Merger under the Built-in Gain rules, notwithstanding that the Private REIT
Merger otherwise qualified as a tax-free reorganization under the Code, and the
Company would be required to recognize

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taxable gain with respect to AMB's assets on its election to be taxed as a REIT
under the Built-in Gain rules, notwithstanding that the Company otherwise
qualified as a REIT. The liability for any tax due with respect to the gain
described above would be assumed by the Company as a result of the Mergers. The
Company believes that (i) each of the Private REITs has qualified as a REIT
throughout its existence and (ii) AMB has qualified as an S corporation since
its 1989 taxable year and that it did not own any assets prior to such date.
However, the Company intends to make a protective election under Notice 88-19
with respect to each of the Private REIT Mergers, and its election to be taxed
as a REIT, in order to avoid the adverse consequences that otherwise could
result from such events.

OTHER TAX CONSEQUENCES

The Company and its stockholders may be subject to state or local taxation
in various state or local jurisdictions, including those in which it or they
transact business or reside. The state and local tax treatment of the Company
and its stockholders may not conform to the Federal income tax consequences
discussed above. Consequently, prospective stockholders should consult their own
tax advisors regarding the effect of state and local tax laws on an investment
in the Company. In addition, the Investment Management Subsidiary will not
qualify as a REIT or as a partnership and, accordingly, will be subject to
Federal, state and local income taxes on its taxable income at regular corporate
rates. As a result, the Investment Management Subsidiary will only be able to
distribute out its net after-tax earnings to its stockholders, including the
Operating Partnership, thereby reducing the cash available for distribution by
the Company to its stockholders.

ERISA CONSIDERATIONS

The following is a summary of material considerations arising under ERISA
and the prohibited transaction provisions of Section 4975 of the Code that may
be relevant to a prospective purchaser (including, with respect to the
discussion contained in "-- Status of the Company under ERISA," a prospective
purchaser that is not an employee benefit plan, another tax-qualified retirement
plan or an individual retirement account ("IRA")). This discussion does not
purport to deal with all aspects of ERISA or Section 4975 of the Code or, to the
extent not preempted, state law that may be relevant to particular employee
benefit plan stockholders (including plans subject to Title I of ERISA, other
employee benefit plans and IRAs subject to the prohibited transaction provisions
of Section 4975 of the Code, and governmental plans and church plans that are
exempt from ERISA and Section 4975 of the Code but that may be subject to state
law requirements) in light of their particular circumstances.

A FIDUCIARY MAKING THE DECISION TO INVEST IN SHARES OF COMMON STOCK ON
BEHALF OF A PROSPECTIVE PURCHASER WHICH IS AN ERISA PLAN, A TAX QUALIFIED
RETIREMENT PLAN, AN IRA OR OTHER EMPLOYEE BENEFIT PLAN IS ADVISED TO CONSULT ITS
OWN LEGAL ADVISOR REGARDING THE SPECIFIC CONSIDERATIONS ARISING UNDER ERISA,
SECTION 4975 OF THE CODE, AND (TO THE EXTENT NOT PRE-EMPTED) STATE LAW WITH
RESPECT TO THE PURCHASE, OWNERSHIP OR SALE OF SHARES OF COMMON STOCK BY SUCH
PLAN OR IRA. Plans should also consider the entire discussion under the heading
"Federal Income Tax Consequences," as material contained therein is relevant to
any decision by an employee benefit plan, tax-qualified retirement plan or IRA
to purchase the Common Stock.

EMPLOYEE BENEFIT PLANS, TAX-QUALIFIED RETIREMENT PLANS AND IRAS

Each fiduciary of an employee benefit plan subject to Title I of ERISA (an
"ERISA Plan") should carefully consider whether an investment in shares of
Common Stock is consistent with its fiduciary responsibilities under ERISA. In
particular, the fiduciary requirements of Part 4 of Title I of ERISA require (i)
an ERISA Plan's investments to be prudent and in the best interests of the ERISA
Plan, its participants and beneficiaries, (ii) an ERISA Plan's investments to be
diversified in order to reduce the risk of large losses, unless it is clearly
prudent not to do so, (iii) an ERISA Plan's investments to be authorized under
ERISA and the terms of the governing documents of the ERISA Plan and (iv) that
the fiduciary not cause the ERISA

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Plan to enter into transactions prohibited under Section 406 of ERISA. In
determining whether an investment in shares of Common Stock is prudent for
purposes of ERISA, the appropriate fiduciary of an ERISA Plan should consider
all of the facts and circumstances, including whether the investment is
reasonably designed, as a part of the ERISA Plan's portfolio for which the
fiduciary has investment responsibility, to meet the objectives of the ERISA
Plan, taking into consideration the risk of loss and opportunity for gain (or
other return) from the investment, the diversification, cash flow and funding
requirements of the ERISA Plan, and the liquidity and current return of the
ERISA Plan's portfolio. A fiduciary should also take into account the nature of
the Company's business, the length of the Company's operating history and other
matters described under "Risk Factors."

The fiduciary of an IRA or of an employee benefit plan not subject to Title
I of ERISA because it is a governmental or church plan or because it does not
cover common law employees (a "Non-ERISA Plan") should consider that such an IRA
or Non-ERISA Plan may only make investments that are either authorized or not
prohibited by the appropriate governing documents, not prohibited under Section
4975 of the Code and permitted under applicable state law.

STATUS OF THE COMPANY UNDER ERISA

A prohibited transaction may occur if the assets of the Company are deemed
to be assets of the investing ERISA Plans and disqualified persons deal with
such assets. In certain circumstances where an ERISA Plan holds an interest in
an entity, the assets of the entity are deemed to be ERISA Plan assets (the
"look-through rule"). Under such circumstances, any person that exercises
authority or control with respect to the management or disposition of such
assets is an ERISA Plan fiduciary. ERISA Plan assets are not defined in ERISA or
the Code, but the United States Department of Labor has issued regulations,
effective March 13, 1987 (the "Regulations"), that outline the circumstances
under which an ERISA Plan's interest in an entity will be subject to the
look-through rule.

The Regulations apply only to the purchase by an ERISA Plan of an "equity
interest" in an entity, such as common stock of a REIT. However, the Regulations
provide an exception to the look-through rule for equity interests that are
"publicly-offered securities." The Regulations also provide exceptions to the
look-through rule for equity interests in certain types of entities, including
any entity which qualifies as either a "real estate operating company" (a
"REOC") or a "venture capital operating company" (a "VCOC").

Under the Regulations, a "publicly-offered security" is a security that is
(i) freely transferable, (ii) part of a class of securities that is widely-held
and (iii) either (a) part of a class of securities that is registered under
section 12(b) or 12(g) of the Exchange Act or (b) sold to an ERISA Plan as part
of an offering of securities to the public pursuant to an effective registration
statement under the Securities Act and the class of securities of which such
security is a part is registered under the Exchange Act within 120 days (or such
longer period allowed by the SEC) after the end of the fiscal year of the issuer
during which the offering of such securities to the public occurred. Whether a
security is considered "freely transferable" depends on the facts and
circumstances of each case. Under the Regulations, if the security is part of an
offering in which the minimum investment is $10,000 or less, then, (i) any
restriction on or prohibition against any transfer or assignment of such
security for the purposes of preventing a termination or reclassification of the
entity for Federal or state tax purposes will not ordinarily prevent the
security from being considered freely transferable and (ii) limitations or
restrictions on the transfer or assignment of a security which are created or
imposed by persons other than the issuer of the security or persons acting for
or on behalf of the issuer will ordinarily not prevent the security from being
considered freely transferable. A class of securities is considered
"widely-held" if it is a class of securities that is owned by 100 or more
investors independent of the issuer and of one another.

Under the Regulations, a REOC is defined as an entity (i) which on certain
testing dates has at least 50% of its assets (other than short-term investments
pending long-term commitment or distribution to investors), valued at cost,
invested in real estate which is managed or developed and with respect to which
the entity has the right to substantially participate directly in the management
or development activities and (ii) which, in the ordinary course of its
business, is engaged directly in real estate management or development
activities. A VCOC is defined as an entity (i) which on certain testing dates
has at least 50% of its assets (other than short-term investments pending
long-term commitment or distribution to investors), valued at cost, invested in
one

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or more operating companies with respect to which the entity has management
rights and (ii) which, in the ordinary course of its business, actually
exercises its management rights with respect to one or more of the operating
companies in which it invests.

The Common Stock of the Company is expected to meet the criteria of the
publicly-offered securities exception to the look-through rule. First, the
Common Stock should be considered to be freely transferable, as the minimum
investment will be less than $10,000 and the only restrictions upon its transfer
are those required under Federal tax laws to maintain the Company's status as a
REIT, resale restrictions under applicable Federal securities laws with respect
to securities not purchased in the Offering and those owned by the Company's
officers, directors and other affiliates, and voluntary restrictions agreed to
by the Company's executive officers, directors and stockholders and Morgan
Stanley & Co. Incorporated, on behalf of the Underwriters in connection with the
Offering. Second, the Common Stock is expected to be held by 100 or more
investors and it is expected that at least 100 or more of these investors will
be independent of the Company and of one another. Third, the Common Stock will
be part of an offering of securities to the public pursuant to an effective
registration statement under the Securities Act and will be registered under the
Exchange Act within 120 days after the end of the fiscal year of the Company
during which the offering of such securities to the public occurs. In addition,
the Company intends to obtain management rights with respect to the Operating
Partnership and to conduct its affairs in such a manner that it will qualify as
either a REOC or VCOC under the Regulations. Accordingly, the Company believes
that if an ERISA Plan purchases the Common Stock, the Company's assets should
not be deemed to be ERISA Plan assets and, therefore, that any person who
exercises authority or control with respect to the Company's assets should not
be an ERISA Plan fiduciary.

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UNDERWRITING

Under the terms and subject to the conditions in the Underwriting Agreement
dated the date hereof (the "Underwriting Agreement"), the U.S. Underwriters
named below for whom Morgan Stanley & Co. Incorporated, BT Alex. Brown
Incorporated, Lehman Brothers Inc., Montgomery Securities and Smith Barney Inc.
are acting as U.S. Representatives, and the International Underwriters named
below for whom Morgan Stanley & Co. International Limited, BT Alex. Brown
International, division of Bankers Trust International PLC, Lehman Brothers
International (Europe), Montgomery Securities and Smith Barney Inc. are acting
as International Representatives, have severally agreed to purchase, and the
Company has agreed to sell to them, severally, the respective number of shares
of Common Stock set forth opposite the names of such Underwriters below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
------------------------------------------------------------------ ---------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated...............................
BT Alex. Brown Incorporated.....................................
Lehman Brothers Inc.............................................
Montgomery Securities...........................................
Smith Barney Inc. ..............................................
-------
Subtotal...................................................
-------
International Underwriters:
Morgan Stanley & Co. International Limited......................
BT Alex. Brown International, division of Bankers Trust
International PLC............................................
Lehman Brothers International (Europe)..........................
Montgomery Securities...........................................
Smith Barney Inc. ..............................................
-------
Subtotal...................................................
-------
Total...................................................
-------
</TABLE>

The U.S. Underwriters and the International Underwriters, and the U.S.
Representatives and the International Representatives, are collectively referred
to as the "Underwriters" and the "Representatives," respectively. The
Underwriting Agreement provides that the obligations of the several Underwriters
to pay for and accept delivery of the shares of Common Stock offered hereby are
subject to the approval of certain legal matters by their counsel and to certain
other conditions. The Underwriters are obligated to take and pay for all of the
shares of Common Stock offered hereby (other than those covered by the U.S.
Underwriters' over-allotment option described below) if any such shares are
taken.

Pursuant to the Agreement between U.S. and International Underwriters, each
U.S. Underwriter has represented and agreed that, with certain exceptions: (i)
it is not purchasing any Shares (as defined herein) for the account of anyone
other than a United States or Canadian Person (as defined herein) and (ii) it
has not offered or sold, and will not offer or sell, directly or indirectly, any
Shares or distribute any prospectus relating to the Shares outside the United
States or Canada or to anyone other than a United States or Canadian Person.
Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has represented and agreed that, with certain
exceptions: (i) it is not purchasing any Shares for the account of any United
States or Canadian Person and (ii) it has not offered or sold, and will not
offer or sell, directly or indirectly, any Shares or distribute any prospectus
relating to the Shares in the United States or Canada or to any United States or
Canadian Person. With respect to any Underwriter that is a U.S. Underwriter and
an International Underwriter, the foregoing representations and agreements (i)
made by it in its capacity as a U.S. Underwriter apply only to it in its
capacity as a U.S. Underwriter and (ii) made by it in its capacity as an
International Underwriter apply only to it in its capacity as an International
Underwriter. The foregoing limitations do not apply to stabilization
transactions or to certain other transactions specified in the Agreement between
U.S. and International Underwriters. As used herein, "United States or Canadian
Person" means any national or resident of the United States or Canada, or any
corporation, pension, profit-

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<PAGE> 162

sharing or other trust or other entity organized under the laws of the United
States or Canada or of any political subdivision thereof (other than a branch
located outside the United States and Canada of any United States or Canadian
Person), and includes any United States or Canadian branch of a person who is
otherwise not a United States or Canadian Person. All shares of Common Stock to
be purchased by the Underwriters under the Underwriting Agreement are referred
to herein as the "Shares."

Pursuant to the Agreement between U.S. and International Underwriters,
sales may be made between the U.S. Underwriters and International Underwriters
of any number of Shares as may be mutually agreed. The per share price of any
Shares sold shall be the public offering price set forth on the cover page
hereof, in United States dollars, less an amount not greater than the per share
amount of the concession to dealers set forth below.

Pursuant to the Agreement between U.S. and International Underwriters, each
U.S. Underwriter has represented that it has not offered or sold, and has agreed
not to offer or sell, any Shares, directly or indirectly, in any province or
territory of Canada or to, or for the benefit of, any resident of any province
or territory of Canada in contravention of the securities laws thereof and has
represented that any offer or sale of Shares in Canada will be made only
pursuant to an exemption from the requirement to file a prospectus in the
province or territory of Canada in which such offer or sale is made. Each U.S.
Underwriter has further agreed to send to any dealer who purchases from it any
of the Shares a notice stating in substance that, by purchasing such Shares,
such dealer represents and agrees that it has not offered or sold, and will not
offer or sell, directly or indirectly, any of such Shares in any province or
territory of Canada or to, or for the benefit of, any resident of any province
or territory of Canada in contravention of the securities laws thereof and that
any offer or sale of Shares in Canada will be made only pursuant to an exemption
from the requirement to file a prospectus in the province or territory of Canada
in which such offer is made, and that such dealer will deliver to any other
dealer to whom it sells any of such Shares a notice containing substantially the
same statement as is contained in this sentence.

Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has represented and agreed that (i) it has not offered
or sold and, prior to the date six months after the closing date for the sale of
Shares to the International Underwriters, will not offer or sell, any Shares to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Shares in, from or otherwise involving
the United Kingdom; and (iii) it has only issued or passed on and will only
issue or pass on in the United Kingdom any document received by it in connection
with the offering of the Shares to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 or is a person to whom such document may otherwise
lawfully be issued or passed on.

Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has further represented that it has not offered or
sold, and has agreed not to offer or sell, directly or indirectly, in Japan or
to or for the account of any resident thereof, any of the Shares acquired in
connection with the distribution contemplated hereby, except for offers or sales
to Japanese International Underwriters or dealers and except pursuant to any
exemption from the registration requirements of the SEC and otherwise in
compliance with applicable provisions of Japanese law. Each International
Underwriter has further agreed to send to any dealer who purchases from it any
of the Shares a notice stating in substance that, by purchasing such Shares,
such dealer represents and agrees that it has not offered or sold, and will not
offer or sell, any of such Shares, directly or indirectly, in Japan or to or for
the account of any resident thereof except for offers or sales to Japanese
International Underwriters or dealers and except pursuant to any exemption from
the registration requirements of the SEC and otherwise in compliance with
applicable provisions of Japanese law, and that such dealer will send to any
other dealer to whom it sells any of such Shares a notice containing
substantially the same statement as is contained in this sentence.

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<PAGE> 163

The Underwriters initially propose to offer part of the shares of Common
Stock directly to the public at the public offering price set forth on the cover
page hereof and part to certain dealers at a price that represents a concession
not in excess of $. a share under the public offering price. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $. a share to other Underwriters or other Underwriters or to certain
dealers. After the initial offering of the shares of Common Stock, the offering
price and other selling terms may from time to time be varied by the
Representatives.

Pursuant to the Underwriting Agreement, the Company has granted to the U.S.
Underwriters an option, exercisable for 30 days from the date of this
Prospectus, to purchase up to an aggregate of additional shares of
Common Stock at the public offering price set forth on the cover page hereof,
less underwriting discounts and commissions. The U.S. Underwriters may exercise
such option to purchase solely for the purpose of covering over-allotments, if
any, made in connection with the offering of the shares of Common Stock offered
hereby. To the extent such option is exercised, each U.S. Underwriter will
become obligated, subject to certain conditions, to purchase approximately the
same percentage of such additional shares of Common stock as the number set
forth next to such U.S. Underwriter's name in the preceding table bears to the
total number of shares of Common Stock set forth next to the names of all U.S.
Underwriters in the preceding table.

At the request of the Company, the Underwriters have reserved for sale, at
the initial public offering price, up to shares offered hereby for
directors, officers and employees of the Company. The number of shares of Common
Stock available for sale to the general public will be reduced to the extent
such persons purchase such reserved shares. Any reserved shares which are not so
purchased will be offered by the Underwriters to the general public on the same
basis as the other shares offered hereby.

The shares of Common Stock have been approved for listing, subject to
official notice of issuance, on the NYSE under the symbol "AMB."

Each of the Executive Officers of the Company has agreed that, during the
period ending two years after the date of this Prospectus, and the Company and
the Independent Directors have agreed that, during the period ending one year
after the date of this Prospectus, without the prior written consent of Morgan
Stanley & Co. Incorporated on behalf of the Underwriters, they will not (i)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of, directly or indirectly, any shares
of Common Stock or any securities convertible into or exercisable or
exchangeable for shares of Common Stock (provided that such shares or securities
are either now owned by such party or are hereafter acquired prior to or in
connection with the offering of the Common Stock offered hereby) or (ii) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise, other
than (x) the Shares, (y) the issuance by the Company of shares of Common Stock
upon the exercise of an option or a warrant or the conversion of a security
outstanding on the date of this Prospectus of which the Underwriters have been
advised in writing and (z) the issuance of shares of Common Stock by the Company
upon conversion or redemption of Units.

The Underwriters have informed the Company that they do not intend sales to
discretionary accounts to exceed five percent of the total number of shares of
Common Stock offered by them.

In order to facilitate the offering of the shares of Common Stock, the
Underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the shares of Common Stock. Specifically, the Underwriters
may over-allot in connection with the Offering, creating a short position in the
shares of Common Stock for their own account. In addition, to cover
over-allotments or to stabilize the price of the shares of Common Stock, the
Underwriters may bid for, and purchase, shares of Common Stock in the open
market. Finally, the underwriting syndicate may reclaim selling concessions
allowed to an Underwriter or a dealer for distributing the shares of Common
Stock in the Offering, if the syndicate repurchases previously distributed
shares of Common Stock in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the shares of Common Stock above independent
market levels. The Underwriters are not required to engage in these activities,
and may end any of these activities at any time.

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<PAGE> 164

The Company and the Underwriters have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act.

Prior to the Offering, there has been no public market for the Common
Stock. The initial public offering price will be determined by negotiations
between the Company and the U.S. Underwriters. Among the factors considered in
determining the initial public offering price will be the future prospects of
the Company and its industry in general, sales, earnings and certain other
financial and operating information of the Company in recent periods, and the
price-earnings ratio, price-sales ratio, market prices of securities and certain
financial and operating information of companies engaged in activities similar
to those of the Company.

Morgan Stanley Asset Management Inc. ("MSAM"), an affiliate of Morgan
Stanley & Co. Incorporated, purchased on behalf of an affiliate and four other
clients for which MSAM serves as an investment advisor an aggregate of
shares of Common Stock in the Formation Transactions at $ per
share.

The Company has agreed to pay Morgan Stanley & Co. Incorporated an advisory
fee equal to 0.65% of the gross proceeds received from the sale of Common Stock
of the Offering for advisory services rendered in connection with the
evaluation, analysis and structuring of the Formation Transactions and the
Offering.

LEGAL MATTERS

Certain legal matters in connection with the Offering will be passed upon
for the Company by Latham & Watkins, Los Angeles, California. Certain legal
matters will be passed upon for the Underwriters by Gibson, Dunn & Crutcher LLP,
Los Angeles, California. Certain legal matters relating to Maryland law,
including the validity of the issuance of the shares of Common Stock offered
hereby, will be passed upon for the Company by Ballard Spahr Andrews &
Ingersoll, Baltimore, Maryland. Morrison & Foerster LLP, San Francisco,
California will give certain legal opinions in connection with the Formation
Transactions on behalf of CIF and VAF, each of which are AMB Predecessors. In
addition, the description of Federal income tax consequences contained in this
Prospectus under the caption "Federal Income Tax Consequences" is, to the extent
that it constitutes matters of law, summaries of legal matters or legal
conclusions, the opinion of Latham & Watkins, special tax counsel to the Company
as to the material Federal income tax consequences of the Offering.

EXPERTS

The financial statements and schedules included in this Prospectus, to the
extent and for the periods indicated in their reports thereto, have been audited
by Arthur Andersen LLP, independent public accountants, and are included herein
in reliance upon the authority of said firm as experts in auditing and
accounting in giving said reports.

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ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-11 (of which this Prospectus is a part) under the Securities Act with respect
to the securities offered hereby. This Prospectus does not contain all
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the content of any contract or
other document are not necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement is qualified in all respects by such
reference and the exhibits and schedules hereto. For further information
regarding the Company and the shares of Common Stock offered hereby, reference
is hereby made to the Registration Statement and such exhibits and schedules,
which may be obtained from the Commission at its principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549, upon payment of the fees prescribed by the
Commission. The Commission maintains a website at http://www.sec.gov containing
reports, proxy and information statements and other information regarding
registrants, including the Company, that file electronically with the
Commission. In addition, the Company intends to file an application to list the
shares of Common Stock on the NYSE and, if the shares of Common Stock are listed
on the NYSE, similar information concerning the Company can be inspected and
copied at the offices of the New York Stock Exchange, 20 Broad Street, New York,
New York 10005.

The Company intends to furnish its stockholders with annual reports
containing audited financial statements and a report thereon by independent
certified public accountants.

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GLOSSARY

"ACBM" means asbestos-containing building materials.

"ADA" means the Americans with Disabilities Act of 1990.

"affiliate" has the meaning given to it in the Securities Act.

"AMB" means AMB Institutional Realty Advisors, Inc., a California
corporation.

"AMB Contributed Properties" means a collective reference to 92 properties
located throughout the U.S., which are owned by certain real estate investment
funds, trusts and partnerships and which are managed by AMB under separate
investment management agreements.

"AMB Intercompany Party" means a party to the Intercompany Agreement.

"AMB Predecessors" means collectively, AMB and certain real estate
investment funds, trusts, corporations and partnerships that prior to the
Offering owned the Properties, as identified in "Note 1. Organization and Basis
of Presentation" to the historical financial statements of the AMB Contributed
Properties, including CIF, VAF, WPF and the Individual Account Investors.

"AMB Property Corporation" means AMB Property Corporation, a Maryland
corporation with its principal office at 505 Montgomery Street, San Francisco,
California 94111.

"AMBCREA" means AMB Corporate Real Estate Advisors, Inc., a California
corporation.

"AMBI" means AMB Investments, Inc., a California corporation.

"Anchor Tenants" means retail tenants occupying more than 10,000 square
feet of rentable square feet and all grocery stores and drugstores.

"Annualized Base Rent" means the monthly contractual rent under existing
leases at June 30, 1997, multiplied by 12. This amount excludes expense
reimbursements and rental abatements for industrial and retail properties as
well as percentage rents for retail properties.

"Articles of Incorporation" means the Articles of Incorporation of the
Company.

"Beneficiary" means a qualified charitable organization selected by the
Company which is the beneficiary of a trust to which will be transferred any
shares of Common Stock in excess of the Ownership Limit or any other limit.

"Book-Tax Difference" means the difference between the fair market value of
contributed property at the time of contribution and the adjusted tax basis of
such property at such time.

"Built-in Gain Asset" means an asset acquired by the Company from a
corporation which is or has been a C Corporation.

"Bylaws" means the bylaws of the Company.

"catch-up adjustment" means an adjustment found in certain advisory
agreements, which is the equivalent of an incentive fee adjustment, as used in
the Amended and Restated Agreement of Limited Partnership of WPF, dated as of
December 15, 1990.

"CIF" means AMB Current Income Fund, Inc., a Maryland corporation.

"CIF Facility" means the unsecured $200 million line of credit by and
between CIF and Morgan Guaranty Trust Company of New York entered into on August
8, 1997.

"Code" means the Internal Revenue Code of 1986.

"Common Stock" means shares of common stock of the Company.

"Company" means AMB Property Corporation and its subsidiaries, including
AMB Property, L.P. and AMB Institutional Realty Advisors, Inc., and with respect
to the period prior to the Offering, the AMB Predecessors.

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"Continuing Investors" means persons and entities which beneficially own
interests in the AMB Predecessors or in the Properties and will receive shares
of Common Stock, or Units, in connection with the Formation Transactions.

"Core Portfolio" means Properties held by the Company during the entire
period for the years being compared as set forth under "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

"Credit Facility" means the unsecured $300 million line of credit with a
consortium of national and international banks which the Company expects to
enter into through the Operating Partnership.

"Debt-to-Total Market Capitalization Ratio" means a ratio calculated based
on the total consolidated and unconsolidated debt of the Company as a percentage
of the market value of outstanding shares of Common Stock and Units (not owned
by the Company) plus total consolidated and unconsolidated debt, but excluding
(i) all nonrecourse consolidated debt in excess of the Company's proportionate
share of such debt and (ii) all nonrecourse unconsolidated debt of partnerships
in which the Company is a limited partner.

"debt financed property" means debt financed property as defined in Section
514(b) of the Code.

"Eastern region" means the Eastern region of the United States as defined
by the National Council of Real Estate Investment Fiduciaries, which contains
the Properties located in Albany, Baltimore, Hartford, Northern New Jersey,
Philadelphia, Washington, D.C. and Wilmington.

"Effective Date" means January 1, 1997.

"Eligible Entity" means a domestic business entity not otherwise classified
as a corporation and which has at least two members.

"Environmental Laws" means the Federal, state and local laws and
regulations relating to the protection of the environment.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

"ERISA Plan" means a pension or welfare benefit plan subject to ERISA or
Section 4975 of the Code.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Executive Officers" means the executive officers of the Company.

"expense reimbursements" means each tenant's proportionate share of taxes,
insurance and operating expenses to be reimbursed to the Company.

"FASB" means the Financial Accounting Standards Board.

"Final Regulations" means certain recently finalized and published Treasury
Regulations which provide that an Eligible Entity may elect to be taxed as a
partnership for Federal income tax purposes.

"FIRPTA" means the Foreign Investment in Real Property Tax Act of 1980.

"Formation Transactions" means certain transactions which the Company, the
Operating Partnership and the Investment Management Subsidiary will engage in to
enable the Company to continue and grow the real estate operations of the AMB
Predecessors, to facilitate the Offering, to enable the Company to qualify as a
REIT for Federal income tax purposes commencing with its taxable year ending
December 31, 1997 and to preserve certain tax advantages for the existing owners
of the Properties.

"forward-looking statements" means statements relating to, without
limitation, future economic performance, plans and objectives of management for
future operations and projections of revenue and other financial items, which
can be identified by the use of forward-looking terminology such as "may,"
"will," "should," "expect," "anticipate," "estimate" or "continue" or the
negative thereof or other variations thereon or comparable terminology.

"Funds from Operations" or "FFO" means income (loss) from operations before
disposal of real estate properties, minority interests and extraordinary items
plus depreciation, amortization, excluding depreciation

161
<PAGE> 168

of furniture, fixtures and equipment less cash distributable to minority
interests in certain Properties owned by the AMB Predecessors.

"GAAP" means generally accepted accounting principles.

"GP Units" means units of the Operating Partnership representing the
general partnership interest therein, with generally identical rights to
distributions as the Units.

"greater than 10% stockholder" means an individual owning (within the
meaning of Section 424(d) of the Code) more than ten percent of the total
combined voting power of all classes of stock of the Company, any subsidiary or
any parent corporation.

"Incentive Stock Option" means the options which the Company expects to
issue, upon consummation of the Offering, to certain officers and employees of
the Company to purchase a specified number of shares of Common Stock at an
exercise price equal to the price to the public in the Offering.

"Indemnity Consideration" means the shares of Common Stock or Units issued,
or cash paid pursuant to any indemnification obligation.

"Indemnity Escrow" means an escrow available to provide for an
indemnification commitment into which the Indemnity Consideration will be
deposited.

"Independent Director" means a director who is not an employee, officer or
affiliate of the Company or a subsidiary or division thereof, or a relative of a
principal executive officer, or who is not an individual member of an
organization acting as advisor, consultant or legal counsel, receiving
compensation on a continuing basis from the Company in addition to director's
fees.

"Individual Account Investors" means certain individual account investors,
each of which has assets under management with AMB pursuant to an investment
advisory agreement.

"Industrial Properties" means the industrial properties comprised
principally of warehouse distribution facilities which are owned by the Company.

"in-fill" means those which are typified by significant population
densities and low availability of land which could be developed into competitive
retail properties. Such properties allow for a more precise analysis of their
trade areas and competition than properties located in areas which are
undergoing substantial real estate development.

"Intercompany Agreement" means that certain agreement dated January 1,
1993, as amended, entered into by and among AMBI, AMB, AMBCREA, AMB Properties,
AMB Development, Inc., AMB Institutional Housing Partners and other related or
commonly controlled business entities as may become parties thereto from to
time.

"International Prospectus" means the prospectus to be used in connection
with an international offering of the shares of Common Stock.

"International Underwriters" means the underwriters named herein for whom
Morgan Stanley & Co. International Limited, BT Alex. Brown International,
division of Bankers Trust International PLC, Lehman Brothers International
(Europe), Montgomery Securities and Smith Barney Inc. are acting as
International Representatives.

"Investment Management Subsidiary" means AMB Institutional Realty Advisors,
Inc., a Maryland corporation, of which the Company will own 100% of the
non-voting preferred stock (representing 95% of its economic value) and the
Executive Officers will own 100% of the outstanding voting common stock
(representing 5% of its economic value) and which will provide the real estate
advisory services to the Company and to certain of AMB's current clients which
do not participate in the Consolidation.

"Investors" means the CIF Stockholders, VAF Stockholders, WPF Investors and
the Individual Account Investors.

"IRA" means an individual retirement account.

162
<PAGE> 169

"IRS" means the United States Internal Revenue Service.

"Joint Ventures" means the joint ventures, limited liability companies and
partnerships between affiliates of CIF, VAF and certain Individual Account
Investors on the one hand, and certain third parties, on the other.

"look-through rule" means under certain circumstances, where an investing
plan holds an interest in an entity and the assets of the entity are deemed to
be Plan assets.

"Measurement Date" means each of the 15th, 18th, 21st and 24th month
anniversaries of the consummation of the Offering.

"Merger Sub" means a newly-formed wholly-owned subsidiary of each of CIF
and VAF.

"Mergers" means the mergers of CIF and VAF into the Merger Subs, the
mergers of the survivors of such mergers into the Company, and the
Reincorporation Merger.

"MGCL" means Maryland General Corporation Law.

"MGT" means Morgan Guaranty Trust Company of New York.

"Midwestern region," means the Midwestern region of the United States as
defined by the National Council of Real Estate Investment Fiduciaries, which
contains the Properties located in Chicago, Cleveland and Minneapolis.

"Morgan Stanley" means Morgan Stanley & Co. Incorporated

"Mortgages" means secured indebtedness as set forth under "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

"MSAM" means Morgan Stanley Asset Management Inc., an affiliate of Morgan
Stanley & Co. Incorporated.

"Named Executive Officers" means the Company's Chief Executive Officer and
the four other most highly compensated executive officers.

"NAIOP" means the National Association of Industrial and Office Parks.

"NAREIM" means the National Association of Real Estate Investment Managers.

"NAREIT" means the National Association of Real Estate Investment Trusts.

"NCREIF" means the National Council of Real Estate Investment Fiduciaries.

"Non-Anchor Tenant" refers to all tenants which are not Anchor Tenants.

"Non-ERISA Plan" means the fiduciary of an IRA or of an employee benefit
plan not subject to Title I of ERISA because it is a governmental or church plan
or because it does not cover common law employees.

"Non-U.S. Stockholders" means persons that are, for purposes of United
States Federal income taxation, nonresident alien individuals, foreign
corporations, foreign partnerships or foreign estates or trusts.

"NPI" means the NCREIF National Property Index.

"NYSE" means the New York Stock Exchange.

"Offering" means the initial public offering of the Company's common stock
made hereby.

"Operating Partnership" means AMB Property, L.P., a Delaware limited
partnership of which the Company is the general partner.

"Ownership Limit" means the Company generally will prohibit ownership,
directly or by virtue of the constructive ownership provisions of the Code, by
any single stockholder of more than 9.8% of the issued and outstanding shares of
Common Stock (subject to certain exceptions) and generally will prohibit
ownership, directly or by virtue of the constructive ownership provisions of the
Code, by any single stockholder of more than 9.8% of the issued and outstanding
shares of any class or series of the Company's Preferred Stock.

163
<PAGE> 170

"Partnership Act" means the Delaware Uniform Limited Partnership Act.

"Partnership Agreement" means the partnership agreement of the Operating
Partnership.

"Pending Acquisitions" means those properties acquired, or in the process
of being acquired by the Company, after June 30, 1997.

"percentage rents" means the rents calculated as a percentage of a tenant's
gross sales above predetermined thresholds.

"Performance Investors" means those Investors which own assets (either
directly or through CIF, VAF or WPF) which are subject to advisory agreements
with AMB and include an incentive fee provision or, in the case of WPF, a "catch
up adjustment."

"Performance Shares" means the specified portion of the Shares issuable in
the Formation Transactions to Performance Investors.

"Performance Units" means units of the Operating Partnership issuable to
certain officers and employees of the Operating Partnership.

"Plan" means an ERISA Plan, a tax-qualified retirement plan or other
employee benefit plan.

"Preference Units" means the preferred units and other partnership
interests of different classes and series of the Operating Partnership having
such rights, preferences and other privileges, variations and designations as
may be determined by the Company.

"Preferred Stock" means preferred shares of beneficial interest, $0.01 par
value per share, which the Articles of Incorporation of the Company authorize
the Board of Directors to cause the Company to issue, in series, and to
establish the preferences, rights and other terms of any series so issued.

"Private REIT(s)" means CIF and VAF individually or collectively, including
the Merger Sub of each.

"Private REIT Mergers" means the mergers of the Private REITs with and into
the Company.

"Prohibited Owner" means the person or entity holding shares in excess of
the Ownership Limit or such other limit.

"Prohibited Transferee" means the purported transferee of a transfer of
Shares of the Company or any other event that would result in any person
violating the Ownership Limit or such other limit provided in the Company's
Articles of Incorporation or as otherwise permitted by the Board of Directors of
the Company.

"Properties" means the Industrial Properties and the Retail Properties.

"property operating expenses" means real estate taxes and insurance,
repairs and maintenance and property operating expenses.

"Proposed Regulations" means certain proposed regulations concerning the
tax treatment of the Private REIT Mergers.

"Prospectuses" means the International Prospectus and the U.S. Prospectus.

"R&D" means research and development.

"Recognition Period" means a 10-year period during which the Company
recognizes gain on the disposition of a Built-in Gain Asset.

"Registrable Shares" means the Shares issuable upon exchange of Units or
otherwise, the holder of which has certain registration rights with respect to
those Shares.

"Registration Rights" means certain registration rights with respect to the
Shares issuable upon exchange of Units or otherwise granted to Investors
receiving Units in connection with the Formation Transactions.

"Regulations" means regulations issued by the United States Department of
Labor, effective as of March 13, 1987.

164
<PAGE> 171

"Reincorporation Merger" means the merger by which AMB would merge into AMB
Property Corporation for the purpose of reincorporating from California into
Maryland.

"REIT" means a real estate investment trust under the Code.

"Related Party Tenant" means a tenant in which a REIT, or an owner of 10%
or more of the REIT actually or constructively owns 10% or more of such tenant.

"Renovation and Expansion Projects" means those properties owned by the
Company under development for completion after June 30, 1997.

"REOC" means an entity (i) which on certain testing dates has at least 50%
of its assets (other than short-term investments pending long-term commitment or
distribution to investors), valued at cost, invested in real estate which is
managed or developed and with respect to which the entity has the right to
substantially participate directly in the management or development activities
and (ii) which, in the ordinary course of its business, is engaged directly in
real estate management or development activities.

"Representatives" means the collective reference to the U.S.
Representatives and the International Representatives.

"restricted securities" has the meaning given to it in Rule 144 under the
Securities Act.

"Restricted Shares" means the "restricted securities" under the meaning of
Rule 144 of the Securities Act consisting of the Shares held or to be held by
Investors and the Shares reserved for issuance upon redemption of Units by
Investors who elect to receive Units in exchange for their respective real
property interests.

"Retail Properties" means the retail properties comprised principally of
community shopping centers which are owned by the Company.

"Rule 144" means the rule adopted by the SEC that permits holders of
restricted securities as well as affiliates of an issuer of the securities,
pursuant to certain conditions and subject to certain restrictions, to sell
their securities publicly without registration under the Securities Act.

"San Francisco Bay Area" means the area comprised of the nine counties in
immediate proximity to the San Francisco Bay.

"SEC" or "Commission" means the Securities and Exchange Commission.

"Section 401(k) Plan" means the Company's Section 401(k) savings/retirement
plan.

"Secured Facility" means a 12-year non-recourse secured financing facility
entered into by CIF on December 12, 1996, which will become an obligation of the
Company upon consummation of the Formation Transactions.

"Securities Act" means the Securities Act of 1933, as amended.

"SFAS" means statements of financial accounting standards issued by the
Financial Accounting Standards Board from time to time.

"Short C Year" means a period in which AMB will be taxable as a C
Corporation beginning on the effective date of revocation of AMB's S Corporation
status and ending on the following December 31.

"Short S Year" means the period prior to which AMB is expected to terminate
its status as an S Corporation beginning on January 1 of such year and ending on
the day before the revocation is effective.

"Southern region" means the Southern region of the United States as defined
by the National Council of Real Estate Investment Fiduciaries, which contains
the Properties located in Atlanta, Austin, Dallas/ Ft. Worth, Houston, Miami and
Orlando.

"stabilization" or "stabilized" means with respect to property, that
capital improvements for repositioning, development and redevelopment programs
have been completed and in effect for a sufficient period of time (but in no
case more than 12 months after shell completion) to achieve market occupancy.

165
<PAGE> 172

"Stock Incentive Plan" means the Stock Option and Incentive Plan
established by the Company.

"Stockholders" means the collective reference to Stockholders of each of
CIF, VAF and AMB.

"Subsidiaries" means the subsidiaries of AMB Property Corporation and AMB
Property, L.P.

"Surviving Partnership" means a limited partnership or limited liability
company which is the surviving entity of a merger, consolidation or combination
of assets with the Operating Partnership.

"Tax-Exempt Stockholder" means a Stockholder exempt from taxation under the
Code.

"Termination Transaction" means, with respect to the Company, any merger,
consolidation or other combination with or into another person, a sale of all or
substantially all of its assets or any reclassification, recapitalization or
change of its outstanding equity interests, unless in connection with such
transaction, all holders of Units either will receive, or will have the right to
elect to receive, for each Unit an amount of cash, securities or other property
equal to the product of the number of Shares into which each Unit is then
exchangeable and the greatest amount of cash, securities or other property paid
to the holder of one Share in consideration of one Share pursuant to such
transaction.

"Transferee" means an assignee, legatee, distributee or other transferee of
all or any portion of a partner's interest in the Operating Partnership.

"Treasury Regulations" means the IRS regulations.

"UBTI" or "unrelated business taxable income" means unrelated business
taxable income as defined in Section 512 of the Code.

"Underwriters" means the collective reference to the U.S. Underwriters and
the International Underwriters.

"Underwriting Agreement" means that certain underwriting agreement dated
the date hereof pursuant to which the U.S. Underwriters and the International
Underwriters have severally agreed to purchase, and the Company has agreed to
sell to them, severally, the respective number of shares of Common Stock set
forth on the table under the caption "Underwriting" herein.

"United States or Canadian Person" means any national or resident of the
United States or Canada, or any corporation, pension, profit-sharing or other
trust or other entity organized under the laws of the United States or Canada or
of any political subdivision thereof (other than a branch located outside the
United States and Canada of any United States or Canadian Person), and includes
any United States or Canadian branch of a person who is otherwise not a United
States or Canadian Person.

"Unitholder" means a holder of Units or Performance Units.

"Units" means units of the Operating Partnership.

"UPREIT" means an umbrella partnership real estate investment trust which
is a REIT that holds all or substantially all of its properties through a
partnership in which the REIT holds an interest.

"U.S. Prospectus" means the prospectus to be used in connection with a
United States offering of the Company's shares of Common Stock.

"U.S. Stockholder" means a holder of shares of Common Stock who (for United
States Federal income tax purposes) (i) is a citizen or resident of the United
States, (ii) is a corporation, partnership, or other entity created or organized
in or under the laws of the United States or of any political subdivision
thereof or (iii) is an estate or trust, the income of which is subject to United
States Federal income taxation regardless of its source.

"U.S. Underwriters" means those underwriters named herein for whom Morgan
Stanley & Co. Incorporated, BT Alex. Brown Incorporated, Lehman Brothers Inc.,
Montgomery Securities and Smith Barney Inc. are acting as U.S. Representatives.

"VAF" means AMB Value Added Fund, Inc., a Maryland corporation.

166
<PAGE> 173

"VCOC" means an entity (i) which on certain testing dates has at least 50%
of its assets (other than short-term investments pending long-term commitment or
distribution to investors), valued at cost invested in one or more operating
companies with respect to which the entity has management rights and (ii) which,
in the ordinary course of its business, actually exercises its management rights
with respect to one or more of the operating companies in which it invests.

"Western region" means the Western region of the United States as defined
by the National Council of Real Estate Investment Fiduciaries, which contains
the Properties located in Denver, Los Angeles, Orange County, Reno, Sacramento,
San Diego, the San Francisco Bay Area, Santa Barbara and Seattle.

"White Paper" means the White Paper on Funds from Operations approved by
the Board of Governors of the NAREIT in March 1995.

"WPF" means AMB Western Properties Fund-I, a California limited
partnership.

"WPF Interests" means the partnership interests in WPF.

"WPF Investors" means the partners of WPF.

167
<PAGE> 174

INDEX TO FINANCIAL INFORMATION

<TABLE>
<CAPTION>
PRO FORMA FINANCIAL INFORMATION (UNAUDITED) PAGE
-----
<S> <C>
AMB PROPERTY CORPORATION
- Pro forma condensed consolidated balance sheet as of June 30, 1997............... F-3
- Notes to pro forma condensed consolidated balance sheet.......................... F-4
- Pro forma condensed consolidated statements of operations for the six months
ended June 30, 1997 and for the year ended December 31, 1996..................... F-6
- Notes to pro forma condensed consolidated statements of operations............... F-8
</TABLE>

HISTORICAL FINANCIAL INFORMATION

<TABLE>
<S> <C>
AMB CONTRIBUTED PROPERTIES
- Report of independent public accountants......................................... F-12
- Combined balance sheets as of December 31, 1995 and 1996 and June 30, 1997....... F-13
- Combined statements of operations for the years ended December 31, 1994, 1995 and
1996 and for the six months ended June 30, 1996 (unaudited) and 1997............. F-14
- Combined statements of owners' equity for the years ended December 31, 1994, 1995
and 1996 and for the six months ended June 30, 1997.............................. F-15
- Combined statements of cash flows for the years ended December 31, 1994, 1995 and
1996 and for the six months ended June 30, 1996 (unaudited) and 1997............. F-16
- Notes to combined financial statements........................................... F-17
- Schedule III -- Historical combined real estate and accumulated depreciation..... F-24
AMB INSTITUTIONAL REALTY ADVISORS, INC.
- Report of independent public accountants......................................... F-29
- Balance sheets as of December 31, 1995 and 1996 and June 30, 1997................ F-30
- Statements of operations for the years ended December 31, 1994, 1995 and 1996 and
for the six months ended June 30, 1996 (unaudited) and 1997...................... F-31
- Statement of changes in shareholders' equity for the years ended December 31,
1994, 1995 and 1996, and for the six months ended June 30, 1997.................. F-32
- Statements of cash flows for the years ended December 31, 1994, 1995 and 1996,
and for the six months ended June 30, 1996 (unaudited) and 1997.................. F-33
- Notes to financial statements.................................................... F-34
THE 1997 ACQUIRED PROPERTIES
- Report of independent public accountants......................................... F-38
- Combined statements of revenues and certain expenses for the year ended December
31, 1996 and for the period from January 1, 1997 to the earlier of the
acquisition date or June 30, 1997 (unaudited).................................... F-39
- Notes to combined statements of revenues and certain expenses.................... F-40
THE 1996 ACQUIRED PROPERTIES
- Report of independent public accountants......................................... F-42
- Combined statements of revenues and certain expenses for the year ended December
31, 1995 and for the period from January 1, 1996 to the acquisition date
(unaudited)...................................................................... F-43
- Notes to combined statements of revenues and certain expenses.................... F-44
</TABLE>

F-1
<PAGE> 175

AMB PROPERTY CORPORATION

PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

BACKGROUND

The accompanying unaudited pro forma condensed consolidated balance sheet
as of June 30, 1997 has been prepared to reflect: (i) the Pending Acquisitions,
(ii) the disposition or partial disposition of properties subsequent to June 30,
1997, (iii) the Formation Transactions, (iv) the Offering and the application of
the net proceeds therefrom and (v) certain other adjustments as if such
transactions and adjustments had occurred on June 30, 1997. The accompanying
unaudited pro forma condensed consolidated statements of operations have been
prepared to reflect: (i) the incremental effect of the acquisition of properties
during the six months ended June 30, 1997 and during the year ended December 31,
1996, (ii) the Pending Acquisitions, (iii) the incremental effect of the
disposition or partial disposition of properties during 1997 and in 1996, (iv)
the Formation Transactions, (v) pro forma debt adjustments resulting from the
repayment of indebtedness with the net proceeds of the Offering and (vi) certain
other adjustments as if such transactions and adjustments had occurred on
January 1, 1996.

These unaudited pro forma condensed consolidated statements should be read
in connection with the historical combined financial statements and notes
thereto of the AMB Contributed Properties and the financial statements and notes
thereto of AMB included elsewhere in this Prospectus. In the opinion of
management, the pro forma condensed consolidated financial information provides
for all adjustments necessary to reflect the effects of the Formation
Transactions, the Offering, property acquisitions and dispositions and certain
other transactions.

The pro forma information is unaudited and is not necessarily indicative of
the consolidated results that would have occurred if the transactions and
adjustments reflected therein had been consummated in the period or on the date
presented, or on any particular date in the future, nor does it purport to
represent the financial position, results of operations or changes in cash flows
for future periods.

F-2
<PAGE> 176

AMB PROPERTY CORPORATION

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
AMB PRE-
CONTRIBUTED PENDING PROPERTY OTHER FORMATION OFFERING
PROPERTIES AMB ACQUISITIONS DISPOSITIONS ADJUSTMENTS TRANSACTIONS AS OFFERING
(1) (2) (3) (4) (5) (6) ADJUSTED (7)
----------- ------ ------------ ------------ ----------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in real
estate, net....... $1,688,083 $ -- $282,300 $(10,682) $ 4,239 $ 251,630 $2,215,570 $ --
Cash and cash
equivalents....... 31,419 917 (3,200) 12,070 (10,300) (16,915) 13,991 --
Financing and
leasing costs,
net............... 15,214 -- -- -- -- (15,214) -- 500
Other assets........ 24,437 6,220 -- -- -- (8,017) 22,640 (2,291)
---------- ------ -------- ------- ------- -------- ---------- ----------
Total
assets.... $1,759,153 $7,137 $279,100 $ 1,388 $ (6,061) $ 211,484 $2,252,201 $ (1,791)
========== ====== ======== ======= ======= ======== ========== ==========
LIABILITIES
Secured line of
credit............ $48,613 $ -- $(48,613) $ -- $ -- $ -- $ -- $ --
Secured debt
facility.......... 73,000 -- -- -- -- 1,167 74,167 --
Credit Facility..... 45,900 -- 134,100 -- -- -- 180,000 (169,667)
Mortgage loans...... 429,047 -- 4,700 -- 19,539 12,488 465,774 (4,533)
Other liabilities... 33,529 3,464 -- -- -- (362) 36,631 (2,291)
---------- ------ -------- ------- ------- -------- ---------- ----------
Total
liabilities... 630,089 3,464 90,187 -- 19,539 13,293 756,572 (176,491)
---------- ------ -------- ------- ------- -------- ---------- ----------
MINORITY
INTERESTS......... 9,598 -- 7,930 -- -- 49,523 67,051 --
---------- ------ -------- ------- ------- -------- ---------- ----------
SHAREHOLDERS' EQUITY
Common shares....... -- -- -- -- -- -- -- --
Additional paid-in
capital........... -- -- -- -- -- 1,428,578 1,428,578 174,700
Owners'
equity/retained
earnings.......... 1,119,466 3,673 180,983 1,388 (25,600) (1,279,910) -- --
---------- ------ -------- ------- ------- -------- ---------- ----------
Total
equity.... 1,119,466 3,673 180,983 1,388 (25,600) 148,668 1,428,578 174,700
---------- ------ -------- ------- ------- -------- ---------- ----------
$1,759,153 $7,137 $279,100 $ 1,388 $ (6,061) $ 211,484 $2,252,201 $ (1,791)
========== ====== ======== ======= ======= ======== ========== ==========

AMB PROPERTY
CORPORATION PRO
FORMA
---------------
<S> <C>
ASSETS
Investments in real
estate, net....... $ 2,215,570
Cash and cash
equivalents....... 13,991
Financing and
leasing costs,
net............... 500
Other assets........ 20,349
----------
Total
assets.... $ 2,250,410
==========
LIABILITIES
Secured line of
credit............ $ --
Secured debt
facility.......... 74,167
Credit Facility..... 10,333
Mortgage loans...... 461,241
Other liabilities... 34,340
----------
Total
liabilities... 580,081
----------
MINORITY
INTERESTS......... 67,051
----------
SHAREHOLDERS' EQUITY
Common shares....... --
Additional paid-in
capital........... 1,603,278
Owners'
equity/retained
earnings.......... --
----------
Total
equity.... 1,603,278
----------
$ 2,250,410
==========
</TABLE>

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

F-3
<PAGE> 177

AMB PROPERTY CORPORATION

NOTES TO PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997 (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

1. Reflects the historical combined balance sheet of the AMB Contributed
Properties as of June 30, 1997. See the historical combined financial statements
and notes thereto of the AMB Contributed Properties included elsewhere in this
Prospectus.

2. Reflects the historical balance sheet of AMB as of June 30, 1997. See
the historical financial statements and notes thereto of AMB included elsewhere
in this Prospectus.

3. Reflects the Pending Acquisitions for an estimated total purchase price
of approximately $282,300, including estimated acquisition costs. See "Business
and Properties -- Property Additions and Projects in Progress." The Company
expects to fund these acquisitions with borrowings on its Credit Facility,
assumption of a mortgage loan, capital contributions by the owners of the AMB
Contributed Properties and cash on hand. The assumed mortgage loan of
approximately $4,700 bears interest at 8.0% and matures in December 1997.

Also reflects the repayment of the secured line of credit with capital
contributed by the owners of the AMB Contributed Properties of approximately
$48,613.

The net increase in owners' equity/retained earnings of $180,983 represents
the portion of the completed and pending acquisitions and paydown of the secured
line of credit funded through capital contributions by the owners of the AMB
Contributed Properties.

4. Reflects the effects of the disposition or partial disposition of four
properties subsequent to June 30, 1997. These dispositions result in a net gain
on disposition of approximately $1,388.

5. Reflects the effects of certain debt transactions occurring subsequent
to June 30, 1997, which result in a total increase in mortgage loans of
approximately $19,539, consisting of (i) construction loan draws of
approximately $2,539, (ii) the securing of new mortgage debt of approximately
$10,000 which bears interest at 7.84% and matures in 2007 (the proceeds of which
were distributed to the owners of the AMB Contributed Properties) and (iii) the
refinancing of a construction loan payable of approximately $16,000 relative to
a completed development project with a permanent mortgage loan of approximately
$23,000 resulting in additional debt of approximately $7,000. The new mortgage
loan bears interest at 7.78% and matures in August 2002.

Also, reflects the effects of development costs of approximately $4,239
incurred subsequent to June 30, 1997, at properties currently under development,
approximately $2,539 of which were funded with draws the construction loan set
forth above, with the balance of $1,700 funded by cash on hand.

The change in cash consists of cash used to fund development costs of
$1,700 and distributions of $8,600 paid to certain owners of the AMB Contributed
Properties.

6. Reflects the effect of the Formation Transactions which, in accordance
with GAAP, will be accounted for as a purchase business combination with AMB as
the acquiring company.

F-4
<PAGE> 178

AMB PROPERTY CORPORATION

NOTES TO PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)
AS OF JUNE 30, 1997 (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

The following table sets forth the Company's calculation of such fair value
and the allocation of the consideration paid in establishing the pro forma
balances:

<TABLE>
<S> <C>
Shares and units issued for interests in Properties, CIF, VAF
and WPF......................................................
Fair value of shares and units................................. $
Fair value of interests acquired............................... $ 1,495,629
Fair value of debt assumed, including debt premium of
approximately $13,655........................................ 719,941
Fair value of minority interests in consolidated joint
ventures..................................................... 21,097
----------
Total consideration paid by AMB................................ $ 2,236,667
==========
</TABLE>

The application of the purchase accounting results in (i) an increase in
the investments in real estate of approximately $251,630 (based upon a pro forma
value of approximately $2,215,570, including certain acquisition costs), (ii)
the write-off of financing and leasing costs associated with the AMB Contributed
Properties of approximately $15,214, (iii) the write-off of deferred rent
receivables of approximately $7,655, (iv) the distribution of estimated net
working capital balances of approximately $16,915 to the owners of the AMB
Contributed Properties, and (v) the recording of debt assumed by AMB at its
estimated fair value, resulting in debt premiums of approximately $1,167 and
$12,488 on the secured debt facility and the mortgage loans, respectively. The
estimated fair value of the debt assumed is based upon estimated borrowing rates
available to the Company for similar debt instruments.

The Consolidation adjustments also reflect the effects of (i) certain
eliminating entries as a result of the consolidation of the historical results
of the AMB Contributed Properties and AMB, (ii) the purchase of furniture,
fixtures and equipment from an affiliate, AMBI, for approximately $1,400 and
(iii) the Company's pro forma equity investment in the Investment Management
Subsidiary of approximately $400. It is anticipated that the Company will
purchase these assets from AMBI contingent upon and concurrent with the
completion of the Offering.

Also reflects the elimination of historical owner's equity/retained
earnings balances and the establishing of the new capital structure of the
Company based on the purchase accounting as described above.

The net change in other liabilities consists of (i) the elimination of
intercompany payables of $1,762 and (ii) a payable of $1,400 incurred in
connection with the Company's purchase of furniture, fixtures and equipment from
AMBI.

The change in minority interests consists of (i) an increase to minority
interests in consolidated joint ventures of $3,569 resulting from recording the
minority interests' share of the fair value of the properties and (ii) the
Company's 2.63% interest in the Operating Partnership (based upon
limited partner units) valued at $45,954.

7. Reflects (i) the repayment of indebtedness of approximately $174,200 and
(ii) the acquisition of interests in certain properties from an Individual
Account Investor for a purchase price of approximately $41,670 with the net
proceeds of the Offering of approximately $215,870. Also reflects financing
costs of approximately $500 incurred in connection with the modification of the
Credit Facility. The modification of the Credit Facility results in an increase
in the total amount available from $200,000 from $300,000.

Also, reflects an adjustment to eliminate approximately $2,291 of accrued
Offering costs, which have been included in the historical financial statements
of AMB as deferred Offering costs and accrued liabilities.

F-5
<PAGE> 179

AMB PROPERTY CORPORATION

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMPLETED
AMB AND
CONTRIBUTED PENDING PROPERTY OTHER FORMATION
PROPERTIES AMB ACQUISITIONS DISPOSITIONS ADJUSTMENTS TRANSACTIONS PRE-OFFERING
(1) (2) (3) (4) (5) (6) AS ADJUSTED
----------- ------- ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Rental revenue................. $ 114,693 $ -- $ 13,354 $ (902) $ -- $ 244 127,389
Net advisory income............ -- 11,008 -- -- (3,707) (6,657) 644
Interest and other income...... 715 75 3,060 -- -- -- 3,850
-------- ------- ------- ----- ------- ------- --------
Total revenues......... 115,408 11,083 16,414 (902) (3,707) (6,413) 131,883
-------- ------- ------- ----- ------- ------- --------

OPERATING EXPENSES
Property operating expenses.... 21,651 -- 1,884 (171) -- (3,841) 19,523
Real estate taxes.............. 16,133 -- 1,334 (151) -- -- 17,316
Interest expense............... 22,751 -- -- (64) 2,338 -- 25,025
Depreciation and
amortization................. 18,131 262 -- (100) (33) 2,578 20,838
General, administrative and
other........................ 415 8,057 -- -- (3,189) (2,212) 3,071
-------- ------- ------- ----- ------- ------- --------
Total operating
expenses............. 79,081 8,319 3,218 (486) (884) (3,475) 85,773
-------- ------- ------- ----- ------- ------- --------
Income from operations before
disposal of real estate and
minority interests........... 36,327 2,764 13,196 (416) (2,823) (2,938) 46,110
-------- ------- ------- ----- ------- ------- --------
Gain on disposal of real
estate....................... 186 -- -- (186) -- -- --
-------- ------- ------- ----- ------- ------- --------
Income from operations before
minority interests........... 36,513 2,764 13,196 (602) (2,823) (2,938) 46,110
-------- ------- ------- ----- ------- ------- --------
Minority interests............. (467) -- (150) -- -- (1,405) (2,022)
-------- ------- ------- ----- ------- ------- --------
Net income..................... $ 36,046 $2,764 $ 13,046 $ (602) $(2,823) $ (4,343) $ 44,088
======== ======= ======= ===== ======= ======= ========
Net income per common share....
Weighted average common shares
outstanding..................

PRO FORMA AMB
DEBT AND OTHER PROPERTY
ADJUSTMENTS CORPORATION
(7) PRO FORMA
-------------- -----------
<S> <C> <C>
REVENUES
Rental revenue................. $ -- $ 127,389
Net advisory income............ -- 644
Interest and other income...... -- 3,850
------- --------
Total revenues......... -- 131,883
------- --------
OPERATING EXPENSES
Property operating expenses.... -- 19,523
Real estate taxes.............. -- 17,316
Interest expense............... (5,958) 19,067
Depreciation and
amortization................. -- 20,838
General, administrative and
other........................ -- 3,071
------- --------
Total operating
expenses............. (5,958) 79,815
------- --------
Income from operations before
disposal of real estate and
minority interests........... 5,958 52,068
------- --------
Gain on disposal of real
estate....................... -- --
------- --------
Income from operations before
minority interests........... 5,958 52,068
------- --------
Minority interests............. 35 (1,987)
------- --------
Net income..................... $ 5,993 $ 50,081(8)
======= ========
Net income per common share.... $ (9)
========
Weighted average common shares
outstanding..................
========
</TABLE>

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

F-6
<PAGE> 180

AMB PROPERTY CORPORATION

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996 (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMPLETED
AMB AND
CONTRIBUTED PENDING PROPERTY OTHER FORMATION
PROPERTIES AMB ACQUISITIONS DISPOSITIONS ADJUSTMENTS TRANSACTIONS PRE-OFFERING
(1) (2) (3) (4) (5) (6) AS ADJUSTED
----------- ------- ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Rental revenue................. $ 174,695 $ -- $ 65,091 $ (2,942) $ -- $ 3,258 $240,102
Net advisory income............ -- 23,430 -- -- (7,574) (14,357) 1,499
Interest and other income...... 1,538 416 6,322 -- -- -- 8,276
-------- ------- ------- ------- ------- ------- --------
Total revenues......... 176,233 23,846 71,413 (2,942) (7,574) (11,099) 249,877
-------- ------- ------- ------- ------- ------- --------

OPERATING EXPENSES
Property operating expenses.... 33,916 -- 8,921 (704) -- (4,507) 37,626
Real estate taxes.............. 23,676 -- 8,977 (451) -- -- 32,202
Interest expense............... 27,076 -- -- (128) 23,102 -- 50,050
Depreciation and
amortization................. 29,191 -- -- (414) (66) 12,965 41,676
General, administrative and
other........................ 838 16,843 -- -- (6,377) (5,162) 6,142
-------- ------- ------- ------- ------- ------- --------
Total operating
expenses............. 114,697 16,843 17,898 (1,697) 16,659 3,296 167,696
-------- ------- ------- ------- ------- ------- --------
Income from operations before
disposal of real estate and
minority interests........... 61,536 7,003 53,515 (1,245) (24,233) (14,395) 82,181
-------- ------- ------- ------- ------- ------- --------
Loss on disposal of real
estate....................... (1,471) -- -- 1,471 -- -- --
-------- ------- ------- ------- ------- ------- --------
Income from operations before
minority interests........... 60,065 7,003 53,515 226 (24,233) (14,395) 82,181
-------- ------- ------- ------- ------- ------- --------
Minority interests............. (465) -- (363) -- -- (2,504) (3,332)
-------- ------- ------- ------- ------- ------- --------
Net income..................... $ 59,600 $ 7,003 $ 53,152 $ 226 $ (24,233) $(16,899) $ 78,849
======== ======= ======= ======= ======= ======= ========
Net income per common share....
Weighted average common shares
outstanding..................

PRO FORMA AMB
DEBT AND OTHER PROPERTY
ADJUSTMENTS CORPORATION
(7) PRO FORMA
--------------- -----------
<S> <C> <C>
REVENUES
Rental revenue................. -- $ 240,102
Net advisory income............ -- 1,499
Interest and other income...... -- 8,276
------- --------
Total revenues......... -- 249,877
------- --------
OPERATING EXPENSES
Property operating expenses.... -- 37,626
Real estate taxes.............. -- 32,202
Interest expense............... (11,916) 38,134
Depreciation and
amortization................. -- 41,676
General, administrative and
other........................ -- 6,142
------- --------
Total operating
expenses............. (11,916) 155,780
------- --------
Income from operations before
disposal of real estate and
minority interests........... 11,916 94,097
------- --------
Loss on disposal of real
estate....................... -- --
------- --------
Income from operations before
minority interests........... 11,916 94,097
------- --------
Minority interests............. 28 (3,304)
------- --------
Net income..................... $11,944 $ 90,793(8)
======= ========
Net income per common share.... $ (9)
========
Weighted average common shares
outstanding..................
========
</TABLE>

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

F-7
<PAGE> 181

AMB PROPERTY CORPORATION

NOTES TO PRO FORMA
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996 (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

1. Reflects the historical combined operations of the AMB Contributed
Properties. See the historical combined financial statements and notes thereto
of the AMB Contributed Properties included elsewhere in this prospectus.

2. Reflects the historical operations of AMB. See the historical financial
statements and notes thereto of AMB included elsewhere in this prospectus.

3. Reflects the incremental effects of (i) 22 properties acquired during
1996, (ii) six properties acquired during the six months ended June 30, 1997 and
the Pending Acquisitions based on the historical operations of such properties
and investments for periods prior to acquisition by the Company. Below is a
summary of the incremental effect of such properties:

<TABLE>
<CAPTION>
1997 1996
------------------------------------ ------------------------------------
1997 1996 AND 1997
ACQUIRED OTHER ACQUIRED OTHER
PROPERTIES PROPERTIES TOTAL PROPERTIES PROPERTIES TOTAL
------------- ---------- ------- ------------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Rental Revenues.................. $11,268 $2,086 $13,354 $50,111 $ 14,980 $65,091
Other income..................... 16 3,044 3,060 118 6,204 6,322
Property operating expenses...... (1,850) (34) (1,884) (7,316) (1,605) (8,921)
Real estate taxes................ (1,219) (115) (1,334) (7,290) (1,687) (8,977)
------- ------ ------- ------- ------- -------
Pro forma effect on net income
before disposal of real estate
and minority interests......... $ 8,215 $4,981 $13,196 $35,623 $ 17,892 $53,515
======= ====== ======= ======= ======= =======
</TABLE>

Of the Pending Acquisitions described above, one transaction represents the
acquisition of a property, and the formation of several joint ventures that will
own the property, in which the Company will own a 90% interest. The joint
venture will be accounted for on a consolidated basis and, accordingly, a 10%
minority interest has been reflected relative to this pending acquisition.
Additionally, one transaction represents an investment in a limited partnership
interest that represents a 52% limited partnership interest in an existing
partnership, which will be accounted for under the equity method of accounting.
Accordingly, the Company's portion of the partnership's net income of $3,044 and
$6,089, respectively, for the six months ended June 30, 1997 and the year ended
December 31, 1996 is included in interest and other income in the accompanying
pro forma statements of operations.

4. Reflects the incremental effects of the disposition of one property
during 1996 and the disposition or partial disposition of six properties during
1997, based upon the historical operations of such properties.

5. Reflects the effects of establishing the Company's investment in the
Investment Management Subsidiary which results in the elimination of (i)
advisory revenues of $3,707 and $7,574, respectively, (ii) general and
administrative expenses of $3,189 and $6,377, respectively, and (iii)
depreciation and amortization of $33 and $66, respectively, for the six months
ended June 30, 1997 and the year ended December 31, 1996. The pro forma
operations of the Investment Management Subsidiary and the Company's

F-8
<PAGE> 182

AMB PROPERTY CORPORATION

NOTES TO PRO FORMA
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996 (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

share of the Investment Management Subsidiary's net income based upon its 95%
economic interest are as follows:

<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Advisory revenues........................................ $ 4,351 $ 9,073
General and administrative expenses...................... (3,189) (6,377)
Depreciation and amortization............................ (33) (66)
------- -------
Income before income taxes............................... 1,129 2,630
Income taxes (at assumed effective tax rate of 40%)...... (452) (1,052)
------- -------
Net income............................................... 677 $ 1,578
------- -------
Company's share of net income............................ $ 644 $ 1,499
======= =======
</TABLE>

Advisory revenues consist of actual fees earned by AMB during the six
months ended June 30, 1997 and the year ended December 31, 1996 from the assets
that are expected to be managed by the Investment Management Subsidiary.

General and administrative expenses consist of direct costs and indirect
costs allocated to the Investment Management Subsidiary by the Company. Such
indirect costs have been allocated based upon the percentage of total assets
expected to be managed by the Investment Management Subsidiary.

Also, reflects an adjustment to historical interest expense to derive
pre-Offering as adjusted interest expense, which has been based upon the
pre-Offering as adjusted debt balances as of June 30, 1997. The calculation of
pre-Offering as adjusted interest expense is as follows:

<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Secured debt facility, pre-Offering balance of $73,000
(before premium of $1,167), assumed interest rate of
7.53%.................................................. $ 2,748 $ 5,497
Credit Facility, pre-Offering balance of $180,000,
assumed interest rate of 7.13%......................... 6,417 12,834
Mortgage loans, pro forma balance of $453,286 (before
premium of $12,488), assumed weighted average interest
rate of 7.90%.......................................... 17,904 35,809
Deferred financing fee amortization, $500 balance, 2 year
term................................................... 125 250
Amortization of debt premium, $13,655 balance, 8 year
term................................................... (853) (1,707)
Unused Credit Facility fees, unused balance of $20,000,
fee of 0.20%........................................... 20 40
Capitalized interest, pro forma construction in process
of $33,454, overall weighted average interest rate of
7.99%.................................................. (1,336) (2,673)
------- -------
Pre-Offering as adjusted interest expense................ $25,025 $50,050
======= =======
</TABLE>

In August 1997, CIF increased the amount available under the Credit
Facility from $100,000 to $200,000. The Credit Facility bears interest at a
variable rate and is subject to changes in LIBOR. A 1/8% increase or decrease
in LIBOR would result in an increase or decrease in annual interest expense of
approximately $225.

6. Reflects the effects of the application of purchase accounting as a
result of the Formation Transactions resulting in pro forma expense adjustments
for the six months ended June 30, 1997, and the year ended December 31, 1996 as
follows: (i) an increase in depreciation expense of $2,578 and $12,965,
respectively (including the effect of depreciation in the amount of $100 and
$200, respectively, on furniture, fixtures and

F-9
<PAGE> 183

AMB PROPERTY CORPORATION

equipment to be purchased by the Company from AMBI), (ii) the reclassification
of certain property-related expenses from general and administrative expense to
property operating expense (due to the internalization of management) of
approximately $2,501 and $5,001, respectively, and (iii) an increase (decrease)
in general, administrative and other expenses of $289 and $(161), respectively,
as a result of the estimated change in costs due to operating as a public entity
including investor relations, accounting and legal fees and other costs related
to the internalization of management. Estimated depreciation and amortization
has been based upon asset lives of 5 to 40 years.

The Consolidation adjustments also reflect the effects of certain
eliminating entries as a result of the consolidation of the historical results
of the AMB Contributed Properties and AMB for the six months ended June 30, 1997
and the year ended December 31, 1996, including: (i) the elimination of $6,657
and $14,357, respectively, in intercompany advisory revenues charged to the
owners of the AMB Contributed Properties by AMB, (ii) the elimination of the
corresponding advisory fee expense recorded by the owners of the AMB Contributed
Properties of $6,342 (excluding approximately $315 in real estate acquisition
fees paid to AMB which have been accounted for as acquisition costs by the
owners of the AMB Contributed Properties and accordingly capitalized into
Investments in Real Estate) and $9,508 (excluding approximately $4,849 in real
estate acquisition fees), respectively.

Also reflects the effect of the Consolidation on minority interests. Such
adjustment is based upon pre-Offering as adjusted income from operations of the
Operating Partnership of approximately $46,110 and $82,181, respectively, for
the six months ended June 30, 1997 and the year ended December 31, 1996 and
pre-Offering minority interests in the Operating Partnership of approximately
3%.

Also, reflects an adjustment to record rental revenues on a straight line
basis for the Properties, including the pending acquisitions, from January 1,
1996, the assumed date of acquisition by AMB. The pro forma straight-line rent
adjustments for the six months ended June 30, 1997 and the year ended December
31, 1996 are calculated as the difference between (i) pro forma straight-line
rental revenues of $1,858 and $5,692, respectively and (ii) historical
straight-line rental revenues of $1,614 and $2,434, respectively.

The pro forma straight-line rents for the Properties and the pending
acquisition have been based upon an assumed completion date of the Formation
Transactions (the acquisition date of the Properties by AMB for pro forma
accounting purposes) of January 1, 1996. The Company expects to complete the
Formation Transactions and the Offering during November 1997. Based upon leases
in place as of August 31, 1997, the Company expects that straight-line rents for
the 12 months following the completion of the Formation Transactions and the
Offering will be approximately $6,570.

The pre-Offering as adjusted operations do not reflect any increases in
real estate taxes that may result from potential tax reassessments that could
occur as the result of the Formation Transactions. Based on the Company's
analysis of potential tax increases, and its ability to pass through such
increases to its tenants in the form of tax reimbursements, the Company believes
that the impact on pro forma revenues and expenses is not material.

F-10
<PAGE> 184

AMB PROPERTY CORPORATION

7. Reflects an adjustment to pre-Offering as adjusted interest expense to
derive pro forma interest expense, which has been based upon the pro forma debt
balances as of June 30, 1997. The calculation of pro forma interest expense is
as follows:

<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Secured debt facility, pro forma balance of $73,000
(before premium of $1,167), assumed interest rate of
7.53%.................................................. $ 2,748 $ 5,497
Credit Facility, pro forma balance of $10,333, assumed
interest rate of 7.13%................................. 368 737
Mortgage loans, pro forma balance of $448,753 (before
premium of $12,488), assumed weighted average interest
rate of 7.90%.......................................... 17,725 35,450
Deferred financing fee amortization, $500 balance, 2 year
term................................................... 125 250
Amortization of debt premium, $13,655 balance, 8 year
term................................................... (853) (1,707)
Unused Credit Facility fees, unused pro forma balance of
$289,667, fee of 0.20%................................. 289 578
Capitalized interest, pro forma construction in process
of $33,454, overall weighted average interest rate of
7.99%.................................................. (1,335) (2,671)
------- -------
Pro forma interest expense............................... $19,067 $38,134
======= =======
</TABLE>

In connection with the Offering, the Company expects to increase the amount
available under the Credit Facility from $200,000 to $300,000. The Credit
Facility bears variable interest at LIBOR plus 150 basis points (which may be
lowered depending upon the credit rating of the Company), requires interest only
payments and has a two-year term which may be extended at the option of the
Company. A 1/8% increase or decrease in LIBOR would result in an increase or
decrease in annual interest expense of approximately $13.

Also reflects the effect of the Offering on minority interests. Such
adjustment is based on pro forma income from operations of the Operating
Partnership of $52,068 and $94,097, respectively, for the six months ended June
30, 1997 and the year ended December 31, 1996 and pro forma minority interests
in the Operating Partnerships of approximately 2.63%.

8. The pro forma taxable income of the Company for the 12 months ended June
30, 1997 is approximately $92,000 which is based upon pro forma income from
operations before minority interest of the Operating Partnership of
approximately $100,000 plus book depreciation and amortization of approximately
$41,200 less other book/tax differences of approximately $9,200 and less tax
depreciation and amortization of approximately $40,000.

9. Represents both primary and fully diluted earnings per share based upon
pro forma shares outstanding of . The impact of options to purchase
shares of Common Stock and the conversion of Units in the Operating Partnership
into shares of Common Stock are not dilutive and as such are excluded from the
calculation of primary and fully diluted earnings per share.

The impact on pro forma per share amounts resulting from the adoption of
Statement of Financial Accounting Standards No. 128 -- "Earnings Per Share" is
not expected to be material.

F-11
<PAGE> 185

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Owners of the
AMB Contributed Properties:

We have audited the accompanying combined balance sheets of the AMB
Contributed Properties as of December 31, 1995 and 1996 and June 30, 1997, and
the related combined statements of operations, owners' equity and cash flows for
the years ended December 31, 1994, 1995 and 1996 and for the six months ended
June 30, 1997. These combined financial statements and the schedule referred to
below are the responsibility of the management of the AMB Contributed
Properties. Our responsibility is to express an opinion on these combined
financial statements and the schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, the evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of the AMB Contributed
Properties as of December 31, 1995 and 1996 and June 30, 1997, and the results
of their operations and their cash flows for the years ended December 31, 1994,
1995 and 1996 and for the six months ended June 30, 1997, in conformity with
generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying schedule is presented
for purposes of complying with the Securities and Exchange Commission rules and
is not a part of the basic financial statements. The schedule has been subjected
to the auditing procedures applied in the audits of the basic financial
statements and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to the basic
financial statements as a whole.

ARTHUR ANDERSEN LLP

San Francisco, California,
August 15, 1997

F-12
<PAGE> 186

AMB CONTRIBUTED PROPERTIES

COMBINED BALANCE SHEETS
AS OF DECEMBER 31, 1995 AND 1996
AND JUNE 30, 1997
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
----------------------- ----------
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
ASSETS
Investments in real estate:
Land and land improvements............................. $ 271,727 $ 450,969 $ 466,526
Buildings and improvements............................. 818,007 1,220,848 1,277,515
Construction in progress............................... 11,431 26,758 22,847
---------- ---------- ----------
Total investments in real estate.................... 1,101,165 1,698,575 1,766,888
Less -- accumulated depreciation....................... (33,726) (61,704) (78,805)
---------- ---------- ----------
Net investments in real estate......................... 1,067,439 1,636,871 1,688,083
---------- ---------- ----------
Cash and cash equivalents................................ 110,474 33,120 31,419
Accounts receivable, net of reserves of $403, $877, and
$1,077, respectively................................... 9,646 13,842 14,606
Deferred rent receivable................................. 3,465 5,899 7,513
Deferred financing and leasing costs, net................ 6,281 13,840 15,214
Prepaid expenses and other assets........................ 2,360 1,471 2,318
---------- ---------- ----------
Total assets................................... $1,199,665 $1,705,043 $1,759,153
========== ========== ==========

LIABILITIES AND OWNERS' EQUITY
Debt:
Mortgage loans......................................... $ 257,597 $ 406,851 $ 429,047
Secured debt facility.................................. -- 73,000 73,000
Secured line of credit................................. -- 46,313 48,613
Unsecured line of credit............................... -- 25,500 45,900
---------- ---------- ----------
Total debt..................................... 257,597 551,664 596,560
---------- ---------- ----------
Accounts payable and other liabilities................... 11,395 14,298 9,942
Accounts payable to affiliates........................... 529 2,713 2,139
Accrued real estate taxes................................ 7,240 8,465 11,995
Security deposits payable................................ 2,141 6,714 7,594
Unearned rental income................................... 896 1,703 1,859
---------- ---------- ----------
Total liabilities 279,798 585,557 630,089
---------- ---------- ----------
Commitments and contingencies
Minority interests....................................... 3,714 12,931 9,598
---------- ---------- ----------
Owners' equity........................................... 916,961 1,107,331 1,120,191
Note receivable from owner............................... (808) (776) (725)
---------- ---------- ----------
Total owners' equity........................... 916,153 1,106,555 1,119,466
---------- ---------- ----------
Total liabilities and owners' equity........... $1,199,665 $1,705,043 $1,759,153
========== ========== ==========
</TABLE>

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

F-13
<PAGE> 187

AMB CONTRIBUTED PROPERTIES

COMBINED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996, AND
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED) AND 1997
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
----------------------------- ----------------------
1994 1995 1996 1996 1997
------- -------- -------- ----------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES
Rental income.......................................... $51,217 $110,418 $174,695 $81,715 $114,693
Interest and other income.............................. 789 2,069 1,538 845 715
------- ------- ------- ------- -------
Total revenues................................. 52,006 112,487 176,233 82,560 115,408
------- ------- ------- ------- -------
OPERATING EXPENSES
Rental expenses........................................ 7,266 15,947 24,408 11,352 15,309
Real estate taxes...................................... 6,412 15,853 23,676 11,212 16,133
Interest expense, including amortization of financing
costs............................................... 12,068 20,902 27,076 13,016 22,751
Depreciation and amortization.......................... 8,845 18,124 29,191 14,410 18,131
Asset management fees to affiliate..................... 3,167 6,250 9,508 4,370 6,342
General, administrative and other expenses............. 350 782 838 335 415
------- ------- ------- ------- -------
Total operating expenses....................... 38,108 77,858 114,697 54,695 79,081
------- ------- ------- ------- -------
Income from operations before disposal of real
estate properties and minority interests.......... 13,898 34,629 61,536 27,865 36,327
Gain (loss) on disposition of properties............... -- -- (1,471) 43 186
------- ------- ------- ------- -------
Income from operations before minority interests.... 13,898 34,629 60,065 27,908 36,513
Minority interests' share of (income) loss............. (559) 12 (465) (220) (467)
------- ------- ------- ------- -------
Net income..................................... $13,339 $ 34,641 $ 59,600 $27,688 $ 36,046
======= ======= ======= ======= =======
</TABLE>

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

F-14
<PAGE> 188

AMB CONTRIBUTED PROPERTIES

COMBINED STATEMENTS OF OWNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996, AND
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
OWNERS' NOTE RECEIVABLE
EQUITY FROM OWNER TOTAL
---------- --------------- ----------
<S> <C> <C> <C>
Balance at December 31, 1993......................... $ 211,364 $(767) $ 210,597
Contributions...................................... 322,651 -- 322,651
Distributions...................................... (43,512) -- (43,512)
Net income......................................... 13,339 -- 13,339
---------- ----- ----------
Balance at December 31, 1994......................... 503,842 (767) 503,075
Contributions...................................... 458,652 -- 458,652
Distributions...................................... (80,174) -- (80,174)
Increase in note receivable from owner............. -- (41) (41)
Net income......................................... 34,641 -- 34,641
---------- ----- ----------
Balance at December 31, 1995......................... 916,961 (808) 916,153
Contributions...................................... 253,322 -- 253,322
Distributions...................................... (122,552) -- (122,552)
Principal reduction on note receivable from
owner........................................... -- 32 32
Net income......................................... 59,600 -- 59,600
---------- ----- ----------
Balance at December 31, 1996......................... 1,107,331 (776) 1,106,555
Contributions...................................... 32,204 -- 32,204
Distributions...................................... (55,390) -- (55,390)
Principal reduction on note receivable from
owner........................................... -- 51 51
Net income......................................... 36,046 -- 36,046
---------- ----- ----------
Balance at June 30, 1997............................. $1,120,191 $(725) $1,119,466
========== ===== ==========
</TABLE>

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

F-15
<PAGE> 189

AMB CONTRIBUTED PROPERTIES

COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996, AND
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED) AND 1997
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
--------------------------------- ----------------------
1994 1995 1996 1996 1997
--------- --------- --------- ----------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................ $ 13,339 $ 34,641 $ 59,600 $ 27,688 $ 36,046
Adjustments to reconcile net income to
net cash provided by operating
activities
Depreciation and amortization......... 8,845 18,124 29,191 14,410 18,131
Amortization of deferred financing
costs.............................. 138 217 479 240 706
Straight-line rents................... (1,404) (2,061) (2,434) (1,033) (1,614)
Minority interests' share of net
income (loss)...................... 559 (12) 465 220 467
(Gain) loss on disposition of
properties......................... -- -- 1,471 (43) (186)
Increase in accounts receivable and
other assets....................... (776) (5,603) (3,307) (3,530) (1,611)
Increase (decrease) in payable to
affiliates......................... 1,001 (472) 2,184 921 (574)
Increase (decrease) in accounts
payable and other liabilities...... 3,364 6,679 7,844 807 (2,881)
Increase in accrued real estate
taxes.............................. 3,634 3,605 1,225 913 3,530
--------- --------- --------- --------- --------
Net cash provided by operating
activities....................... 28,700 55,118 96,718 40,593 52,014
--------- --------- --------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to properties............... (355,485) (419,574) (566,878) (187,996) (71,744)
Additions to leasing costs............ (1,898) (2,741) (6,002) (1,319) (2,885)
--------- --------- --------- --------- --------
Net cash used for investing
activities....................... (357,383) (422,315) (572,880) (189,315) (74,629)
--------- --------- --------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on debt.................... 125,527 59,852 331,023 94,212 47,656
Payments on debt...................... (20,534) (7,744) (36,956) (22,088) (2,760)
Additions to financing fees........... (836) (816) (3,248) (657) (224)
Capital distributions................. (43,512) (80,174) (122,552) (67,645) (55,390)
Capital contributions................. 322,651 450,586 231,491 63,975 32,204
Contributions by minority interests... 150 457 556 -- --
Distributions to minority interests... (368) (2,994) (1,538) (101) (623)
Decrease (increase) in note receivable
from owner......................... (767) (41) 32 16 51
--------- --------- --------- --------- --------
Net cash provided by financing
activities....................... 382,311 419,126 398,808 67,712 20,914
--------- --------- --------- --------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS........................... 53,628 51,929 (77,354) (81,010) (1,701)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD............................. 4,917 58,545 110,474 110,474 33,120
--------- --------- --------- --------- --------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD................................ $ 58,545 $ 110,474 $ 33,120 $ 29,464 $ 31,419
========= ========= ========= ========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest............. $ 11,285 $ 19,699 $ 25,949 $ 12,579 $ 21,860
========= ========= ========= ========= ========
Non cash contributions of real
estate investments by owners and
minority interests-
Assets contributed................. $ -- $ 13,995 $ 32,004 $ 21,831 $ 3,836
Less liabilities assumed........... -- -- (439) (439) --
--------- --------- --------- --------- --------
Net assets contributed........ $ -- $ 13,995 $ 31,565 $ 21,392 $ 3,836
========= ========= ========= ========= ========
</TABLE>

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

F-16
<PAGE> 190

AMB CONTRIBUTED PROPERTIES

NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)

1. ORGANIZATION AND BASIS OF PRESENTATION

The accompanying combined financial statements represent a combination of
the assets, liabilities and operations of 92 properties (the "Properties")
located throughout the United States, which are owned by certain real estate
investment funds, trusts and partnerships. Collectively, the combination of the
operations of the investments in the Properties is referred to as the "AMB
Contributed Properties." The AMB Contributed Properties are managed by AMB
Institutional Realty Advisors, Inc. ("AMB"), the investment manager, under
separate investment management agreements (the "Agreements"). The AMB
Contributed Properties is not a legal entity. A summary of the various entities
that own the Properties, the number of properties and square footage as of June
30, 1997 is as follows:

<TABLE>
<CAPTION>
NUMBER OF
PROPERTY OWNER PROPERTIES SQUARE FOOTAGE
----------------------------------------------------- --------- --------------
<S> <C> <C>
AMB Current Income Fund, Inc.(1)..................... 27 12,891,938
AMB Value Added Fund, Inc............................ 4 1,362,353
AMB Western Properties Fund-I........................ 8 1,119,166
Ameritech Corporation................................ 15 5,989,948
City and County of San Francisco Employees'
Retirement System.................................. 12 3,933,609
First Allmerica Financial Life Insurance Company..... 1 484,370
Milwaukee Employes' Retirement System(1)............. 1 285,480
Southern Company Services Inc........................ 20 8,586,894
SPP Investment Management............................ 1 743,372
Various Family Trusts................................ 3 510,298
--
----------
Total.............................................. 92 35,907,428
== ==========
</TABLE>

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

(1) AMB Current Income Fund, Inc. and Milwaukee Employes' Retirement System own
respective interests in a limited liability company of 66.7% and 33.3%. The
principal asset of the limited liability company is a 2,512,465 square foot
property. The property is included in AMB Current Income Fund, Inc.'s number
of properties and square footage above.

In August 1997, the owners of the AMB Contributed Properties and AMB
approved a business combination plan whereby the owners of the Properties will
exchange their ownership interests for shares in AMB Property Corporation, units
in a subsidiary partnership, AMB Property L.P. (the "Operating Partnership") or,
in certain limited circumstances, cash. The allocation of ownership interests
among the owners of the AMB Contributed Properties and AMB will be based on the
agreed-upon relative value of net assets contributed. The initial allocation
among these entities may change pending the resolution of certain future
performance criteria of AMB Property Corporation. The planned combination is
contingent upon a successful initial public offering of AMB Property
Corporation's common stock. It is anticipated that AMB Property Corporation will
seek to qualify as a real estate investment trust under the Internal Revenue
Code of 1986, as amended.

It is contemplated that AMB Property Corporation will simultaneously raise
equity through an initial public offering of its common stock with anticipated
gross proceeds approximating $250,000. The net proceeds from the anticipated
offering will be used to purchase interests in the Properties of certain owners
of the Properties who have elected not to receive shares or units in AMB
Property Corporation or the Operating Partnership, to repay certain indebtedness
and for working capital. AMB Property Corporation will transfer its ownership
interest in the Properties to the Operating Partnership in exchange for a
general partnership interest therein.

F-17
<PAGE> 191

AMB CONTRIBUTED PROPERTIES

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

The investment management activities previously carried out by AMB for
substantially all of its clients are expected to be transferred to a subsidiary
of AMB Property Corporation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Generally Accepted Accounting Principals

The financial statements have been prepared in accordance with generally
accepted accounting principals using the accrual method of accounting.

Combination

The combined financial statements include the financial position, results
of operations and cash flows of the AMB Contributed Properties and subsidiaries.
All significant intercompany balances and transactions have been eliminated in
the combined financial statements. The combined financial statements include all
costs related to the ownership of the Properties.

The combined statement of operations for the six months ended June 30, 1996
is unaudited; however, in management's opinion, all adjustments of a normal
recurring nature necessary for a fair presentation of the combined financial
statements for the interim period have been reflected.

Investments in Real Estate

Investments in real estate are stated at the lower of depreciated cost or
net realizable value. Net realizable value for financial reporting purposes is
evaluated and identified periodically on a property-by-property basis using
undiscounted cash flow. If a potential impairment is identified, it is measured
by the property's fair value less estimated carrying costs (including interest)
throughout the anticipated holding period, plus the estimated cash proceeds from
the ultimate disposition of the property. To the extent that the carrying value
exceeds the net realizable value, a provision for decrease in net realizable
value is recorded. Net realizable value is not necessarily an indication of a
property's current value or the amount that will be realized upon the ultimate
disposition of the property. As of December 31, 1995 and 1996 and, June 30, 1997
there were no permanent impairments of the carrying values of the Properties.

Depreciation and amortization are calculated using the straight-line method
over the estimated useful lives of the investments. The estimated lives are as
follows:

<TABLE>
<S> <C>
Land improvements......................... 5 to 40 years
Buildings and improvements................ 5 to 40 years
Tenant improvements....................... Term of the related lease
</TABLE>

The cost of buildings and improvements includes the purchase price of the
property or interests in property, legal fees and acquisition costs and
interest, property taxes and other costs incurred during the period of
construction.

Expenditures for maintenance and repairs are charged to operations as
incurred. Significant renovations or betterments which extend the economic
useful life of assets are capitalized.

Construction in Progress

Project costs directly associated with the development and construction of
a real estate project are capitalized as construction in progress. In addition,
interest, real estate taxes and other costs are capitalized during the period in
which activities necessary to prepare the property for its intended use are in
progress.

F-18
<PAGE> 192

AMB CONTRIBUTED PROPERTIES

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

Cash and Cash Equivalents

Cash and cash equivalents include cash held in financial institutions and
other highly liquid short-term investments with original maturities of three
months or less. Cash and cash equivalents as of December 31, 1995 and 1996 and
June 30, 1997 include restricted cash of $77,593, $11,042, and $2,968,
respectively, which represent amounts held in escrow in connection with property
purchases and capital improvements.

Deferred Financing and Leasing Costs

Costs incurred in connection with financing or leasing are capitalized and
amortized to interest expense and depreciation and amortization, respectively,
on a straight-line basis (which approximates the effective interest method in
the case of financing costs) over the term of the related loan or lease for
periods generally ranging from six months to 10 years. Unamortized costs are
charged to expense upon the early repayment of the related debt or upon the
early termination of the lease. Accumulated amortization as of December 31, 1995
and 1996 and, June 30, 1997 was $1,239, $2,930 and $4,665 respectively.

Fair Value of Financial Instruments

Based on the borrowing rates currently available to the Properties, the
fair value of its debt at June 30, 1997 (with a carrying amount of $596,560) was
approximately $610,215. Such valuation is based on the current rates offered to
the AMB Contributed Properties for debt of the same remaining maturities. The
carrying amount of cash and cash equivalents approximates fair value.

Minority Interests

Minority interests in the AMB Contributed Properties represent interests
held by certain entities in eight real estate limited partnerships and limited
liability companies that are consolidated for financial reporting purposes.

Revenues

All leases are classified as operating leases. Rental income is recognized
on a straight-line basis over the term of the leases. Deferred rent receivable
represents the excess of rental revenue recognized on a straight-line basis over
cash received under the applicable lease provisions.

Interest and Other Income

Interest and other income primarily represents interest income on cash and
cash equivalents.

Use of Estimates

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.

New Accounting Pronouncements

In February of 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
per Share," effective for financial statements issued after December 15, 1997.
SFAS 128 requires public business enterprises to disclose basic earnings per
share if the entity has a simple capital structure with no potential common
shares from convertible securities, options or warrants. If the entity does have
potential common shares, it is considered to have a complex capital

F-19
<PAGE> 193

AMB CONTRIBUTED PROPERTIES

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

structure and must disclose basic and diluted earnings per share. This statement
is not applicable to the AMB Contributed Properties, as they are not public
business enterprises.

In February of 1997, the FASB issued SFAS No. 129, "Disclosure of
Information about Capital Structure," effective for periods ending after
December 15, 1997. This statement establishes standards for disclosing
information about an entity's capital structure. This statement has no effect on
the financial statements of the AMB Contributed Properties, as they are not a
legal entity.

In June of 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This statement, effective for fiscal years beginning after December 15,
1997, would require the entity to report components of comprehensive income in a
financial statement that is displayed with the same prominence as other
financial statements. Comprehensive income is defined by Concepts Statement No.
6, "Elements of Financial Statements" as the change in the equity of a business
enterprise during a period from transactions and other events and circumstances
from nonowner sources. This statement has no impact on the AMB Contributed
Properties as their net and comprehensive income are equal.

In June of 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." This statement, effective for
financial statements for periods beginning after December 15, 1997, requires
that a public business enterprise report financial and descriptive information
about its reportable operating segments. Generally, information is required to
be reported on the basis that it is used internally for evaluating segment
performance and deciding how to allocate resources to segments. This statement
is not applicable to the AMB Contributed Properties, as they are not public
business enterprises.

3. NOTE RECEIVABLE FROM OWNER

An affiliate of AMB holds a 1% general partnership interest in AMB Western
Properties Fund-I. The general partner's capital contribution was made through a
note payable to AMB Western Properties Fund-I. The note accrues interest at
9.29%, payable from the general partner's quarterly cash distributions. At
December 31, 1995 and 1996, and June 30, 1997, outstanding principal and
interest on the notes totaled $808, $776 and $725, respectively.

4. TRANSACTIONS WITH INVESTMENT MANAGER

The owners of the AMB Contributed Properties are obligated to pay AMB
acquisition fees and asset management fees, as defined in the Agreements. For
the years ended December 31, 1994, 1995 and 1996, and the six months ended June
30, 1996 (unaudited) and 1997, the AMB Contributed Properties incurred $3,167,
$6,250, $9,508, $4,370 and $6,342, respectively, related to asset management
fees for the Properties. In addition, acquisition fees paid to AMB of $3,521,
$3,884, $4,849, $1,241 and $315 were capitalized to investments in real estate
in the accompanying combined balance sheets for the years ended December 31,
1994, 1995 and 1996, and for the six months ended June 30, 1996 (unaudited) and
1997, respectively. At December 31, 1995 and 1996 and June 30, 1997, total
acquisition and asset management fees payable to AMB were $529, $2,713 and
$2,139, respectively.

Certain owners of the AMB Contributed Properties are also obligated to pay
incentive management fees to AMB during ownership and upon disposition of the
Properties to the extent that operations of the Properties and their fair values
meet certain criteria. In connection with the approval of the proposed business
combination subsequent to June 30, 1997, the AMB Contributed Properties agreed
to terminate their respective existing incentive management fee agreements with
AMB. One of the AMB Contributed Properties agreed to a final incentive
management fee of $3,011. Such fee will be paid prior to the contemplated
offering.

F-20
<PAGE> 194

AMB CONTRIBUTED PROPERTIES

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

5. DEBT

As of December 31, 1996 and 1995 and June 30, 1997, debt consisted of the
following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1996 JUNE 30, 1997
-------- -------- -------------
<S> <C> <C> <C>
Mortgage loans, varying interest rates
from 7.0% to 10.4%, due July 1997 to
December 2008.......................... $257,597 $406,851 $ 429,047
Secured debt facility, fixed interest at
7.53%, Due December 2008............... -- 73,000 73,000
Secured line of credit, variable interest
at LIBOR plus 0.5% (6.2% at June 30,
1997), due October 1998................ -- 46,313 48,613
Unsecured line of credit, variable
interest at LIBOR plus 1.5% (7.2% at
June 30,1997), due October 1998........ -- 25,500 45,900
-------- -------- --------
Total debt..................... $257,597 $551,664 $ 596,560
======== ======== ========
</TABLE>

The unsecured line of credit has total availability of $100,000. The
unsecured line includes a one year option to extend and a fee on average unused
funds of 0.25%. Subsequent to June 30, 1997, the unsecured line was increased to
$200,000 and maturity was extended to 1999.

The secured debt facility and secured line of credit in aggregate have
total availability of $123,000 as of June 30, 1997.

Mortgage loans generally require monthly principal and interest payments.
The mortgage loans are secured by deeds of trust on 40 Properties. The net book
value of real estate investments pledged as collateral under deeds of trust for
mortgage loans and the secured debt facility at December 31, 1995 and 1996 and
June 30, 1997 is $475,783, $934,233 and $957,090, respectively. In addition,
Properties with a net book value of $129,192, $147,452 and $215,465 as of
December 31, 1995 and 1996 and June 30, 1997, respectively, are part of a
collateral pool for cross-collateralized mortgage debt of one of the Property
owners. As such mortgage is deemed to be debt of the real estate investment fund
rather than of the Properties and as such Properties will be contributed to AMB
Property Corporation free of debt, the debt is not reflected in the accompanying
combined financial statements.

The secured line is collateralized by capital subscriptions receivable of
$221,436 at June 30, 1997 from the owners of AMB Value Added Fund, Inc. which
have been netted against owners' equity in the accompanying combined financial
statements.

The weighted-average fixed interest rate on debt at June 30, 1997, was
7.87%. Interest capitalized related to construction projects for the years ended
December 31, 1994, 1995, and 1996 and for the six months ended June 30, 1996
(unaudited) and 1997 was $132, $105, $1,134, $318 and $603, respectively.

The scheduled maturities of all debt outstanding as of June 30, 1997 are as
follows:

<TABLE>
<S> <C>
1997 (six months)......................................... $ 2,945
1998...................................................... 113,693
1999...................................................... 25,099
2000...................................................... 7,098
2001...................................................... 35,363
Thereafter................................................ 412,362
--------
$596,560
========
</TABLE>

F-21
<PAGE> 195

AMB CONTRIBUTED PROPERTIES

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

6. LEASING ACTIVITY

Future minimum rentals due under noncancelable operating leases with
tenants in effect at June 30, 1997 are as follows:

<TABLE>
<S> <C>
1997 (six months)........................................ $ 82,893
1998..................................................... 153,708
1999..................................................... 130,988
2000..................................................... 112,309
2001..................................................... 92,598
Thereafter............................................... 462,308
----------
$1,034,804
==========
</TABLE>

In addition to minimum rental payments, certain tenants pay reimbursements
for their pro rata share of specified operating expenses, which reimbursements
amounted to $9,077, $21,008, $33,805, $15,675 and $23,211 for the years ended
December 31, 1994, 1995 and 1996 and for the six months ended June 30, 1996
(unaudited) and 1997, respectively. These amounts are included as rental income
and operating expenses in the accompanying combined statements of operations.
Certain of the leases also provide for the payment of additional rent based on a
percentage of the tenant's revenues. Some leases contain options to renew. No
individual tenant accounts for greater that 10% of rental revenues.

7. PROPERTY DISPOSITIONS

During the year ended December 31, 1996 and the six months ended June 30,
1997, the AMB Contributed Properties disposed of certain Properties. The
accompanying combined financial statements include the operations of such
Properties for periods prior to their disposition. The following table sets
forth the revenues and expenses of the disposed Properties included in the
accompanying combined financial statements for the years ended December 31,
1994, 1995, and 1996 and for the six months ended June 30, 1996 (unaudited) and
1997.

<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
-------------------------- --------------
1994 1995 1996 1996 1997
----- ------ ----- ----- ----
<S> <C> <C> <C> <C> <C>
Revenues......................... $ 953 $1,110 $ 930 $ 496 $ 3
Expenses......................... (317) (439) (453) (236) (1)
----- ------ ----- ----- ---
Net Income............. $ 636 $ 671 $ 477 $ 260 $ 2
===== ====== ===== ===== ===
</TABLE>

8. INCOME TAXES

The Properties are owned by entities that are generally not subject to
federal income taxes, including tax-exempt master trusts, real estate investment
trusts and partnerships. Accordingly, no provision for income taxes has been
made in the accompanying combined financial statements.

9. COMMITMENTS AND CONTINGENCIES

Deferred Offering Costs

In connection with the anticipated business combination and public
offering, AMB has incurred offering costs of $2,291 representing legal,
accounting and other costs. In the event the offering is unsuccessful, these
costs will be borne by the owners of the AMB Contributed Properties and AMB pro
rata in accordance with their relative contribution values.

F-22
<PAGE> 196

AMB CONTRIBUTED PROPERTIES

NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

Pending Acquisitions

The owners of the AMB Contributed Properties have entered into contracts to
acquire 11 properties at an estimated gross purchase price of approximately
$282,300. Such acquisitions are expected to be funded through existing lines of
credit and equity contributions from the owners of the AMB Contributed
Properties.

Environmental Matters

The owners of the AMB Contributed Properties follow the policy of
monitoring its properties for the presence of hazardous or toxic substances. The
owners of the AMB Contributed Properties are not aware of any environmental
liability with respect to the Properties that would have a material adverse
effect on the AMB Contributed Properties' business, assets or results of
operations; however, there can be no assurance that a material environmental
liability does not exist. The existence of any such material environmental
liability would have an adverse effect on the AMB Contributed Properties'
results of operations and cash flow.

General Uninsured Losses

The AMB Contributed Properties generally carry comprehensive liability,
fire, flood, extended coverage and rental loss insurance with policy
specifications, limits and deductibles customarily carried for similar
properties. There are, however, certain types of extraordinary losses that may
be either uninsurable, or not economically insurable. Should an uninsured loss
occur, the AMB Contributed Properties could lose its investment in, and
anticipated profits and cash flows from, a property.

Certain of the AMB Contributed Properties are located in areas that are
subject to earthquake activity; the AMB Contributed Properties has therefore
obtained limited earthquake insurance.

F-23
<PAGE> 197

AMB CONTRIBUTED PROPERTIES

SCHEDULE III
HISTORICAL COMBINED REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF JUNE 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GROSS AMOUNT CARRIED AT
COSTS END OF PERIOD
CAPITALIZED -----------------------
INITIAL COSTS SUBSEQUENT TO
PROPERTY LOCATION TYPE ENCUMBRANCES(1) LAND BUILDING ACQUISITION LAND IMPROVEMENTS
- -------------------------- -------- ---- --------------- ------------- ---------- ------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alvarado Business
Center................... CA IND $ -- $ 6,385 $ 19,156 $ 226 $ 6,385 $ 19,381
Ardenwood Corporate
Park.................... CA IND -- 4,980 14,939 162 4,980 15,102
Corporate Square.......... MN IND -- 3,566 10,699 319 3,566 11,018
Crossroads Industrial..... IL IND -- 2,340 7,021 60 2,340 7,081
Fairway Drive
Industrial.............. CA IND -- 1,393 4,179 2,263 1,393 6,442
Harvest Business Park..... WA IND 3,675 2,133 6,399 52 2,133 6,451
Itasca Industrial
Portfolio............... IL IND -- 5,352 16,055 935 5,352 16,990
Melrose Park.............. IL IND -- 2,435 7,306 -- 2,435 7,306
Norcross/Brookhollow
Portfolio............... GA IND -- 3,231 9,694 55 3,231 9,749
Penn James Office
Warehouse............... MN IND -- 1,635 4,905 519 1,635 5,424
Twin Cities............... MN IND -- 4,094 12,281 843 4,094 13,124
Mendota Heights(2)........ MN IND 668 1,146 -- -- 1,146 --
Brittania Business Park... FL IND -- 2,603 7,808 -- 2,603 7,808
Boulden................... DE IND -- 2,964 8,891 -- 2,964 8,891
Mid-Atlantic Business
Center.................. PA IND -- 6,096 18,289 -- 6,096 18,289
Silicon Valley
Portfolio............... CA IND -- 7,438 22,313 -- 7,438 22,313
Linder Skokie............. IL IND -- 3,610 6,375 -- 3,610 6,375
Activity Distribution
Center.................. CA IND 5,384 3,050 9,150 55 3,050 9,205
Amwiler-Gwinnett
Industrial Portfolio.... GA IND 14,417 6,442 19,325 388 6,442 19,713
Civic Center Plaza........ IL RET 13,723 5,965 17,896 540 5,965 18,436
The Plaza at Delray....... FL RET 15,667 2,696 8,088 17,409 2,696 25,497
Hewlett Packard
Distribution............ CA IND 3,426 1,629 4,886 -- 1,629 4,886
Kendall Mall.............. FL RET 24,848 6,022 18,067 1,640 6,022 19,707
Lakeshore Plaza Shopping
Center.................. CA RET 14,166 7,915 23,746 651 7,915 24,398
Lincoln Industrial
Center.................. TX IND -- 571 1,712 135 571 1,846
Metric Center............. TX IND -- 9,955 29,864 1,163 9,955 31,027

YEAR OF DEPRECIABLE
TOTAL ACCUMULATED CONSTRUCTION LIFE
PROPERTY COSTS DEPRECIATION OR ACQUISITION (YEARS)
- -------------------------- ---------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Alvarado Business
Center................... $ 25,766 $ 1,085 1995 5-40
Ardenwood Corporate
Park.................... 20,082 473 1996 5-40
Corporate Square.......... 14,584 340 1996 5-40
Crossroads Industrial..... 9,421 222 1996 5-40
Fairway Drive
Industrial.............. 7,835 147 1996 5-40
Harvest Business Park..... 8,584 362 1995 5-40
Itasca Industrial
Portfolio............... 22,342 1,316 1994/95 5-40
Melrose Park.............. 9,741 413 1995 5-40
Norcross/Brookhollow
Portfolio............... 12,980 306 1996 5-40
Penn James Office
Warehouse............... 7,059 158 1996 5-40
Twin Cities............... 17,218 700 1995 5-40
Mendota Heights(2)........ 1,146 -- 1997 5-40
Brittania Business Park... 10,411 521 1994 5-40
Boulden................... 11,855 537 1995 5-40
Mid-Atlantic Business
Center.................. 24,385 838 1995 5-40
Silicon Valley
Portfolio............... 29,751 883 1995 5-40
Linder Skokie............. 9,985 714 1995 5-40
Activity Distribution
Center.................. 12,255 747 1994 5-40
Amwiler-Gwinnett
Industrial Portfolio.... 26,155 714 1995/96 5-40
Civic Center Plaza........ 24,401 1,464 1994 5-40
The Plaza at Delray....... 28,193 572 1995 5-40
Hewlett Packard
Distribution............ 6,515 399 1994 5-40
Kendall Mall.............. 25,729 901 1994 5-40
Lakeshore Plaza Shopping
Center.................. 32,313 1,348 1995 5-40
Lincoln Industrial
Center.................. 2,417 141 1994 5-40
Metric Center............. 40,982 771 1995/96/97 5-40
</TABLE>

F-24
<PAGE> 198

AMB CONTRIBUTED PROPERTIES

SCHEDULE III (CONTINUED)
HISTORICAL COMBINED REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF JUNE 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GROSS AMOUNT CARRIED AT
COSTS END OF PERIOD
CAPITALIZED -----------------------
INITIAL COSTS SUBSEQUENT TO
PROPERTY LOCATION TYPE ENCUMBRANCES(1) LAND BUILDING ACQUISITION LAND IMPROVEMENTS
- -------------------------- -------- ---- --------------- ------------- ---------- ------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Minneapolis Industrial
Portfolio IV............. MN IND $ 8,321 $ 4,124 $ 12,372 $ 1,178 $ 4,124 $ 13,549
Silverado Plaza Shopping
Center.................. CA RET 4,929 2,214 6,641 199 2,214 6,840
Stadium Business Park..... CA IND 4,894 2,980 8,940 1,083 2,980 10,023
2 South Middlesex......... NJ IND -- 1,498 7,621 67 1,498 7,688
Applewood Village Shopping
Center.................. CO RET -- 10,921 20,344 566 10,921 20,909
Bayhill Shopping Center... CA RET -- 5,318 5,761 288 5,318 6,049
Beacon Industrial Park.... FL IND -- 7,886 23,925 -- 7,886 23,925
Corbins Corner Shopping
Center.................. CT RET -- 9,455 19,982 592 9,455 20,574
Elk Grove Village
Industrial.............. IL IND -- 6,363 20,599 365 6,363 20,965
Five Points Shopping
Center.................. CA RET -- 15,227 8,460 329 15,227 8,788
Kent Centre............... WA IND -- 3,022 8,277 114 3,022 8,391
L.A. County Industrial
Portfolio(3)............ CA IND -- 6,574 37,343 524 6,574 37,868
Lake Michigan Industrial
Portfolio............... IL IND -- 3,189 6,938 7 3,189 6,945
Artesia Industrial
Portfolio............... CA IND 54,100 28,452 62,159 499 28,452 62,658
Lisle Industrial.......... IL IND -- 2,619 5,868 -- 2,619 5,868
Milmont Page.............. CA IND -- 3,283 7,401 72 3,283 7,473
Pleasant Hill Shopping
Center.................. CA RET -- 9,809 13,646 16 9,809 13,662
Randall's Houston Retail
Portfolio(4)............ TX RET -- 19,405 28,508 176 19,405 28,684
Riverview Plaza Shopping
Center.................. IL RET -- 3,984 8,968 1 3,984 8,968
South Bay Industrial...... CA IND 19,571 11,417 26,900 541 11,417 27,442
Southfield................ GA IND 6,342 19,982 198 6,342 20,179
Minneapolis Distribution
Portfolio............... MN IND -- 4,864 21,127 2,625 4,864 23,752
Texas Industrial
Portfolio(5)............ TX IND -- 3,312 33,852 3,149 3,312 37,001
Long Gate Shopping
Center.................. MD RET -- 21,566 25,531 30 21,566 25,561
Rockford Road Plaza....... MN RET -- 6,179 14,723 -- 6,179 14,723
Moffett Business Center... CA IND 12,905 5,575 16,724 184 5,575 16,909
Southwest Pavilion........ NV RET -- 2,492 6,126 19 2,492 6,145
Arapahoe Village Shopping
Center.................. CO RET 10,877 4,451 13,352 9 4,451 13,361
Atlanta South............. GA IND -- 5,933 17,798 1 5,933 17,799

YEAR OF DEPRECIABLE
TOTAL ACCUMULATED CONSTRUCTION LIFE
PROPERTY COSTS DEPRECIATION OR ACQUISITION (YEARS)
- -------------------------- ---------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Minneapolis Industrial
Portfolio IV............. $ 17,673 $ 1,017 1994 5-40
Silverado Plaza Shopping
Center.................. 9,054 543 1994/96 5-40
Stadium Business Park..... 13,003 736 1994 5-40
2 South Middlesex......... 9,186 345 1995 5-40
Applewood Village Shopping
Center.................. 31,830 836 1996 5-40
Bayhill Shopping Center... 11,367 306 1995 5-40
Beacon Industrial Park.... 31,811 997 1995/96 5-40
Corbins Corner Shopping
Center.................. 30,029 921 1995 5-40
Elk Grove Village
Industrial.............. 27,328 937 1995 5-40
Five Points Shopping
Center.................. 24,015 446 1995 5-40
Kent Centre............... 11,413 376 1995 5-40
L.A. County Industrial
Portfolio(3)............ 44,442 2,690 1994 5-40
Lake Michigan Industrial
Portfolio............... 10,134 652 1995 5-40
Artesia Industrial
Portfolio............... 91,110 1,379 1996 5-40
Lisle Industrial.......... 8,487 265 1995 5-40
Milmont Page.............. 10,756 258 1996 5-40
Pleasant Hill Shopping
Center.................. 23,471 589 1996 5-40
Randall's Houston Retail
Portfolio(4)............ 48,089 632 1996 5-40
Riverview Plaza Shopping
Center.................. 12,952 180 1996 5-40
South Bay Industrial...... 38,859 1,722 1995 5-40
Southfield................ 26,521 927 1995/97 5-40
Minneapolis Distribution
Portfolio............... 28,616 1,518 1994 5-40
Texas Industrial
Portfolio(5)............ 40,313 2,636 1994 5-40
Long Gate Shopping
Center.................. 47,127 513 1996 5-40
Rockford Road Plaza....... 20,902 264 1997 5-40
Moffett Business Center... 22,484 529 1996 5-40
Southwest Pavilion........ 8,637 1,112 1990 5-40
Arapahoe Village Shopping
Center.................. 17,812 422 1996/97 5-40
Atlanta South............. 23,732 534 1996 5-40
</TABLE>

F-25
<PAGE> 199

AMB CONTRIBUTED PROPERTIES

SCHEDULE III (CONTINUED)
HISTORICAL COMBINED REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF JUNE 30, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GROSS AMOUNT CARRIED AT
COSTS END OF PERIOD
CAPITALIZED -----------------------
INITIAL COSTS SUBSEQUENT TO
PROPERTY LOCATION TYPE ENCUMBRANCES(1) LAND BUILDING ACQUISITION LAND IMPROVEMENTS
- -------------------------- -------- ---- --------------- ------------- ---------- ------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bensenville............... IL IND $ 42,008 $ 17,221 $ 51,664 $ 3,239 $ 17,221 $ 54,903
Blue Lagoon............... FL IND 11,942 4,714 14,143 242 4,714 14,385
Brentwood Commons......... IL RET 5,123 2,279 6,837 837 2,279 7,673
Chicago Industrial........ IL IND 3,280 1,307 3,921 615 1,307 4,536
Crysen Corridor........... MD IND 3,550 1,521 4,563 86 1,521 4,649
Granada Village........... CA RET 14,708 6,114 18,341 5,761 6,114 24,102
Kingsport Industrial
Park.................... WA IND 17,635 6,691 20,073 862 6,691 20,935
La Jolla Village.......... CA RET 18,054 7,036 21,108 269 7,036 21,377
Latham Farms.............. NY RET 37,932 16,416 49,249 (324) 16,416 48,924
Lonestar.................. TX IND 17,000 6,432 19,296 905 6,432 20,201
Minneapolis Industrial.... MN IND 7,574 3,810 11,429 1,858 3,810 13,287
Pacific Business Center... CA IND 9,935 4,054 12,163 90 4,054 12,253
Shoppes at Lago Mar....... FL RET 5,900 2,497 7,491 4 2,497 7,495
Toys 'R Us................ MD IND -- 2,837 8,511 13 2,837 8,524
Valwood................... TX IND 4,051 1,775 5,326 478 1,775 5,804
West North Carrier........ TX IND 3,280 1,309 3,928 67 1,309 3,995
Woodlawn Point Shopping
Center.................. GA RET 4,679 2,827 8,482 16 2,827 8,498
Ygnacio Plaza............. CA RET 7,847 3,094 9,282 895 3,094 10,176
O'Hare Industrial
Portfolio............... IL IND -- 7,117 21,351 4 7,117 21,356
7575 Chancellor........... FL IND 2,978 516 3,182 835 516 4,017
Dock's Corner............. NJ IND -- 3,415 17,472 6,354 3,415 23,825
Moffett Park R&D
Portfolio............... CA IND -- 16,723 23,956 56 16,723 24,012
Palm Aire................. FL RET -- 590 2,468 2,490 590 4,958
Eastgate Plaza............ WA RET -- 1,865 5,596 228 1,865 5,824
International
Multifoods.............. CA IND -- 1,459 4,377 36 1,459 4,413
Northpointe Commerce...... CA IND -- 1,407 4,220 2 1,407 4,222
Northwest Distribution
Center.................. WA IND -- 1,615 4,845 69 1,615 4,914
Rancho San Diego Village
Shopping Center......... CA RET -- 3,281 9,844 612 3,281 10,457
Systematics............... CA IND -- 807 2,420 8 807 2,428

YEAR OF DEPRECIABLE
TOTAL ACCUMULATED CONSTRUCTION LIFE
PROPERTY COSTS DEPRECIATION OR ACQUISITION (YEARS)
- -------------------------- ---------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Bensenville............... $ 72,124 $ 5,411 1993 5-40
Blue Lagoon............... 19,099 448 1996 5-40
Brentwood Commons......... 9,952 905 1992 5-40
Chicago Industrial........ 5,843 520 1992 5-40
Crysen Corridor........... 6,170 373 1994 5-40
Granada Village........... 30,216 2,451 1992 5-40
Kingsport Industrial
Park.................... 27,626 2,647 1992 5-40
La Jolla Village.......... 28,413 2,779 1992 5-40
Latham Farms.............. 65,340 4,016 1994 5-40
Lonestar.................. 26,633 1,854 1993 5-40
Minneapolis Industrial.... 17,097 945 1994 5-40
Pacific Business Center... 16,307 1,297 1993 5-40
Shoppes at Lago Mar....... 9,992 237 1996 5-40
Toys 'R Us................ 11,361 694 1994 5-40
Valwood................... 7,579 438 1994 5-40
West North Carrier........ 5,304 419 1993 5-40
Woodlawn Point Shopping
Center.................. 11,325 642 1994 5-40
Ygnacio Plaza............. 13,270 1,227 1992 5-40
O'Hare Industrial
Portfolio............... 28,473 632 1996/97 5-40
7575 Chancellor........... 4,533 104 1996 5-40
Dock's Corner............. 27,240 591 1996 5-40
Moffett Park R&D
Portfolio............... 40,735 757 1996 5-40
Palm Aire................. 5,548 93 1996 5-40
Eastgate Plaza............ 7,689 738 1992 5-40
International
Multifoods.............. 5,872 467 1993 5-40
Northpointe Commerce...... 5,629 450 1993 5-40
Northwest Distribution
Center.................. 6,529 638 1992 5-40
Rancho San Diego Village
Shopping Center......... 13,738 1,299 1992 5-40
Systematics............... 3,235 258 1993 5-40
</TABLE>

F-26
<PAGE> 200

AMB CONTRIBUTED PROPERTIES

YEAR OF DEPRECIABLE
TOTAL ACCUMULATED CONSTRUCTION LIFE
PROPERTY COSTS DEPRECIATION OR ACQUISITION (YEARS)
- -------------------------- ---------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Twin Oaks Shopping
Center.................. 11,105 944 1992 5-40
Zanker/Charcot
Industrial.............. 12,818 1,178 1992 5-40
Aurora Marketplace........ 14,871 1,745 1991 5-40
Dowe Industrial........... 11,964 1,254 1991 5-40
---------- -------
TOTAL..................... $1,766,888 $78,805
========== =======
</TABLE>

F-27
<PAGE> 201

AMB CONTRIBUTED PROPERTIES

SCHEDULE III (CONTINUED)
HISTORICAL COMBINED REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF JUNE 30, 1997
(DOLLARS IN THOUSANDS)

A summary of activity for real estate and accumulated depreciation for the
years ended December 31, 1995 and 1996 and the six months ended June 30, 1997 is
as follows:

<TABLE>
<CAPTION>
1995 1996 1997
---------- ---------- ----------
<S> <C> <C> <C>
INVESTMENTS IN REAL ESTATE:
Balance at beginning of year......... $ 672,756 $1,101,165 $1,698,575
Acquisition of properties and
limited partners' interests..... 402,294 568,335 52,677
Improvements...................... 26,115 36,340 17,745
Disposition of properties......... -- (7,265) (2,109)
---------- ---------- ----------
Balance at end of year............... $1,101,165 $1,698,575 $1,766,888
========== ========== ==========
ACCUMULATED DEPRECIATION:
Balance at beginning of year......... $ 16,179 $ 33,726 $ 61,704
Depreciation and amortization
expense......................... 17,547 27,978 17,101
---------- ---------- ----------
Balance at end of year............... $ 33,726 $ 61,704 $ 78,805
========== ========== ==========
</TABLE>

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

(1) As of June 30, 1997, Properties with a net book value of $197,571 serve as
collateral for outstanding indebtedness under the secured debt facility of
$73,000.

(2) Represents one parcel of land totaling 10.3 acres which is intended for
eventual development.

(3) Consists of two properties with seven buildings in Los Angeles and one
building in Anaheim.

(4) Includes four individual grocer anchor centers.

(5) Consists of two properties with five buildings in Houston and 18 buildings
in Dallas.

F-28
<PAGE> 202

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
AMB Institutional Realty Advisors, Inc.:

We have audited the accompanying balance sheets of AMB Institutional Realty
Advisors, Inc. (a California corporation) as of December 31, 1995 and 1996, and
June 30, 1997 and the related statements of operations, changes in shareholders'
equity and cash flows for the years ended December 31, 1994, 1995 and 1996 and
for the six months ended June 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of AMB Institutional Realty
Advisors, Inc. as of December 31, 1995 and 1996, and June 30, 1997 and the
results of its operations and its cash flows for the years ended December 31,
1994, 1995 and 1996, and for the six months ended June 30, 1997 in conformity
with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

San Francisco, California,
August 15, 1997

F-29
<PAGE> 203

AMB INSTITUTIONAL REALTY ADVISORS, INC.

BALANCE SHEETS
AS OF DECEMBER 31, 1995 AND 1996
AND JUNE 30, 1997
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
----------------- --------
1995 1996 1997
------ ------ --------
<S> <C> <C> <C>
ASSETS
Cash............................................................. $1,080 $2,783 $ 917
Accounts receivable.............................................. 3,016 925 1,239
Receivable from affiliates....................................... 704 3,027 2,585
Deferred offering costs.......................................... -- -- 2,291
Other assets..................................................... 114 213 105
------ ------ ------
Total assets........................................... $4,914 $6,948 $7,137
====== ====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable................................................. $ 440 $ 298 $ 105
Accrued liabilities.............................................. 233 350 3,359
------ ------ ------
Total liabilities...................................... 673 648 3,464
------ ------ ------
Commitments and Contingencies
Shareholders' Equity:
Capital stock, no par value:
Authorized -- 100,000,000 shares; issued and
outstanding -- 1,695,085, 1,728,986 and 1,728,986 shares,
respectively.............................................. 1,042 1,349 1,349
Additional paid-in capital..................................... 1,298 1,298 1,298
Retained earnings.............................................. 2,781 4,522 1,532
Notes receivable from shareholders............................. (880) (869) (506)
------ ------ ------
Total shareholders' equity............................. 4,241 6,300 3,673
------ ------ ------
Total liabilities and shareholders' equity............. $4,914 $6,948 $7,137
====== ====== ======
</TABLE>

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

F-30
<PAGE> 204

AMB INSTITUTIONAL REALTY ADVISORS, INC.

STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996,
AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED) AND 1997
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------- -----------------------
1994 1995 1996 1996 1997
------- ------- ------- ----------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES
Investment management income......... $ 6,111 $ 6,468 $ 9,073 $ 3,861 4,351
Investment management income from
affiliates........................ 6,688 10,134 14,357 5,611 6,657
Interest and other income............ 66 224 416 223 75
------- ------- ------- ------ -------
Total Revenues............... 12,865 16,826 23,846 9,695 11,083
------- ------- ------- ------ -------
EXPENSES
Salaries, general and administrative
expenses paid to affiliates....... 9,940 13,564 16,843 7,751 8,319
------- ------- ------- ------ -------
Net Income................... $ 2,925 $ 3,262 $ 7,003 $ 1,944 $ 2,764
======= ======= ======= ====== =======
</TABLE>

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

F-31
<PAGE> 205

AMB INSTITUTIONAL REALTY ADVISORS, INC

STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996,
AND FOR THE SIX MONTHS ENDED JUNE 30, 1997
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
COMMON STOCK NOTES
------------------ ADDITIONAL RECEIVABLE
NUMBER OF PAID-IN RETAINED FROM
SHARES AMOUNT CAPITAL EARNINGS SHAREHOLDERS TOTAL
---------- ------ ---------- -------- ------------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993.................... 1,594,736 499 1,298 1,119 (436) 2,480
Net Income.................................... -- -- -- 2,925 -- 2,925
Dividends declared and paid................... -- -- -- (1,600) -- (1,600)
Share Purchase price reduction for
Shareholders............................... -- (64) -- -- 64 --
Principal payment of notes receivable from
shareholders............................... -- -- -- -- 43 43
Issuance of common stock for notes............ 66,448 264 -- -- (264) --
--------- ----- ----- ------ ---- ------
Balance at December 31, 1994.................... 1,661,184 699 1,298 2,444 (593) 3,848
Net Income.................................... -- -- -- 3,262 -- 3,262
Dividends declared and paid................... -- -- -- (2,925) -- (2,925)
Principal payment of notes receivable from
shareholders............................... -- -- -- -- 56 56
Issuance of common stock for notes............ 33,901 343 -- -- (343) --
--------- ----- ----- ------ ---- ------
Balance at December 31, 1995.................... 1,695,085 1,042 1,298 2,781 (880) 4,241
Net Income.................................... -- -- -- 7,003 -- 7,003
Dividends declared and paid................... -- -- -- (5,262) -- (5,262)
Principal payment of notes receivable from
shareholders............................... -- -- -- -- 318 318
Issuance of common stock for notes............ 33,901 307 -- -- (307) --
--------- ----- ----- ------ ---- ------
Balance at December 31, 1996.................... 1,728,986 1,349 1,298 4,522 (869) 6,300
Net Income.................................... -- -- -- 2,764 -- 2,764
Dividends declared and paid................... -- -- -- (5,754) (5,754)
Principal payment of notes receivable from
shareholders............................... -- -- -- -- 363 363
Issuance of common stock for notes............ -- -- -- -- -- --
--------- ----- ----- ------ ---- ------
Balance at June 30, 1997........................ 1,728,986 1,349 1,298 1,532 (506) 3,673
========= ===== ===== ====== ==== ======
</TABLE>

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

F-32
<PAGE> 206

AMB INSTITUTIONAL REALTY ADVISORS, INC.

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996,
AND FOR THE MONTHS ENDED JUNE 30, 1996 (UNAUDITED) AND 1997
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------- -----------------------
1994 1995 1996 1996 1997
------- ------- ------- ----------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income....................................... $ 2,925 $ 3,262 $ 7,003 $ 1,944 $ 2,764
Adjustments to reconcile net income to net cash
provided by operating activities:
Changes in assets and liabilities:
Accounts Receivable......................... (213) (1,665) 2,091 2,161 (314)
Receivable from affiliates.................. 39 28 (2,323) (1,271) 442
Other Assets................................ (31) 8 (99) (54) 108
Accounts Payable............................ 30 258 (142) (443) (193)
Accrued Liabilities......................... (45) 171 117 666 3,009
------- ------- ------- ------- -------
Net cash provided by operating activities........ 2,705 2,062 6,647 3,003 5,816
------- ------- ------- ------- -------

CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred offering costs.......................... -- -- -- -- (2,291)
Borrowings on line of credit..................... -- 750 -- -- --
Repayments of line of credit..................... -- (750) -- -- --
Dividends paid................................... (1,600) (2,925) (5,262) (2,262) (5,754)
Principal payment of notes receivable from
shareholders................................... 43 56 318 138 363
------- ------- ------- ------- -------
Net cash used in financing
activities..................................... (1,557) (2,869) (4,944) (2,124) (7,682)
------- ------- ------- ------- -------

NET INCREASE (DECREASE) IN CASH.................. 1,148 (807) 1,703 879 (1,866)

CASH AT BEGINNING OF PERIOD...................... 739 1,887 1,080 1,080 2,783
------- ------- ------- ------- -------
CASH AT END OF PERIOD............................ $ 1,887 $ 1,080 $ 2,783 $ 1,959 $ 917
======= ======= ======= ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID FOR INTEREST........................... $ -- $ 3,713 $ -- $ -- $ --
======= ======= ======= ======= =======
</TABLE>

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

F-33
<PAGE> 207

AMB INSTITUTIONAL REALTY ADVISORS, INC.

NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)

1. ORGANIZATION

AMB Institutional Realty Advisors, Inc. ("AMB"), a California corporation,
was formed on December 29, 1988, for the purpose of providing professional
services in real estate investments and development. AMB is a registered
investment advisor with the Securities and Exchange Commission under the
Investment Advisors Act of 1940 and a qualified professional asset manager.
AMB's clients consist primarily of institutional investors, including retirement
funds.

In August 1997, AMB and several of AMB's clients approved a business
combination plan whereby the clients will exchange their ownership interests in
real estate investments (the "AMB Contributed Properties") for shares in AMB
Property Corporation, units in a subsidiary partnership, AMB Property, L.P.
("the Operating Partnership")or, in certain limited circumstances, cash. The
allocation of ownership interests among AMB and the owners of the AMB
Contributed Properties will be based on the agreed-upon relative value of net
assets contributed. The initial allocation among these entities could change
pending the resolution of certain future performance criteria of AMB Property
Corporation. The planned combination is contingent upon a successful initial
public offering of AMB Property Corporation's common stock. It is anticipated
that AMB Property Corporation will seek to qualify as a real estate investment
trust under the Internal Revenue Code of 1986, as amended.

It is contemplated that AMB Property Corporation will simultaneously raise
equity through an initial public offering of its common stock with anticipated
gross proceeds of $250,000. The proceeds from the anticipated offering will be
used to purchase interests in the properties of the owners of the AMB
Contributed Properties who have elected not to receive shares in AMB Property
Corporation or units in the Operating Partnership, to repay indebtedness and for
working capital. AMB Property Corporation will transfer its ownership interest
in properties to the Operating Partnership in exchange for a general partnership
interest therein.

The investment management activities previously carried out by AMB for
substantially all of its clients, will be transferred to a subsidiary of AMB
Property Corporation.

The statement of operations for the six months ended June 30, 1996 is
unaudited; however, in management's opinion, all adjustments of a normal
recurring nature necessary for a fair presentation of the financial statements
for the interim period have been reflected.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Generally Accepted Accounting Principles

The financial statements have been prepared in accordance with generally
accepted accounting principles using the accrual method of accounting.

Deferred Offering Costs

Deferred offering costs represent legal, accounting and other costs
incurred in connection with the anticipated merger. These costs, in addition to
costs expected to be incurred after June 30, 1997, associated with the offering,
will be deducted from additional paid-in capital upon a successful closing of
the offering. In the event the offering is unsuccessful, these costs will be
borne by AMB and the owners of the AMB Contributed Properties pro rata in
accordance with their relative contribution values.

Income Taxes

As an S corporation, AMB is exempt from federal income taxes under
Subchapter S of the Internal Revenue Code. Under this election, federal income
taxes are paid by the shareholders of AMB. AMB is recognized as an S corporation
for tax purposes in California and Massachusetts. As such, it is required to pay

F-34
<PAGE> 208

AMB INSTITUTIONAL REALTY ADVISORS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)

a California franchise tax at a reduced rate of 1.5 percent and a Massachusetts
income tax at 4.5 percent at the corporate level. These taxes are included in
general and administrative expense. The net income for financial reporting
purposes differs from the net income for income tax reporting purposes primarily
because AMB is a cash-basis taxpayer.

Revenue Recognition

Revenues are recognized as services are provided. AMB's revenues consist
primarily of professional fees generated from real estate investment management
services. During the years ended December 31, 1994, 1995 and 1996 and for the
six months ended June 30, 1996 (unaudited) and 1997, AMB's three largest clients
provided over 82, 30, 52, 47, and 52 percent, respectively, of professional fees
earned.

Use of Estimates

New Accounting Pronouncements

In February of 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
per Share," effective for financial statements issued after December 15, 1997.
SFAS 128 requires public business enterprises to disclose basic earnings per
share if the entity has a simple capital structure with no potential common
shares from convertible securities, options or warrants. If the entity does not
have potential common shares, it is considered to have a complex capital
structure and must disclose basic and diluted earnings per share. This statement
is not applicable to AMB, as it is not a public business enterprise.

In February of 1997, the FASB issued SFAS No. 129, "Disclosure of
Information about Capital Structure," effective for periods ending after
December 15, 1997. This statement establishes standards for disclosing
information about an entry's capital structure. The financial statements of AMB
are prepared in accordance with the requirements of SFAS 129.

In June of 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This statement, effective for fiscal years beginning after December 15,
1997, would require the entity to report components of comprehensive income in a
financial statement that is displayed with the same prominence as other
financial statements. Comprehensive income is defined by Concepts Statement No.
6, "Elements of Financial Statements" as the change in the equity of a business
enterprise during a period from transactions and other events and circumstances
from nonowner sources. This statement has no impact on AMB as its net income and
comprehensive income are equal.

F-35
<PAGE> 209

AMB INSTITUTIONAL REALTY ADVISORS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)

3. OTHER ASSETS

During 1995, AMB became general partner in a limited partnership ("the
Limited Partnership") that provides professional services in real estate and
development for certain international clients. This investment, which is
included in other assets in the accompanying financial statements, is being
accounted for under the equity method of accounting because AMB receives
approximately 50% of the income of the Limited Partnership and does not exercise
control over it. AMB's interest in the Limited Partnership was $76, $180 and $93
as of December 31, 1995 and 1996 and June 30, 1997, respectively, and its equity
in earnings of the Limited Partnership totaled $0, $30, $135, $92 and $6 for the
years ended December 31, 1994, 1995 and 1996, and for the six months ended June
30, 1996 (unaudited) and 1997, respectively. In addition, AMB received
distributions of $0, $0, $30, $30 and $112 over the same periods.

4. ACCRUED LIABILITIES

Accrued liabilities primarily consist of accrued vacation costs. In
addition, at June 30, 1997, accrued liabilities include $2,047 of accrued
offering costs and $962 of accrued bonuses.

5. NOTES RECEIVABLE FROM SHAREHOLDERS

Since 1990, AMB has issued from time to time capital stock to certain
shareholder-employees in exchange for notes receivable. These notes bear
interest at varying rates (generally prime plus 1 percent), and principal and
interest are payable in annual installments over approximately 10 years. As of
June 30, 1997, maturities on all of the notes range from 2005 to 2006. At
December 31, 1995 and 1996, and June 30, 1997, outstanding principal and
interest on the notes totaled $880, $869 and $506 respectively.

6. LINE OF CREDIT AGREEMENT

AMB has a line of credit agreement with a bank for a total facility of
$4,000. The agreement provides for interest at prime rate plus .25 percent (8.5
percent at June 30, 1997). This agreement is partially guaranteed by three
shareholders of AMB. There were no borrowings outstanding on this line at
December 31, 1995 or 1996, or June 30, 1997.

7. TRANSACTIONS WITH AFFILIATES

Expense Reimbursements

AMB Investments, Inc., an affiliate of AMB, pays all general and
administrative costs of AMB, including rent, salaries, employee benefits and
other administrative expenses. Such expenses are billed back to AMB at cost. In
addition, AMB pays a rental charge to AMB Investments, Inc. for use of its
furniture, fixtures and equipment. Such reimbursement of general and
administrative expenses totaled $2,082, $2,721, $3,611, $1,766 and $1,915 for
the years ended December 31, 1994, 1995 and 1996, and for the six months ended
June 30, 1996 (unaudited) and 1997, respectively. Receivables from affiliates of
$176, $314 and $446, and payables to affiliates of $4, $1 and $0, as of December
31, 1995 and 1996, and June 30, 1997, respectively, represent unreimbursed
activity among the entities. Such unreimbursed activity bears interest at prime
plus 3 percent.

Investment Management Income from Affiliates

The Company provides the Limited Partnership and the AMB Contributed
Properties with certain professional services in return for an investment
management fee, which is calculated in accordance with the applicable investment
management agreements. Included in receivables from affiliates is $529, $2,713
and $2,139 of asset management and other fees receivable from the AMB
Contributed Properties, as of December 31, 1995 and 1996 and June 30, 1997,
respectively.

F-36
<PAGE> 210

AMB INSTITUTIONAL REALTY ADVISORS, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)

8. EMPLOYEE BENEFITS

Effective January 1, 1988, AMB Investments, Inc. adopted a savings and
retirement plan. The plan covers the employees of its affiliates, including AMB.
Employees may elect to defer up to 10 percent of their annual compensation, not
to exceed $10 per individual. The participating affiliates provide a matching
contribution equal to 50 percent of the amount deferred up to 3.5 percent of
annual compensation, not to exceed $3 per individual. The participating
affiliates also may contribute a discretionary amount to be determined each
year. The total participating affiliates' contribution to the plan accrued for
the years ended December 31, 1994, 1995 and 1996, and for the six months ended
June 30, 1996 (unaudited) and 1997 was $87, $109, $137, $0 and $0, respectively,
of which $62, $85, $109, $0 and $0, respectively, was allocated to AMB. The
contribution to the plan is made in the first quarter of the following calendar
year.

9. LEASE COMMITMENTS

AMB shares common office space under lease obligations of AMB Investments,
Inc. Total occupancy costs for AMB Investments, Inc. under these leases during
years ended December 31, 1994, 1995 and 1996, and during the six months ended
June 30, 1996 (unaudited) and 1997, were $397, $591, $783, $395 and $457. Of
this amount, $289, $435, $510, $256 and $303, respectively, was allocated to AMB
based on square footage. AMB Investments, Inc.'s minimum annual and aggregate
future rentals are as follows:

<TABLE>
<S> <C>
1997 (six months)...................................... $ 463
1998................................................... 918
1999................................................... 404
2000................................................... 404
2001................................................... 404
----------
$ 2,593
==========
</TABLE>

Minimum annual lease payments of $514 are subject to a three-year renewal
option beginning January 1, 1999.

10. SUBSEQUENT EVENT

Certain of AMB's investment management agreements call for incentive
management fees to be paid during ownership and upon disposition of the real
estate investments under management to the extent that operations of the real
estate investments and their fair values meet certain thresholds. It is AMB's
policy not to accrue such fees until disposition of a real estate investment is
contemplated and the ultimate fee can be reasonably estimated. Subsequent to
year-end and in anticipation of the merger, AMB and one of its the AMB
Contributed Properties agreed to an incentive management fee of $3,011 to be
paid to AMB prior to the anticipated merger. Such fee is not reflected in the
accompanying financial statements.

F-37
<PAGE> 211

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Owners of the
AMB Contributed Properties:

We have audited the accompanying statement of revenues and certain expenses
of the 1997 Acquired Properties (as defined in Note 1), for the year ended
December 31, 1996. This financial statement is the responsibility of management
of the AMB Contributed Properties. Our responsibility is to express an opinion
on this financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

The accompanying statement of revenues and certain expenses was prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission for inclusion in the Registration Statement on Form S-11
of AMB Property Corporation as described in Note 1 and is not intended to be a
complete presentation of the revenues and expenses of the 1997 Acquired
Properties.

In our opinion, the financial statement referred to above presents fairly,
in all material respects, the revenues and certain expenses of the 1997 Acquired
Properties for the year ended December 31, 1996, in conformity with generally
accepted accounting principles.

ARTHUR ANDERSEN LLP

San Francisco, California,
August 31, 1997

F-38
<PAGE> 212

1997 ACQUIRED PROPERTIES

COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996 AND
FOR THE PERIOD FROM JANUARY 1, 1997 TO THE EARLIER OF
THE ACQUISITION DATE OR JUNE 30, 1997 (UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1997
1996 -----------
----------- (UNAUDITED)
<S> <C> <C>
REVENUES
Rental revenues.................................................... $24,728 $11,268
Other income....................................................... 116 16
----------- -----------
24,844 11,284
CERTAIN EXPENSES
Property operating and maintenance................................. 3,686 1,850
Real estate taxes.................................................. 3,330 1,219
----------- -----------
7,016 3,069
----------- -----------
REVENUES IN EXCESS OF CERTAIN EXPENSES............................... $17,828 $ 8,215
========= =========
</TABLE>

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

F-39
<PAGE> 213

1997 ACQUIRED PROPERTIES

NOTES TO COMBINED STATEMENTS OF REVENUES
AND CERTAIN EXPENSES
(DOLLARS IN THOUSANDS)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Properties Acquired

The accompanying combined statements of revenues and certain expenses
include the combined operations (see "Basis of Presentation" below) of seven
properties (the "Properties") to be acquired by the Owners of the AMB
Contributed Properties (the "Company") during the first three quarters of 1997.

<TABLE>
<CAPTION>
PROPERTY NAME LOCATION RENTABLE SQUARE FEET
------------- ------- --------------------
<S> <C> <C>
Manhattan Village Manhattan Beach, CA 515,666
Rockford Road Plaza Plymouth, MN 205,787
Cabot Business Park Mansfield, MA 1,071,517
Weslayan Plaza Houston, TX 356,309
Acer Distribution San Jose, CA 196,643
Patuxent Jessup, MD 147,383
Executive Drive Addison, IL 75,020
</TABLE>

Basis of Presentation

The accompanying combined statements of revenues and certain expenses are
not representative of the actual operations of the Properties for the periods
presented. Certain expenses may not be comparable to the expenses expected to be
incurred by the Company in the proposed future operations of the Properties;
however, the Company is not aware of any material factors relating to these
Properties that would cause the reported financial information not to be
indicative of future operating results. Excluded expenses consist of interest,
depreciation and amortization and other costs not directly related to the future
operations of the Properties.

Revenue Recognition

All leases are classified as operating leases, and rental revenue is
recognized on a straight-line basis over the terms of the leases.

Use of Estimates

F-40
<PAGE> 214

1997 ACQUIRED PROPERTIES

NOTES TO COMBINED STATEMENTS OF REVENUES
AND CERTAIN EXPENSES (CONTINUED)
(DOLLARS IN THOUSANDS)

2. LEASING ACTIVITY:

The following is a schedule of future minimum rental revenues for 1997 and
annually thereafter on non-cancelable operating leases in effect as of December
31, 1996.

<TABLE>
<CAPTION>
YEAR AMOUNT
---- --------
<S> <C>
1997 (six months)......................................... $ 9,214
1998...................................................... 20,353
1999...................................................... 21,121
2000...................................................... 21,016
2001...................................................... 21,036
Thereafter................................................ 48,419
--------
Total........................................... $141,159
========
</TABLE>

In addition to minimum rental payments, tenants pay reimbursements for
their pro rata share of specified operating expenses, which amounted to $6,032
and $2,632 for the year ended December 31, 1996 and for the period from January
1, 1997 to the earlier of the acquisition date or June 30, 1997 (unaudited).
Certain leases contain options to renew.

F-41
<PAGE> 215

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Owners of the
AMB Contributed Properties:

We have audited the accompanying statement of revenues and certain expenses
of the 1996 Acquired Properties (as defined in Note 1), for the year ended
December 31, 1995. This financial statement is the responsibility of management
of the AMB Contributed Properties. Our responsibility is to express an opinion
on this financial statement based on our audit.

In our opinion, the financial statement referred to above presents fairly,
in all material respects, the revenues and certain expenses of the 1996 Acquired
Properties for the year ended December 31, 1995, in conformity with generally
accepted accounting principles.

ARTHUR ANDERSEN LLP

San Francisco, California,
August 4, 1997

F-42
<PAGE> 216

1996 ACQUIRED PROPERTIES

COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1995 AND FOR THE PERIOD FROM
JANUARY 1, 1996 TO THE ACQUISITION DATE (UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1995 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
REVENUES
Rental revenues.................................................... $30,407 $25,383
Other income....................................................... 1,175 2
------- -------
31,582 25,385

CERTAIN EXPENSES
Property operating and maintenance................................. 3,919 3,630
Real estate taxes.................................................. 4,311 3,960
------- -------
8,230 7,590
------- -------
REVENUES IN EXCESS OF CERTAIN EXPENSES............................... $23,352 $17,795
======= =======
</TABLE>

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

F-43
<PAGE> 217

1996 ACQUIRED PROPERTIES

NOTES TO COMBINED STATEMENTS OF REVENUES
AND CERTAIN EXPENSES
(DOLLARS IN THOUSANDS)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Properties Acquired

The accompanying combined statements of revenues and certain expenses
include the combined operations (see "Basis of Presentation" below) of eight
properties (the "Properties") acquired by the Owners of the AMB Contributed
Properties (the "Company") during the period from April 1, 1996 to December 31,
1996.

<TABLE>
<CAPTION>
DATE OF RENTABLE
PROPERTY NAME ACQUISITION LOCATION SQUARE FEET
- ------------- ----------- -------- -----------
<S> <C> <C> <C>
Milmont Page............................... 5/16/96 Fremont, CA 199,862
Dock's Corner.............................. 5/23/96 South Brunswick, NJ 554,521
Moffet Park R & D Portfolio................ 10/16/96 Sunnyvale, CA 462,245
Moffet Business Center..................... 10/16/96 Sunnyvale, CA 285,480
Randall's Houston Retail Portfolio......... 11/12/96 Houston, TX 467,349
Artesia Industrial Portfolio............... 11/27/96 Los Angeles, CA 2,496,465
Riverview Plaza Shopping Center............ 12/5/96 Chicago, IL 139,272
O'Hare Industrial Portfolio................ 12/31/96 Itasca & Naperville, IL 743,372
</TABLE>

Basis of Presentation

The accompanying combined statements of revenues and certain expenses is
not representative of the actual operations of the Properties for the periods
presented. Certain expenses may not be comparable to the expenses expected to be
incurred by the Company in the proposed future operations of the Properties;
however, the Company is not aware of any material factors relating to these
Properties that would cause the reported financial information not to be
indicative of future operating results. Excluded expenses consist of interest,
depreciation and amortization and other costs not directly related to the future
operations of the Properties.

Revenue Recognition

All leases are classified as operating leases, and rental revenue is
recognized on a straight-line basis over the terms of the leases.

Use of Estimates

F-44
<PAGE> 218

1996 ACQUIRED PROPERTIES

NOTES TO COMBINED STATEMENTS OF REVENUES
AND CERTAIN EXPENSES (CONTINUED)
(DOLLARS IN THOUSANDS)

2. LEASING ACTIVITY:

The following is a schedule of future minimum rental revenues for 1996 and
annually thereafter on non-cancelable operating leases in effect as of December
31, 1995.

<TABLE>
<CAPTION>
YEAR AMOUNT
---- ---------
<S> <C>
1996.............................................. $ 23,076
1997.............................................. 26,810
1998.............................................. 25,757
1999.............................................. 20,795
2000.............................................. 17,189
Thereafter........................................ 67,862
--------
Total................................... $ 181,489
========
</TABLE>

In addition to minimum rental payments, tenants pay reimbursements for
their pro rata share of specified operating expenses, which amounted to $5,372
and $5,160 for the year ended December 31, 1995 and for the period from January
1, 1996 to the acquisition date. Certain leases contain options to renew.

F-45
<PAGE> 219

ALTERNATE COVER PAGE FOR INTERNATIONAL PROSPECTUS
PROSPECTUS (Subject to Completion)
Issued , 1997

AMB Property Corporation
COMMON STOCK
------------------------

OF THE SHARES OF COMMON STOCK, $.01 PAR VALUE PER SHARE (THE "COMMON STOCK"), OF
THE COMPANY OFFERED HEREBY (THE "OFFERING"), ARE BEING OFFERED INITIALLY
OUTSIDE THE UNITED STATES AND CANADA BY THE INTERNATIONAL UNDERWRITERS AND
ARE BEING OFFERED INITIALLY IN THE UNITED STATES AND CANADA BY THE
U.S. UNDERWRITERS. ALL OF THE SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING
SOLD BY THE COMPANY AND WILL REPRESENT APPROXIMATELY % OF THE COMPANY'S
OUTSTANDING COMMON EQUITY. THE REMAINING COMMON EQUITY (OR INTERESTS
EXCHANGEABLE FOR COMMON EQUITY) IN THE COMPANY WILL BE BENEFICIALLY OWNED %
BY THE COMPANY'S OFFICERS AND DIRECTORS AND % BY THE COMPANY'S OTHER
EXISTING STOCKHOLDERS EXCLUDING SHARES TO BE PURCHASED IN THE OFFERING. SEE
"UNDERWRITING."
------------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 14 HEREIN FOR CERTAIN FACTORS RELEVANT TO
AN INVESTMENT IN THE SHARES OF COMMON STOCK, INCLUDING:
- - The possibility that the consideration paid by the Company for the properties
and other assets contributed to the Company in its formation may exceed their
fair market value, and the fact there were no arm's-length negotiations or
third-party appraisals of such properties in connection with the Company's
formation.

- - Taxation of the Company as a corporation if it fails to qualify as a REIT for
Federal income tax purposes and the resulting decrease in cash available for
distribution.

- - The ability of the Board of Directors to change the Company's growth strategy
and investment strategy, financing and certain other policies without a vote
of the Company's stockholders.

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

PRICE $ A SHARE
------------------------

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
------------------------- ------------------------- -------------------------
<S> <C> <C> <C>
Per Share................... $ $ $
Total(3).................... $ $ $
</TABLE>

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

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(2) Before deducting expenses payable by the Company estimated at $
million.
(3) The Company has granted to the U.S. Underwriters an option, exercisable
within 30 days of the date hereof, to purchase up to an aggregate of
additional shares of Common Stock at the price to public less
underwriting discounts and commissions for the purpose of covering
over-allotments, if any. If the U.S. Underwriters exercise such option in
full, the total price to public, underwriting discounts and commissions
and proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting."

Morgan Stanley Dean Witter
BT Alex. Brown International

Lehman Brothers

Montgomery Securities

Smith Barney Inc.
, 1997
<PAGE> 220

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 31. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the fees and expenses in connection with the
issuance and distribution of the securities being registered hereunder. Except
for the SEC registration fee and the fee of the NASD, all amounts are estimates.

<TABLE>
<S> <C>
SEC Registration Fee.............................................. $ 87,121
NYSE Filing Fee...................................................
Printing and Engraving Expenses...................................
Legal Fees and Expenses...........................................
Accounting Fees and Expenses......................................
Registrar and Transfer Agent Fees and Expenses....................
Blue Sky Fees and Expenses........................................ 15,000
National Association of Securities Dealers, Inc................... 29,250
Miscellaneous Expenses............................................
--------
Total................................................... $
========
</TABLE>

All of the costs identified above will be paid by the Company.

ITEM 32. SALES TO SPECIAL PARTIES.

See Item 33.

ITEM 33. RECENT SALES OF UNREGISTERED SECURITIES.

Immediately prior to the consummation of the Offering, the Company will in
connection with its formation issue unregistered shares of Common Stock to AMB
for a purchase price of $ per share. Immediately prior to the consummation
of the Offering, as part of the Formation Transactions, the Continuing Investors
will be issued an aggregate of shares of Common Stock and Units.

In addition, shortly prior to the consummation of the Offering, AMB will
form the Operating Partnership as the sole general partner thereof, with the
stockholders of AMB as the limited partners thereof. Such limited partner
interests will be redeemed for no consideration in the Formation Transactions.
In addition, upon formation of the Operating Partnership, the terms pursuant to
which the PLPs may receive Performance Units will be established in the
Partnership Agreement.

In January 1995, AMB issued 33,901 shares of its common stock to one of its
officers, for total consideration of $342,806, and in December 1996, it issued
33,901 shares of common stock to one of its officers, for total consideration of
$307,071.

All of the above sales will be made to "accredited investors" as defined in
Regulation D under the Securities Act in transactions not involving a public
offering pursuant to Regulation D. See "Formation and Structure of the Company."

ITEM 34. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 2-418 of the MGCL permits a corporation to indemnify its directors
and officers and certain other parties against judgments, penalties, fines,
settlements, and reasonable expenses actually incurred by them in connection
with any proceeding to which they may be made a party by reason of their service
in those or other capacities unless it is established that (i) the act or
omission of the director or officer was material to the matter giving rise to
the proceeding and (a) was committed in bad faith or (b) was the result of
active and deliberate dishonesty; (ii) the director or officer actually received
an improper personal benefit in money, property or services; or (iii) in the
case of any criminal proceeding, the director or officer had reasonable cause

II-1
<PAGE> 221

to believe that the act or omission was unlawful. Indemnification may be made
against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by the director or officer in connection with the proceeding;
provided, however, that if the proceeding is one by or in the right of the
corporation, indemnification may not be made with respect to any proceeding in
which the director or officer has been adjudged to be liable to the corporation.
In addition, a director or officer may not be indemnified with respect to any
proceeding charging improper personal benefit to the director or officer,
whether or not involving action in the director's or officer's official
capacity, in which the director or officer was adjudged to be liable on the
basis that personal benefit was received. The termination of any proceeding by
conviction, or upon a plea of nolo contendere or its equivalent, or an entry of
any order of probation prior to judgment, creates a rebuttable presumption that
the director or officer did not meet the requisite standard of conduct required
for indemnification to be permitted.

In addition, Section 2-418 of the MGCL requires that, unless prohibited by
its charter, a corporation indemnify any director or officer who is made a party
to any proceeding by reason of service in that capacity against reasonable
expenses incurred by the director or officer in connection with the proceeding,
in the event that the director or officer is successful, on the merits or
otherwise, in the defense of the proceeding.

The Company's Charter and Bylaws provide in effect for the indemnification
by the Company of the directors and officers of the Company to the fullest
extent permitted by applicable law. The Company has purchased directors' and
officers' liability insurance for the benefit of its directors and officers.

ITEM 35. TREATMENT OF PROCEEDS FROM STOCK BEING REGISTERED.

Not applicable.

ITEM 36. FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES AND EXHIBITS.

(a)(1) Financial Statements

PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

AMB PROPERTY CORPORATION

Pro forma condensed consolidated balance sheet as of June 30, 1997 with
accompanying notes and adjustments.

Notes to pro forma condensed consolidated balance sheet.

Pro forma condensed consolidated statements of operations for the six
months ended June 30, 1997 and for the year ended December 31, 1996 with
accompanying notes and adjustments.

Notes to pro forma condensed consolidated statements of operations.

HISTORICAL FINANCIAL INFORMATION

AMB CONTRIBUTED PROPERTIES

Report of independent public accountants.

Combined balance sheets as of December 31, 1995 and 1996 and June 30, 1997.

Combined statements of operations for the years ended December 31, 1994,
1995 and 1996 and for the six months ended June 30, 1996 (unaudited) and
1997.

Combined statements of owners' equity for the years ended December 31,
1994, 1995 and 1996 and for the six months ended June 30, 1997.

Combined statements of cash flows for the years ended December 31, 1994,
1995 and 1996 and for the six months ended June 30, 1996 (unaudited) and
1997.

Notes to combined financial statements.

II-2
<PAGE> 222

AMB INSTITUTIONAL REALTY ADVISORS, INC.

Report of independent public accountants.

Balance sheets as of December 31, 1995 and 1996 and June 30, 1997.

Statements of operations for the years ended December 31, 1994, 1995 and
1996 and for the six months ended June 30, 1996 (unaudited) and 1997.

Statement of changes in shareholders' equity for the years ended December
31, 1994, 1995 and 1996, and for the six months ended June 30, 1997.

Statements of cash flows for the years ended December 31, 1994, 1995 and
1996, and for the six months ended June 30, 1996 (unaudited) and 1997.

Notes to financial statements.

THE 1997 ACQUIRED PROPERTIES

Report of independent public accountants.

Combined statements of revenues and certain expenses for the year ended
December 31, 1996 and for the period from January 1, 1997 to the earlier of
the acquisition date or June 30, 1997 (unaudited).

Notes to combined statements of revenues and certain expenses.

THE 1996 ACQUIRED PROPERTIES

Report of independent public accountants.

Combined statements of revenues and certain expenses for the year ended
December 31, 1995 and for the period from January 1, 1996 to the
acquisition date (unaudited).

Notes to combined statements of revenues and certain expenses.

(a)(2) Financial Statement Schedule

HISTORICAL FINANCIAL INFORMATION -- AMB CONTRIBUTED PROPERTIES

Schedule III -- Historical Combined Real Estate and Accumulated
Depreciation.

(b) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ----------------------------------------------------------------------------------
<C> <S>
**1.1 Form of Underwriting Agreement.
**3.1 Articles of Incorporation of the Registrant.
**3.2 Bylaws of the Registrant.
**3.3 Form of Certificate for Common Stock of the Registrant.
**5.1 Opinion of Ballard Spahr Andrews & Ingersoll regarding the validity of the Common
Stock being registered.
**8.1 Opinion of Latham & Watkins regarding certain Federal income tax matters.
**10.1 Amended and Restated Agreement of Limited Partnership of AMB Property, L.P.
**10.2 Form of Registration Rights Agreement among the Registrant and the persons named
therein.
**10.3 Form of Employment Agreement between the Registrant and Executive Officers.
**23.1 Consent of Latham & Watkins (filed with Exhibit 8.1).
**23.2 Consent of Ballard Spahr Andrews & Ingersoll (filed with Exhibit 5.1).
*23.3 Consent of Arthur Andersen LLP.
*23.4 Consent of Douglas D. Abbey
</TABLE>

II-3
<PAGE> 223

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ----------------------------------------------------------------------------------
<C> <S>
*23.5 Consent of Hamid R. Moghadam
*23.6 Consent of T. Robert Burke
*23.7 Consent of Daniel H. Case, III
*23.8 Consent of Robert H. Edelstein, Ph.D.
*23.9 Consent of Lynn M. Sedway.
*23.10 Consent of Paul P. Shepherd.
*23.11 Consent of Jeffrey L. Skelton, Ph.D.
*23.12 Consent of Thomas W. Tusher.
*23.13 Consent of Caryl B. Welborn, Esq.
*24.1 Power of Attorney (included on the signature page hereto).
*27.1 Financial Data Schedule -- AMB Contributed Properties.
*27.2 Financial Data Schedule -- AMB Institutional Realty Advisors, Inc.
</TABLE>

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

* Filed herewith.

** To be filed by amendment.

ITEM 37. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the provisions described under Item 34
above, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer,
or controlling person of the registrant in the successful defense of any action,
suit, or proceeding) is asserted by such director, officer, or controlling
person in connection with the securities registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

The Registrant hereby undertakes:

(1) For purposes of determining any liability under the Act, the
information omitted from the form of Prospectus filed as part of the
Registration Statement in reliance upon Rule 430A and contained in the form
of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of the Registration
Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

The Registrant hereby undertakes to provide to the Underwriters at the
closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

II-4
<PAGE> 224

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-11 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized in the City of San Francisco, State of California, on the 18th day of
September, 1997.

AMB PROPERTY CORPORATION

By: /s/ HAMID R. MOGHADAM

------------------------------------
Hamid R. Moghadam
President and Chief Executive
Officer

Date: September 18, 1997

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Douglas D. Abbey, Hamid R. Moghadam, T. Robert
Burke and S. Davis Carniglia, and each of them, as his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
foregoing, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or their substitutes, may lawfully do or cause to be done by virtue
hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- -------------------
<C> <S> <C>
/s/ T. ROBERT BURKE Chairman of the Board and September 18, 1997
- --------------------------------------------- Director
T. Robert Burke

/s/ HAMID R. MOGHADAM President, Chief Executive September 18, 1997
- --------------------------------------------- Officer and Director
Hamid R. Moghadam (Principal Executive
Officer)

/s/ DOUGLAS D. ABBEY Chairman of Investment September 18, 1997
- --------------------------------------------- Committee and Director
Douglas D. Abbey

/s/ S. DAVIS CARNIGLIA Chief Financial Officer and September 18, 1997
- --------------------------------------------- General Counsel (Principal
S. Davis Carniglia Financial Officer and
Principal Accounting
Officer)
</TABLE>

II-5
<PAGE> 225
GRAPHICAL MATERIALS ON COLOR-FOLD OUT COVERS

AMB EXPERIENCE

INSERT LOGO
AMB PROPERTY CORPORATION

Founded in 1983, AMB has grown to become a leading investment manager with $2.6
billion in real estate assets under management for over 70 institutional
investors.

INSERT ACQUISITION AND TAKEOVER GROWTH CHART

Pending
Acquisitions Total
Acquisitions Takeovers
1988 $390 $390
1989 $615 $76 $691
1990 $864 $113 $977
1991 $1,046 $198 $1,244
1992 $1,331 $198 $1,529
1993 $1,546 $222 $1,768
1994 $2,077 $270 $2,347
1995 $2,401 $711 $3,112
1996 $2,987 $734 $3,721
1997 $3,097 $734 $463 $4,294

Experience:
*14 years of experience
Active:
*Over 160 property acquisitions totaling approximately $3.0 billion since
inception
Access to Transactions:
*28 property acquisitions totaling approximately $585 million in 1996
Results:
*Strong returns through real estate cycles
*A leader in the formation and management of private REITs
*No AMB client has ever replaced AMB as its real estate investment manager in
connection with its historical investment management business
*Highly rated in independent surveys by its tenants, investor clients and their
consultants
Focused:
*Consistent strategy focused on industrial properties and community shopping
centers
Institutional Investor Clients

Corporate Pension Plans
*Ameritech
*Blue Cross Blue Shield Association
*Consolidated Freightways
*Edison International
*International Monetary Fund
*The Southern Company
*The World Bank

Public Pension Plans
*Chicago Public Teachers
*City and County of San Francisco
*City of Milwaukee
*City of Orlando
*City of San Diego
*Denver Employees
*Illinois Municipal

Foundations and Endowments
*Ford Foundation
*Hewlett Foundation
*Pomona College
*Rockefeller Foundation
*Stanford University
*The Kresge Foundation
*University of Illinois
<PAGE> 226
Photographs of the following Properties:

Harvest Business Park
Kent, Washington
191,841 Square Feet

Pacific Business Center
Fremont, California
375,912 Square Feet

Artesia Industrial Portfolio
Los Angeles, California
2,496,465 Square Feet

La Jolla Village
La Jolla (San Diego), California
165,287 Square Feet

Dallas Industrial Portfolio
Dallas, Texas
1,066,098 Square Feet

Bensenville Industrial Portfolio
Chicago, Illinois (O'Hare submarket)
2,137,370 Square Feet

Riverview Plaza Shopping Center
Chicago, Illinois
139,272 Square Feet

Two South Middlesex
Northern New Jersey (Exit 8A)
218,088 Square Feet

Southfield Industrial Portfolio
Atlanta, Georgia
780,623 Square Feet

Kendall Mall
Kendall (Miami), Florida
299,505 Square Feet
<PAGE> 227
AMB LOGO
PROPERTY CORPORATION

AMB owns and operates industrial properties and community shopping centers
nationally in select hub distribution markets and retail trade areas. As of the
consummation of this Offering the Company will own 103 properties, of which 70
are industrial properties, and 33 are community shopping centers totaling over
35 million square feet in 24 markets (including Pending Acquisitions).

US MAP SHOWING PROPERTY LOCATIONS

List of Cities on Map

Atlanta
Austin
Baltimore
Chicago
Dallas
Denver
Houston
Los Angeles
Miami
Minneapolis
N. New Jersey
Orlando
Sacramento
Philadelphia
San Diego
San Francisco
Seattle
Washington D.C.

Western Region
10.7 Million Square Feet -- Industrial
35% of Total Industrial
2.2 Million Square Feet -- Retail
40% of Total Retail

Midwestern Region
9.8 Million Square Feet -- Industrial
32% of Total Industrial
0.7 Million Square Feet -- Retail
13% of Total Retail

Southern Region
7.6 Million Square Feet -- Industrial
25% of Total Industrial
1.4 Million Square Feet -- Retail
25% of Total Retail

Eastern Region
2.3 Million Square Feet -- Industrial
8% of Total Industrial
1.2 Million Square Feet -- Retail
22% of Total Retail

<PAGE> 228

AMB Headquarters
AMB Boston Office

AMB Property Corporation

INSERT GEOGRAPHIC DIVERSIFICATION PIE GRAPHS

<TABLE>
<CAPTION>
Number of Rentable Percentage Number of Number of Rentable % Industrial
Region Properties Square Feet of Portfolio Properties Buildings Square Feet Portfolio % Leased
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Western 39 12,882,461 35.9% 24 128 10,690,015 35.1% 94.1%
Southern 24 9,011,637 25.1% 15 78 7,610,919 25.0% 96.6%
Midwestern 20 10,501,517 29.2% 16 80 9,790,994 32.2% 94.1%
Eastern 9 3,511,813 9.8% 6 20 2,327,351 7.7% 87.2%

TOTALS
24 Markets 92 35,907,428 100.0% 61 306 30,419,279 100.0% 94.2%
</TABLE>

<TABLE>
<CAPTION>
Number of Rentable % Retail
Region Properties Square Feet Portfolio % Leased
<S> <C> <C> <C> <C>
Western 15 2,192,446 39.9% 96.5%
Southern 9 1,400,718 25.5% 83.9%
Midwestern 4 710,523 13.0% 95.4%
Eastern 3 1,184,462 21.6% 95.9%

TOTALS
24 Markets 31 5,488,149 100.0% 93.0%
</TABLE>

Top 10 AMB Markets Total Square Feet
Chicago 6,794,846
San Francisco Bay Area 5,088,264
Los Angeles 3,990,703
Minneapolis 3,706,671
Dallas 2,595,921
Atlanta 2,503,048
Miami 2,043,783
New Jersey/Philadelphia 1,817,874
Seattle 1,794,379
Houston 932,045
Total 31,267,534
<PAGE> 229

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------------------------------------------------------------------------------
<C> <S>
**1.1 Form of Underwriting Agreement.
**3.1 Articles of Incorporation of the Registrant.
**3.2 Bylaws of the Registrant.
**3.3 Form of Certificate for Common Stock of the Registrant.
**5.1 Opinion of Ballard Spahr Andrews & Ingersoll regarding the validity of the Common
Stock being registered.
**8.1 Opinion of Latham & Watkins regarding certain Federal income tax matters.
**10.1 Amended and Restated Agreement of Limited Partnership of AMB Property, L.P.
**10.2 Form of Registration Rights Agreement among the Registrant and the persons named
therein.
**10.3 Form of Employment Agreement between the Registrant and Executive Officers.
**23.1 Consent of Latham & Watkins (filed with Exhibit 8.1).
**23.2 Consent of Ballard Spahr Andrews & Ingersoll (filed with Exhibit 5.1).
*23.3 Consent of Arthur Andersen LLP.
*23.4 Consent of Douglas D. Abbey
*23.5 Consent of Hamid R. Moghadam
*23.6 Consent of T. Robert Burke
*23.7 Consent of Daniel H. Case, III
*23.8 Consent of Robert H. Edelstein, Ph.D.
*23.9 Consent of Lynn M. Sedway.
*23.10 Consent of Paul P. Shepherd.
*23.11 Consent of Jeffrey L. Skelton, Ph.D.
*23.12 Consent of Thomas W. Tusher.
*23.13 Consent of Caryl B. Welborn, Esq.
*24.1 Power of Attorney (included on the signature page hereto).
*27.1 Financial Data Schedule -- AMB Contributed Properties.
*27.2 Financial Data Schedule -- AMB Institutional Realty Advisors, Inc.
</TABLE>

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

* Filed herewith.

** To be filed by amendment.

<PAGE> 1
EXHIBIT 23.3

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
reports, AMB Contributed Properties, dated August 15, 1997, AMB Institutional
Realty Advisors, dated August 15, 1997, 1997 Acquired Properties, dated August
31, 1997, and 1996 Acquired Properties, dated August 4, 1997, included in this
registration statement of AMB Property Corporation on Form S-11, dated
September 18, 1997.

/s/ ARTHUR ANDERSEN LLP

September 18, 1997

<PAGE> 1
EXHIBIT 23.4

CONSENT OF DIRECTOR NOMINEE