<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): March 9, 1999
AMB PROPERTY CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 001-13545 94-3281941
- ------------------------------ ------------ -------------------
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
505 MONTGOMERY STREET , SAN FRANCISCO, CA 94111
- ----------------------------------------- ----------
(Address of principal executive offices) (Zip code)
(415) 394-9000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE> 2
AMB PROPERTY CORPORATION
CURRENT REPORT
ON
FORM 8-K/A
AMENDMENT NO.1
Item 5. Other Events
On April 8, 1999, we filed a Form 8-K with the Securities and Exchange
Commission reporting the signing of the agreements described below and
providing an unaudited pro forma condensed consolidated balance sheet
as of December 31, 1998 and an unaudited pro forma condensed
consolidated statement of operations for the year ended December 31,
1998. This amendment amends and restates the Form 8-K to update the
information contained in the Form 8-K and to provide an unaudited pro
forma condensed consolidated balance sheet as of March 31, 1999, an
unaudited pro forma condensed consolidated statement of operations for
the three months ended March 31, 1999 and an unaudited pro forma
condensed consolidated statement of operations for the year ended
December 31, 1998.
On March 9, 1999, AMB Property, L.P., a Delaware limited partnership in
which we are the sole general partner, signed a series of definitive
agreements with BPP Retail, LLC, a co-investment entity between Burnham
Pacific Properties and the California Public Employees' Retirement
System, pursuant to which, if fully consummated, BPP Retail will
acquire up to 28 retail shopping centers, totaling approximately 5.1
million square feet, for an aggregate price of $663.4 million. The sale
of five of the properties is subject to the consent of our joint
venture partners. One of our joint venture partners who holds an
interest in three of the properties has indicated that it will not
consent to the sale of these properties at this time. As a result, the
sale price with respect to the 25 remaining properties, totaling
approximately 4.3 million square feet, is approximately $560.4 million.
We intend to dispose of these three properties or our interests in the
joint ventures through which we hold the three properties and we have
therefore continued to reflect the properties as properties held for
divestiture in the accompanying pro forma balance sheet. Pursuant to
the agreements, BPP Retail will acquire the 25 centers in separate
transactions. We originally expected the first closing to occur on or
about April 30, 1999. Under the agreements, AMB Property, L.P. has the
right to extend the closing dates for a period of up to either 20 or 50
days. AMB Property, L.P. has exercised this right with respect to the
first closing, which we now expect to occur on or about June 15, 1999.
We currently expect the second and third closings to occur on or about
July 31, 1999 and December 1, 1999.
In addition, AMB Property, L.P. has entered into a definitive
agreement, subject to a financing condition, with Burnham Pacific,
pursuant to which if fully consummated, Burnham Pacific will acquire up
to six additional retail centers, totaling 1.5 million square feet, for
$284.4 million. Assuming satisfaction or waiver of the financing
condition, we currently expect this transaction to close by December
31, 1999. In connection with these transactions, we have also granted
the California Public Employees' Retirement System an option to
purchase up to 2,000,000 shares of our common stock for an exercise
price of $25 per share that the California Public Employees' Retirement
System may exercise on or before March 31, 2000. The above transactions
are collectively referred to as the "Divestiture."
Although none of the transactions has a discretionary due diligence
period, the transaction with Burnham Pacific is subject to a financing
condition and all of the transactions are subject to certain customary
closing conditions, which are generally applied on a property-by-
property basis. Burnham Pacific has announced that it has received and
is reviewing a merger proposal. We do not believe that the contractual
obligations of Burnham Pacific or BPP Retail with respect to the
purchase of the retail centers will be affected by any resulting
merger, although we are unable to predict the effect of any merger on
Burnham Pacific's ability to satisfy the financing condition. BPP
Retail has posted certain initial deposits aggregating $25 million on
the transactions, approximately $3.9 million of which was refunded in
connection with the three joint venture properties for which our joint
venture partner's consent was not obtained. BPP Retail's liability in
the event of its default under a definitive agreement is limited to its
deposit. We intend to use the proceeds of approximately $844.8 million
from the sale of the 31 retail centers to Burnham Pacific and BPP
Retail to pay approximately $9.4 million in transaction expenses, to
repay secured debt related to the properties, to partially pay down our
unsecured credit facility, for potential acquisitions and for general
corporate purposes. Although we believe that the transactions are
probable, they may not close as scheduled or close at all, and it is
possible that the transactions may close with respect to just a portion
of the properties currently subject to the agreements.
As of the date of this report, we own an approximate 95.0% common
general partnership interest in AMB Property, L.P. We are the sole
general partner of AMB Property, L.P. and we have the full, exclusive
and complete responsibility and discretion in the management and
control of AMB Property, L.P. Therefore, we consolidate AMB Property,
L.P. for financial reporting purposes.
Forward Looking Statements
Some of the information included in this report contains
forward-looking statements, such as statements pertaining to the
closing of the BPP Retail and Burnham Pacific transactions, the
anticipated net proceeds, sale price and number of properties subject
to the transactions and the effect of any merger of Burnham Pacific on
its and BPP Retail's contractual obligations. Likewise, the pro forma
financial information included in this report also contains
forward-looking statements. Forward-looking statements involve numerous
risks and uncertainties and you should not rely on them as predictions
of future events. The events or circumstances reflected in
forward-looking statements might not occur. You can identify
forward-looking statements by the use of forward-looking terminology
such as "believes," "expects," "may," "will," "should," "seeks,"
"approximately," "intends," "plans," "pro forma," "estimates" or
"anticipates" or the negative of these words and phrases or similar
words or phrases. You can also identify forward-looking statements by
discussions of strategy, plans or intentions. Forward-looking
statements are necessarily dependent on assumptions, data or methods
that may be incorrect or imprecise and we may not be able to realize
them. The failure of the transactions with BPP Retail and Burnham
Pacific to close with respect to some or all of the properties under
contract or a significant delay with respect to one or more of the
closings could cause actual results and future events to differ
materially from those set forth or contemplated in the forward-looking
statements. We caution you not to place undue reliance on
forward-looking statements, which reflect our analysis only and speak
only as of the date of this report or the dates indicated in the
statements.
Item 7. Financial Statements and Exhibits.
(a) Pro Forma Financial Information for AMB Property Corporation
(Unaudited)
Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1999
Notes and adjustments to Pro Forma Condensed Consolidated Balance
Sheet as of March 31, 1999
Pro Forma Condensed Consolidated Statement of Operations for the
three months ended March 31, 1999
Notes and adjustments to Pro Forma Condensed Consolidated Statement
of Operations for the three months ended March 31, 1999
Pro Forma Condensed Consolidated Statement of Operations for the
year ended December 31, 1998
Notes and adjustments to Pro Forma Condensed Consolidated Statement
of Operations for the year ended December 31, 1998
2
<PAGE> 3
AMB PROPERTY CORPORATION
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
BACKGROUND
The accompanying unaudited pro forma condensed consolidated balance sheet as
of March 31, 1999 has been prepared to reflect AMB Property, L.P. (the
"Operating Partnership") entering into a series of definitive agreements
whereby, if fully consummated, the Operating Partnership will divest up to 31
retail shopping centers with various estimated closing dates through December
31, 1999 for an aggregate price of $844.8 million (the "Divestiture") as if the
Divestiture had occurred on March 31, 1999. The accompanying unaudited pro forma
condensed consolidated statement of operations for the three months ended March
31, 1999 has been prepared to reflect the Divestiture as if such transactions
and adjustments had occurred on January 1, 1998 and were carried forward through
March 31, 1999. The accompanying unaudited pro forma condensed consolidated
statement of operations for the year ended December 31, 1998 has been prepared
to reflect: (i) the incremental effect of the acquisition of properties during
1998, (ii) pro forma debt and other adjustments resulting from the sale of the
Operating Partnership's senior debt securities, the sale of 8.5% Series A
Cumulative Redeemable Preferred Stock (the "Series A Preferred Stock") of AMB
Property Corporation (the "Company"), the sale of 8.625% Series B Cumulative
Redeemable Preferred Units (the "Series B Preferred Units") of the Operating
Partnership and the sale of 8.75% Series C Cumulative Redeemable Preferred
Units (the "Series C Preferred Units") of AMB Property II, L.P. and the
application of the resulting net proceeds and (iii) the Divestiture as if such
transactions and adjustments had occurred on January 1, 1998 and were carried
forward through December 31, 1998.
These unaudited pro forma condensed consolidated statements should be read
in connection with the historical consolidated financial statements and notes
thereto included in the Company's December 31, 1998 Form 10-K. In the opinion of
management, the pro forma condensed consolidated financial information provides
for all adjustments necessary to reflect the effects of the sale of the senior
debt securities, the sale of the Series A Preferred Stock, the sale of the
Series B Preferred Units and the sale of the Series C Preferred Units and the
application of the resulting net proceeds therefrom, the 1998 property
acquisitions and the Divestiture.
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.
3
<PAGE> 4
AMB PROPERTY CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1999
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
COMPANY(1) DIVESTITURE(2) PRO FORMA
---------- -------------- ----------
ASSETS
<S> <C> <C> <C>
Investments in real estate, net ....... $2,735,601 $ -- $2,735,601
Properties held for divesture, net .... 871,665 (738,006) 133,659
Divestiture receivable ................ -- 694,273 694,273
Cash and cash equivalents ............. 29,165 (11,368) 17,797
Other assets .......................... 60,187 -- 60,187
---------- ---------- ----------
Total assets ................. $3,696,618 $ (55,101) $3,641,517
========== ========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Secured debt .......................... $ 770,429 $ (132,091) $ 638,338
Unsecured credit facility.............. 316,000 -- 316,000
Unsecured Senior debt securities ...... 400,000 -- 400,000
Other liabilities ..................... 123,796 -- 123,796
---------- ---------- ----------
Total liabilities ............ 1,610,225 (132,091) 1,478,134
---------- ---------- ----------
Minority interests .................... 324,860 (3,683) 321,177
---------- ---------- ----------
Stockholders' Equity
Series A Preferred Stock ............ 96,100 -- 96,100
Common Shares ....................... 860 -- 860
Additional paid-in capital .......... 1,664,573 -- 1,664,573
Retained earnings ................... -- 80,673 80,673
---------- ---------- ----------
Total equity ................. 1,761,533 80,673 1,842,206
---------- ---------- ----------
Total liabilities and
stockholder's equity ....... $3,696,618 $ (55,101) $3,641,517
========== ========== ==========
</TABLE>
4
<PAGE> 5
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1999
(UNAUDITED, DOLLARS IN THOUSANDS)
(1.) Reflects the historical consolidated balance sheet of AMB Property
Corporation as of March 31, 1999. See the historical consolidated financial
statements and notes thereto included in AMB Property Corporation's March 31,
1999 Form 10-Q.
(2.) On March 9, 1999, AMB Property, L.P., a Delaware limited partnership
(the "Operating Partnership"), in which AMB Property Corporation (the "Company")
is the sole general partner, signed a series of definitive agreements with BPP
Retail, LLC ("BPP Retail"), a co-investment entity between Burnham Pacific
Properties ("BPP") and the California Public Employees' Retirement System
("CalPERS"), pursuant to which, if fully consummated, BPP Retail will acquire up
to 28 retail shopping centers from the Operating Partnership, totaling 5.1
million square feet, for an aggregate price of $663,400. The sale of five of the
properties is subject to the consent of the Company's joint venture partners.
One of the Company's joint venture partners who holds an interest in three of
the properties has indicated that it will not consent to the sale of the
properties at this time. As a result, the sale price with respect to the 25
remaining properties, totaling approximately 4.3 million square feet is
approximately $560,400. The Company intends to dispose of these three properties
or its interests in the joint ventures through which it holds the three
properties and has therefore continued to reflect the properties as properties
held for divestiture in the accompanying pro forma balance sheet.
Pursuant to the agreements, BPP Retail will acquire the 25 centers in
separate transactions. The Company originally expected the first closing to
occur on or about April 30, 1999. Under the agreements, the Operating
Partnership has the right to extend the closing dates for a period of up to
either 20 or 50 days. The Operating Partnership has exercised this right with
respect to the first closing, which is now expected to occur on or about June
15, 1999. The Company currently expects the second and third closings to occur
on or about July 31, 1999 and December 1, 1999. In addition, the Operating
Partnership has entered into a definitive agreement, subject to a financing
condition, with BPP, pursuant to which if fully consummated, BPP will acquire up
to six additional retail centers, totaling 1.5 million square feet, for
$284,400. Assuming satisfaction or waiver of this condition, this transaction is
currently expected to close by December 31, 1999. BPP has announced that it has
received and is reviewing a merger proposal. The Company does not believe that
the contractual obligations of BPP or BPP Retail with respect to the purchase of
the retail centers will be affected by any resulting merger, although the
Company is unable to predict the effect of any merger on BPP's ability to
satisfy the financing condition. Although the Company believes that the
transactions are probable, they may not close as scheduled or close at all, and
it is possible that the transactions may close with respect to just a portion of
the properties currently subject to the agreements.
Expected details of the transactions are as follows:
<TABLE>
<CAPTION> TOTAL RENTABLE SALE
SQUARE FOOTAGE PRICE
APPROXIMATE CLOSING DATE CENTERS (000's) (MILLIONS)
- ------------------------ ------- -------------- ----------
<S> <C> <C> <C>
June 15, 1999 9 1,409 $207.4
July 31, 1999 12 2,036 245.8
December 1, 1999 4 868 107.2
SUBTOTAL 25 4,313 $560.4
December 31, 1999 6 1,533 284.4
TOTAL 31 5,846 $844.8
</TABLE>
In connection with these transactions, the Company has also granted CalPERS
an option to purchase up to 2,000,000 shares of the Company's Common Stock for
an exercise price of $25 per share that may be exercised on or before March 31,
2000. The above transactions are collectively referred to as the "Divestiture".
As of March 31, 1999, the net carrying value of the 31 properties being
divested in connection with the Divestiture was approximately $738,000. Certain
of the properties included in these transactions are subject to secured
indebtedness which totaled approximately $132,100 as of March 31, 1999. The
Company intends to use the proceeds of approximately $844,800 from the
Divestiture to pay approximately $9,400 in transaction expenses, to repay the
secured debt related to the properties divested, to partially pay down the
unsecured credit facility, for potential acquisitions and for general corporate
purposes.
The adjustments reflect the elimination of the real estate assets being
divested as well as the acquisition by the Operating Partnership of the joint
venture interests in the two properties in which the minority partners consented
to sell their interest in connection with the Divestiture. The Operating
Partnership intends to acquire the minority interests in these two joint
ventures for approximately $11,400 prior to the Divestiture. The adjustments
also include a Divestiture receivable for the difference between the net
proceeds of approximately $835,400 and the repayment of the secured indebtedness
including prepayment penalties. The adjustments also reflect the repayment of
secured indebtedness before prepayment penalties of approximately $132,100
related to certain of the properties being Divested. The repayment of the
secured indebtedness will result in an extraordinary loss of approximately
$9,000. The extraordinary loss consists of prepayment penalties of approximately
$14,000 offset by the write-off of approximately $5,000 in debt premiums related
to the indebtedness extinguished. The Divestiture will result in an estimated
gain of approximately $84,800, which is net of the approximately $9,000
extraordinary loss on the extinguishment of the debt. The net gain has been
allocated to the Company and the limited partners based on their respective
ownership of the Operating Partnership as of March 31, 1999.
5
<PAGE> 6
AMB PROPERTY CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMPANY(1) DIVESTITURE(2) PRO FORMA
------------ ----------- ------------
<S> <C> <C> <C>
REVENUES
Rental revenues .......................... $ 107,657 $ (24,557) $ 83,100
Equity in earnings of unconsolidated
joint venture ........................... 1,151 -- 1,151
Investment management and other income ... 764 (185) 579
------------ --------- ------------
Total revenues ................ 109,572 (24,742) 84,830
------------ --------- ------------
OPERATING EXPENSES
Property operating expenses ............. 14,499 (3,411) 11,088
Real estate taxes ....................... 15,035 (3,281) 11,754
General, administrative and other . ..... 4,072 -- 4,072
Depreciation and amortization ........... 18,424 (4,931) 13,493
Interest expense ........................ 22,967 (2,528) 20,439
------------ --------- ------------
Total operating expenses ...... 74,997 (14,151) 60,846
------------ --------- ------------
Income from operations before
minority interests ..................... 34,575 (10,591) 23,984
Minority interests' share of net
income ................................ (6,561) 722 (5,839)
------------ --------- ------------
Net income .................... 28,014 (9,869) 18,145
Preferred stock dividends ............... (2,125) -- (2,125)
------------ --------- ------------
Net income available to common
stockholders .......................... $ 25,889 $ (9,869) $ 16,020
============ ========= ============
Net income per common share
Basic ................................. $ .30 $ .19
============ ============
Diluted ............................... $ .30 $ .19
============ ============
Weighted average common shares
outstanding
Basic ................................. 86,001,104 86,001,104
============ ============
Diluted ............................... 86,020,680 86,020,680
============ ============
</TABLE>
6
<PAGE> 7
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE AND UNIT DATA)
(1.) Reflects the historical consolidated operations of AMB Property
Corporation for the three months ended March 31, 1999. See the historical
consolidated financial statements and notes thereto included in AMB Property
Corporation's March 31, 1999 Form 10-Q.
(2.) Reflects the elimination of the historical revenues and expenses for
the three months ended March 31, 1999 related to the real estate assets to be
divested in connection with the Divestiture.
7
<PAGE> 8
AMB PROPERTY CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DEBT AND
1998 PROPERTY PREFERRED
COMPANY(1) ACQUISITIONS(2) OFFERINGS(3) DIVESTITURE(4) PRO FORMA (5)
------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
REVENUES
Rental revenues .......................... $ 354,658 $ 52,457 $ -- $ (94,831) $ 312,284
Interest and other income ............... 4,229 2,988 -- (711) 6,506
------------ ------------ ------------ --------- ------------
Total revenues ................ 358,887 55,445 -- (95,542) 318,790
------------ ------------ ------------ --------- ------------
OPERATING EXPENSES
Real estate taxes and property
operating expenses ..................... 96,074 11,863 -- (26,009) 81,928
Interest expense ........................ 69,670 -- 19,189 (10,283) 78,576
Depreciation and amortization ........... 57,464 7,732 -- (17,797) 47,399
General, administrative and other . ..... 11,929 -- -- -- 11,929
------------ ------------ ------------ --------- ------------
Total operating expenses ...... 235,137 19,595 19,189 (54,089) 219,832
------------ ------------ ------------ --------- ------------
Income from operations before
minority interests ..................... 123,750 35,850 (19,189) (41,453) 98,958
Minority interests' share of net
income ................................ (11,157) (2,384) (13,436) 2,837 (24,140)
------------ ------------ ------------ --------- ------------
Net income .................... 112,593 33,466 (32,625) (38,616) 74,818
Preferred stock dividends ............... (3,639) -- (4,861) -- (8,500)
------------ ------------ ------------ --------- ------------
Net income available to common
stockholders .......................... $ 108,954 $ 33,466 $ (37,486) $ (38,616) $ 66,318
============ ============ ============ ========= ============
Net income per common share
Basic ................................. $ 1.27 $ 0.77
============ ============
Diluted ............................... $ 1.26 $ 0.77
============ ============
Weighted average common shares
outstanding
Basic ................................. 85,876,383 85,876,383
============ ============
Diluted ............................... 86,235,176 86,235,176
============ ============
</TABLE>
8
<PAGE> 9
AMB PROPERTY CORPORATION
NOTES AND ADJUSTMENTS TO PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE AND UNIT DATA)
(1.) Reflects the historical consolidated operations of AMB Property
Corporation for the year ended December 31, 1998. See the historical
consolidated financial statements and notes thereto included in AMB Property
Corporation's December 31, 1998 Form 10-K.
(2.) The following reflects the incremental effects of properties acquired
during the year ended December 31, 1998 based on the historical operations of
such properties for the periods prior to acquisition by the Company:
<TABLE>
<CAPTION>
REAL ESTATE TAXES REVENUES IN
AND PROPERTY EXCESS OF
OPERATING CERTAIN
RENTAL REVENUES EXPENSES EXPENSES
--------------- ----------------- ---------
<S> <C> <C> <C>
Cascade .............................. $ 44 $ (11) $ 33
Wilsonville .......................... 167 (41) 126
Atlanta South Phase II ............... 116 (30) 86
Boston Industrial Portfolio .......... 2,853 (108) 2,745
Mansfield Industrial Portfolio ....... 71 (2) 69
Orlando Central Park ................. 804 (260) 544
Jamesburg Property ................... 1,466 (543) 923
Corporate Park Industrial ............ 757 (130) 627
Minneapolis Industrial Portfolio...... 592 (230) 362
Houston Service Center ............... 706 (249) 457
Meadowridge Business Park ............ 1,058 (238) 820
Northwest Business Center ............ 323 (75) 248
Forbes ............................... -- -- --
Southfield ........................... -- -- --
Crysen Corridor Warehouse ............ 247 (63) 184
Garland Industrial Portfolio ......... 1,966 (412) 1,554
Suffolk .............................. 165 (42) 123
Minnetonka Industrial Portfolio ...... 2,022 (768) 1,254
Alsip Industrial ..................... 374 (106) 268
Suffolk Industrial ................... 444 (112) 332
Chemway Industrial ................... 688 (140) 548
Amberjack Portfolio................... 5,924 (2,151) 3,773
Willow Lake Portfolio ................ 4,501 (1,026) 3,475
Willow Park Portfolio ................ 9,610 (1,977) 7,633
Porete Avenue Warehouse............... 1,352 (270) 1,082
Mawah Portfolio ...................... 3,379 (282) 3,097
National Distribution Portfolio ...... 8,180 (1,731) 6,449
South Point Business Park............. 2,087 (201) 1,886
Northridge ........................... 108 (43) 65
Totem Lake Malls ..................... 758 (277) 481
Around Lenox ......................... 1,695 (345) 1,350
-------- --------- --------
$ 52,457 $ (11,863) $ 40,594
======== ========= ========
</TABLE>
9
<PAGE> 10
Five of the property acquisitions, Jamesburg Property, Corporate Park
Industrial, Garland Industrial Portfolio, Minnetonka Industrial Portfolio and
South Point Business Park, represent a joint venture with a client of AMB
Investment Management in which the Company owns a controlling 50.0005% interest.
The joint venture acquisitions are accounted for on a consolidated basis and,
accordingly, minority interests of $2,384 has been reflected relative to these
acquisitions.
Two of the property acquisitions, Forbes and Southfield, represent the
purchase of vacant buildings which are in the process of being leased. As such,
no property operations have been reflected in the accompanying pro forma
statement of operations relative to these acquisitions.
Also reflects the acquisition of a non-controlling unconsolidated limited
partnership interest in an existing real estate joint venture which owns the
DuPage Elk Grove Property. As such, the Company's incremental share of equity in
earnings of this joint venture of $2,988 is included in interest and other
income in the accompanying pro forma statement of operations.
Also reflects the estimated incremental depreciation and amortization of the
1998 property acquisitions based on estimated useful lives of 40 years.
(3.) Reflects an adjustment to derive pro forma interest expense as follows:
<TABLE>
<S> <C>
Secured debt .............................................. $ 9,868
Unsecured Senior Debt Securities .......................... 14,820
Credit Facility .......................................... (5,499)
-------
$19,189
=======
</TABLE>
The increase in pro forma interest expense is the result of borrowings on
the Credit Facility related to property acquisitions, the issuance of unsecured
senior debt securities, the assumption of secured debt in connection with
property acquisitions which is offset by the repayment of borrowings on the
Credit Facility of approximately $395,000 with the net proceeds from the sale of
the Unsecured Senior Debt Securities and approximately $264,000 from the sale of
Series A Preferred Shares, Series B Preferred Units and Series C Preferred
Units.
In June 1998, the Operating Partnership issued $400,000 aggregate principal
amount of unsecured notes ("Unsecured Senior Debt Securities") in an
underwritten public offering, of which the net proceeds of approximately
$394,466 were contributed to the Operating Partnership and used to repay amounts
outstanding under the Credit Facility. The Unsecured Senior Debt Securities
mature in June 2008. June 2015 and June 2018 and bear interest at a weighted
average rate of 7.18%.
In July, 1998, the Company sold 4,000,000 shares of 8.5% Series A Cumulative
Redeemable Preferred Stock at $25.00 per share for $100,000 in an underwritten
public offering. These shares are redeemable solely at the option of the Company
on or after July 27, 2003. The net proceeds of $96,100 from the offering were
contributed to the Operating Partnership in exchange for 4,000,000 Series A
preferred units with terms identical to the Series A Preferred Stock. The
Operating Partnership used these proceeds to repay borrowings under the Credit
Facility.
In November 1998, the Operating Partnership issued and sold 1,300,000
8.625% Series B Cumulative Redeemable Preferred Units at a price of $50.00 per
unit in a private placement. Distributions are cumulative from the date of
original issuance and are payable quarterly in arrears at a rate per unit equal
to $4.3125 per annum. The Series B Preferred Units are redeemable by the
Operating Partnership on or after November 12, 2003, subject to certain
conditions, for cash at a redemption price equal to $50.00 per unit, plus
accumulated and unpaid distributions thereon, if any, to the redemption date.
The Series B Preferred Units are exchangeable, at specified times and subject
to certain conditions, on a one-for-one basis, for shares of the Company's
Series B Preferred Stock. The Operating Partnership used the net proceeds of
$62,259 to repay borrowings under the Credit Facility.
In November 1998, a subsidiary of the Operating Partnership issued and sold
2,200,000 units of 8.75% Series C Cumulative Redeemable Preferred Units at a
price of $50.00 per unit in a private placement. Distributions are cumulative
from the date of original issuance and are payable quarterly in arrears at a
rate per unit equal to $4.375 per annum. The Series C Preferred Units are
redeemable by the subsidiary of the Operating Partnership on or after November
24, 2003, subject to certain conditions, for cash at a redemption price equal to
$50.00 per unit, plus accumulated and unpaid distributions thereon, if any, to
the redemption date. The Series C Preferred Units are exchangeable, at specified
times and subject to certain conditions, on a one-for-one basis, for shares of
the Company's Series C Preferred Stock. The subsidiary of the Operating
Partnership used the net proceeds of $105,734 to make a loan to the Operating
Partnership, which used the funds to repay borrowings under the Credit Facility.
Also reflects the payment of pro forma Series A Preferred Stock dividends at
a dividend rate of 8.5%, Series B Preferred Unit distributions at a distribution
rate of 8.625% and Series C Preferred Unit distributions at a distribution rate
of 8.75%.
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(4.) Reflects the elimination of the historical revenues and expenses for
the year ended December 31, 1998 related to the real estate assets to be
divested in connection with the Divestiture.
(5.) The pro forma taxable income of the Company for the year ended
December 31, 1998 is approximately $66,700, which is based upon pro forma
income from operations of approximately $74,800, plus book depreciation and
amortization of approximately $46,000 less other book/tax differences of
approximately $6,300 and less tax depreciation and amortization of approximately
$47,800.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMB PROPERTY CORPORATION
(Registrant)
Date: June 9, 1999 By: /s/ MICHAEL A. COKE
---------------- --------------------------------
Michael A. Coke
Chief Financial Officer and
Senior Vice President
(Principal Financial and
Accounting Officer)
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