AMB PROPERTY CORP, DEF 14A, 1999-04-05

AMB PROPERTY CORP
DEF 14A, 1999-04-05
REAL ESTATE

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<PAGE> 1
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12

AMB Property Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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<PAGE> 2

March 31, 1999

Dear Stockholder:

You are cordially invited to attend the 1999 Annual Meeting of stockholders
of AMB PROPERTY CORPORATION. The Annual Meeting will be held on May 7, 1999, at
9:00 a.m. in the Colonnade Room at the Ritz Carlton Hotel located at 600
Stockton Street, San Francisco, California 94108. Information about the Annual
Meeting and the various matters on which the stockholders will act is included
in the Notice of Annual Meeting of Stockholders and Proxy Statement which
follow. Also included is a proxy card and return envelope.

Our 1999 Annual Report is also enclosed. Our Annual Report discusses the
importance of our Strategic Alliance Programs to our operating strategy. We
encourage you to read our Annual Report and hope you will find it interesting
and useful.

It is important that your shares be represented at the meeting. Whether or
not you plan to attend, please complete and return your proxy card in the
enclosed envelope as promptly as possible.

Sincerely,

HAMID R. MOGHADAM
President and Chief Executive Officer
<PAGE> 3
AMB PROPERTY CORPORATION
505 Montgomery Street
San Francisco, California 94111
----------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 7, 1999
----------------

To the Stockholders of AMB Property Corporation:

TIME 9:00 a.m., local time, on Friday, May 7, 1999

PLACE Ritz Carlton Hotel
Colonnade Room
600 Stockton Street
San Francisco, California 94108

ITEMS OF BUSINESS (1) To elect nine directors to AMB's Board of Directors
to serve until the next annual meeting of
stockholders and until their successors are duly
elected and qualified.

(2) To approve the amendment to the First Amended and
Restated 1997 Stock Option and Incentive Plan of AMB
Property Corporation, AMB Investment Management, Inc.
and their Respective Subsidiaries, increasing the
number of shares of AMB's Common Stock authorized for
issuance thereunder by 3,200,000 shares, from
5,750,000 to 8,950,000.

(3) To transact such other business as may properly come
before the Annual Meeting or any adjournment or
postponement thereof.

RECORD DATE Holders of shares of Common Stock of record at the close of
business on March 22, 1999 are entitled to vote at the Annual
Meeting.

ANNUAL REPORT AMB's 1998 Annual Report, which is not a part of the proxy
solicitation material, is enclosed.

PROXY VOTING It is important that your shares be represented and voted at
the Annual Meeting. You can vote your shares by one of the
following methods: vote by proxy over the Internet or by
telephone using the instructions on the enclosed proxy card
(if these options are available to you) OR mark, sign, date
and promptly return the enclosed proxy card in the postage
paid envelope furnished for that purpose. Any proxy may be
revoked in the manner described in the accompanying Proxy
Statement at any time prior to its exercise at the Annual
Meeting.

By Order of the Board of Directors

DAVID S. FRIES
Chief Administrative Officer,
Managing Director, General Counsel
and Secretary

March 31, 1999
San Francisco, California

<PAGE> 4

AMB PROPERTY CORPORATION
505 MONTGOMERY STREET
SAN FRANCISCO, CALIFORNIA 94111

ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 7, 1999

----------------
PROXY STATEMENT
----------------

INTRODUCTION

GENERAL

This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of AMB Property Corporation, a Maryland corporation ("AMB" or
the "Company"), of proxies from the holders of the Company's issued and
outstanding shares of Common Stock to be voted at the Annual Meeting of
Stockholders (the "Annual Meeting") and at any adjournment(s) or postponement(s)
thereof. The Annual Meeting will be held on May 7, 1999 in the Colonnade Room at
the Ritz Carlton Hotel located at 600 Stockton Street, San Francisco, California
94108, beginning at 9:00 a.m. local time.

At the Annual Meeting, the items of business that you will be asked to
consider and vote upon are:

1. The election of nine directors to serve until the next annual meeting of
stockholders and until their successors are duly elected and qualify;

2. The approval of the amendment of the First Amended and Restated 1997
Stock Option and Incentive Plan of AMB Property Corporation, AMB
Investment Management, Inc. and their Respective Subsidiaries (the "1997
Plan"), increasing the number of shares of AMB's Common Stock authorized
for issuance thereunder by 3,200,000 shares, from 5,750,000 to 8,950,000;
and

3. Such other business as may properly come before the Annual Meeting.

This Proxy Statement and accompanying form of proxy are being sent to
holders of the Company's Common Stock on the record date, which is March 22,
1999 (the "Record Date"). This Proxy Statement and accompanying form of proxy
are first being mailed to you on or about March 31, 1999.

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT, AND, IF
GIVEN OR MADE, SUCH INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED AND THE DELIVERY OF THIS PROXY STATEMENT SHALL, UNDER NO
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

AMB's executive offices are located at 505 Montgomery Street, San Francisco,
California 94111, telephone (415) 394-9000. References herein to "AMB" or the
"Company" refer to AMB Property Corporation and its subsidiaries, unless the
context otherwise requires.

VOTING AND REVOCATION OF PROXIES

YOUR VOTE IS IMPORTANT. Because most of AMB's stockholders cannot attend the
Annual Meeting in person, it is necessary for a large number to be represented
by proxy. Most stockholders have a choice of voting by proxy over the Internet,
by using a toll free telephone number or by completing a proxy card and mailing
it in the postage-paid envelope provided. Check your proxy card or the
information forwarded by your bank, broker or other holder of record to see
which options are available to you. If you vote by proxy

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over the Internet, please be aware that you may incur costs such as
telecommunications and Internet access charges for which you will be
responsible. The Internet and telephone proxy voting facilities for stockholders
of record will close at noon, California time, on May 6, 1999.

The Internet and telephone proxy voting procedures are designed to
authenticate stockholders by use of a control number and to allow stockholders
to confirm that their instructions have been properly recorded. The method by
which you vote will in no way limit your right to vote at the Annual Meeting if
you later decide to attend in person. If your shares of Common Stock are held in
the name of a bank, broker or other holder of record, you must obtain a proxy,
executed in your favor, from the holder of record, to be able to vote in person
at the Annual Meeting.

You may revoke your proxy at any time before it is exercised by writing to
David S. Fries, the Secretary of AMB, by timely delivery of a properly executed,
later-dated proxy (including an Internet or telephone vote) or by voting by
ballot at the Annual Meeting. Mere attendance at the Annual Meeting will not
revoke a proxy.

AMB is a corporation organized under the laws of the State of Maryland.
Section 2-507 of the Maryland General Corporation Law authorizes the granting of
proxies by telephone or over the Internet. Accordingly, proxies granted by
telephone or over the Internet, in accordance with the procedures set forth on
the proxy card, will be valid under Maryland law.

All shares of Common Stock entitled to vote and represented by properly
completed proxies received prior to the Annual Meeting and not revoked will be
voted in accordance with your instructions. IF NO INSTRUCTIONS ARE INDICATED ON
A PROPERLY COMPLETED PROXY, THE SHARES OF COMMON STOCK REPRESENTED BY THAT PROXY
WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS.

If any other matters are properly presented at the Annual Meeting for
consideration, including, among other things, consideration of a motion to
adjourn the Annual Meeting to another time or place, the persons named as
proxies and acting thereunder will have discretion to vote on those matters
according to their best judgment to the same extent as the person delivering the
proxy would be entitled to vote. At the time this Proxy Statement went to press,
AMB did not anticipate that any other matters would be raised at the Annual
Meeting.

STOCKHOLDERS ENTITLED TO VOTE

Stockholders at the close of business on the Record Date are entitled to
notice of and to vote at the Annual Meeting. As of the Record Date, there were
86,026,271 shares of AMB's Common Stock outstanding. Each share of Common Stock
is entitled to one vote on each matter properly brought before the Annual
Meeting.

REQUIRED VOTE

A majority of the shares of Common Stock outstanding must be represented, in
person or by proxy, at the Annual Meeting to constitute a quorum for the
transaction of business at the Annual Meeting. Abstentions and broker
"non-votes" are counted as present and entitled to vote for purposes of
determining a quorum. A broker "non-vote" occurs when a nominee holding shares
of Common Stock for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power with respect to
that item and has not received instructions from the beneficial owner.

The affirmative vote of a majority of the votes cast is required to approve
the increase in the number of shares of Common Stock reserved for issuance under
the 1997 Plan, provided that the total vote cast on the proposal represents over
50% of the shares of Common Stock entitled to vote on the proposal. Abstentions
and broker "non-votes" are counted as votes against the proposal, unless holders
of more than 50% of the shares of Common Stock cast votes, in which event
neither an abstention nor a broker "non-vote" will have any effect on the result
of the vote.

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COST OF PROXY SOLICITATION

The cost of soliciting proxies will be paid by the Company. Proxies may be
solicited on behalf of the Company by Directors, officers or employees of the
Company in person or by telephone, facsimile or other electronic means. These
people will not be specially compensated for their solicitation of proxies. The
Company has engaged Corporate Investor Communications, Inc. to assist the
Company in the distribution and solicitation of proxies. The Company has agreed
to pay Corporate Investor Communications, Inc. a fee of approximately $6,500
plus expenses for these services.

In accordance with the regulations of the SEC and the New York Stock
Exchange (the "NYSE"), AMB will also reimburse brokerage firms and other
custodians, nominees and fiduciaries for their expenses incurred in sending
proxies and proxy materials to the beneficial owners of shares of AMB's Common
Stock.

ADVANCE NOTICE PROCEDURES

Deadline for Submitting Stockholder Proposals for Inclusion in the Company's
Proxy Statement. SEC Rule 14a-8 provides that certain stockholder proposals must
be included in the proxy statement for the Company's annual meeting. For a
stockholder proposal to be considered for inclusion in the proxy statement for
the Company's 2000 annual meeting of stockholders, it must be received by the
Company no later than December 2, 1999.

Deadline for Submitting Nominations for Director and Other Stockholder
Proposals Outside of SEC Rule 14a-8. Under the Company's Bylaws, nominations for
Director may be made only by the Board or a committee of the Board, or by a
stockholder entitled to vote who delivered notice to the Company not less than
50 days nor more than 75 days prior to the meeting; provided, however, that in
the event that less than 65 days notice or prior public disclosure of the date
of the meeting is given or made to stockholders, then notice by the stockholder
to be timely must be delivered to the Company not later than the close of
business of the 15th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made.

The Bylaws also provide that no business may be brought before an annual
meeting except as specified in the notice of the meeting or as otherwise brought
before the meeting by or at the direction of the Board of Directors or by a
stockholder entitled to vote who has delivered notice to the Company (containing
certain information specified in the Bylaws) within the time limits described
above for delivering notice of a nomination for the election of a Director.
These requirements apply to any matter that a stockholder wishes to raise at an
annual meeting other than pursuant to the procedures in SEC Rule 14a-8.

A copy of the full text of the Bylaw provisions discussed above may be
obtained by writing to the Secretary at 505 Montgomery Street, San Francisco,
California 94111.

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THE DATE OF THIS PROXY STATEMENT IS MARCH 31, 1999.

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PROPOSAL 1: ELECTION OF DIRECTORS

AMB's Board of Directors consists of nine directors. 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 a
division thereof, or a relative of a principal executive officer, and who is not
an individual member of an organization acting as an advisor, consultant or
legal counsel, receiving compensation on a continuing basis from the Company in
addition to Director's compensation. Currently, six of the nine presently
elected Directors are Independent Directors. Each member of the Board serves a
one-year term, which expires at the following annual meeting of stockholders.

The persons named in the enclosed proxy intend to vote such proxy for the
election of each of the nominees named below, unless you indicate that your vote
should be withheld from any or all of them. Each nominee elected as a Director
will continue in office until his or her successor has been duly elected and
qualified, or until the earliest of his or her resignation, retirement or death.

The Board of Directors has proposed the following nominees for election as
Directors at the Annual Meeting: Douglas D. Abbey, Hamid R. Moghadam, T. Robert
Burke, Daniel H. Case III, Robert H. Edelstein, Ph.D., Lynn M. Sedway, Jeffrey
L. Skelton, Ph.D., Thomas W. Tusher and Caryl B. Welborn, Esq. Each of the
nominees is currently serving as a Director of the Company. THE BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES FOR ELECTION AS
DIRECTORS.

Each of the nominees has consented to be named in this Proxy Statement and
to serve as a Director if elected. The principal occupation and certain other
information regarding the nominees is set forth below. Information about each
nominee's share ownership can be found on page 21.

NOMINEES FOR DIRECTOR
<TABLE>
<CAPTION>

DIRECTOR POSITIONS CURRENTLY
NOMINEES FOR DIRECTOR SINCE HELD WITH THE COMPANY
- --------------------- ----- ---------------------

<S> <C> <C>
Douglas D. Abbey 1997 Director and Chairman of AMB Investment
Management, Inc.
Hamid R. Moghadam 1997 President, Chief Executive Officer and Director
T. Robert Burke 1997 Chairman of the Board of Directors
Daniel H. Case, III 1997 Director
Robert H. Edelstein, Ph.D. 1997 Director
Lynn M. Sedway 1997 Director
Jeffrey L. Skelton, Ph.D. 1997 Director
Thomas W. Tusher 1997 Director
Caryl B. Welborn, Esq 1997 Director
</TABLE>

DOUGLAS D. ABBEY, age 49, one of the founders (in 1983) of the predecessor
to AMB, is a Director of the Company, Chairman of AMB Investment Management,
Inc. ("AMB Investment Management") and Chairman of the Investment Committee, and
is responsible for directing the economic research used to determine AMB's
investment strategy, as well as the market research for property acquisitions.
Mr. Abbey has 24 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 a trustee
of the Urban Land Institute, serves on the Policy Advisory Board for the Center
for Real Estate and Urban Economics at the University of California at Berkeley
and is a Trustee of Golden Gate University.

HAMID R. MOGHADAM, age 42, one of the founders (in 1983) of the predecessor
to AMB, is a Director of AMB, is the President and Chief Executive Officer of
the Company and Chairman of its Executive Committee. Mr. Moghadam has 19 years
of experience in real estate and is a member of the Investment Committee. Mr.
Moghadam holds bachelor's and master's degrees in engineering from the
Massachusetts Institute of Technology and an M.B.A. degree from the Graduate
School of Business at Stanford University. He is a Vice Chairman of the board of
directors of the National Realty Committee, is a member of the Young Presidents'
Organization, has served on various committees of the Massachusetts Institute of
Technology and is a Trustee of the Bay Area Discovery Museum. In 1998, Mr.
Moghadam was named the Real Estate Entrepreneur of the Year in Northern
California and the runner-up in the national competition.

T. ROBERT BURKE, age 56, one of the founders (in 1983) of the predecessor to
AMB, is the Chairman of the Board of Directors of AMB. He has 30 years of
experience in real estate and is a member of the Investment Committee. He was
formerly a senior real

<PAGE> 8

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 former
member of the Board of Governors of the National Association of Real Estate
Investment Trusts ("NAREIT"), 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.

DANIEL H. CASE III, age 41, is a Director of AMB and is Chairman of the
Board, President and Chief Executive Officer of the Hambrecht & Quist Group. Mr.
Case was named co-director of Mergers and Acquisitions of Corporate Finance of
Hambrecht & Quist 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. In April 1992, he was elected President and Co-Chief Executive
Officer. He became President and Chief Executive Officer in October 1994 and
Chairman in 1998. 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 one of the "100 Global Leaders for Tomorrow" by
the World Economics Forum (1998) and one of the "Top 50 Innovators in
Technology" by Time Magazine (1997). 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.

ROBERT H. EDELSTEIN, PH.D., age 55, is a Director of AMB. 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, age 57, is a Director of AMB. She is principal and founder
of the Sedway Group, a 21-year old real estate economics firm headquartered in
San Francisco. 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 and a board member of
Bridge Housing, the Counselors of Real Estate, Lambda Alpha, the Swig Company,
and Alexander & Baldwin and its affiliate companies. Ms. Sedway is a member of
the Policy Advisory Board of the Fisher Center for Real Estate and the
International Council of Shopping Centers.

JEFFREY L. SKELTON, PH.D., age 49, is a Director of AMB. 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
1984 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.

THOMAS W. TUSHER, age 57, is a Director of AMB. He was President and Chief
Operating Officer of Levi Strauss & Co. from 1984 through 1996, when he retired.
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 (Pearl Izumi). He is 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. Mr. Tusher is also a Director of the World Wildlife Fund and a
member of the Advisory Council of Stanford University's Graduate School of
Business.

CARYL B. WELBORN, ESQ., age 48, is a Director of AMB. She is a commercial
real estate attorney in San Francisco and, prior to starting her own firm in
1995, she was an attorney with Morrison & Foerster LLP from 1982 to 1995. Ms.
Welborn has a bachelor's

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degree from Stanford University and a J.D. degree from the Law School at the
University of California at Los Angeles. She is an officer 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. Ms. Welborn
is a program chair and frequent lecturer on real estate issues nationally, and
has published numerous articles in professional publications.

BOARD OF DIRECTORS MEETINGS AND ATTENDANCE

Pursuant to the Maryland General Corporation Law and the Company's Bylaws,
the business, property and affairs of AMB are managed under the direction of the
Board of Directors. Members of the Board are kept informed of AMB's business
through discussions with the Chairman of the Board and AMB's officers, by
reviewing materials provided to them and by participating in meetings of the
Board and its committees.

During 1998, the Board held five meetings and acted once by unanimous
written consent. No director attended fewer than 75% of the aggregate of (i) the
total number of meetings of the Board while they were on the Board and (ii) the
total number of meetings of the committees of the Board on which such directors
served.

BOARD COMMITTEES

The Board of Directors of the Company has an Audit Committee, an Executive
Committee and a Compensation Committee.

Audit Committee. The Audit Committee consists of three Independent
Directors: Ms. Welborn, the Chairman, Dr. Edelstein and Dr. Skelton. The Audit
Committee makes recommendations concerning the engagement of independent public
accountants, reviews with the independent public accountants the scope and
results of the audit engagement, approves professional services provided by the
independent public accountants, reviews the independence of the independent
public accountants, considers the range of audit and non-audit fees and reviews
the adequacy of AMB's internal accounting controls. The Audit Committee held
three meetings during 1998.

Executive Committee. The Executive Committee consists of Mr. Case, the
Chairman, Dr. Skelton, Messrs. Moghadam and Burke, and Ms. Sedway. The Executive
Committee has the authority within certain parameters to acquire, dispose of and
finance investments for the Company (including the issuance by AMB Property,
L.P. (the "Operating Partnership") of additional limited partnership units
("Units") or other equity interests) and approve the execution of contracts and
agreements including those related to the borrowing of money by AMB and
generally exercise all other powers of the Board except as prohibited by law.
The Executive Committee held one meeting and acted by unanimous written consent
four times during 1998.

Compensation Committee. The Compensation Committee consists of three
Independent Directors: Mr. Tusher, the Chairman, and Dr. Skelton and Ms. Sedway.
The function of the Compensation Committee is to determine compensation for
AMB's executive officers, and 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, and implement the 1997 Plan and any other
incentive programs. The Compensation Committee held four meetings during 1998.

COMPENSATION OF DIRECTORS

The Company currently does not pay its Independent Directors cash
compensation for their services. However, each Independent Director receives
$1,250 for each meeting in excess of six meetings of the Board of Directors
attended during each annual term. During 1998, the Company did not pay any cash
compensation to the Independent Directors. Each Independent Director is also
reimbursed for reasonable expenses incurred to attend director and committee
meetings. In addition, in lieu of cash compensation, each Independent Director
receives, upon initial election to the Board, an initial option grant to
purchase up to 20,000 shares of Common Stock. Upon re-election, each Independent
Director receives a subsequent option grant to purchase up to 15,000 shares of
Common Stock. All of such options vest fully on the first anniversary of the
grant date, except that all options granted to the Independent Directors at the
Company's initial public offering vested immediately upon grant. If re-elected
at the Annual Meeting, the Independent Directors will be granted additional
options. All stock options are issued pursuant to the 1997 Plan at an exercise
price equal to or greater than the fair market value of the Common Stock at the
date of grant. Officers of the Company who are directors are not paid any
director's fees or granted options as directors.

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VOTE REQUIRED

A plurality of the votes cast is required for the election of Directors
(i.e., the nominees receiving the greatest number of votes will be elected).
Abstentions and broker "non-votes" are not counted for purposes of the election
of Directors and do not have an effect on the result of the vote for the
election of Directors. THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE NINE
DIRECTOR NOMINEES TO SERVE UNTIL THE NEXT ANNUAL MEETING OF STOCKHOLDERS AND
UNTIL THEIR RESPECTIVE SUCCESSORS ARE DULY ELECTED AND QUALIFY.

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PROPOSAL 2: AMENDMENT OF THE 1997 STOCK OPTION AND INCENTIVE PLAN

Effective November 26, 1997, the Company adopted the 1997 Stock Option and
Incentive Plan to (1) enable executive officers, employees and directors of the
Company, the Operating Partnership and AMB Investment Management and their
subsidiaries to participate in the ownership of the Company, (2) attract and
retain executive officers, other key employees (those employees who from
time-to-time are recognized for exceptional contributions to the Company and its
subsidiaries, including the Operating Partnership) and directors of the Company,
the Operating Partnership and AMB Investment Management and their subsidiaries,
and (3) provide incentives to those persons to maximize the Company's
performance and its cash flow available for distribution.

On March 5, 1999, the Board of Directors adopted the First Amended and
Restated 1997 Stock Option and Incentive Plan (the "1997 Plan"), which
amendment, among other things, removed the provisions permitting the repricing
of stock options granted under the 1997 Plan. On March 5, 1999, the Board of
Directors also adopted, subject to stockholder approval, a First Amendment to
the 1997 Plan to increase the number of shares of Common Stock issuable under
the plan by 3,200,000 shares, from 5,750,000 shares to 8,950,000 shares. Under
the terms of the 1997 Plan, an amendment to increase the maximum number of
shares of stock which may be issued under the plan requires the approval of a
majority of the Company's stockholders. After approval of the First Amendment by
the Company's stockholders, the Company will restate the 1997 Plan as the Second
Amended and Restated 1997 Stock Option and Incentive Plan for the purpose of
reflecting the change set forth in the First Amendment. As of the date of this
Proxy Statement, the Company has granted options to purchase 4,335,317 shares of
Common Stock (net of forfeitures) and 48,720 restricted shares of Common Stock.

The Board of Directors believes that increasing the number of shares
available for issuance under the 1997 Plan will give the Compensation Committee
and the Board of Directors greater flexibility to carry out their
responsibilities to establish compensation programs that attract, motivate and
retain executive officers, other key employees and directors of the Company, the
Operating Partnership and AMB Investment Management and their subsidiaries and
to administer those programs in a manner that benefits the long-term interest of
the Company and its stockholders.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE
FIRST AMENDMENT TO THE 1997 PLAN.

GENERAL DESCRIPTION OF THE 1997 PLAN

The principal features of the 1997 Plan are summarized below, but the
summary is qualified in its entirety by reference to the full text of the plan.
A copy of the 1997 Plan and the proposed First Amendment to the 1997 Plan are
attached as Appendix A to this Proxy Statement.

The 1997 Plan provides for the award of non-qualified and incentive stock
options, restricted stock, stock appreciation rights, performance awards,
dividend equivalents, stock payments and deferred stock. The 1997 Plan limits
the maximum number of shares of Common Stock for which awards may be issued
during any fiscal year to any participant in the 1997 Plan to 1,000,000. In
addition, the 1997 Plan provides that the 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 may
not exceed $100,000.

ADMINISTRATION OF THE 1997 PLAN

The 1997 Plan is administered by the Compensation Committee except that the
full Board of Directors conducts the general administration of the 1997 Plan
with respect to stock options granted to Independent Directors. No person is
eligible to serve on the Compensation Committee unless he or she is an
Independent Director and also a "non-employee" director as defined by Rule 16b-3
of the Exchange Act and an "outside director" for purposes of Section 162(m) of
the Internal Revenue Code. The Compensation Committee has the authority to
interpret the 1997 Plan and the agreements pursuant to which awards are granted,
to adopt rules for the administration, interpretation and application of the
1997 Plan that are consistent with the plan, and to interpret, amend or revoke
any of those rules. In its discretion, the Board of Directors may at any time
and from time to time exercise any and all rights and duties of the Compensation
Committee under the 1997 Plan except with respect to matters which under Rule
16b-3 or Section 162(m) of the Internal Revenue Code, or any regulations or
rules issued thereunder, are required to be determined in the sole discretion of
the Compensation Committee.

8
<PAGE> 12

The 1997 Plan provides that the Compensation Committee may, but need not,
delegate from time to time to a committee consisting of one or more members of
the Compensation Committee or of one or more officers of the Company some or all
of the Compensation Committee's authority to grant awards under the 1997 Plan to
eligible recipients; provided, however, that each such recipient must be an
individual other than an "officer," "director" or "beneficial owner of more than
ten per centum of any class of any equity security" within the meaning of each
such term as it is used under Section 16(b) of the Exchange Act. Any delegation
of authority will be subject to the restrictions and limits that the
Compensation Committee specifies at the time of the delegation of authority and
may be rescinded at any time by the Compensation Committee. At all times, any
committee appointed by the Compensation Committee will serve at the pleasure of
the Compensation Committee.

ELIGIBILITY

Employees and consultants of the Company, the Operating Partnership and AMB
Investment Management and their subsidiaries, and directors of the Company and
AMB Investment Management and their subsidiaries may receive stock payments,
performance awards, restricted stock, dividend equivalents and deferred stock
under the 1997 Plan. Employees and consultants of the Company, the Operating
Partnership and AMB Investment Management and their subsidiaries may receive
stock appreciation rights under the 1997 Plan. Non-Employee Directors (as
defined in the 1997 Plan) and employees and consultants of the Company, the
Operating Partnership and AMB Investment Management and their subsidiaries may
receive options to purchase shares of Common Stock under the 1997 Plan.
Independent Directors will receive automatic grants of options to purchase
shares of Common Stock, as described below under "Stock Options."

AWARDS

Stock Options. Directors of the Company, employees of the Operating
Partnership, employees and directors of AMB Investment Management, 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.

Nonqualified stock options will provide for the right to purchase Common
Stock at a specified price which, except with respect to nonqualified stock
options intended to qualify as performance-based compensation under Section
162(m) of the Internal Revenue Code, may be less than fair market value of a
share of Common Stock on the date of grant (but not less than par value).

Incentive stock options will be designed to comply with the provisions of
the Internal Revenue Code and will be subject to certain restrictions contained
in the Internal Revenue Code. Incentive stock options must have an exercise
price not less than the fair market value of a share of Common Stock on the date
of grant, may only be granted to employees, must expire within a specified
period of time following the optionee's termination of employment, and must be
exercised within ten years after the date of grant. Incentive stock options may
be subsequently modified to disqualify them from treatment as incentive stock
options. In the case of an incentive stock option granted to an individual who
owns more than 10% of the total combined voting power of all classes of stock of
the Company or any subsidiary or parent corporation of the Company, the 1997
Plan provides that the exercise price must be at least 110% of the fair market
value of a share of Common Stock on the date of grant.

The term of an option will be set by the Committee in its discretion;
provided, however, that, (1) the Committee may not grant an option with a term
of more than 10 years from the date of grant, (2) in the case of options granted
to Independent Directors, the term must be 10 years from the date of grant, and
(3) in the case of incentive stock options, the term must not be more than five
years from the date of grant, if the incentive stock option is granted to an
individual who then owns more than 10% of the total combined voting power of all
classes of stock of the Company or any subsidiary or parent corporation of the
Company.

During the term of the 1997 Plan, in addition to stock options granted at
the time of the Company's initial public offering, each person who was an
Independent Director at the time of the Company's initial public offering will
be granted an option to purchase 15,000 shares of Common Stock, subject to
adjustment, on the date of each annual meeting of stockholders at which the
Independent Director is reelected to the Board of Directors. During the term of
the 1997 Plan, each person (other than a person who was an Independent Director
at the time of the Company's initial public offering) who is initially elected
to the Board after the Company's initial public offering and who is an
Independent Director at the time of initial election will automatically be
granted (1) an option to purchase 20,000 shares of Common Stock, subject to
adjustment, on the date of initial election, and (2) as long as the person
continues to serve as an Independent Director, an option to purchase 15,000
shares of Common Stock, subject to adjustment, on the date of each annual
meeting of stockholders after initial election. Members of the Board of
Directors who are employees of the Company who subsequently retire from the
Company and remain on the Board of Directors will not receive an initial option
grant pursuant to

9
<PAGE> 13

clause (1) of the preceding sentence, but to the extent that they are otherwise
eligible, will receive, after retirement from employment with the Company,
options as described in clause (2) of the preceding sentence.

The Compensation Committee will set the period during which the right to
exercise a stock option vests in the optionee. Unless the Board of Directors
otherwise provides, no stock option will be exercisable by any optionee who is
then subject to Section 16 of the Exchange Act within the period ending six
months and one day after the date the stock option is granted. Unless the
Compensation Committee otherwise provides, stock options granted to Independent
Directors will become fully exercisable on the first anniversary of the date of
grant. At any time after grant of a stock option, the Compensation Committee may
accelerate the period during which a stock option (except a stock option granted
to an Independent Director) vests.

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: (1)
in cash or by certified or cashier's check payable to the order of the Company,
(2) by delivery of shares of Common Stock already owned by, and in the
possession of, the optionee or (3) 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.

The Compensation Committee (or the Board, in the case of options granted to
Independent Directors), in its absolute discretion, may impose such limitations
and restrictions on the exercise of options as it deems appropriate. Any such
limitation will be set forth in the respective stock option agreement. An
optionee may not exercise an option if in the sole and absolute discretion of
the Compensation Committee the exercise of the option would likely result in (1)
the optionee's or any other person's ownership of capital stock being in
violation of the ownership limit contained in the Company's Articles of
Incorporation or (2) income to the Company that could impair the Company's
status as a REIT.

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 price if certain conditions or
restrictions are removed or expire. Purchasers of restricted stock will have
voting rights and receive distributions prior to the time when the restrictions
lapse.

Stock Appreciation Rights. Stock appreciation rights may be granted in
connection and simultaneously with the grant of a stock option, with respect to
a previously granted stock option, or independent of a stock option. A stock
appreciation right will be subject to such terms and conditions not inconsistent
with the 1997 Plan as the Compensation Committee may impose. The Compensation
Committee may require that as a condition of the grant of a stock appreciation
right to an employee or consultant that the employee or consultant surrender for
cancellation some or all of any unexercised other awards previously granted
under the 1997 Plan.

Performance Awards. Performance awards are cash or stock bonuses or other
performance or incentive awards paid in cash, Common Stock or a combination of
both. The value of performance awards may be linked to performance criteria of
the Common Stock determined appropriate by the Compensation Committee. The
Compensation Committee may establish the term and purchase price of any
performance award.

Dividend Equivalents. Dividend equivalents are rights to receive the
equivalent value (in cash or Common Stock) of dividends or regular cash
distributions paid on Common Stock. Dividend equivalents will be converted to
cash or additional shares of Common Stock by such formula and at such time and
subject to such limitations as may be determined by the Compensation Committee.

Stock Payments. Stock payments are payments in the form of shares of Common
Stock or options or other rights to purchase shares of Common Stock as part of a
deferred compensation arrangement. The number of shares granted as stock
payments will be determined by the Compensation Committee and may be based upon
performance criteria of the Common Stock determined appropriate by the
Compensation Committee. The Compensation Committee may establish the term and
purchase price or exercise price of any stock payment.

Deferred Stock. The number of shares of deferred stock granted will be
determined by the Compensation Committee and may be linked to performance
criteria of the Company determined appropriate by the Compensation Committee.
The Compensation Committee may establish the term and purchase price of any
award of deferred stock.

10
<PAGE> 14

NON-ASSIGNABILITY

Awards under the 1997 Plan may be transferred only by will or by the laws of
descent and distribution unless and until such awards have been exercised or the
shares underlying such awards have been issued and all restrictions applicable
to such shares have lapsed. During a participant's lifetime, options are
exercisable only by the participant.

NO REPRICING OF OPTIONS

In March 1999, the Board of Directors revised the 1997 Plan and removed the
provisions that permitted the reduction of the exercise price of stock options
granted under the 1997 Plan.

ADJUSTMENTS

If the Compensation Committee (or the Board of Directors, in the case of
options granted to Independent Directors) determines that any dividend,
reclassification, stock split, reorganization, merger, consolidation or other
similar change in corporate structure affects the Common Stock such that the
Committee or the Board of Directors determines an adjustment is appropriate in
order to prevent dilution, then the Committee or the Board will make appropriate
adjustment to the maximum number and class of shares issuable under the 1997
Plan and the number and/or class of shares and price per share in effect under
each outstanding option.

AMENDMENT, SUSPENSION OR TERMINATION OF THE 1997 PLAN

The Board of Directors may at any time suspend or terminate the 1997 Plan.
The Board of Directors or Compensation Committee may also at any time amend the
1997 Plan. However, no such amendment or revision may, unless appropriate
stockholder approval of such amendment or revision is obtained, (1) increase the
maximum number of shares which may be acquired pursuant to awards granted under
the 1997 Plan (except for adjustments described in the foregoing paragraph) or
(2) increase the maximum number of shares of Common Stock (1,000,000) for which
awards may be issued during any fiscal year to any participant. No amendment of
the 1997 Plan may alter or impair any rights or obligations under any awards
already granted unless the holder of the award consents or the award otherwise
provides. No awards may be granted or awarded during any period of suspension or
after termination of the 1997 Plan. No incentive stock option may be granted
under the 1997 Plan after the first to occur of the expiration of ten years from
the date the 1997 Plan was adopted by the Board of Directors or the expiration
of ten years from the date the 1997 Plan was approved by the stockholders.

SECURITIES LAWS AND FEDERAL INCOME TAXES

Securities Laws. The 1997 Plan is intended to conform to the extent
necessary with all provisions of the Securities Act and the Exchange Act and any
and all regulations and rules promulgated by the SEC thereunder, including
without limitation Rule 16b-3. The 1997 Plan will be administered, and options
will be granted and may be exercised, only in such a manner as to conform to
such laws, rules and regulations. To the extent permitted by applicable law, the
1997 Plan and options granted thereunder will be deemed amended to the extent
necessary to conform to such laws, rules and regulations.

General Federal Tax Consequences. Under current Federal laws, in general,
recipients of awards and grants of nonqualified stock options, stock
appreciation rights, restricted stock, deferred stock, dividend equivalents,
performance awards, and stock payments under the 1997 Plan are taxable under
Section 61 or 83 of the Internal Revenue Code upon their receipt of Common Stock
or cash with respect to such awards or grants and, subject to Section 162(m) of
the Internal Revenue Code, the Company will be entitled to an income tax
deduction with respect to the amounts taxable to such recipients. Under Sections
421 and 422 of the Internal Revenue Code, recipients of incentive stock options
are generally not taxable on their receipt of Common Stock upon exercise of
incentive stock options if the incentive stock options and option stock are held
for certain minimum holding periods and, in such event, the Company is not
entitled to income tax deductions with respect to such exercises.

Section 162(m) Limitation. In general, under Section 162(m) of the Internal
Revenue Code, income tax deductions of publicly-held corporations may be limited
to the extent total compensation (including base salary, annual bonus, stock
option exercises, transfers of property and benefits paid under non-qualified
plans) for certain executive officers exceeds $1,000,000 (less the amount of any
"excess parachute payments" as defined in Section 280G of the Internal Revenue
Code) in any one year. However, under Section 162(m), the deduction limit does
not apply to certain "performance-based compensation."

11
<PAGE> 15

Under Section 162(m), stock options and stock appreciation rights will
satisfy the "performance-based compensation" exception if the award of the
options or stock appreciation rights are made by a Board of Directors committee
consisting solely of 2 or more "outside directors," the plan sets the maximum
number of shares that can be granted to any person within a specified period and
the compensation is based solely on an increase in the stock price after the
grant date (i.e., the option or stock appreciation right exercise price is equal
to or greater than the fair market value of the stock subject to the award on
the grant date). Other types of awards may only qualify as "performance-based
compensation" if such awards are only granted or payable to the recipients based
upon the attainment of objectively determinable and pre-established performance
goals which are established by a qualifying committee and which relate to
performance targets which are approved by the corporation's stockholders.

The 1997 Plan has been designed to permit the Compensation Committee to
grant stock options and stock appreciation rights which will qualify as
"performance-based compensation." In addition, in order to permit awards other
than stock options and stock appreciation rights to qualify as
"performance-based compensation, the 1997 Plan provides that the Compensation
Committee may designate as "Section 162(m) Participants" certain employees whose
compensation for a given fiscal year may be subject to the limit on deductible
compensation imposed by Section 162(m) of the Internal Revenue Code. The
Compensation Committee may grant awards to Section 162(m) Participants that vest
or become exercisable upon the attainment of performance targets which are
related to one or more of the following performance goals: (1) pre-tax income;
(2) operating income; (3) cash flow; (4) earnings per share, (5) return on
equity; (6) return on invested capital or assets; (7) cost reductions or
savings, (8) funds from operations, (9) appreciation in the fair market value of
Common Stock and (10) earnings before any one or more of the following items:
interest, taxes, depreciation or amortization.

VOTE REQUIRED

12
<PAGE> 16

CERTAIN INFORMATION WITH RESPECT TO EXECUTIVE OFFICERS

The following table sets forth certain current information with respect to
the executive officers of the Company:
<TABLE>
<CAPTION>

NAME AGE POSITION
---- ---- --------
<S> <C> <C>
Douglas D. Abbey.................... 49 Director and Chairman of AMB Investment
Management
Hamid R. Moghadam................... 42 President, Chief Executive Officer and Director
T. Robert Burke..................... 56 Chairman of the Board
W. Blake Baird...................... 38 Chief Investment Officer and Managing Director
Luis A. Belmonte.................... 58 Managing Director, Industrial Division
Michael A. Coke..................... 31 Chief Financial Officer, Senior Vice President
and Director of Financial Management and
Reporting
John H. Diserens.................... 45 Managing Director, Retail Division
Bruce H. Freedman................... 50 Managing Director, Industrial Division
David S. Fries...................... 35 Chief Administrative Officer, Managing
Director, General Counsel and Secretary
John T. Roberts, Jr................. 35 Senior Vice President, Director of Capital
Markets and Treasurer
Craig A. Severance.................. 47 Managing Director, New Initiatives and
Technology
</TABLE>

The following is a biographical summary of the experience of the executive
officers of the Company:

DOUGLAS D. ABBEY has served as Chairman of the Investment Committee and a
Director of AMB since November 1997. Biographical information regarding Mr.
Abbey is set forth under "Proposal 1: Election of Directors -- Nominees For
Director."

HAMID R. MOGHADAM has served as AMB's President and Chief Executive Officer
and a Director of the Company since November 1997. Biographical information
regarding Mr. Moghadam is set forth under "Proposal 1: Election of Directors --
Nominees For Director."

T. ROBERT BURKE has served as AMB's Chairman of the Board since November
1997. Biographical information regarding Mr. Burke is set forth under "Proposal
1: Election of Directors -- Nominees For Director."

W. BLAKE BAIRD, age 38, is the Chief Investment Officer and a Managing
Director, and is Vice Chairman of the Investment Committee and the Executive
Committee. Prior to joining AMB in January 1999, Mr. Baird was a Managing
Director of Morgan Stanley Dean Witter & Co., most recently as head of Real
Estate Investment Banking for the Western United States. Mr. Baird spent 15
years at Morgan Stanley Dean Witter, the last 11 focusing on real estate. Mr.
Baird holds a B.S. in Economics from the Wharton School and a B.A. in History
from the College of Arts and Sciences at the University of Pennsylvania. He also
holds an M.B.A. from New York University. Mr. Baird is a former member of the
Board of Directors of NAREIT, a charter member of the Advisory Board of the
Steven L. Newman Real Estate Institute at Baruch College, a member of the Urban
Land Institute and serves on the Policy Advisory Board for the Center for Real
Estate and Urban Economics of the University of California at Berkeley.

LUIS A. BELMONTE, age 58, is a Managing Director and co-head of the
Company's Industrial Division and is a member of the Investment Committee. He
specializes in industrial property development and redevelopment. He joined AMB
in 1990 and has over 30 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, and former President
of the San Francisco chapter of the National Association of Industrial and
Office Parties ("NAIOP"), The Association for Commercial Real Estate.

MICHAEL A. COKE, age 31, is the Chief Financial Officer, a Senior Vice
President and Director of Financial Management and Reporting. Mr. Coke joined
AMB in 1997 after seven years with Arthur Andersen LLP, where he most recently
served as an audit manager. At Arthur Andersen, he primarily served public and
private real estate companies, including several public REITs, and

13
<PAGE> 17

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.

JOHN H. DISERENS, age 45, is a Managing Director and head of the Company's
Retail Division and is a member of the Investment Committee. He has over 21
years of experience in asset and property management. In his ten 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. Mr.
Diserens holds a bachelor's degree in economics and accounting from Macquarie
University of Sydney, Australia, is designated Certified Commercial Investment
Member 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, the
Institute of Real Estate Management, and is on the board of the National
Association of Real Estate Investment Managers ("NAREIM").

BRUCE H. FREEDMAN, age 50, is a Managing Director and co-head of the
Company's Industrial Division and is a member of the Investment Committee. He
joined the Company in 1995 and has over 28 years of experience in real estate
finance and investment. Before joining the Company, he served as President of
Allmerica Realty Advisors from 1993 to 1995 and as Principal of Aldrich, Eastman
& Waltch ("AEW") from 1986 to 1992. Mr. Freedman is a cum laude graduate of
Babson College. He is a member of the Urban Land Institute, Real Estate Finance
Association and NAREIM, and holds the CRE designation from the American Society
of Real Estate Counselors. He is also a member of NAIOP and is an Advisory Board
member of the Babson Center for Real Estate. His charitable and community
services activities include being a founding member of the Bullfinch Society of
Massachusetts General Hospital, a member of the President's Forum of Children's
Hospital of Boston, and a member of the President's Society of Boston College.

DAVID S. FRIES, age 35, is the Chief Administrative Officer, a Managing
Director, General Counsel and Secretary, and is Chairman of the Administrative
Committee, Vice Chairman of the Executive Committee and a member of the
Investment Committee. Prior to joining AMB in 1998, he was a real estate partner
with the international law firms of Orrick, Herrington & Sutcliffe LLP and
Morrison & Foerster LLP, where he focused on the real estate, securities and
financing issues affecting REITs, the acquisition of large real estate
portfolios and the negotiation of complex joint venture agreements. Mr. Fries
holds a bachelor's degree in political science from the University of
Pennsylvania and a J.D. degree from Stanford Law School. He is a member of the
State Bar of California and NAREIT and a past President of The Belden Club.

JOHN T. ROBERTS, JR., age 35, is a Senior Vice President, the Director of
Capital Markets and Treasurer, and has over 11 years of experience in real
estate finance and investment. Mr. Roberts joined AMB in 1997 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.

CRAIG A. SEVERANCE, age 47, is a Managing Director responsible for various
strategic initiatives and AMB's information technology and is a member of the
Investment Committee. Previously, Mr. Severance was head of the Company's
acquisitions group, where he managed the screening of all property submissions
and 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. 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.

14
<PAGE> 18

EXECUTIVE COMPENSATION

The following table sets forth the estimated annual base salary rates and
other compensation paid for the years ended December 31, 1997 and 1998 to the
Chief Executive Officer and certain of AMB's other executive officers who, on an
annualized basis, have a total annual salary and bonus in excess of $100,000
(collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>

LONG-TERM COMPENSATION
----------------------------------------
ANNUAL COMPENSATION SECURITIES
--------------------------------------- UNDERLYING INCENTIVE
OTHER ANNUAL RESTRICTED ANNUAL STOCK OPTION
CASH COMPENSATION STOCK OPTIONS BONUS
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(2) ($) AWARD(S)(#)(2) GRANTED(4) (#)(2)
--------------------------- ---- --------- ----------- ------------ -------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Hamid R. Moghadam
President and
Chief Executive
Officer ...................... 1997 40,362(1) 0 (3) 0 500,000 0
1998 350,000 0 (3) 0 252,486 263,430
Bruce H. Freedman
Managing Director,
Industrial Division .......... 1997 21,389(1) 0 2,800 0 130,000 0
1998 200,000 0 (3) 8,177 49,757 0
Craig A. Severance
Managing Director, New
Initiatives and Technology ... 1997 21,389(1) 0 2,800 0 130,000 0
1998 200,000 140,000 (3) 0 32,370 0
Luis A. Belmonte
Managing Director,
Industrial Division .......... 1997 21,389(1) 0 2,800 0 130,000 0
1998 200,000 127,958 (3) 0 29,780 0
Douglas D. Abbey
Chairman of Investment
Committee .................... 1997 21,389(1) 0 2,800 0 250,000 0
1998 200,000 0 (3) 0 20,000 71,231
</TABLE>

- --------

(1) Represents the actual amount of compensation paid from November 26, 1997
through December 31, 1997.

(2) The amount of any such bonus has been determined by the Compensation
Committee of the Board of Directors. At the option of the Named Executive
Officer, such officer may receive his bonus in cash, restricted shares of
Common Stock (valued at 125% of the cash bonus, with three year vesting) or
options to purchase Common Stock (valued at 150% of the cash bonus based on
AMB's Black-Scholes value, with three year vesting).

(3) The aggregate amount of the perquisites and other personal benefits,
securities or property for each of the Named Executive Officers is less than
the lesser of either $50,000 or 10% of his salary and bonus paid in such
year.

(4) Shares of restricted stock and options to purchase an aggregate of 4,384,037
shares of Common Stock (net of forfeitures) have been granted to directors,
executive officers and other employees of AMB as of December 31, 1998.
Options granted in 1997 vest pro rata in equal annual installments over a
four-year period, while options granted in 1998 vest pro rata in equal
annual installments over a three year period. An additional 1,365,963 shares
of Common Stock are currently reserved for issuance under the 1997 Plan;
however, if the stockholders approve the proposed amendment to the 1997
Plan, an additional 4,565,963 shares of Common Stock will be reserved for
issuance under the 1997 Plan.

15
<PAGE> 19

OPTION GRANTS IN LAST FISCAL YEAR

The following table shows certain information relating to options to
purchase shares of Common Stock granted to the Named Executive Officers during
1998.
<TABLE>
<CAPTION>

INDIVIDUAL GRANTS(1) POTENTIAL
-------------------------------------- REALIZABLE
NUMBER OF PERCENT OF VALUE OF ASSUMED
SHARES OF TOTAL ANNUAL RATES OF
COMMON OPTIONS COMMON SHARE PRICE
STOCK GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES IN EXERCISE OF OPTION TERM(2)
OPTIONS FISCAL PRICE PER EXPIRATION ------------------------
NAME GRANTED(#) YEAR(3) SHARE($) DATE 5% 10%
---- ---------- ------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Hamid R. Moghadam ......................... 515,916 35.1% $21.625 12/15/08 $7,016,378 $17,780,880
Bruce H. Freedman ......................... 49,757 3.4 21.625 12/15/08 676,688 1,714,859
Craig A. Severance ........................ 32,370 2.2 21.625 12/15/08 440,227 1,115,622
Luis A. Belmonte .......................... 29,780 2.0 21.625 12/15/08 405,003 1,026,358
Douglas D. Abbey .......................... 91,231 6.2 21.625 12/15/08 1,240,728 3,144,247
</TABLE>

- ----------

(1) All options granted in 1998 become exercisable in three equal installments
(rounded to the nearest whole share of Common Stock) beginning on January 1,
2000 and have a term of not more than ten years. The option exercise price
is equal to the fair market value of the Common Stock on the date of grant.

(2) In accordance with the rules promulgated by the Securities and Exchange
Commission, these amounts are the hypothetical gains or "option spreads"
that would exist for the respective options based on assumed rates or 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. Such amounts have been calculated as the exercise price
multiplied by the respective annual assumed growth rate (compounded), less
the exercise price of the underlying option, multiplied by the number of
options granted.

(3) The total number of shares of Common Stock underlying such options used in
such calculation are net of forfeitures.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

The following table sets forth certain information concerning exercised and
unexercised options held by the Named Executive Officers at December 31, 1998.
<TABLE>
<CAPTION>

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
DECEMBER 31, 1998 DECEMBER 31, 1998
EXERCISE SHARES ACQUIRED VALUE ------------------------------ -------------------------
NAME PRICE ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE(1)
---- --------- --------------- ----------- ------------ -------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Hamid R. Moghadam $ 21.000 N/A N/A 125,000 375,000 $125,000 $375,000
21.625 N/A N/A 0 515,916 0 193,469

Bruce H. Freedman $ 21.000 N/A N/A 32,500 97,500 32,500 97,500
21.625 N/A N/A 0 49,757 0 18,659

Craig A. Severance $ 21.000 N/A N/A 32,500 97,500 32,500 97,500
21.625 N/A N/A 0 32,370 0 12,139

Luis A. Belmonte $ 21.000 N/A N/A 32,500 97,500 32,500 97,500
21.625 N/A N/A 0 29,780 0 11,168

Douglas D. Abbey $ 21.000 N/A N/A 62,500 187,500 62,500 187,500
21.625 N/A N/A 0 91,231 0 34,212
</TABLE>

- --------

(1) Based on a price per share of Common Stock of $22.00, the closing price per
share on the New York Stock Exchange on December 31, 1998.

16
<PAGE> 20

1997 PLAN

The 1997 Plan was adopted by the Board of Directors and approved by the
stockholders to enable executive officers, key employees and directors of the
Company, the Operating Partnership and AMB Investment Management to participate
in the ownership of the Company. The 1997 Plan is designed to attract and retain
executive officers, other key employees and directors of the Company, the
Operating Partnership and AMB Investment Management, and to provide incentives
to such persons to maximize AMB's performance and its cash flow available for
distribution. The 1997 Plan currently covers an aggregate of 5,750,000 shares of
Common Stock and will expire in 2007. See "Proposal 2: Amendment of the 1997
Stock Option and Incentive Plan."

401(K) PLAN

Effective November 26, 1997, AMB established its Section 401(k)
Savings/Retirement Plan (the "401(k) Plan") to cover eligible employees of the
Company and any designated affiliate. The 401(k) Plan permits eligible employees
of AMB to defer up to 10% of their annual compensation, subject to certain
limitations imposed by the Internal Revenue Code. The employees' elective
deferrals are immediately vested and non-forfeitable upon contributions to the
401(k) Plan. AMB currently makes matching contribution to the 401(k) Plan in an
amount equal to 50% of the first 3.5% of annual compensation deferred by each
employee; however, it has reserved the right to make greater matching
contributions or discretionary profit sharing contributions in the future.
Participants vest immediately in the matching contributions by the Company.
Discretionary contributions by the Company vest over a three-year period (none
were made for 1998). Employees of the Company are eligible to participate in the
401(k) Plan if they meet certain requirements concerning minimum period of
credited service. AMB's matching contribution to the 401(k) Plan for the year
ended December 31, 1998 was approximately $158,719. The 401(k) Plan qualifies
under Section 401 of the Internal Revenue Code so that contributions by
employees to the 401(k) Plan, and income earned on plan contributions, are not
taxable to employees until withdrawn from the 401(k) Plan.

EMPLOYMENT AGREEMENTS; CHANGE IN CONTROL AND NONCOMPETITION AGREEMENTS

Currently, there are no employment agreements between AMB and any of the
Named Executive Officers. However, each of the Named Executive Officers has
entered into a Change in Control and Noncompetition Agreement with the Company
which became effective on November 26, 1998 and which replaced the employment
agreements that had been entered into at the time of the initial public
offering. Such agreements have an initial term of four years and are subject to
automatic one-year extensions following the expiration of the initial term. The
agreements provide for severance payments during the term of the agreement and,
upon the occurrence of a "change in control," for 24 months thereafter in the
event of a termination of the Named Executive Officer's employment resulting
from death, disability or a "change in control." A "change in control" will be
deemed to have occurred if (i) the stockholders of AMB approve a plan of
complete liquidation of AMB or an agreement for the sale or disposition by AMB
of all or substantially all of AMB's assets, or AMB disposes of more than 50% of
its interest in the Operating Partnership; (ii) any person becomes the
beneficial owner, directly or indirectly, of securities of AMB representing 40%
or more of the combined voting power of AMB's then outstanding securities; (iii)
during any period of two consecutive years, individuals who at the beginning of
such period constitute AMB's Board of Directors, and any new Director whose
election by the Board or nomination for election by AMB's stockholders was
approved by a vote of at least two-thirds of the Directors then still in office
who either were Directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least a majority of the Board of Directors; or (iv) AMB's
stockholders approve a merger or consolidation of AMB with any other corporation
or other entity, other than (A) a merger or consolidation which would result in
the voting securities of AMB outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined voting power
of the voting securities of AMB or such surviving entity outstanding immediately
after such merger or consolidation or (B) where more than 50% of the directors
of AMB or the surviving entity after such merger or consolidation were directors
of AMB immediately before such merger or consolidation. Upon death or
disability, severance benefits include base compensation and bonus based on the
most recent amount paid. In the event of a "change in control," severance

17
<PAGE> 21

benefits, payable over a period of two years following the "change in control,"
include an amount equal to twice (i) base compensation and (ii) bonus based on
the most recent amount paid, as well as certain continuing insurance and other
benefits.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

There are no Compensation Committee interlocks and no employees of the
Company participate on the Compensation Committee.

Notwithstanding anything to the contrary set forth in any of AMB's or the
Operating Partnership's previous filings under the Securities Act of 1933, as
amended (the "Securities Act"), or the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"), that might incorporate future filings, including
this Proxy Statement, in whole or in part, the following report and the Stock
Performance Graph shall not be deemed to be incorporated by reference into any
such filings and shall not otherwise be deemed to be filed under such Acts.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors consists of the
Independent Directors listed below. The Committee determines base compensation
for the executive officers, and reviews and makes recommendations concerning
proposals by the management of AMB with respect to compensation, bonuses,
employment agreements and other benefits and policies respecting such matters
for AMB's employees, including its executive officers. The Committee also
administers the 1997 Plan, under which grants of stock options, share
appreciation rights, shares of restricted stock and other awards may be made to
employees of AMB, including the executive officers. The purposes of AMB's
executive compensation program are to provide incentives to create value for
AMB's stockholders and to establish and maintain a performance and achievement
oriented environment throughout the organization. Through the executive
compensation program, the Compensation Committee intends to maintain strong
links between the compensation of AMB's executive officers and corporate
performance.

In 1998, AMB retained the services of Arthur Andersen to design a formal
organization-wide incentive program, which program was approved by the
Compensation Committee and implemented in the form of AMB's Performance Pay
Program. The Performance Pay Program is designed to encourage teamwork and
innovation, focus attention on specific business objectives and award the
achievement of these objectives. The compensation of most employees, including
that of all executive officers and other officers, consists of two components:
base salary, which is intended to be competitive in the market for the scope and
responsibilities of the job performed and which is targeted at the median level
of compensation in the market for similar positions, and performance pay, which
is determined based on the achievement of a specific combination of corporate,
group (to the extent applicable) and individual performance goals and objectives
that have been predetermined and, in the case of the executive officers,
approved by the Committee. In addition, AMB's officers are eligible to receive
annual stock option grants based on their individual performance for that year.
For services performed in 1998, executive compensation consisted of base salary,
performance pay and grants of stock options under AMB's 1997 Plan. Each of these
components is discussed below.

BASE SALARIES

Base salaries for executive officers are targeted at the median level of
compensation paid for the position at comparative companies and are reviewed
annually by the Committee.

PERFORMANCE PAY

Most employees, including all executive officers and other officers, are
eligible to receive performance pay provided that certain performance objectives
are met. Performance pay is paid once a year, after assessing AMB's financial
performance, the performance of the group in which the employee works (if
applicable) and the employee's individual performance. AMB's Chief Executive
Officer retains the discretion to adjust each individual's performance pay by
plus or minus 20% in exceptional circumstances. The Committee evaluates the
individual performance of the Chief Executive Officer and determines his
aggregate performance pay award and approves the goals and objectives that
determine the performance pay awards of the other executive officers. Officers
may choose to receive all or a portion of their bonuses in cash, shares of
restricted stock (valued at 125% of the cash bonus, with three year vesting),
stock options (valued at 150% of the cash bonus based on AMB's Black-Scholes
value, with three year vesting), or any combination of the foregoing. This
feature, which permits officers to take all or a portion of their bonuses in
restricted stock or stock options, is

18
<PAGE> 22

designed to further align the interests of AMB's executive officers and other
officers with the interests of AMB's stockholders and to encourage the retention
of officers. Annual performance pay provides executive officers with the
opportunity to earn cash compensation up to the 90th percentile level for the
position at comparative companies, but only in the event that corporate, group
(to the extent applicable) and individual goals have all been fully maximized.

Bonuses for each executive officer are weighted differently among the
corporate, group (to the extent applicable) and individual performance
objectives. Generally, the bonuses of executive officers are weighted more
heavily toward the achievement of corporate and, to the extent applicable, group
performance levels. Corporate performance is measured on the basis of achieving
targeted financial objectives, which, for 1998, was a predetermined range of
Funds From Operations ("FFO") per share, with the corporate component of
performance pay determined based on AMB's actual FFO per share within such range
for such year. For 1999, corporate performance will be based on a comparison of
AMB's total stockholder return and FFO per share growth to that of a group of
peer companies. Group performance is measured on the basis of achieving specific
quantitative and qualitative performance objectives that measure the financial
performance and operating success of a group within AMB. Individual performance
is measured on the basis of quantitative and qualitative performance objectives
that measure an individual's contribution to AMB's success.

STOCK OPTIONS

To provide executive officers and other officers with incentives to maximize
the long-term performance of AMB and to promote the interests of AMB's
stockholders, officers are also eligible to receive stock option grants. The
1997 Plan, which has been approved by the stockholders, authorizes the
Compensation Committee to grant stock options, stock appreciation rights,
restricted stock and other awards to the executive officers and other employees
of AMB and its affiliates. Awards are granted based upon the executive officer's
performance with respect to his or her individual objectives for that year;
however, AMB's Chief Executive Officer retains the discretion to adjust each
individual's stock option award by plus or minus 20% in exceptional
circumstances. Generally, stock options are granted on an annual basis at 100%
of the then current market value of AMB's stock and will only be of value to the
executive officer if the stock price increases over time. All such stock options
granted to executive officers in 1998 vest over a period of three years at a
rate of one-third of such grant each year, thereby encouraging the retention of
officers.

CHIEF EXECUTIVE OFFICER'S COMPENSATION

For 1998, the compensation of Mr. Moghadam was determined on the same
general basis discussed above for other executive officers. In 1998, Mr.
Moghadam received a base salary of $350,000. During 1998, AMB met certain
predetermined financial goals, which determined, in part, the level of
performance pay that Mr. Moghadam was eligible to receive. Mr. Moghadam was
awarded a performance payment in the amount of $425,000, which amount he chose
to receive entirely in stock options, equating to 263,430 shares of stock
applying a Black-Scholes value of $2.42 per share. In addition, Mr. Moghadam was
awarded a stock option to purchase up to 252,486 shares of stock. Mr. Moghadam's
base salary, performance pay and stock option awards are reviewed annually by
the Compensation Committee. In 1998, AMB contributed $10,000 to Mr. Moghadam's
401(k) account under the terms and conditions of that plan. Mr. Moghadam does
not participate in or otherwise influence the decisions of the Compensation
Committee with respect to his compensation.

SECTION 162(m)

Section 162(m) of the Internal Revenue Code limits the tax deduction for
compensation paid to AMB's Chief Executive Officer and the additional four most
highly compensated officers who are employed at fiscal year end to $1.0 million
per year, subject to certain performance, disclosure and stockholder
requirements. Grants of stock options and restricted stock under the 1997 Plan
are intended to qualify as performance based compensation, which is not subject
to the Section 162(m) deduction limitation. The Compensation Committee presently
intends that, so long as it is consistent with the Company's overall
compensation objectives and to the extent reasonable, all executive compensation
will be deductible for federal income tax purposes and, for the year ended
December 31, 1998, there were no exceptions. The Committee, however, may design
programs that recognize a full range of performance criteria important to AMB's
success, even where compensation payable under such programs may not be
deductible.

Respectfully,

Thomas W. Tusher, Chairman
Jeffrey L. Skelton, Ph.D.
Lynn M. Sedway

19
<PAGE> 23

PERFORMANCE GRAPH

As a part of the rules concerning executive compensation disclosure, the
Company is obligated to provide a chart comparing the yearly percentage change
in the cumulative total stockholder return on the Common Stock over a five-year
period. However, since the Common Stock has been publicly traded only since
November 21, 1997, such information is provided from that date through December
31, 1998.

The following line graph compares the change in AMB's cumulative stockholder
return on its shares of Common Stock from the Company's initial public offering
at $21.00 per share on November 21, 1997 to December 31, 1998, to the cumulative
total return of the Standard & Poor's 500 Stock Index ("S&P 500 Index") and the
NAREIT Equity REIT Total Return Index ("NAREIT Equity Index") from November 30,
1997 to December 31, 1998. The line graph starts at November 21, 1997, the date
that AMB's shares of Common Stock commenced trading on the New York Stock
Exchange; however, the beginning value of each of the NAREIT Equity Index and
the S&P 500 Index is as of November 30, 1997, as each index is calculated only
on a monthly basis. The graph assumes the investment of $100 in AMB and each of
the indices and, as required by the Securities and Exchange Commission, the
reinvestment of all distributions. The return shown on the graph is not
necessarily indicative of future performance.

COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG AMB PROPERTY CORPORATION,
S&P 500 INDEX AND NAREIT EQUITY INDEX
<TABLE>
<CAPTION>

MEASUREMENT PERIOD AMB PROPERTY NAREIT EQUITY

(FISCAL YEAR COVERED) CORPORATION INDEX S&P 500 INDEX
--------------------- ----------- ----- -------------
<S> <C> <C> <C>
11/21/97 100 100 100

12/31/97 120 105 106

12/31/98 112 86 137
</TABLE>

- ----------

(1) Beginning value of each of the NAREIT Equity Index and the S&P 500 Index is
as of November 30, 1997, as each index is calculated only on a monthly
basis.

20
<PAGE> 24

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information, as of March 22, 1999,
regarding the beneficial ownership of Common Stock and limited partnership units
for (i) each person known by AMB to be the beneficial owner of five percent or
more of AMB's outstanding Common Stock or the Operating Partnership's
outstanding units, (ii) each Director and each Named Executive Officer and (iii)
the Directors and officers of the Company as a group. Except as indicated below,
all of such Common Stock and limited partnership units are owned directly and
the indicated person has sole voting and investment power with respect to all of
the shares of Common Stock and limited partnership units beneficially owned by
such person.
<TABLE>
<CAPTION>
PERCENTAGE OF
PERCENTAGE OUTSTANDING
NUMBER OF SHARES OF PERCENTAGE OF NUMBER OF OF SHARES
COMMON STOCK OUTSTANDING SHARES UNITS OUTSTANDING OF COMMON STOCK
NAME OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED(1) OF COMMON STOCK(1) BENEFICIALLY OWNED UNITS AND UNITS(1)
- ---------------------------- -------------------- ------------------ ----------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Hamid R. Moghadam(2) ................. 1,755,483 2.04 -- -- 1.95

Bruce H. Freedman(3) ................. 136,744 * -- -- *

Craig A. Severance(3) ................ 248,335 * -- -- *

Luis A. Belmonte(3) .................. 175,667 * -- -- *

Douglas D. Abbey(4) .................. 1,295,549 1.50 -- -- 1.44

T. Robert Burke(5) ................... 1,033,539 1.20 -- -- 1.15

Daniel H. Case III(6) ................ 56,500 * -- -- *

Robert H. Edelstein, Ph.D.(7) ........ 27,452 * -- -- *

Lynn M. Sedway(7) .................... 29,625 * -- -- *

Jeffrey L. Skelton, Ph.D.(7) ......... 27,452 * -- -- *

Thomas W. Tusher(7) .................. 52,452 * -- -- *

Caryl B. Welborn, Esq.(7) ............ 34,452 * -- -- *

Ameritech Pension Trust(8) ........... 12,040,530 14.00 -- -- 13.36

City and County of San Francisco
Employees' Retirement System(9) ...... 6,117,440 7.11 -- -- 6.76

Southern Company Services, Inc.(10) .. 5,532,415 6.43 6.11

All Directors and Named Executive
Officers as a group
(12 persons)(11) ..................... 4,873,250 5.63 -- -- 5.41

Allmerica ............................ -- -- 559,628 12.58 *

Campenelli ........................... -- -- 955,657 21.48 1.06

Gamble ............................... -- -- 482,153 10.84 *

Holbrook W. Goodale .................. -- -- 239,928 5.39 *

Legacy Partners Commercial, Inc. ..... -- -- 699,837 15.73 *

Charles R. Wichman ................... -- -- 426,582 9.59 *

Frederick B. Wichman ................. -- -- 426,582 9.59 *

</TABLE>

- -----

* Represents less than 1.0% of outstanding shares of Common Stock or limited
partnership units, based on 86,026,271 shares of Common Stock and 4,448,873
limited partnership units outstanding as of March 22, 1999.

21
<PAGE> 25

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

(2) Includes options to purchase up to 125,000 shares of Common Stock, which
are exercisable within 60 days of March 22, 1999.

(3) Includes options to purchase up to 32,500 shares of Common Stock, which are
exercisable within 60 days of March 22, 1999.

(4) Includes options to purchase up to 62,500 shares of Common Stock, which are
exercisable within 60 days of March 22, 1999.

(5) Includes options to purchase up to 56,250 shares of Common Stock, which are
exercisable within 60 days of March 22, 1999.

(6) Includes options to purchase up to 26,500 shares of Common Stock, which are
exercisable within 60 days of March 22, 1999. Pursuant to a Form 4 for
January 1999, filed with the Securities and Exchange Commission, 10,0000
shares are held by Mr. Case's wife and he has disclaimed beneficial
ownership of these securities.

(7) Includes options to purchase up to 26,500 shares of Common Stock, which are
exercisable within 60 days of March 22, 1999.

(8) Pursuant to a Form 4 for February 1999, filed with the Securities and
Exchange Commission. Reflects shares held by State Street Bank and Trust
Company, as trustee, the voting and investment power with respect to which
are held by Ameritech Pension Trust. The address of Ameritech Pension Trust
for this purpose is 225 W. Randolph, HQ13A, Chicago, Illinois 60606, Attn.:
Director - Real Estate.

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

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

(11) Includes options to purchase up to 500,250 shares of Common Stock, which
are exercisable within 60 days of March 22, 1999.

22
<PAGE> 26

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

AMB has engaged in the following transactions and relationships with certain
of its executive officers, Directors and persons who hold more than 5% of the
outstanding shares of Common Stock.

FORMATION TRANSACTIONS

In connection with the formation of the Company (the "Formation
Transactions"), the Company's predecessor effected a series of mergers pursuant
to which certain entities merged into the Company. As a result, the Company's
executive officers (the former stockholders of the predecessor) received an
aggregate of 4,746,616 shares of Common Stock, with a total value at the time of
the initial public offering of $99.7 million, and the right to receive in the
Company's second year of operation up to 4,237,750 limited partnership Units
(the "Performance Units"). The issuance of such Units is dependent upon the
future trading price of and dividends on the shares of Common Stock. In
addition, such executive officers received the right to receive certain
investment management fees earned by AMB Investment Management, subject to
certain limitations. During the year ended December 31, 1998, approximately
$5,062,000 was paid to the Company's executive officers in respect of the right
to receive such investment management fees.

In addition, certain individual account investors, former investment
management clients of the predecessor, including Ameritech Pension Trust, City
and County of San Francisco Employees' Retirement System and Southern Company
System Master Retirement Trust, contributed certain real property interests to
the Company. In exchange for such contribution of properties, Ameritech Pension
Trust, City and County of San Francisco Employees' Retirement System and
Southern Company System Master Retirement Trust received 12,441,580 shares of
Common Stock, 6,772,640 shares of Common Stock and 8,032,415 shares of Common
Stock, respectively, with a total value at the time of the initial public
offering of $572.2 million. See "Security Ownership of Certain Beneficial Owners
and Management."

In connection with consummation of the Formation Transactions, the Company
assumed the $4.0 million revolving credit facility of the predecessor, of which
approximately $1.1 million was outstanding upon completion of the Formation
Transactions, relieving three of the Company's executive officers, Messrs.
Abbey, Moghadam and Burke, of their respective obligations with respect to the
partial guaranty of such indebtedness. The proceeds of such indebtedness were
used by the predecessor to acquire certain assets historically used in the
predecessor's operations from AMB Investment, Inc. ("AMBI"), an entity owned
equally by Messrs. Abbey, Moghadam and Burke. The Company also assumed a
$791,925 note payable of AMBI as consideration for the transfer to the Company
of AMBI's general partner interest in a real estate fund managed by the
predecessor (which the Company believed had a value equal to or greater than the
face amount of such note at the time such note payable was assumed).

OTHER RELATED TRANSACTIONS

In January 1993, AMBI, the predecessor, AMB Corporate Real Estate Advisors,
Inc. ("AMBCREA"), AMB Development 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. 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; (iii) act as lessee for office space for each
AMB Intercompany Party; (iv) 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 (v) 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 the
predecessor during the years ended December 31, 1994, 1995, 1996 and 1997 was
$9,940,762, $13,564,178, $16,842,615 and $18,159,000, respectively, which
equaled the expenses incurred by AMBI allocable to the predecessor for each such
year.

As part of the Formation Transactions, the Company acquired AMBI's assets
(other than its leasehold interest for office space and certain office
equipment) and employed the employees utilized in its business, and all other
AMBI employees were transferred to AMBCREA. Accordingly, upon consummation of
the initial public offering, the Intercompany Agreement was modified so that it
applies only to the office space and certain office equipment leased by AMBI,
which is used by the Company, the Operating Partnership and AMB Investment
Management, respectively, for fees equal to an allocation of AMBI's cost
thereof. Pursuant to this

23
<PAGE> 27

agreement, the Operating Partnership reimbursed AMB Investments, Inc. $1.2
million for occupancy costs in 1998. AMBCREA, AMB Institutional Housing
Partners, AMB Development, Inc. and AMB Development L.P. are continuing to use
the name "AMB" pursuant to royalty-free license arrangements with the Company.
AMBCREA ceased operations during 1998.

In November 1997, the Operating Partnership and AMB Investment Management
Limited Partnership (the "IM Partnership") entered into an agreement pursuant to
which the Operating Partnership agreed to provide to the IM Partnership certain
acquisition related services and agreed to share the services of, and certain
employment obligations of, certain employees. During the year ended December 31,
1998, the total amount paid to the Operating Partnership by the IM Partnership
for acquisition related services was approximately $1.8 million and the total
amount paid to the IM Partnership by the Operating Partnership for employee
related costs was approximately $600,000.

COMPLIANCE WITH FEDERAL SECURITIES LAWS

Section 16(a) of the Exchange Act requires AMB's officers and Directors, and
persons who own more than 10% of a registered class of AMB's equity securities
(collectively, "Insiders"), to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of AMB's Common
Stock and other equity securities of AMB. Insiders are required by regulation of
the Securities and Exchange Commission to furnish the Company with copies of all
Section 16(a) forms they file.

To AMB's knowledge, based solely on review of the copies of such reports
furnished to AMB or written representations that no other reports were required,
during the year ended December 31, 1998, all Insiders complied with all Section
16(a) filing requirements applicable to them.

AUDITORS

Subject to its discretion to appoint alternative auditors if it deems such
action appropriate, the Board of Directors has retained Arthur Andersen LLP as
AMB's auditors for the current fiscal year. The Board has been advised that
Arthur Andersen LLP is independent with regard to AMB within the meaning of the
Securities Act and the applicable published rules and regulations thereunder.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting and will have the opportunity to make statements if they desire and to
respond to appropriate questions from stockholders.

AVAILABLE INFORMATION

AMB is subject to the informational requirements of the Exchange Act and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission. Reports, proxy statements and other
information filed by AMB may be inspected without charge and copies obtained
upon payment of prescribed fees from the Public Reference Section of the
Securities and Exchange Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, or at the Securities and Exchange
Commission's regional offices located at 7 World Trade Center, 13th Floor, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60621-2511, or by way of the Securities and Exchange
Commission's Internet address, http://www.sec.gov.

AMB will provide without charge to each person to whom a copy of the Proxy
Statement is delivered, upon the written or oral request of any such persons,
additional copies of AMB's Form 10-K for the period ended December 31, 1998.
Requests for such copies should be addressed to: AMB Property Corporation, 505
Montgomery Street, San Francisco, California 94111, Attn: Investor Relations,
telephone (415) 394-9000.

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OTHER MATTERS

The Board of Directors does not know of any other matter which will be
brought before the Annual Meeting. However, if any other matter properly comes
before the Annual Meeting, or any adjournment or postponement thereof, which may
properly be acted upon, the proxies solicited hereby will be voted on such
matter in accordance with the discretion of the proxy holders named therein.

March 31, 1999

By Order of the Board of Directors,

/s/ DAVID S. FRIES
-----------------------------------
DAVID S. FRIES
Chief Administrative Officer,
Managing Director, General Counsel
and Secretary

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EXHIBIT A

THE FIRST AMENDED AND RESTATED
1997 STOCK OPTION AND INCENTIVE PLAN
OF
AMB PROPERTY CORPORATION
AND AMB INVESTMENT MANAGEMENT, INC.
AND THEIR RESPECTIVE SUBSIDIARIES

AMB Property Corporation, a Maryland corporation (the
"Company") and AMB Investment Management, Inc., a Maryland corporation (the
"Investment Management Company") adopted The 1997 Stock Option and Incentive
Plan of AMB Property Corporation and AMB Investment Management, Inc. and their
Respective Subsidiaries (as such term is defined below), effective November 26,
1997, for the benefit of their eligible employees, consultants and directors and
those of their Subsidiaries. The 1997 Stock Option and Incentive Plan of AMB
Property Corporation and AMB Investment Management, Inc. and their Respective
Subsidiaries is hereby amended and restated in its entirety in the form of this
First Amended and Restated 1997 Stock Option and Incentive Plan of AMB Property
Corporation and AMB Investment Management, Inc. and their Respective
Subsidiaries (the "Plan"), effective as of March 5, 1999. The Plan consists of
two plans, one for the benefit of employees, consultants and independent
directors of the Company and its Subsidiaries and one for the benefit of the
employees, consultants and independent directors of the Investment Management
Company and its Subsidiaries.

The purposes of this Plan are as follows:

(1) To provide an additional incentive for directors, key
Employees and consultants to further the growth, development and financial
success of the Company by personally benefiting through the ownership of Company
stock and/or rights which recognize such growth, development and financial
success.

(2) To enable the Company and the Investment Management
Company, and their respective Subsidiaries, to obtain and retain the services of
directors, key Employees and consultants considered essential to the long range
success of the Company by offering them an opportunity to own stock in the
Company and/or rights which will reflect the growth, development and financial
success of the Company.

ARTICLE I.

DEFINITIONS

1.1. General. Wherever the following terms are used in this
Plan they shall have the meanings specified below, unless the context clearly
indicates otherwise.

1.2. Award Limit. "Award Limit" shall mean 1 million shares of
Common Stock, as adjusted pursuant to Section 10.3.

1.3. Board. "Board" shall mean the Board of Directors of the
Company.

1.4. Cause. "Cause," unless otherwise defined in an Employee's
employment agreement, or a consultant's consulting agreement, with the Company
or one of its Subsidiaries, shall mean (i) gross negligence or willful
misconduct, (ii) an uncured breach of any of the employee's material duties
under their 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.

1.5. Change in Control. "Change in Control" shall mean a
change in ownership or control of the Company effected through either of the
following transactions:

<PAGE> 30

(a) any person or related group of persons (other than the
Company or a person that directly or indirectly controls, is controlled by, or
is under common control with, the Company) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of securities possessing more than fifty percent (50%) of the total combined
voting power of the Company's outstanding securities pursuant to a tender or
exchange offer made directly to the Company's stockholders which the Board does
not recommend such stockholders to accept; or

(b) there is a change in the composition of the Board over a
period of thirty-six (36) consecutive months (or less) such that a majority of
the Board members (rounded up to the nearest whole number) ceases, by reason of
one or more proxy contests for the election of Board members, to be comprised of
individuals who either (i) have been Board members continuously since the
beginning of such period or (ii) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (i) who were still in office at the time such election or
nomination was approved by the Board.

1.6. Code. "Code" shall mean the Internal Revenue Code of
1986, as amended.

1.7. Committee. "Committee" shall mean, with respect to the
Company and any Company Subsidiary, the Compensation Committee of the Board, or
another committee or subcommittee of the Board, appointed as provided in Section
9.1 and, with respect to the Investment Management Company, the Compensation
Committee of its board of directors or another committee or subcommittee of such
board, if any, appointed by the Board of Directors of the Investment Management
Company in a manner consistent with Section 9.1 hereof (except that references
to the Board in such Section shall mean the board of directors of the Investment
Management Company) or the Investment Management Company's board of directors;
provided, however, that in the case of a person who is an "officer or director
of the issuer" within the meaning of Rule 16-3(a) under the Securities Exchange
Act of 1934, as amended, the grant of any award under this Plan to such person
shall be made by the Compensation Committee of the Board.

1.8. Common Stock. "Common Stock" shall mean the common stock
of the Company, par value $.01 per share, and any equity security of the Company
issued or authorized to be issued in the future, but excluding any preferred
stock and any warrants, options or other rights to purchase Common Stock. Debt
securities of the Company convertible into Common Stock shall be deemed equity
securities of the Company.

1.9. Company. "Company" shall mean AMB Property Corporation, a
Maryland corporation.

1.10. Company Employee. "Company Employee" shall mean any
officer or other employee (as defined in accordance with Section 3401(c) of the
Code) of the Company or of any Company Subsidiary.

1.11. Company Subsidiary. "Company Subsidiary" shall mean (i)
a corporation, association or other business entity of which 50% or more of the
total combined voting power of all classes of capital stock is owned, directly
or indirectly, by the Company or by one or more Company Subsidiaries or by the
Company and one or more Company Subsidiaries, (ii) any partnership or limited
liability company of which 50% or more of the capital and profits interests is
owned, directly or indirectly, by the Company or by one or more Company
Subsidiaries or by the Company and one or more Company Subsidiaries, and (iii)
any other entity not described in clauses (i) or (ii) above of which 50% or more
of the ownership and the power, pursuant to a written contract or agreement, to
direct the policies and management or the financial and the other affairs
thereof, are owned or controlled by the Company or by one or more other Company
Subsidiaries or by the Company and one or more Company Subsidiaries.

1.12. Consultant. "consultant" shall mean any consultant or
adviser if:

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(a) the consultant or adviser renders bona fide services to
the Company, the Investment Management Company or their respective subsidiaries;

(b) the services rendered by the consultant or adviser are not
in connection with the offer or sale of securities in a capital-raising
transaction and do not directly or indirectly promote or maintain a market for
the securities of the Company, the Investment Management Company or their
respective subsidiaries; and

(c) the consultant or adviser is a natural person who has
contracted directly with the Company, the Investment Management Company or their
respective subsidiaries, as applicable, to render such services.

1.13. Corporate Transaction. "Corporate Transaction" shall
mean any of the following stockholder-approved transactions to which the Company
is a party:

(a) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the State in which the Company is incorporated, form a holding company or
effect a similar reorganization as to form whereupon this Plan and all Options
are assumed by the successor entity;

(b) the sale, transfer, exchange or other disposition of all
or substantially all of the assets of the Company, in complete liquidation or
dissolution of the Company in a transaction not covered by the exceptions to
clause (a), above; or

(c) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities are
transferred or issued to a person or persons different from those who held such
securities immediately prior to such merger.

1.14. Deferred Stock. "Deferred Stock" shall mean Common Stock
awarded under Article VII of this Plan.

1.15. Director. "Director" shall mean an Independent Director,
an Investment Management Company Director or a Non-Employee Director.

1.16. Dividend Equivalent. "Dividend Equivalent" shall mean a
right to receive the equivalent value (in cash or Common Stock) of dividends or
regular cash distributions paid on Common Stock, awarded under Article VII of
this Plan.

1.17. Employee. "Employee" shall mean any Company Employee or
any Investment Management Company Employee.

1.18. Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.

1.19. Fair Market Value. "Fair Market Value" of a share of
Common Stock as of a given date shall be (i) the closing price of a share of
Common Stock on the principal exchange on which shares of Common Stock are then
trading, if any (or as reported on any composite index which includes such
principal exchange), on the trading day previous to such date, or if shares were
not traded on the trading day previous to such date, then on the next preceding
date on which a trade occurred, or (ii) if Common Stock is not traded on an
exchange but is quoted on Nasdaq or a successor quotation system, the mean
between the closing representative bid and asked prices for the Common Stock on
the trading day previous to such date as reported by Nasdaq or such successor

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quotation system; or (iii) if Common Stock is not publicly traded on an exchange
and not quoted on Nasdaq or a successor quotation system, the Fair Market Value
of a share of Common Stock as established by the Committee (or the Board, in the
case of Options granted to Independent Directors) acting in good faith.
Notwithstanding anything to the contrary herein, the Fair Market Value at the
time of grant of a share of Common Stock underlying an option grant or other
award made under this Plan and in connection with the initial public offering of
the Company shall be the initial offering price per share.

1.20. General Partner Interest. "General Partner Interest"
shall mean an ownership interest in the Partnership that is a general partner
interest and includes any and all benefits to which the holder of such an
interest may be entitled as provided in the Partnership Agreement, together with
all obligations of such holder to comply with the terms and provisions of such
agreement.

1.21. Grantee. "Grantee" shall mean an Employee or consultant
granted a Performance Award, Dividend Equivalent, Stock Payment or Stock
Appreciation Right, or an award of Deferred Stock, under this Plan.

1.22. Incentive Stock Option. "Incentive Stock Option" shall
mean an option which conforms to the applicable provisions of Section 422 of the
Code and which is designated as an Incentive Stock Option by the Committee.

1.23. Initial Independent Director. "Initial Independent
Director" shall have the meaning given to such term in Section 3.4(d) hereof.

1.24. Independent Director. "Independent Director" shall mean
a member of the Board 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, and who is not an individual member of an organization acting
as an advisor, consultant or legal counsel receiving compensation on a
continuing basis from the Company in addition to director's fees.

1.25. Investment Management Company. "Investment Management
Company" shall mean AMB Investment Management, Inc., a Maryland corporation.

1.26. Investment Management Company Employee. "Investment
Management Company Employee" shall mean any officer or other employee (as
defined in accordance with Section 3401(c) of the Code) of the Investment
Management Company, or any corporation or partnership which is then an
Investment Management Company Subsidiary.

1.27. Investment Management Company Independent Director.
"Investment Management Company Independent Director" shall mean a member of the
Investment Management Company Board who is not (i) an employee, officer, or
affiliates of the Company, the Investment Management Company or a subsidiary or
division of the foregoing, or a relative of a principal executive officer, and
who is not an individual member of an organization acting as an advisor,
consultant or legal counsel receiving compensation on a continuing basis from
the company or the Investment Management Company in addition to director's fees
or (b) an Independent Director.

1.28. Investment Management Company Purchase Price.
"Investment Management Company Purchase Price" shall have the meaning set forth
in Section 5.5 hereof.

1.29. Investment Management Company Purchased Shares.
"Investment Management Company Purchased Shares" shall have the meaning set
forth in Section 5.5 hereof.

1.30. Investment Management Company Subsidiary. "Investment
Management Company Subsidiary" shall mean (i) a corporation, association or
other business of which 50% or more of the total combined

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voting power of all classes of capital stock is owned, directly or indirectly,
by the Investment Management Company or by one or more Investment Management
Company Subsidiaries or by the Investment Management Company and one or more
Investment Management Company Subsidiaries, (ii) any partnership or limited
liability company of which 50% or more of the capital and profits interests is
owned, directly or indirectly, by the Investment Management Company or by one or
more Investment Management Company Subsidiaries or by the Investment Management
Company and one or more Investment Management Company Subsidiaries and (iii) any
other entity not described in clauses (i) or (ii) above of which 50% or more of
the ownership and the power, pursuant to a written contract or agreement, to
direct the policies and management or the financial and the other affairs
thereof, are owned or controlled by the Investment Management Company or by one
or more Investment Management Company Subsidiaries or by the Investment
Management Company and one or more Investment Management Company Subsidiaries.

1.31. Non-Employee Director. "Non-Employee Director" shall
mean a member of the Board or the Investment Management Company Board who is not
an Independent Director, an Investment Management Company Independent Director
or an Employee.

1.32. Non-Qualified Stock Option. "Non-Qualified Stock Option"
shall mean an Option which is not designated as an Incentive Stock Option by the
Committee.

1.33. Option. "Option" shall mean a stock option granted under
Article III of this Plan. An Option granted under this Plan shall, as determined
by the Committee, be either a Non-Qualified Stock Option or an Incentive Stock
Option; provided, however, that Options granted to anyone other than Company
Employees shall be Non-Qualified Stock Options.

1.34. Optionee. "Optionee" shall mean an Employee, consultant
or Director granted an Option under this Plan.

1.35. Partnership. "Partnership" shall mean AMB Property,
L.P., a Delaware limited partnership.

1.36. Partnership Agreement. "Partnership Agreement" shall
mean the Amended and Restated Agreement of Limited Partnership of the
Partnership, as the same may be amended, modified or restated from time to time.

1.37. Partnership Employee. "Partnership Employee" shall mean
any officer, other employee (as defined in accordance with Section 3401(c) of
the Code) of the Partnership, or any entity which is then a Partnership
Subsidiary.

1.38. Partnership Purchase Price. "Partnership Purchase Price"
shall have the meaning set forth in Section 5.4

1.39. Partnership Purchased Shares. "Partnership Purchased
Shares" shall have the meaning set forth in Section 5.4.

1.40. Partnership Subsidiary. "Partnership Subsidiary" shall
mean (i) a corporation, association or other business entity of which 50% or
more of the total combined voting power of all classes of capital stock is
owned, directly or indirectly, by the Partnership or by one or more Partnership
Subsidiaries or by the Partnership and one or more Partnership Subsidiaries,
(ii) any partnership or limited liability company of which 50% or more of the
capital and profits interests is owned, directly or indirectly, by the
Partnership or by one or more Partnership Subsidiaries or by the Partnership and
one or more Partnership Subsidiaries, and (iii) any other entity not described
in clauses (i) or (ii) above of which 50% or more of the ownership and the
power, pursuant to a

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written contract or agreement, to direct the policies and management or the
financial and the other affairs thereof, are owned or controlled by the
Partnership or by one or more other Partnership Subsidiaries or by the
Partnership and one or more Partnership Subsidiaries.

1.41. Performance Award. "Performance Award" shall mean a cash
bonus, stock bonus or other performance or incentive award that is paid in cash,
Common Stock or a combination of both, awarded under Article VII of this Plan.

1.42. Plan. "Plan" shall mean the First Amended and Restated
1997 Stock Option and Incentive Plan of AMB Property Corporation and AMB
Investment Management, Inc. and their Respective Subsidiaries.

1.43. Restricted Stock. "Restricted Stock" shall mean Common
Stock awarded under Article VI of this Plan.

1.44. Restricted Stockholder. "Restricted Stockholder" shall
mean an Employee or consultant granted an award of Restricted Stock under
Article VI of this Plan.

1.45. Rule 16b-3. "Rule 16b-3" shall mean that certain Rule
16b-3 under the Exchange Act, as such Rule may be amended from time to time.

1.46. Section 162(m) Participant. "Section 162(m) Participant"
shall mean any key Employee designated by the Committee as a key Employee whose
compensation for the fiscal year in which the key Employee is so designated or a
future fiscal year may be subject to the limit on deductible compensation
imposed by Section 162(m) of the Code.

1.47. Stock Appreciation Right. "Stock Appreciation Right"
shall mean a stock appreciation right granted under Article VIII of this Plan.

1.48. Stock Payment. "Stock Payment" shall mean (i) a payment
in the form of shares of Common Stock, or (ii) an option or other right to
purchase shares of Common Stock, as part of a deferred compensation arrangement,
made in lieu of all or any portion of the compensation, including without
limitation, salary, bonuses and commissions, that would otherwise become payable
to a key Employee or consultant in cash, awarded under Article VII of this Plan.

1.49. Subsidiary. "Subsidiary" shall mean any Company
Subsidiary or Investment Management Company Subsidiary.

1.50. Termination of Consultancy. "Termination of Consultancy"
shall mean the time when the engagement of an Optionee, Grantee or Restricted
Stockholder as a consultant to the Company, a Company Subsidiary, the Investment
Management Company, an Investment Management Company Subsidiary, the Partnership
or a Partnership Subsidiary is terminated for any reason, with or without Cause,
including, but not by way of limitation, by resignation, discharge, death or
retirement; but excluding terminations where there is a simultaneous
commencement of employment with the Company, a Company Subsidiary, the
Investment Management Company, an Investment Management Company Subsidiary, the
Partnership or a Partnership Subsidiary. The Committee, in its absolute
discretion, shall determine the effect of all matters and questions relating to
Termination of Consultancy, including, but not by way of limitation, the
question of whether a Termination of Consultancy resulted from a discharge for
Cause, and all questions of whether a particular leave of absence constitutes a
Terminations of Consultancy. Notwithstanding any other provision of this Plan,
the Company, a Company Subsidiary, the Investment Management Company, an
Investment Management Company Subsidiary, the Partnership or a Partnership
Subsidiary has an absolute and unrestricted right to terminate a consultant's
service at

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any time for any reason whatsoever, with or without Cause, except to the extent
expressly provided otherwise in writing.

1.51. Termination of Directorship. "Termination of
Directorship" shall mean the time when an Optionee, Grantee or Restricted
Stockholder who is an Independent Director or a Management Investment Company
Independent Director ceases to be a Director for any reason, including, but not
by way of limitation, a termination by resignation, failure to be elected, death
or retirement; but excluding, at the discretion of the Committee, terminations
(i) where there is a simultaneous reemployment or continuing employment of an
Optionee, Grantee or Restricted Stockholder by the Company, a Company
Subsidiary, the Investment Management Company, an Investment Management Company
Subsidiary, the Partnership or a Partnership Subsidiary and (ii) which are
followed by the simultaneous establishment of a directorship with the Company, a
Company Subsidiary, the Investment Management Company, an Investment Management
Company Subsidiary, the Partnership or a Partnership Subsidiary. The Board, in
its sole and absolute discretion, shall determine the effect of all matters and
questions relating to Termination of Directorship with respect to Independent
Directors or Management Investment Company Independent Directors in accordance
with the Company's bylaws.

1.52. Termination of Employment. "Termination of Employment"
shall mean the time when the employee-employer relationship between an Optionee,
Grantee or Restricted Stockholder and the Company, Investment Management Company
or Partnership, or any of their respective Subsidiaries, is terminated for any
reason, with or without Cause, including, but not by way of limitation, a
termination by resignation, discharge, death, disability or retirement; but
excluding (i) terminations where there is a simultaneous reemployment or
continuing employment of an Optionee, Grantee or Restricted Stockholder by the
Company, a Company Subsidiary, the Investment Management Company, an Investment
Management Company Subsidiary, the Partnership or a Partnership Subsidiary, (ii)
at the discretion of the Committee, terminations which result in a temporary
severance of the employee-employer relationship, and (iii) at the discretion of
the Committee, terminations which are followed by the simultaneous establishment
of a consulting relationship by the Company, a Company Subsidiary, the
Investment Management Company, an Investment Management Company Subsidiary, the
Partnership or a Partnership Subsidiary with the former employee. The Committee,
in its absolute discretion, shall determine the effect of all matters and
questions relating to Termination of Employment, including, but not by way of
limitation, the question of whether a Termination of Employment resulted from a
discharge for Cause, and all questions of whether a particular leave of absence
constitutes a Termination of Employment; provided, however, that, with respect
to Incentive Stock Options unless otherwise determined by the Committee in its
discretion, a leave of absence, change in status from an employee to an
independent contractor or other change in the employee-employer relationship
shall constitute a Termination of Employment if, and to the extent that, such
leave of absence, change in status or other change interrupts employment for the
purposes of Section 422(a)(2) of the Code and the then applicable regulations
and revenue rulings under said Section. Notwithstanding any other provision of
this Plan, the Company, a Company Subsidiary, the Investment Management Company,
an Investment Management Company Subsidiary, the Partnership or a Partnership
Subsidiary has an absolute and unrestricted right to terminate an Employee's
employment at any time for any reason whatsoever, with or without Cause, except
to the extent expressly provided otherwise in writing.

ARTICLE II.
SHARES SUBJECT TO PLAN

2.1. Shares Subject to Plan.

(a) The shares of stock subject to Options, awards of
Restricted Stock, Performance Awards, Dividend Equivalents, awards of Deferred
Stock, Stock Payments or Stock Appreciation Rights shall be shares of Common
Stock. The aggregate number of such shares which may be issued upon exercise of
such Options or rights or upon any such awards under the Plan shall not exceed
Five Million Seven Hundred Fifty Thousand (5,750,000).

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The shares of Common Stock issuable upon exercise of such Options or rights or
upon any such awards may be either previously authorized but unissued shares or
treasury shares.

(b) The maximum number of shares which may be subject to
Options, awards of Restricted Stock, Performance Awards, Dividend Equivalents,
awards of Deferred Stock, Stock Payments or Stock Appreciation Rights granted
under the Plan to any individual in any calendar year shall not exceed the Award
Limit.

2.2. Add-back of Options and Other Rights. If any Option, or
other right to acquire shares of Common Stock under any other award under this
Plan, expires or is canceled without having been fully exercised, or is
exercised in whole or in part for cash as permitted by this Plan, the number of
shares subject to such Option or other right but as to which such Option or
other right was not exercised prior to its expiration, cancellation or exercise
may again be optioned, granted or awarded hereunder, subject to the limitations
of Section 2.1. Furthermore, any shares subject to Options or other awards which
are adjusted pursuant to Section 10.3 and become exercisable with respect to
shares of stock of another corporation shall be considered canceled and may
again be optioned, granted or awarded hereunder, subject to the limitations of
Section 2.1. Shares of Common Stock which are delivered by the Optionee or
Grantee or withheld by the Company upon the exercise of any Option or other
award under this Plan, in payment of the exercise price thereof, may again be
optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. If any share of Restricted Stock is forfeited by the Grantee or repurchased
by the Company pursuant to Section 6.6 hereof, such share may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1.
Notwithstanding the provisions of this Section 2.2, no shares of Common Stock
may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an incentive stock option under
Section 422 of the Code.

ARTICLE III.
GRANTING OF OPTIONS

3.1. Eligibility. Any Employee, consultant or Non-Employee
Director selected by the Committee pursuant to Section 3.4(a)(i) shall be
eligible to be granted an Option. Independent Directors of the Company shall be
eligible to be granted Options at the times and in the manner set forth in
Section 3.4(d).

3.2. Disqualification for Stock Ownership. No person may be
granted an Incentive Stock Option under this Plan if such person, at the time
the Incentive Stock Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any then existing Subsidiary or parent corporation (within the
meaning of Section 422 of the Code) unless such Incentive Stock Option conforms
to the applicable provisions of Section 422 of the Code.

3.3. Qualification of Incentive Stock Options. No Incentive
Stock Option shall be granted to any person who is not an Employee, or to any
Employee of a Subsidiary which does not constitute a "subsidiary corporation"
within Section 424(f) of the Code.

3.4. Granting of Options

(a) The Committee shall from time to time, in its absolute
discretion, and subject to applicable limitations of this Plan:

(i) Determine which Employees are key Employees and
select from among the key Employees, consultants and Non-Employee
Directors (including Employees, consultants and Non-Employee Directors
who have previously received Options or other awards under this Plan)
such of them as in its opinion should be granted Options;

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(ii) Subject to the Award Limit, determine the number
of shares to be subject to such Options granted to the selected key
Employees or consultants;

(iii) Subject to Section 3.3, determine whether such
Options are to be Incentive Stock Options or Non-Qualified Stock
Options and whether such Options are to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code; and

(iv) Determine the terms and conditions of such
Options, consistent with this Plan; provided, however, that the terms
and conditions of Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall
include, but not be limited to, such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of the
Code.

(b) Upon the selection of a key Employee or consultant to be
granted an Option, the Committee shall instruct the Secretary of the Company to
issue the Option and may impose such conditions on the grant of the Option as it
deems appropriate.

(c) Any Incentive Stock Option granted under this Plan may be
modified by the Committee, with the consent of the Optionee, to disqualify such
Option from treatment as an "incentive stock option" under Section 422 of the
Code.

(d) During the term of the Plan, each person who is named as
an Independent Director in the Company's registration statement in connection
with the Company's initial public offering of its Common Stock (an "Initial
Independent Director") as of the date upon which such Independent Director's
term as a director commences, automatically shall be granted (i) an Option to
purchase twenty-six thousand two hundred fifty (26,250) shares of Common Stock
(subject to adjustment as provided in Section 10.3) on the date of such initial
public offering and (ii) an Option to purchase fifteen thousand (15,000) shares
of Common Stock (subject to adjustment as provided in Section 10.3) on the date
of each annual meeting of stockholders after such initial public offering at
which the Independent Director is reelected to the Board commencing with the
annual meeting to be held in 1999. During the term of the Plan, a person, other
than an Initial Independent Director, who is initially elected to the Board
after the consummation of the initial public offering of Common Stock and who is
an Independent Director at the time of such initial election automatically shall
be granted (i) an Option to purchase twenty thousand (20,000) shares of Common
Stock (subject to adjustment as provided in Section 10.3) on the date of such
initial election and (ii) an Option to purchase fifteen thousand (15,000) shares
of Common Stock (subject to adjustment as provided in Section 10.3) on the date
of each annual meeting of stockholders after such initial election at which the
Independent Director is reelected to the Board. Members of the Board who are
employees of the Company who subsequently retire from the Company and remain on
the Board will not receive an initial Option grant pursuant to clause (i) of the
preceding sentence, but to the extent that they are otherwise eligible, will
receive, after retirement from employment with the Company, Options as described
in clause (ii) of the preceding sentence. All the foregoing Option grants
authorized by this Section 3.4(d) are subject to stockholder approval of the
Plan.

ARTICLE IV.
TERMS OF OPTIONS

4.1. Option Agreement. Each Option shall be evidenced by a
written Stock Option Agreement, which shall be executed by the Optionee and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee (or the Board, in the case of Options granted to
Independent Directors) shall determine, consistent with this Plan. Stock Option
Agreements evidencing Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code. Stock

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Option Agreements evidencing Incentive Stock Options shall contain such terms
and conditions as may be necessary to meet the applicable provisions of Section
422 of the Code.

4.2. Option Price. The price per share of the shares subject
to each Option shall be set by the Committee; provided, however, that (i) in the
case of Incentive Stock Options such price shall not be less than 100% of the
Fair Market Value of a share of Common Stock on the date the Option is granted
(or the date the Option is modified, extended or renewed for purposes of Section
424(h) of the Code); (ii) in the case of Incentive Stock Options granted to an
individual then owning (within the meaning of Section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of stock of the
Company or any Subsidiary or parent corporation thereof (within the meaning of
Section 422 of the Code), such price shall not be less than 110% of the Fair
Market Value of a share of Common Stock on the date the Option is granted (or
the date the Option is modified, extended or renewed for purposes of Section
424(h) of the Code); (iii) in the case of Options granted to Independent
Directors, such price shall equal 100% of the Fair Market Value of a share of
Common Stock on the date the Option is granted; provided, however, that the
price of each share subject to each Option granted to Initial Independent
Directors pursuant to Section 3.4(d) hereof shall equal the initial public
offering price per share of Common Stock; and (iv) in the case of all other
Options granted, such price shall be not less than 100% of the Fair Market Value
of a share of Common Stock on the date the Option is granted. Notwithstanding
any other provision of this Plan to the contrary, the Committee shall not have
the authority to amend the terms of any outstanding Option to reduce its
exercise price.

4.3. Option Term. The term of an Option shall be set by the
Committee in its discretion; provided, however, that, (i) no Option shall be
granted with a term of more than ten (10) years from the date the Option is
granted, (ii) in the case of Options granted to Independent Directors, the term
shall be ten (10) years from the date the Option is granted, and (iii) in the
case of Incentive Stock Options, the term shall not be more than five (5) years
from the date the Incentive Stock Option is granted, if the Incentive Stock
Option is granted to an individual then owning (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary or parent corporation thereof
(within the meaning of Section 422 of the Code). Except as limited by
requirements of Section 422 of the Code and regulations and rulings thereunder
applicable to Incentive Stock Options, the Committee may extend the term of any
outstanding Option in connection with any Termination of Employment or
Termination of Consultancy of the Optionee, or amend any other term or condition
of such Option relating to such a termination.

4.4. Option Vesting

(a) The period during which the right to exercise an Option in
whole or in part vests in the Optionee shall be set by the Committee and the
Committee may determine that an Option may not be exercised in whole or in part
for a specified period after it is granted; provided, however, that, unless the
Committee otherwise provides in the terms of the Option or otherwise, no Option
shall be exercisable by any Optionee who is then subject to Section 16 of the
Exchange Act within the period ending six months and one day after the date the
Option is granted; and provided, further, that, unless the Board otherwise
provides in the terms of the Options or otherwise, Options granted to
Independent Directors shall become fully exercisable on first anniversary of the
date of Option grant, except as provided in Section 10.3(b). At any time after
grant of an Option, the Committee may, in its sole and absolute discretion and
subject to whatever terms and conditions it selects, accelerate the period
during which an Option (except an Option granted to an Independent Director)
vests.

(b) No portion of an Option which is unexercisable at
Termination of Employment, Termination of Directorship or Termination of
Consultancy, as applicable, shall thereafter become exercisable, except as may
be otherwise provided by the Committee in the case of Options granted to
Employees or consultants either in the Stock Option Agreement or by action of
the Committee following the grant of the Option.

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(c) To the extent that 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 (under
the Plan and all other incentive stock option plans of the Company and any
parent or subsidiary corporation (within the meaning of Section 422 of the Code)
of the Company) exceeds $100,000, such Options shall be treated as Non-Qualified
Options to the extent required by Section 422 of the Code. 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 purposes of this Section 4.4(c), the Fair
Market Value of stock shall be determined as of the time the Option with respect
to such stock is granted.

4.5. Consideration. In consideration of the granting of an
Option, the Optionee shall agree, in the written Stock Option Agreement, to
remain in the employ of (or to consult for or to serve as an Independent
Director of, as applicable) the Company, a Company Subsidiary, the Investment
Management Company, an Investment Management Company Subsidiary, the Partnership
or a Partnership Subsidiary for a period of at least one year (or such shorter
period as may be fixed in the Stock Option Agreement or by action of the
Committee following grant of the Option) after the Option is granted (or, in the
case of an Independent Director, until the next annual meeting of stockholders
of the Company). Nothing in this Plan or in any Stock Option Agreement hereunder
shall (i) confer upon any Optionee any right to (a) continue in the employ of,
or as a consultant for, the Company, a Company Subsidiary, the Investment
Management Company, an Investment Management Company Subsidiary, the Partnership
or a Partnership Subsidiary, or as a Director, or (b) receive any severance pay
from the Company, a Company Subsidiary, the Investment Management Company, an
Investment Management Company Subsidiary, the Partnership or a Partnership
Subsidiary or (ii) interfere with or restrict in any way the rights of the
Company, a Company Subsidiary, the Investment Management Company, an Investment
Management Company Subsidiary, the Partnership or a Partnership Subsidiary,
which are hereby expressly reserved, to discharge any Optionee at any time for
any reason whatsoever, with or without Cause.

ARTICLE V.
EXERCISE OF OPTIONS

5.1. Partial Exercise. An exercisable Option may be exercised
in whole or in part. However, an Option shall not be exercisable with respect to
fractional shares and the Committee (or the Board, in the case of Options
granted to Independent Directors) may require that, by the terms of the Option,
a partial exercise be with respect to a minimum number of shares.

5.2. Manner of Exercise. All or a portion of an exercisable
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company (or such other officer as identified in the applicable
Stock Option Agreement):

(a) A written notice complying with the applicable rules
established by the Committee (or the Board, in the case of Options granted to
Independent Directors) stating that the Option, or a portion thereof, is
exercised. The notice shall be signed by the Optionee or other person then
entitled to exercise the Option or such portion of the Option;

(b) Such representations and documents as the Committee (or
the Board, in the case of Options granted to Independent Directors), in its
absolute discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Committee or Board may, in
its absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance including, without limitation, placing
legends on share certificates and issuing stop-transfer notices to agents and
registrars;

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(c) In the event that the Option shall be exercised pursuant
to Section 10.1 by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the Option; and

(d) Full cash payment to the Secretary of the Company for the
shares with respect to which the Option, or portion thereof, is exercised.
However, the Committee (or the Board, in the case of Options granted to
Independent Directors), may in its discretion (i) allow a delay in payment up to
thirty (30) days from the date the Option, or portion thereof, is exercised;
(ii) allow payment, in whole or in part, through the delivery of shares of
Common Stock owned by the Optionee, duly endorsed for transfer to the Company
with a Fair Market Value on the date of delivery equal to the aggregate exercise
price of the Option or exercised portion thereof; (iii) allow payment, in whole
or in part, through the surrender of shares of Common Stock then issuable upon
exercise of the Option having a Fair Market Value on the date of Option exercise
equal to the aggregate exercise price of the Option or exercised portion
thereof; (iv) allow payment, in whole or in part, through the delivery of a full
recourse promissory note bearing interest (at no less than such rate as shall
then preclude the imputation of interest under the Code) and payable upon such
terms as may be prescribed by the Committee or the Board; or (v) allow payment
through any combination of the consideration provided in the foregoing
subparagraphs (ii), (iii) and (iv). In the case of a promissory note, the
Committee (or the Board, in the case of Options granted to Independent
Directors) may also prescribe the form of such note and the security to be given
for such note. The Option may not be exercised, however, by delivery of a
promissory note or by a loan from the Company when or where such loan or other
extension of credit is prohibited by law.

5.3. Transfer of Shares to a Company Employee, Consultant or
Independent Director. As soon as practicable after receipt by the Company,
pursuant to Section 5.2(d), of payment for the shares with respect to which an
Option (which in the case of a Company Employee, consultant or Independent
Director was issued to and is held by such Optionee in such capacity), or
portion thereof, is exercised by an Optionee who is a Company Employee,
Independent Director or a consultant to the Company, with respect to each such
exercise, the Company shall transfer to the Optionee the number of shares equal
to

(a) The amount of the payment made by the Optionee to the
Company pursuant to Section 5.2(d), divided by

(b) The price per share of the shares subject to the Option as
determined pursuant to Section 4.2.

5.4. Transfer of Shares to a Partnership Employee, Consultant
or Independent Director. (a) At the time that an Optionee who is an Employee,
Independent Director or consultant of the Partnership or a Partnership
Subsidiary exercises all or any part of an Option pursuant to the terms of this
Plan, such Optionee shall remit to the Partnership or the Partnership
Subsidiary, as the case may be, an amount equal to the product of the exercise
price per share of such Option and the number of shares with respect to such
Option being exercised by such Optionee.

(b) As soon as practicable after receipt by the Operating
Partnership of a notice of the exercise of shares with respect to which an
Option (which was issued to and is held by a Partnership Employee, consultant or
Independent Director in such capacity), or portion thereof, is exercised by an
Optionee who is a Partnership Employee, Independent Director or consultant, with
respect to each such exercise the Company shall sell to the Partnership, or the
Partnership Subsidiary in the case of an Optionee who is an Employee, consultant
or Independent Director of Partnership Subsidiary, the number of shares (the
"Partnership Purchased Shares") equal to the number of shares subject to such
exercise by such Optionee at a purchase price equal to the Fair Market Value of
a share of Common Stock at the time of the exercise (the "Partnership Purchase
Price");

(c) As soon as practicable after receipt of the Partnership
Purchased Shares by the Partnership, or the Partnership Subsidiary in the case
of an Optionee who is an Employee, Independent Director or

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consultant of a Partnership Subsidiary, the Partnership or the Partnership
Subsidiary, as the case may be, shall transfer such shares to the Optionee at no
additional cost.

5.5. Transfer of Shares to an Investment Management Company
Employee, Consultant or Independent Director. (a) At the time that an Optionee
who is an Employee, Independent Director or consultant of the Investment
Management Company or an Investment Management Company Subsidiary exercises all
or any part of an Option pursuant to the terms of this Plan, such Optionee shall
remit to the Investment Management Company or the Investment Management Company
Subsidiary, as the case may be, an amount equal to the product of the exercise
price per share of such Option and the number of shares with respect to such
Option being exercised by such Optionee.

(b) As soon as practicable after receipt by the Investment
Management Company, of a notice of the exercise of shares with respect to which
an Option (which in the case of an Investment Management Company Employee,
consultant or Independent Director was issued to and is held by such Optionee in
such capacity), or portion thereof, is exercised by an Optionee who is an
Investment Management Company Employee, an Investment Management Company
Independent Director or consultant, with respect to each such exercise the
Company shall sell to the Investment Management Company, or the Investment
Management Company Subsidiary in the case of an Optionee who is an Employee,
consultant or Independent Director of an Investment Management Company
Subsidiary, the number of shares (the "Investment Management Company Purchased
Shares") equal to the number of shares subject to such exercise by such Optionee
at a purchase price equal to the Fair Market Value of a share of Common Stock at
the time of the exercise (the "Investment Management Company Purchase Price");

(c) As soon as practicable after receipt of the Investment
Management Company Purchased Shares by the Investment Management Company, or the
Investment Management Company Subsidiary in the case of an Optionee who is an
Employee, Independent Director or consultant of a Investment Management Company
Subsidiary, the Investment Management Company or such Investment Management
Company Subsidiary, as the case may be, shall transfer such shares to the
Optionee at no additional cost.

5.6. Transfer of Payment to the Partnership. As soon as
practicable after receipt by the Company of the amount described in Section
5.2(d), 5.4(b) and 5.5(b) the Company shall contribute to the Partnership an
amount of cash equal to such payment and the Partnership shall issue an
additional interest in the Partnership on the terms set forth in the Partnership
Agreement.

5.7. Conditions to Issuance of Stock Certificates. The Company
shall not be required to issue or deliver any certificate or certificates for
shares of stock purchased upon the exercise of any Option or portion thereof
prior to fulfillment of all of the following conditions:

(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed;

(b) The completion of any registration or other qualification
of such shares under any state or federal law, or under the rulings or
regulations of the Securities and Exchange Commission or any other governmental
regulatory body which the Committee or Board shall, in its absolute discretion,
deem necessary or advisable;

(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee (or Board, in the case
of Options granted to Independent Directors) shall, in its absolute discretion,
determine to be necessary or advisable;

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(d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee (or Board, in the case of Options
granted to Independent Directors) may establish from time to time for reasons of
administrative convenience; and

(e) The receipt by the Company of full payment for such
shares, including payment of any applicable withholding tax.

5.8. Rights as Stockholders. The holders of Options shall not
be, nor have any of the rights or privileges of, stockholders of the Company in
respect of any shares purchasable upon the exercise of any part of an Option
unless and until certificates representing such shares have been issued by the
Company to such holders.

5.9. Ownership and Transfer Restrictions. The Committee (or
Board, in the case of Options granted to Independent Directors), in its absolute
discretion, may impose such restrictions on the ownership and transferability of
the shares purchasable upon the exercise of an Option as it deems appropriate.
Any such restriction shall be set forth in the respective Stock Option Agreement
and may be referred to on the certificates evidencing such shares. The Committee
may require the Employee to give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(i) two years from the date of granting (including the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the Code) such
Option to such Employee or (ii) one year after the transfer of such shares to
such Employee. The Committee may direct that the certificates evidencing shares
acquired by exercise of an Option refer to such requirement to give prompt
notice of disposition.

5.10. Limitations on Exercise of Options Granted to an
Optionee. The Committee (or the Board, in the case of Options granted to
Independent Directors), in its absolute discretion, may impose such limitations
and restrictions on the exercise of Options as it deems appropriate. Any such
limitation shall be set forth in the respective Stock Option Agreement.
Notwithstanding the foregoing, an Option is not exercisable if in the sole and
absolute discretion of the Committee the exercise of such Option would likely
result in any of the following:

(a) the Optionee's or any other person's ownership of capital
stock being in violation of the Stock Ownership Limit (as defined in the
Company's Articles of Incorporation); or

(b) income to the Company that could impair the Company's
status as a real estate investment trust, within the meaning of Sections 856
through 860 of the Code.

ARTICLE VI.
AWARD OF RESTRICTED STOCK

6.1. Eligibility. Subject to the Award Limit, Restricted Stock
may be awarded to any Employee who the Committee determines is a key Employee or
any Director or consultant whom the Committee determines should receive such an
award.

6.2. Award of Restricted Stock

(a) The Committee may from time to time, in its absolute
discretion:

(i) Determine which Employees are key Employees and
select from among the key Employees, Directors or consultants
(including Employees, Directors or consultants who have previously
received other awards under this Plan) such of them as in its opinion
should be awarded Restricted Stock; and

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(ii) Determine the purchase price, if any, and other
terms and conditions (including, without limitation, in the case of
awards to Employees, consultants or Independent Directors of the
Partnership, any Partnership Subsidiary, the Investment Management
Company or any Investment Management Company Subsidiary, the mechanism
for the transfer of the Restricted Stock and payment therefor and, in
the case of the repurchase of shares of Restricted Stock subject to
restrictions in effect at the time of the Termination of Employment,
Directorship or Consultancy of such Employee, Director or consultant,
as the case may be) applicable to such Restricted Stock, consistent
with this Plan.

(b) The Committee shall establish the purchase price, if any,
and form of payment for Restricted Stock; provided, however, that such purchase
price shall be no less than the par value of the Common Stock to be purchased,
unless otherwise permitted by applicable state law. In all cases, legal
consideration shall be required for each issuance of Restricted Stock.

(c) Upon the selection of a key Employee or consultant to be
awarded Restricted Stock, the Committee shall instruct the Secretary of the
Company to issue such Restricted Stock and may impose such conditions on the
issuance of such Restricted Stock as it deems appropriate.

6.3. Restricted Stock Agreement. Restricted Stock shall be
issued only pursuant to a written Restricted Stock Agreement, which shall be
executed by the selected key Employee or consultant and an authorized officer of
the Company and which shall contain such terms and conditions as the Committee
shall determine, consistent with this Plan.

6.4. Consideration. As consideration for the issuance of
Restricted Stock, in addition to payment of any purchase price, the Restricted
Stockholder shall agree, in the written Restricted Stock Agreement, to remain in
the employ of, or to consult for, the Company, a Company Subsidiary, the
Investment Management Company, an Investment Management Company Subsidiary, the
Partnership or a Partnership Subsidiary for a period of at least one year after
the Restricted Stock is issued (or such shorter period as may be fixed in the
Restricted Stock Agreement or by action of the Committee following grant of the
Restricted Stock) or, in the case of a Director, complete the remainder of such
Director's elected term. Nothing in this Plan or in any Restricted Stock
Agreement hereunder shall (i) confer on any Restricted Stockholder any right to
(a) continue in the employ of, as a Director of or as a consultant for, the
Company, a Company Subsidiary, the Investment Management Company, an Investment
Management Company Subsidiary, the Partnership or a Partnership Subsidiary or
(b) receive any severance pay from the Company, a Company Subsidiary, the
Investment Management Company, an Investment Management Company Subsidiary, the
Partnership or a Partnership Subsidiary or (ii) interfere with or restrict in
any way the rights of the Company, a Company Subsidiary, the Investment
Management Company, an Investment Management Company Subsidiary, the Partnership
or a Partnership Subsidiary, which are hereby expressly reserved, to discharge
the Employee or consultant at any time for any reason whatsoever, with or
without Cause, or any Director pursuant to the Company's bylaws.

6.5. Rights as Stockholders. Subject to Section 6.6, upon
delivery of the shares of Restricted Stock to the escrow holder pursuant to
Section 6.8, the Restricted Stockholder shall have, unless otherwise provided by
the Committee, all the rights of a stockholder with respect to said shares,
subject to the restrictions in his Restricted Stock Agreement, including the
right to receive all dividends and other distributions paid or made with respect
to the shares; provided, however, that in the discretion of the Committee, any
extraordinary distributions with respect to the Common Stock shall be subject to
the restrictions set forth in Section 6.6.

6.6. Restriction. All shares of Restricted Stock issued under
this Plan (including any shares received by holders thereof with respect to
shares of Restricted Stock as a result of stock dividends, stock splits or any
other form of recapitalization) shall, in the terms of each individual
Restricted Stock Agreement, be subject to such restrictions as the Committee
shall provide, which restrictions may include, without limitation, restrictions
concerning voting rights and transferability and restrictions based on duration
of employment with the Company,

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Company performance and individual performance; provided, however, that, unless
the Committee otherwise provides in the terms of the Restricted Stock Agreement
or otherwise, no share of Restricted Stock granted to a person subject to
Section 16 of the Exchange Act shall be sold, assigned or otherwise transferred
until at least six months and one day have elapsed from the date on which the
Restricted Stock was issued, and provided, further, that, except with respect to
shares of Restricted Stock granted pursuant to Section 6.10, by action taken
after the Restricted Stock is issued, the Committee may, on such terms and
conditions as it may determine to be appropriate, remove any or all of the
restrictions imposed by the terms of the Restricted Stock Agreement. Restricted
Stock may not be sold or encumbered until all restrictions are terminated or
expire. If no consideration was paid by the Restricted Stockholder upon
issuance, a Restricted Stockholder's rights in unvested Restricted Stock shall
lapse upon a Termination of Employment or, if applicable, upon a Termination of
Directorship or a Termination of Consultancy; provided, however, that the
Committee in its sole and absolute discretion may provide that such rights shall
not lapse in the event of a Termination of Employment or Termination of
Directorship following a "change of ownership control" (within the meaning of
Treasury Regulation Section 1.62-27(e)(2)(v) or any successor regulation
thereto) of the Company or because of the Restricted Stockholder's death or
disability.

6.7. Repurchase of Restricted Stock. The Committee shall
provide in the terms of each individual Restricted Stock Agreement that the
Company shall have the right to repurchase from the Restricted Stockholder the
Restricted Stock then subject to restrictions under the Restricted Stock
Agreement immediately upon a Termination of Employment or, if applicable, upon a
Termination of Director or a Termination of Consultancy, at a cash price per
share equal to the price paid by the Restricted Stockholder for such Restricted
Stock; provided, however, that the Committee in its sole and absolute discretion
may provide that no such right of repurchase shall exist in the event of a
Termination of Employment, Termination of Directorship or Termination of
Consultancy following a "change of ownership or control" (within the meaning of
Treasury Regulation Section 1.162-27(e)(2)(v) or any successor regulation
thereto) of the Company or because of the Restricted Stockholder's death or
disability; provided, further, that, except with respect to shares of Restricted
Stock granted pursuant to Section 6.10, the Committee in its sole and absolute
discretion may provide that no such right of repurchase shall exist in the event
of a Termination of Employment, Termination of Directorship or a Termination of
Consultancy without Cause, following any change in control or ownership of the
Company, because of the Restricted Stockholder's retirement, or otherwise.

6.8. Escrow. The Secretary of the Company or such other escrow
holder as the Committee may appoint shall retain physical custody of each
certificate representing Restricted Stock until all of the restrictions imposed
under the Restricted Stock Agreement with respect to the shares evidenced by
such certificate expire or shall have been removed.

6.9. Legend. In order to enforce the restrictions imposed upon
shares of Restricted Stock hereunder, the Committee shall cause a legend or
legends to be placed on certificates representing all shares of Restricted Stock
that are still subject to restrictions under Restricted Stock Agreements, which
legend or legends shall make appropriate reference to the conditions imposed
thereby.

6.10. Provisions Applicable to Section 162(m) Participants.

(a) Notwithstanding anything in the Plan to the contrary, the
Committee may grant Restricted Stock to a Section 162(m) Participant the
restrictions with respect to which lapse upon the attainment of performance
goals for the Company which are related to one or more of the following business
criteria: (i) pre-tax income, (ii) operating income, (iii) cash flow, (iv)
earnings per share, (v) return on equity, (vi) return on invested capital or
assets, (vii) cost reductions or savings, (viii) funds from operations, (ix)
appreciation in the fair market value of Common Stock and (x) earnings before
any one or more of the following items: interest, taxes, depreciation or
amortization.

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(b) To the extent necessary to comply with the
performance-based compensation requirements of Section 162(m)(4)(C) of the Code,
with respect to Restricted Stock which may be granted to one or more Section
162(m) Participants, no later than ninety (90) days following the commencement
of any fiscal year in question or any other designated fiscal period or period
of service (or such other time as may be required or permitted by Section 162(m)
of the Code), the Committee shall, in writing, (i) designate one or more Section
162(m) Participants, (ii) select the performance goal or goals applicable to the
fiscal year or other designated fiscal period or period of service, (iii)
establish the various targets and amounts of Restricted Stock which may be
earned for such fiscal year or other designated fiscal period or period of
service and (iv) specify the relationship between performance goals and targets
and the amounts of Restricted Stock to be earned by each Section 162(m)
Participant for such fiscal year or other designated fiscal period or period of
service. Following the completion of each fiscal year or other designated fiscal
period or period of service, the Committee shall certify in writing whether the
applicable performance targets have been achieved for such fiscal year or other
designated fiscal period or period of service. In determining the amount earned
by a Section 162(m) Participant, the Committee shall have the right to reduce
(but not to increase) the amount payable at a given level of performance to take
into account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the fiscal year or other
designated fiscal period or period of service.

ARTICLE VII.

PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
DEFERRED STOCK, STOCK PAYMENTS

7.1. Eligibility. Subject to the Award Limit, one or more
Performance Awards, Dividend Equivalents, awards of Deferred Stock, and/or Stock
Payments may be granted to any Employee whom the Committee determines is a key
Employee or any consultant or Independent Director whom the Committee determines
should receive such an award.

7.2. Performance Awards. Any key Employee, consultant or
Independent Director selected by the Committee may be granted one or more
Performance Awards. The value of such Performance Awards may be linked to the
market value, book value, net profits or other measure of the value of Common
Stock or other specific performance criteria determined appropriate by the
Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee, or may be based upon the appreciation in
the market value, book value, net profits or other measure of the value of a
specified number of shares of Common Stock over a fixed period or periods
determined by the Committee. In making such determinations, the Committee shall
consider (among such other factors as it deems relevant in light of the specific
type of award) the contributions, responsibilities and other compensation of the
particular key Employee or consultant.

7.3. Dividend Equivalents. Any key Employee, consultant or
Independent Director selected by the Committee may be granted Dividend
Equivalents based on the dividends declared on Common Stock, to be credited as
of dividend payment dates, during the period between the date an Option, Stock
Appreciation Right, Deferred Stock or Performance Award is granted, and the date
such Option, Stock Appreciation Right, Deferred Stock or Performance Award is
exercised, vests or expires, as determined by the Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of Common Stock by
such formula and at such time and subject to such limitations as may be
determined by the Committee. With respect to Dividend Equivalents granted with
respect to Options intended to be qualified performance-based compensation for
purposes of Section 162(m) of the Code, such Dividend Equivalents shall be
payable regardless of whether such Option is exercised.

7.4. Stock Payments. Any key Employee, consultant or
Independent Director selected by the Committee may receive Stock Payments in the
manner determined from time to time by the Committee. The number of shares shall
be determined by the Committee and may be based upon the Fair Market Value, book
value,

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net profits or other measure of the value of Common Stock or other specific
performance criteria determined appropriate by the Committee, determined on the
date such Stock Payment is made or on any date thereafter.

7.5. Deferred Stock. Any key Employee, consultant or
Independent Director selected by the Committee may be granted an award of
Deferred Stock in the manner determined from time to time by the Committee. The
number of shares of Deferred Stock shall be determined by the Committee and may
be linked to the market value, book value, net profits or other measure of the
value of Common Stock or other specific performance criteria determined to be
appropriate by the Committee, in each case on a specified date or dates or over
any period or periods determined by the Committee. Common Stock underlying a
Deferred Stock award will not be issued until the Deferred Stock award has
vested, pursuant to a vesting schedule or performance criteria set by the
Committee. Unless otherwise provided by the Committee, a Grantee of Deferred
Stock shall have no rights as a Company stockholder with respect to such
Deferred Stock until such time as the award has vested and the Common Stock
underlying the award has been issued.

7.6. Performance Award Agreement, Dividend Equivalent
Agreement, Deferred Stock Agreement, Stock Payment Agreement. Each Performance
Award, Dividend Equivalent, award of Deferred Stock and/or Stock Payment shall
be evidenced by a written agreement, which shall be executed by the Grantee and
an authorized Officer of the Company and which shall contain such terms and
conditions (including, without limitation, in the case of awards to Employees,
consultants or Independent Directors of the Partnership, any Partnership
Subsidiary, the Investment Management Company or any Investment Management
Company Subsidiary, the mechanism for the transfer or rights under such awards)
as the Committee shall determine, consistent with this Plan.

7.7. Term. The term of a Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment shall be set by the
Committee in its discretion.

7.8. Exercise or Purchase Price. The Committee may establish
the exercise or purchase price of a Performance Award, shares of Deferred Stock,
or shares received as a Stock Payment; provided, however, that such price shall
not be less than the par value for a share of Common Stock, unless otherwise
permitted by applicable state law.

7.9. Exercise Upon Termination of Employment. A Performance
Award, Dividend Equivalent, award of Deferred Stock and/or Stock Payment is
exercisable or payable only while the Grantee is an Employee or consultant;
provided, however, that the Committee in its sole and absolute discretion may
provide that the Performance Award, Dividend Equivalent, award of Deferred Stock
and/or Stock Payment may be exercised or paid subsequent to a Termination of
Employment following a "change of control or ownership" (within the meaning of
Section 1.162-27(e)(2)(v) or any successor regulation thereto) of the Company;
provided, further, that except with respect to Performance Awards granted
pursuant to Section 7.12, the Committee in its sole and absolute discretion may
provide that the Performance Awards may be exercised or paid following a
Termination of Employment or a Termination of Consultancy without cause, or
following a change in control of the Company, or because of the Grantee's
retirement, death or disability, or otherwise.

7.10. Payment on Exercise. Payment of the amount determined
under Section 7.1 or 7.2 above shall be in cash, in Common Stock or a
combination of both, as determined by the Committee. To the extent any payment
under this Article VII is effected in Common Stock, it shall be made subject to
satisfaction of all provisions of Section 5.3.

7.11. Consideration. In consideration of the granting of a
Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment, the Grantee shall agree, in a written agreement, to remain in the
employ of, or to consult for, the Company, a Company Subsidiary, the Investment
Management Company, an Investment Management Company Subsidiary, the Partnership
or a Partnership Subsidiary for a

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period of at least one year after such Performance Award, Dividend Equivalent,
award of Deferred Stock and/or Stock Payment is granted (or such shorter period
as may be fixed in such agreement or by action of the Committee following such
grant). Nothing in this Plan or in any agreement hereunder shall (i) confer on
any Grantee any right to (a) continue in the employ of, or as a consultant for,
the Company, a Company Subsidiary, the Investment Management Company, an
Investment Management Company Subsidiary, the Partnership or a Partnership
Subsidiary or (b) receive any severance pay from the Company, a Company
Subsidiary, the Investment Management Company, an Investment Management Company
Subsidiary, the Partnership or a Partnership Subsidiary or (ii) interfere with
or restrict in any way the rights of the Company, a Company Subsidiary, the
Investment Management Company, an Investment Management Company Subsidiary, the
Partnership or a Partnership Subsidiary, which are hereby expressly reserved, to
discharge any Grantee at any time for any reason whatsoever, with or without
Cause.

7.12. Provisions Applicable to Section 162(m) Participants.

(a) Notwithstanding anything in the Plan to the contrary, the
Committee may grant any performance or incentive awards described in Article VII
to a Section 162(m) Participant that vest or become exercisable or payable upon
the attainment of performance goals for the Company which are related to one or
more of the following business criteria: (i) pre-tax income, (ii) operating
income, (iii) cash flow, (iv) earnings per share, (v) return on equity, (vi)
return on invested capital or assets, (vii) cost reductions or savings, (viii)
funds from operations, (ix) appreciation in the fair market value of Common
Stock and (x) earnings before any one or more of the following items: interest,
taxes, depreciation or amortization.

(b) To the extent necessary to comply with the
performance-based compensation requirements of Section 162(m)(4)(C) of the Code,
with respect to performance or incentive awards described in Article VII which
may be granted to one or more Section 162(m) Participants, no later than ninety
(90) days following the commencement of any fiscal year in question or any other
designated fiscal period or period of service (or such other time as may be
required or permitted by Section 162(m) of the Code), the Committee shall, in
writing, (i) designate one or more Section 162(m) Participants, (ii) select the
performance goal or goals applicable to the fiscal year or other designated
fiscal period or period of service, (iii) establish the various targets and
bonus amounts which may be earned for such fiscal year or other designated
fiscal period or period of service and (iv) specify the relationship between
performance goals and targets and the amounts to be earned by each Section
162(m) Participant for such fiscal year or other designated fiscal period or
period of service. Following the completion of each fiscal year or other
designated fiscal period or period of service, the Committee shall certify in
writing whether the applicable performance targets have been achieved for such
fiscal year or other designated fiscal period or period of service. In
determining the amount earned by a Section 162(m) Participant, the Committee
shall have the right to reduce (but not to increase) the amount payable at a
given level of performance to take into account additional factors that the
Committee may deem relevant to the assessment of individual or corporate
performance for the fiscal year or other designated fiscal period or period of
service.

ARTICLE VIII.

STOCK APPRECIATION RIGHTS

8.1. Grant of Stock Appreciation Rights. A Stock Appreciation
Right may be granted to any key Employee or consultant selected by the
Committee. A Stock Appreciation Right may be granted (i) in connection and
simultaneously with the grant of an Option, (ii) with respect to a previously
granted Option, or (iii) independent of an Option. A Stock Appreciation Right
shall be subject to such terms and conditions (including, without limitation,
the mechanism for the transfer of rights under such awards) not inconsistent
with this Plan as the Committee shall impose and shall be evidenced by a written
Stock Appreciation Right Agreement, which shall be executed by the Grantee and
an authorized officer of the Company. The Committee, in its discretion, may
determine whether a Stock Appreciation Right is to qualify as performance-based
compensation as described in

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Section 162(m)(4)(C) of the Code and Stock Appreciation Right Agreements
evidencing Stock Appreciation Rights intended to so qualify shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code.

8.2. Coupled Stock Appreciation Rights

(a) A Coupled Stock Appreciation Right ("CSAR") shall be
related to a particular Option and shall be exercisable only when and to the
extent the related Option is exercisable.

(b) A CSAR may be granted to the Grantee for no more than the
number of shares subject to the simultaneously or previously granted Option to
which it is coupled.

(c) A CSAR shall entitle the Grantee (or other person entitled
to exercise the Option pursuant to this Plan) to surrender to the Company
unexercised a portion of the Option to which the CSAR relates (to the extent
then exercisable pursuant to its terms) and to receive from the Company in
exchange therefor an amount determined by multiplying the difference obtained by
subtracting the Option exercise price from the Fair Market Value of a share of
Common Stock on the date of exercise of the CSAR by the number of shares of
Common Stock with respect to which the CSAR shall have been exercised, subject
to any limitations the Committee may impose.

8.3. Independent Stock Appreciation Rights

(a) An Independent Stock Appreciation Right ("ISAR") shall be
unrelated to any Option and shall have a term set by the Committee. An ISAR
shall be exercisable in such installments as the Committee may determine. An
ISAR shall cover such number of shares of Common Stock as the Committee may
determine; provided, however, that unless the Committee otherwise provides in
the terms of the ISAR or otherwise, no ISAR granted to a person subject to
Section 16 of the Exchange Act shall be exercisable until at least six months
have elapsed from (but excluding) the date on which the Option was granted. The
exercise price per share of Common Stock subject to each ISAR shall be set by
the Committee. An ISAR is exercisable only while the Grantee is an Employee or
consultant; provided that the Committee may determine that the ISAR may be
exercised subsequent to Termination of Employment or Termination of Consultancy
without cause, or following a change in control of the Company, or because of
the Grantee's retirement, death or disability, or otherwise.

(b) An ISAR shall entitle the Grantee (or other person
entitled to exercise the ISAR pursuant to this Plan) to exercise all or a
specified portion of the ISAR (to the extent then exercisable pursuant to its
terms) and to receive from the Company an amount determined by multiplying the
difference obtained by subtracting the exercise price per share of the ISAR from
the Fair Market Value of a share of Common Stock on the date of exercise of the
ISAR by the number of shares of Common Stock with respect to which the ISAR
shall have been exercised, subject to any limitations the Committee may impose.

8.4. Payment and Limitations on Exercise

(a) Payment of the amount determined under Section 8.2(c) and
8.3(b) above shall be in cash, in Common Stock (based on its Fair Market Value
as of the date the Stock Appreciation Right is exercised) or a combination of
both, as determined by the Committee. To the extent such payment is effected in
Common Stock it shall be made subject to satisfaction of all provisions of
Section 5.3 above pertaining to Options.

(b) Grantees of Stock Appreciation Rights may be required to
comply with any timing or other restrictions with respect to the settlement or
exercise of a Stock Appreciation Right, including a window-period limitation, as
may be imposed in the discretion of the Board or Committee.

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8.5. Consideration. In consideration of the granting of a
Stock Appreciation Right, the Grantee shall agree, in the written Stock
Appreciation Right Agreement, to remain in the employ of, or to consult for, the
Company, a Company Subsidiary, the Investment Management Company, an Investment
Management Company Subsidiary, the Partnership or a Partnership Subsidiary for a
period of at least one year after the Stock Appreciation Right is granted (or
such shorter period as may be fixed in the Stock Appreciation Right Agreement or
by action of the Committee following grant of the Restricted Stock). Nothing in
this Plan or in any Stock Appreciation Right Agreement hereunder shall (i)
confer on any Grantee any right to (a) continue in the employ of, or as a
consultant for, the Company, a Company Subsidiary, the Investment Management
Company, an Investment Management Company Subsidiary, the Partnership or a
Partnership Subsidiary or (b) receive any severance pay from the Company, a
Company Subsidiary, the Investment Management Company, an Investment Management
Company Subsidiary, the Partnership or a Partnership Subsidiary or (ii)
interfere with or restrict in any way the rights of the Company, a Company
Subsidiary, the Investment Management Company, an Investment Management Company
Subsidiary, the Partnership or a Partnership Subsidiary, which are hereby
expressly reserved, to discharge any Grantee at any time for any reason
whatsoever, with or without Cause.

ARTICLE IX.

ADMINISTRATION

9.1. Compensation Committee. Prior to the Company's initial
registration of Common Stock under Section 12 of the Exchange Act, the
Compensation Committee shall consist of the entire Board. Following such
registration, the Compensation Committee (or another committee or a subcommittee
of the Board assuming the functions of the Committee under this Plan) shall
consist solely of two or more Independent Directors appointed by and holding
office at the pleasure of the Board, each of whom is both a "non-employee
director" as defined by Rule 16b-3 and an "outside director" for purposes of
Section 162(m) of the Code. Appointment of Committee members shall be effective
upon acceptance of appointment. Committee members may resign at any time by
delivering written notice to the Board. Vacancies in the Committee may be filled
by the Board.

9.2. Duties and Powers of Committee. It shall be the duty of
the Committee to conduct the general administration of this Plan in accordance
with its provisions. The Committee shall have the power to interpret this Plan
and the agreements pursuant to which Options, awards of Restricted Stock or
Deferred Stock, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments are granted or awarded, and to adopt such rules
for the administration, interpretation, and application of this Plan as are
consistent therewith and to interpret, amend or revoke any such rules.
Notwithstanding the foregoing, the full Board, acting by a majority of its
members in office, shall conduct the general administration of the Plan with
respect to Options granted to Independent Directors. Any such grant or award
under this Plan need not be the same with respect to each Optionee, Grantee or
Restricted Stockholder. Any such interpretations and rules with respect to
Incentive Stock Options shall be consistent with the provisions of Section 422
of the Code. In its absolute discretion, the Board may at any time and from time
to time exercise any and all rights and duties of the Committee under this Plan
except with respect to matters which under Rule 16b-3 or Section 162(m) of the
Code, or any regulations or rules issued thereunder, are required to be
determined in the sole discretion of the Committee.

9.3. Majority Rule; Unanimous Written Consent. The Committee
shall act by a majority of its members in attendance at a meeting at which a
quorum is present or by a memorandum or other written instrument signed by all
members of the Committee.

9.4. Compensation; Professional Assistance; Good Faith
Actions. Members of the Committee shall receive such compensation, if any, for
their services as members as may be determined by the Board. All expenses and
liabilities which members of the Committee incur in connection with the
administration of this Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers, or other persons. The Committee, the Company and the
Company's

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officers and Directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. All actions taken and all interpretations and
determinations made by the Committee or the Board in good faith shall be final
and binding upon all Optionees, Grantees, Restricted Stockholders, the Company
and all other interested persons. No members of the Committee or Board shall be
personally liable for any action, determination or interpretation made in good
faith with respect to this Plan, Options, awards of Restricted Stock or Deferred
Stock, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments, and all members of the Committee and the Board shall be fully
protected by the Company in respect of any such action, determination or
interpretation.

9.5. Delegation of Authority to Grant Awards. The Committee
may, but need not, delegate from time to time to a committee consisting of one
or more members of the Committee or of one or more officers of the Company some
or all of the Committee's authority to grant awards under this Plan to eligible
recipients; provided, however, that each such recipient must be an individual
other than an "officer," "director" or "beneficial owner of more than ten per
centum of any class of any equity security" within the meaning of each such term
as it is used under Section 16(b) of the Exchange Act. Any delegation hereunder
shall be subject to the restrictions and limits that the Committee specifies at
the time of such delegation of authority and may be rescinded at any time by the
Committee. At all times, any committee appointed under this Section 9.5 shall
serve in such capacity at the pleasure of the Committee.

ARTICLE X.

MISCELLANEOUS PROVISIONS

10.1. Not Transferable. Options, Restricted Stock awards,
Deferred Stock awards, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments under this Plan may not be sold, pledged,
assigned, or transferred in any manner other than by will or the laws of descent
and distribution, unless and until such rights or awards have been exercised, or
the shares underlying such rights or awards have been issued, and all
restrictions applicable to such shares have lapsed. No Option, Restricted Stock
award, Deferred Stock award, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment or interest or right therein shall be
liable for the debts, contracts or engagements of the Optionee, Grantee or
Restricted Stockholder or his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.

During the lifetime of the Optionee or Grantee, only he may
exercise an Option or other right or award (or any portion thereof) granted to
him under the Plan. After the death of the Optionee or Grantee, any exercisable
portion of an Option or other right or award may, prior to the time when such
portion becomes unexercisable under the Plan or the applicable Stock Option
Agreement or other agreement, be exercised by his personal representative or by
any person empowered to do so under the deceased Optionee's or Grantee's will or
under the then applicable laws of descent and distribution.

10.2. Amendment, Suspension or Termination of this Plan.
Except as otherwise provided in this Section 10.2, this Plan may be wholly or
partially amended or otherwise modified, suspended or terminated at any time or
from time to time by the Board or the Committee. However, without approval of
the Company's stockholders given within twelve months before or after the action
by the Board or the Committee, no action of the Board or the Committee may,
except as provided in Section 10.3, increase the limits imposed in Section 2.1
on the maximum number of shares which may be issued under this Plan or increase
the Award Limit, and no action of the Board or the Committee may be taken that
would otherwise require stockholder approval as a matter of applicable law,
regulation or rule. No amendment, suspension or termination of this Plan shall,
without the consent of the

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holder of Options, Restricted Stock awards, Deferred Stock awards, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments, alter
or impair any rights or obligations under any Options, Restricted Stock awards,
Deferred Stock awards, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments theretofore granted or awarded, unless the award
itself otherwise expressly so provides. No Options, Restricted Stock, Deferred
Stock, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments may be granted or awarded during any period of suspension or
after termination of this Plan, and in no event may any Incentive Stock Option
be granted under this Plan after the first to occur of the following events:

(a) The expiration of ten years from the date the 1997 Stock
Option and Incentive Plan of AMB Property Corporation and AMB Investment
Management, Inc. and their Respective Subsidiaries was adopted by the Board; or

(b) The expiration of ten years from the date the 1997 Stock
Option and Incentive Plan of AMB Property Corporation and AMB Investment
Management, Inc. and their Respective Subsidiaries was approved by the Company's
stockholders under Section 10.4.

10.3. Changes in Common Stock or Assets of the Company,
Acquisition or Liquidation of the Company and Other Corporate Events.

(a) Subject to Section 10.3(d), in the event that the
Committee (or the Board, in the case of Options granted to Independent
Directors) determines that any dividend or other distribution (whether in the
form of cash, Common Stock, other securities, or other property),
recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or substantially all of the assets of the Company (including,
but not limited to, a Corporate Transaction), or exchange of Common Stock or
other securities of the Company, issuance of warrants or other rights to
purchase Common Stock or other securities of the Company, or other similar
corporate transaction or event, in the Committee's sole discretion (or in the
case of Options granted to Independent Directors, the Board's sole discretion),
affects the Common Stock such that an adjustment is determined by the Committee
to be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with respect
to an Option, Restricted Stock award, Performance Award, Stock Appreciation
Right, Dividend Equivalent, Deferred Stock award or Stock Payment, then the
Committee (or the Board, in the case of Options granted to Independent
Directors) shall, in such manner as it may deem equitable, adjust any or all of

(i) the number and kind of shares of Common Stock (or
other securities or property) with respect to which Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments may be granted under the Plan, or which may be granted
as Restricted Stock or Deferred Stock (including, but not limited to,
adjustments of the limitations in Section 2.1 on the maximum number and
kind of shares which may be issued and adjustments of the Award Limit),

(ii) the number and kind of shares of Common Stock
(or other securities or property) subject to outstanding Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents, or
Stock Payments, and in the number and kind of shares of outstanding
Restricted Stock or Deferred Stock, and

(iii) the grant or exercise price with respect to any
Option, Performance Award, Stock Appreciation Right, Dividend
Equivalent or Stock Payment.

(b) Subject to Section 10.3(d), in the event of any Corporate
Transaction or other transaction or event described in Section 10.3(a) or any
unusual or nonrecurring transactions or events affecting the Company,

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any affiliate of the Company, or the financial statements of the Company or any
affiliate, or of changes in applicable laws, regulations, or accounting
principles, the Committee (or the Board, in the case of Options granted to
Independent Directors) in its discretion is hereby authorized to take any one or
more of the following actions whenever the Committee (or the Board, in the case
of Options granted to Independent Directors) determines that such action is
appropriate or desirable:

(i) In its sole and absolute discretion, and on such
terms and conditions as it deems appropriate, the Committee (or the
Board, in the case of Options granted to Independent Directors) may
provide, either by the terms of the agreement or by action taken prior
to the occurrence of such transaction or event and either automatically
or upon the optionee's request, for either the purchase of any such
Option, Performance Award, Stock Appreciation Right, Dividend
Equivalent, or Stock Payment, or any Restricted Stock or Deferred Stock
for an amount of cash equal to the amount that could have been attained
upon the exercise of such option, right or award or realization of the
optionee's rights had such option, right or award been currently
exercisable or payable or fully vested or the replacement of such
option, right or award with other rights or property selected by the
Committee (or the Board, in the case of Options granted to Independent
Directors) in its sole discretion;

(ii) In its sole and absolute discretion, the
Committee (or the Board, in the case of Options granted to Independent
Directors) may provide, either by the terms of such Option, Performance
Award, Stock Appreciation Right, Dividend Equivalent, or Stock Payment,
or Restricted Stock or Deferred Stock or by action taken prior to the
occurrence of such transaction or event that it cannot vest, be
exercised or become payable after such event;

(iii) In its sole and absolute discretion, and on
such terms and conditions as it deems appropriate, the Committee (or
the Board, in the case of Options granted to Independent Directors) may
provide, either by the terms of such Option, Performance Award, Stock
Appreciation Right, Dividend Equivalent, or Stock Payment, or
Restricted Stock or Deferred Stock or by action taken prior to the
occurrence of such transaction or event, that for a specified period of
time prior to such transaction or event, such option, right or award
shall be exercisable as to all shares covered thereby, notwithstanding
anything to the contrary in (i) Section 4.4 or (ii) the provisions of
such Option, Performance Award, Stock Appreciation Right, Dividend
Equivalent, or Stock Payment, or Restricted Stock or Deferred Stock;

(iv) In its sole and absolute discretion, and on such
terms and conditions as it deems appropriate, the Committee (or the
Board, in the case of Options granted to Independent Directors) may
provide, either by the terms of such Option, Performance Award, Stock
Appreciation Right, Dividend Equivalent, or Stock Payment, or
Restricted Stock or Deferred Stock or by action taken prior to the
occurrence of such transaction or event, that upon such event, such
option, right or award be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted
for by similar options, rights or awards covering the stock of the
successor or survivor corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and
prices;

(v) In its sole and absolute discretion, and on such
terms and conditions as it deems appropriate, the Committee (or the
Board, in the case of Options granted to Independent Directors) may
make adjustments in the number and type of shares of Common Stock (or
other securities or property) subject to outstanding Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents, or
Stock Payments, and in the number and kind of outstanding Restricted
Stock or Deferred Stock and/or in the terms and conditions of, and the
criteria included in, outstanding options, rights and awards and
options, rights and awards which may be granted in the future; and

(vi) In its sole and absolute discretion, and on such
terms and conditions as it deems appropriate, the Committee may provide
either by the terms of a Restricted Stock award or Deferred Stock

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<PAGE> 53

award or by action taken prior to the occurrence of such event that,
for a specified period of time prior to such event, the restrictions
imposed under a Restricted Stock Agreement or a Deferred Stock
Agreement upon some or all shares of Restricted Stock or Deferred Stock
may be terminated, and, in the case of Restricted Stock, some or all
shares of such Restricted Stock may cease to be subject to repurchase
under Section 6.6 or forfeiture under Section 6.5 after such event.

(c) Subject to Section 10.3(d) and 10.8, the Committee (or the
Board, in the case of Options granted to Independent Directors) may, in its
discretion, include such further provisions and limitations in any Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent, or Stock
Payment, or Restricted Stock or Deferred Stock agreement or certificate, as it
may deem equitable and in the best interests of the Company.

(d) With respect to Options, Restricted Stock, Deferred Stock,
Stock Appreciation Rights and performance or incentive awards described in
Article VII which are granted to Section 162(m) Participants and are intended to
qualify as performance-based compensation under Section 162(m)(4)(C), no
adjustment or action described in this Section 10.3 or in any other provision of
the Plan shall be authorized to the extent that such adjustment or action would
cause the Plan to violate Section 422(b)(1) of the Code or would cause such
option or stock appreciation right to fail to so qualify under Section
162(m)(4)(C), as the case may be, or any successor provisions thereto.
Furthermore, no such adjustment or action shall be authorized to the extent such
adjustment or action would result in short-swing profits liability under Section
16 or violate the exemptive conditions of Rule 16b-3 unless the Committee (or
the Board, in the case of Options granted to Independent Directors) determines
that the option or other award is not to comply with such exemptive conditions.
The number of shares of Common Stock subject to any option, right or award shall
always be rounded to the next whole number.

10.4. Approval of Plan by Stockholders. This Plan will be
submitted for the approval of the Company's stockholders within twelve months
after the date of the Board's initial adoption of this Plan. Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments may be granted and Restricted Stock or Deferred Stock may be awarded
prior to such stockholder approval, provided that such Options, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments shall
not be exercisable and such Restricted Stock or Deferred Stock shall not vest
prior to the time when this Plan is approved by the stockholders, and provided
further that if such approval has not been obtained at the end of said
twelve-month period, all Options, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents or Stock Payments previously granted and all Restricted
Stock or Deferred Stock previously awarded under this Plan shall thereupon be
canceled and become null and void.

10.5. Tax Withholding. The Company shall be entitled to
require payment in cash or deduction from other compensation payable to each
Optionee, Grantee or Restricted Stockholder of any sums required by federal,
state or local tax law to be withheld with respect to the issuance, vesting,
exercise or payment of any Option, Restricted Stock, Deferred Stock, Performance
Award, Stock Appreciation Right, Dividend Equivalent or Stock Payment. The
Committee (or the Board, in the case of Options granted to Independent
Directors) may in its discretion and in satisfaction of the foregoing
requirement allow such Optionee, Grantee or Restricted Stockholder to elect to
have the Company withhold shares of Common Stock otherwise issuable under such
Option or other award (or allow the return of shares of Common Stock) having a
Fair Market Value equal to the sums required to be withheld.

10.6. Loans. The Committee may, in its discretion, extend one
or more loans to key Employees in connection with the exercise or receipt of an
Option, Performance Award, Stock Appreciation Right, Dividend Equivalent or
Stock Payment granted under this Plan, or the issuance of Restricted Stock or
Deferred Stock awarded under this Plan. The terms and conditions of any such
loan shall be set by the Committee.

10.7. Forfeiture Provisions. Pursuant to its general authority
to determine the terms and conditions applicable to awards under the Plan, the
Committee (or the Board, in the case of Options granted to

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<PAGE> 54

Independent Directors) shall have the right (to the extent consistent with
the applicable exemptive conditions of Rule 16b-3) to provide, in the terms of
Options or other awards made under the Plan, or to require the recipient to
agree by separate written instrument, that (i) any proceeds, gains or other
economic benefit actually or constructively received by the recipient upon any
receipt or exercise of the award, or upon the receipt or resale of any Common
Stock underlying such award, must be paid to the Company, and (ii) the award
shall terminate and any unexercised portion of such award (whether or not
vested) shall be forfeited, if (a) a Termination of Employment, Termination of
Consultancy or Termination of Directorship occurs prior to a specified date, or
within a specified time period following receipt or exercise of the award, or
(b) the recipient at any time, or during a specified time period, engages in any
activity in competition with the Company, or which is inimical, contrary or
harmful to the interests of the Company, as further defined by the Committee (or
the Board, as applicable).

10.8. Limitations Applicable to Section 16 Persons and
Performance-Based Compensation. Notwithstanding any other provision of this
Plan, this Plan, and any Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment granted, or Restricted Stock or Deferred
Stock awarded, to any individual who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule. To the extent permitted by applicable law,
the Plan, Options, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents, Stock Payments, Restricted Stock and Deferred Stock granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule. Furthermore, notwithstanding any other provision
of this Plan, any Option, Stock Appreciation Right or performance or incentive
award described in Article VII which is granted to a Section 162(m) Participant
and is intended to qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code shall be subject to any additional limitations
set forth in Section 162(m) of the Code (including any amendment to Section
162(m) of the Code) or any regulations or rulings issued thereunder that are
requirements for qualification as performance-based compensation as described in
Section 162(m)(4)(C) of the Code, and this Plan shall be deemed amended to the
extent necessary to conform to such requirements.

10.9. Effect of Plan Upon Options and Compensation Plans. The
adoption of this Plan shall not affect any other compensation or incentive plans
in effect for the Company or any Subsidiary. Nothing in this Plan shall be
construed to limit the right of the Company (i) to establish any other forms of
incentives or compensation for Employees, Directors or Consultants of the
Company or any Subsidiary or (ii) to grant or assume options or other rights or
awards otherwise than under this Plan in connection with any proper corporate
purpose including but not by way of limitation, the grant or assumption of
options in connection with the acquisition by purchase, lease, merger,
consolidation or otherwise, of the business, stock or assets of any corporation,
partnership, limited liability company, firm or association.

10.10. Section 83(b) Election Prohibited. No Grantee, Optionee
or Restricted Stockholder may make an election under Section 83(b) of the Code
with respect to any award or grant under this Plan, without the Company's
consent.

10.11. Compliance with Laws. This Plan, the granting and
vesting of Options, Restricted Stock awards, Deferred Stock awards, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments under
this Plan and the issuance and delivery of shares of Common Stock and the
payment of money under this Plan or under Options, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments granted or
Restricted Stock or Deferred Stock awarded hereunder are subject to compliance
with all applicable federal and state laws, rules and regulations (including but
not limited to state and federal securities law and federal margin requirements)
and to such approvals by any listing, regulatory or governmental authority as
may, in the opinion of counsel for the Company, be necessary or advisable in
connection therewith. Any securities delivered under this Plan shall be subject
to such restrictions, and the person acquiring such securities shall, if
requested by the Company, provide such assurances and representations to the
Company as the Company may deem

A-26

<PAGE> 55

necessary or desirable to assure compliance with all applicable legal
requirements. To the extent permitted by applicable law, the Plan, Options,
Restricted Stock awards, Deferred Stock awards, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments granted or awarded
hereunder shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.

10.12. Titles. Titles are provided herein for convenience only
and are not to serve as a basis for interpretation or construction of this Plan.

10.13. Governing Law. This Plan and any agreements hereunder
shall be administered, interpreted and enforced under the internal laws of the
State of California without regard to conflicts of laws thereof.

10.14. Conflicts with Company's Articles of Incorporation.
Notwithstanding any other provision of this Plan, no Optionee, Grantee or
Restricted Stockholder shall acquire or have any right to acquire any Common
Stock, and shall not have other rights under this Plan, which are prohibited
under the Company's Articles of Incorporation.

[Remainder of Page Intentionally Left Blank.]

A-27
<PAGE> 56

I hereby certify that the foregoing Plan was duly adopted by
the Board of Directors of AMB Property Corporation on March 5, 1999.

Executed on this 5th day of March, 1999.

/s/ DAVID S. FRIES
---------------------------------
David S. Fries
Secretary

A-28

<PAGE> 57

IN WITNESS WHEREOF, the parties below have caused the
foregoing Plan to be approved by their officers duly authorized on this 5th day
of March, 1999.

AMB PROPERTY, L.P., a Delaware limited partnership

By: AMB Property Corporation
its general partner

By: /s/ DAVID S. FRIES
-------------------------------------------------
David S. Fries
Managing Director, General Counsel and Secretary

AMB PROPERTY II, L.P., a Delaware limited partnership

By: AMB Property Holding Corporation
its general partner

By: /s/ JOHN T. ROBERTS
-------------------------------------------------
John T. Roberts
Vice President

A-29

<PAGE> 58

AMB INVESTMENT MANAGEMENT, Inc.,
a Maryland corporation

By: /s/ BARBARA J. LINN
--------------------------------------------
Barbara J. Linn
President

AMB INVESTMENT MANAGEMENT LIMITED
PARTNERSHIP

By: AMB Investment Management, Inc.
its general partner

By: /s/ BARBARA J. LINN
-----------------------------------
Barbara J. Linn
President

A-30

<PAGE> 59

FIRST AMENDMENT TO
THE FIRST AMENDED AND RESTATED
1997 STOCK OPTION AND INCENTIVE PLAN OF
AMB PROPERTY CORPORATION AND AMB INVESTMENT MANAGEMENT, INC.
AND THEIR RESPECTIVE SUBSIDIARIES

This First Amendment (this "Amendment") to the First Amended and
Restated 1997 Stock Option and Incentive Plan of AMB Property Corporation and
AMB Investment Management, Inc. and their Respective Subsidiaries (the "Plan")
is hereby adopted pursuant to Section 10.2 of the Plan, effective as of March 5,
1999, subject to stockholder approval of this Amendment. All capitalized terms
used in this Amendment without definition have the meanings assigned to them in
the Plan.

Subsection (a) of Section 2.1 of the Plan is hereby amended to read in
its entirety as follows:

"(a) The shares of stock subject to Options, awards of
Restricted Stock, Performance Awards, Dividend Equivalents, awards of Deferred
Stock, Stock Payments or Stock Appreciation Rights shall be shares of Common
Stock. The aggregate number of such shares which may be issued upon exercise of
such Options or rights or upon any such awards under the Plan shall not exceed
Eight Million Nine Hundred Fifty Thousand (8,950,000). The shares of Common
Stock issuable upon exercise of such Options or rights or upon any such awards
may be either previously authorized but unissued shares or treasury shares."

All other provisions of the Plan remain the same.

This Amendment will be submitted for the approval of the Company's
stockholders within twelve months after the date of the Board's initial adoption
of this Amendment. Options, Performance Awards, Stock Appreciation Rights,
Dividend Equivalents or Stock Payments may be granted and Restricted Stock or
Deferred Stock may be awarded pursuant to this Amendment prior to such
stockholder approval; provided that, to the extent that the shares of Common
Stock subject to such awards exceed the number of shares of Common Stock
available under the Plan without giving effect to this Amendment, such Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents or Stock
Payments shall not be exercisable and such Restricted Stock or Deferred Stock
shall not vest prior to the time when this Amendment is approved by the
stockholders, and provided further that if such approval has not been obtained
at the end of said twelve-month period, all such Options, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments previously
granted and all such Restricted Stock or Deferred Stock previously awarded under
this Amendment in excess of the number of shares of Common Stock available under
the Plan without giving effect to this Amendment shall thereupon be canceled and
become null and void.

************************

I hereby certify that the foregoing First Amendment to the
First Amended and Restated 1997 Stock Option and Incentive Plan of AMB Property
Corporation and AMB Investment Management, Inc. and their Respective
Subsidiaries was duly adopted by the Board of Directors of AMB Property
Corporation on March 5, 1999 and by the stockholders of AMB Property Corporation
on May 7, 1999.

--------------------------
David S. Fries
Secretary

A-31
<PAGE> 60

Dear Stockholder:

Please take note of the important information enclosed with this proxy. There
are a number of issues related to the operation of the Company that require your
immediate attention.

Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.

Please mark the boxes on the proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy in the enclosed
postage paid envelope.

Alternatively, you can vote by proxy over the Internet or by telephone. See the
reverse side for instructions. The Company is a corporation organized under the
laws of the State of Maryland. Section 2-507 of the Maryland General Corporation
Law authorizes the granting of proxies over the Internet or by telephone.
Accordingly, proxies granted over the Internet or by telephone, in accordance
with the procedures set forth on this proxy card, will be valid under Maryland
law.

Sincerely,

AMB Property Corporation

DETACH HERE

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

PROXY

AMB PROPERTY CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 7, 1999

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder of AMB Property Corporation (the "Company")
acknowledges receipt of a copy of the Annual Report and the Proxy Statement
dated March 31, 1999, and, revoking any proxy heretofore given, hereby appoints
T. Robert Burke, Hamid R. Moghadam and David S. Fries, and each of them, as
proxies for the undersigned, and hereby authorizes each of them to vote all the
shares of Common Stock of the Company held of record by the undersigned on March
22, 1999, at the Annual Meeting of Stockholders to be held on May 7, 1999, or
any adjournment or postponement thereof, and otherwise to represent the
undersigned at the meeting with all powers possessed by the undersigned as if
personally present at the meeting.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED
PRIOR TO ITS EXERCISE. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS INDICATED, IT
WILL BE VOTED FOR THE NOMINEES FOR DIRECTOR LISTED IN THE PROXY STATEMENT AND
FOR THE AMENDMENT TO THE 1997 PLAN.

CONTINUED AND TO BE SIGNED ON REVERSE SIDE

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

<PAGE> 61

<TABLE>
<S> <C>
VOTE BY TELEPHONE VOTE BY INTERNET
It's fast, convenient and immediate! It's fast, convenient and your vote is
Call Toll-Free on a Touch-Tone Phone immediately confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683)

Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy Statement 1. Read the accompanying Proxy Statement
and Proxy Card. and Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). For http://www.eproxyvote.com/amb
stockholders residing outside the United 3. Enter your 14-digit Voter Control Number
States call collect on a touch-tone phone located on your Proxy Card above your name.
1-201-536-8073. 4. Follow the instructions provided.
3. Enter your 14-digit Voter Control Number
located on your Proxy Card above your name.
4. Follow the recorded instructions.
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/amb anytime!
</TABLE>
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET

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

[X] Please mark votes as in this example.

1. Election of Directors

Nomineees:

<TABLE>
<S> <C>
Douglas D. Abbey, Hamid R. Moghadam, T. Robert Burke, Daniel H. Case III, Robert H. Edelstein, Ph.D.,
Lynn M. Sedway, Jeffrey L. Skelton, Ph.D., Thomas W. Tusher, Caryl B. Welborn, Esq.

FOR WITHHELD

[ ] [ ]
</TABLE>

[ ]_____________________________________
For all nominees except as noted above

2. Approval of the amendment of the First Amended and Restated 1997 Stock Option
and Incentive Plan increasing the number of shares of AMB's Common Stock
authorized for issuance thereunder by 3,200,000 shares, from 5,750,000 to
8,950,000.

FOR AGAINST ABSTAIN

[ ] [ ] [ ]

3. In their discretion, the proxies are authorized to vote upon any other
business that may properly come before the meeting.

I AM A STOCKHOLDER MARK HERE
100 MAIN STREET FOR ADDRESS
ANYTOWN USA, 10000 CHANGE AND [ ]
NOTE AT LEFT

Please sign exactly as name appears hereon.
Joint owners should each sign. Executors,
administrators, trustees, guardians or other
fiduciaries should give full title as such.
If signing for a corporation, please sign in
full corporate name by a duly authorized
officer.

Signature:_________________________________ Date:_________________