<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM 10-Q
------------------------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 333-49163
------------------------
AMB PROPERTY, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
MARYLAND 94-3285362
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
505 MONTGOMERY ST., SAN FRANCISCO, CALIFORNIA 94111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
(415) 394-9000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
------------------------
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [X].
As of July 31, 1998, there were 89,622,515 partnership units of the
Registrant outstanding.
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<PAGE> 2
AMB PROPERTY, L.P.
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of December 31, 1
1997 and June 30, 1998 (unaudited).................
Consolidated Statements of Operations for the 2
six and three months ended June 30, 1998
(unaudited)........................................
Consolidated Statements of Cash Flows for the 3
six months ended June 30, 1998 (unaudited).........
Consolidated Statement of Partners' Capital for 4
the six months ended June 30, 1998 (unaudited).....
Notes to Consolidated Financial Statements 5
(unaudited)........................................
Item 2. Management's Discussion and Analysis of Financial 10
Condition and Results of Operations....................
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................. 17
Item 2. Changes in Securities............................. 17
Item 3. Defaults Upon Senior Securities................... 17
Item 4. Submission of Matters to a Vote of Security 17
Holders................................................
Item 5. Other Information................................. 17
Item 6. Exhibits and Reports on Form 8-K.................. 18
</TABLE>
i
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMB PROPERTY, L.P.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND JUNE 30, 1998
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
------------ ----------
<S> <C> <C>
Investments in real estate:
Land...................................................... $ 550,635 $ 654,926
Buildings and improvements................................ 1,822,516 2,163,452
Construction in progress.................................. 69,848 111,346
---------- ----------
Total investments in properties................... 2,442,999 2,929,724
Accumulated depreciation and amortization................. (4,153) (29,252)
---------- ----------
Net investments in properties.......................... 2,438,846 2,900,472
Investment in unconsolidated joint venture................ -- 67,149
---------- ----------
Net investments in real estate......................... 2,438,846 2,967,621
Cash and cash equivalents................................... 39,968 29,167
Other assets................................................ 27,441 36,318
---------- ----------
Total assets...................................... $2,506,255 $3,033,106
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Debt:
Unsecured credit facilities............................... $ 150,000 $ 137,000
Senior debt securities.................................... -- 400,000
Secured debt.............................................. 535,652 592,430
---------- ----------
Total debt........................................ 685,652 1,129,430
Other liabilities........................................... 49,350 84,508
Payable to affiliates....................................... 38,071 --
---------- ----------
Total liabilities................................. 773,073 1,213,938
Commitments and contingencies............................... -- --
Minority interests.......................................... 15,784 76,680
Partners' capital:
General Partner, 85,874,513 units outstanding............. 1,668,030 1,669,417
Limited Partners, 2,542,163 and 3,748,002 units
outstanding, respectively.............................. 49,368 73,073
---------- ----------
Total partners' capital........................... 1,717,398 1,742,490
---------- ----------
Total liabilities and partners' capital........... $2,506,255 $3,033,106
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
1
<PAGE> 4
AMB PROPERTY, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 1998
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
FOR THE SIX FOR THE THREE
MONTHS ENDED MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1998
------------- -------------
<S> <C> <C>
REVENUES
Rental revenues........................................... $ 159,003 $ 84,401
Investment management and other income.................... 1,796 613
----------- -----------
Total revenues.................................... 160,799 85,014
OPERATING EXPENSES
Property operating expenses............................... 21,231 11,227
Real estate taxes......................................... 21,273 11,025
General and administrative................................ 5,862 3,144
Interest, including amortization.......................... 27,561 15,720
Depreciation and amortization............................. 25,302 13,516
----------- -----------
Total operating expenses.......................... 101,229 54,632
----------- -----------
Income from operations before minority
interests...................................... 59,570 30,382
Minority interests' share of net income................... (1,659) (1,197)
----------- -----------
Net income........................................ $ 57,911 $ 29,185
=========== ===========
Net income available to unitholders attributable to:
General Partner........................................ $ 55,884 $ 27,978
Limited Partners....................................... 2,027 1,207
----------- -----------
$ 57,911 $ 29,185
=========== ===========
INCOME PER UNIT
Basic..................................................... $ 0.65 $ 0.32
=========== ===========
Diluted................................................... $ 0.65 $ 0.32
=========== ===========
WEIGHTED AVERAGE UNITS OUTSTANDING
Basic..................................................... 88,983,990 89,839,010
=========== ===========
Diluted................................................... 89,362,932 89,886,673
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE> 5
AMB PROPERTY, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED, DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JUNE 30, 1998
-------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................................. $ 57,911
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 25,302
Straight-line rents....................................... (5,489)
Amortization of debt premiums and financing costs......... (1,274)
Minority interests' share of net income................... 1,659
Equity in income of AMB Investment Management............. 95
Changes in assets and liabilities:
Other assets.............................................. (6,958)
Other liabilities......................................... 4,474
---------
Net cash provided by operating activities.............. 75,720
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for property acquisitions......................... (246,213)
Additions to land and building improvements................. (16,922)
Additions to tenant improvements and leasing costs.......... (4,965)
Additions to construction in progress....................... (25,319)
Acquisition of interest in unconsolidated joint venture..... (67,149)
Reduction of payable to affiliates in connection with
Formation Transactions.................................... (38,071)
---------
Net cash used in investing activities.................. (398,639)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on unsecured credit facilities................... 382,000
Borrowings on secured debt.................................. 16,914
Payments on unsecured credit facilities..................... (395,000)
Payments on secured debt.................................... (59,545)
Net proceeds from issuance of senior debt securities........ 399,166
Dividends paid to shareholders.............................. (29,413)
Distributions to minority interests......................... (2,004)
---------
Net cash provided by financing activities.............. 312,118
Net decrease in cash and cash equivalents................... (10,801)
Cash and cash equivalents at beginning of period............ 39,968
---------
Cash and cash equivalents at end of period.................. $ 29,167
=========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest.................................................. $ 26,583
=========
Property acquisitions:
Acquisitions of properties................................ $ 434,353
Assumption of secured debt................................ (99,623)
Minority interests' contributions......................... (60,371)
Limited Partner units issued.............................. (28,146)
---------
Cash paid for property acquisitions....................... $ 246,213
=========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 6
AMB PROPERTY, L.P.
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED, DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
GENERAL PARTNER LIMITED PARTNERS
------------------------ --------------------
UNITS AMOUNT UNITS AMOUNT TOTAL
---------- ---------- --------- ------- ----------
<S> <C> <C> <C> <C> <C>
DECEMBER 31, 1997............... 85,874,513 $1,668,030 2,542,163 $49,368 $1,717,398
Contributions................. -- -- 1,205,839 28,147 28,147
Net income.................... -- 55,884 -- 2,027 57,911
Reallocation.................. -- 4,328 -- (4,328) --
Distributions................. -- (58,825) -- (2,141) (60,966)
---------- ---------- --------- ------- ----------
JUNE 30, 1998................... 85,874,513 1,669,417 3,748,002 $73,073 $1,742,490
========== ========== ========= ======= ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 7
AMB PROPERTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
1. ORGANIZATION AND FORMATION
AMB Property Corporation, a Maryland corporation (the "Company"), commenced
operations as a fully integrated real estate company effective with the
completion of its initial public offering (the "IPO") on November 26, 1997. The
Company expects to be taxed as a real estate investment trust ("REIT") under
Sections 856 through 860 of the Internal Revenue Code of 1986 (the "Code"), as
amended. The Company, through its controlling interest in its subsidiary AMB
Property, L.P., a Delaware limited partnership (the "Operating Partnership"), is
engaged in the acquisition, ownership, operation, management, renovation,
expansion and development of industrial buildings and community shopping centers
in target markets nationwide. Unless the context otherwise requires, the
"Company" means AMB Property Corporation, the Operating Partnership and its
other controlled subsidiaries.
The Company and the Operating Partnership were formed shortly before
consummation of the IPO. AMB Institutional Realty Advisors, Inc., a California
corporation and registered investment advisor (the "Predecessor") formed AMB
Property Corporation, a wholly owned subsidiary, and merged with and into the
Company (the "Merger") in exchange for 4,746,616 shares of the Company's Common
Stock. In addition, the Company and the Operating Partnership acquired, through
a series of mergers and other transactions, 31.8 million rentable square feet of
industrial property and 6.3 million rentable square feet of retail property in
exchange for 65,022,185 shares of the Company's Common Stock, 2,542,163 limited
partner interests ("LP Units") in the Operating Partnership, the assumption of
debt and, to a limited extent, cash. The net assets of the Predecessor and the
properties acquired with Common Stock were contributed to the Operating
Partnership in exchange for 69,768,801 units. The purchase method of accounting
was applied to the acquisition of the properties. Collectively, the Merger and
the other formation transactions described above are referred to as the
"Formation Transactions."
On November 26, 1997, the Company completed its IPO of 16,100,000 shares of
Common Stock, $0.01 par value per share (the "Common Stock") for $21.00 per
share, resulting in gross offering proceeds of approximately $338,100. Net of
underwriters' commission and offering costs aggregating $38,068, the Company
received approximately $300,032 in proceeds from the IPO. The net proceeds of
the IPO were used to repay indebtedness, to purchase interests from certain
investors who elected not to receive shares or units in connection with the
Formation Transactions, to fund property acquisitions, and for general corporate
working capital requirements.
As of June 30, 1998, the Company owned an approximate 95.8% general partner
interest in the Operating Partnership. The remaining 4.2% limited partner
interest is owned by nonaffiliated investors. For local law purposes, properties
in certain states are owned through limited partnerships and limited liability
companies owned 99% by the Operating Partnership and 1% by a wholly owned
subsidiary of the Company. The ownership of such properties through such
entities does not materially affect the Company's overall ownership of the
interests in the properties. As the sole general partner of the Operating
Partnership, the Company has the full, exclusive and complete responsibility and
discretion in the day-to-day management and control of the Operating
Partnership.
In connection with the Formation Transactions, the Operating Partnership
formed AMB Investment Management, Inc., a Maryland corporation ("AMB Investment
Management"). The Operating Partnership purchased 100% of AMB Investment
Management's non-voting preferred stock (representing a 95% economic interest
therein). Certain executive officers of the Company collectively purchased 100%
of the Investment Management Subsidiary's voting common stock (representing a 5%
economic interest therein). The Operating Partnership accounts for its
investment in AMB Investment Management using the equity method of accounting.
AMB Investment Management was formed to succeed to the Predecessor's investment
management business of providing real estate investment management services on a
fee basis to clients.
5
<PAGE> 8
AMB PROPERTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
As of June 30, 1998, the Company owned 500 industrial buildings and retail
centers, consisting of 463 industrial buildings (the "Industrial Properties")
and 37 retail centers (the "Retail Properties") located in 28 markets throughout
the United States. The Industrial Properties, principally warehouse distribution
buildings, encompass approximately 47.7 million rentable square feet and, as of
June 30, 1998, were 95.1% leased to over 1,200 tenants. The Retail Properties,
principally grocer-anchored community shopping centers, encompass approximately
6.8 million rentable square feet and, as of the same date, were 95.0% leased to
over 900 tenants. The Industrial Properties and the Retail Properties
collectively are referred to as the "Properties."
2. INTERIM FINANCIAL STATEMENTS
The consolidated financial statements included herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Accordingly, certain information and note disclosures normally included in the
annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The consolidated financial
statements for prior periods have been reclassified to conform to current
classifications with no effect on results of operations. In the opinion of
management, the accompanying unaudited consolidated financial statements contain
all adjustments, of a normal recurring nature, necessary for a fair presentation
of the Operating Partnership's consolidated financial position and results of
operations for the interim periods.
The Operating Partnership commenced operations on November 26, 1997. As
such, no operations for 1997 are presented.
The interim results of the six and three months ended June 30, 1998 are not
necessarily indicative of the results expected for the entire year. These
financial statements should be read in conjunction with the financial statements
and the notes thereto included in AMB Property Corporation's Annual Report on
Form 10-K for the year ended December 31, 1997.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3. DEBT
In connection with the Formation Transactions, the Company assumed certain
secured debt with an aggregate principal value of $517,031 and a fair value of
$535,613. The difference between the principal value and the fair value was
recorded as a debt premium. The debt premium is being amortized into interest
expense over the term of the related debt instruments using the effective
interest method. As of June 30, 1998, the
6
<PAGE> 9
AMB PROPERTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
unamortized debt premium was $16,799. As of June 30, 1998, debt, excluding
unamortized debt premiums, consists of the following:
<TABLE>
<S> <C>
Unsecured credit facilities, variable interest at LIBOR
plus 90 basis points (6.59% at June 30, 1998), $50,000
due July 1998, remainder due November 2000............. $137,000
Senior debt securities, weighted average interest rate of
7.18%, due June 2008, June 2015 and June 2018.......... 400,000
Secured debt, varying interest rates from 4.00% to 10.38%
due November 1998 to January 2014...................... 575,631
----------
Total Debt..................................... $1,112,631
==========
</TABLE>
Secured debt generally requires monthly principal and interest payments.
The secured debt is secured by deeds of trust on certain Properties. All of the
secured debt bears interest at fixed rates, except for two loans totaling $9,173
which bear interest at variable rates. The secured debt has various financial
and non-financial covenants. Additionally, certain of the secured debt is
cross-collateralized. The weighted-average fixed interest rate on secured debt
at June 30, 1998, was 7.91%.
The Operating Partnership has a $500,000 unsecured revolving credit
agreement (the "Credit Facility") with Morgan Guaranty Trust Company of New York
as agent, and a syndicate of twelve other banks. The Credit Facility has a term
of three years, and is subject to a fee that accrues on the daily average
undrawn funds, which varies between 15 and 25 basis points of the undrawn funds
based on the Operating Partnership's credit rating (15 basis points at June 30,
1998). The Credit Facility has various financial and non-financial covenants. In
addition, in April 1998, the Operating Partnership obtained a $50,000 unsecured
acquisition facility from NationsBank, bearing interest at LIBOR plus 90 basis
points (6.59% at June 30, 1998). The $50,000 unsecured acquisition facility was
repaid in July 1998.
Capitalized interest related to construction projects for the six and three
months ended June 30, 1998, was $3,098 and $1,845, respectively.
The scheduled maturities of the secured debt as of June 30, 1998 are as
follows:
<TABLE>
<S> <C>
1998.............................................. $ 16,939
1999.............................................. 11,188
2000.............................................. 13,192
2001.............................................. 38,698
2002.............................................. 54,364
Thereafter........................................ 441,250
--------
$575,631
========
</TABLE>
7
<PAGE> 10
AMB PROPERTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
In June 1998, the Operating Partnership issued $400,000 aggregate principal
amount of unsecured notes ("Senior Debt Securities") in an underwritten public
offering, the net proceeds of which were used to repay amounts outstanding under
the unsecured credit facilities. As of June 30, 1998, the Senior Debt Securities
consisted of the following:
<TABLE>
<CAPTION>
PRINCIPAL INTEREST
AMOUNT RATE MATURITY
--------- -------- ---------
<S> <C> <C> <C>
2008 Notes.................................. $175,000 7.10% June 2008
2015 Notes -- Putable/Callable in 2005...... 100,000 6.90 June 2015
2018 Notes.................................. 125,000 7.50 June 2018
-------- ----
Total/Weighted Average...................... $400,000 7.18%
======== ====
</TABLE>
Interest on the Senior Debt Securities is payable semiannually in each June
and December commencing December 1998. The 2015 notes are putable and callable
in June 2005.
4. MINORITY INTERESTS
Minority interests represent interests held by certain third parties (some
of which are Institutional Alliance Partners(TM)) in 14 real estate joint
ventures that are consolidated for financial reporting purposes. Such
investments are consolidated because (i) the Company owns a majority interest,
or (ii) the Company holds significant control over the entity through a 50% or
greater ownership interest combined with the ability to control major operating
decisions such as approval of budgets, selection of property managers and
changes in financing.
5. PARTNERS' CAPITAL
On June 19, 1998, the Operating Partnership declared a quarterly cash
distribution of $0.3425 per unit, payable on July 9, 1998, to unitholders of
record as of June 30, 1998.
6. INCOME PER UNIT
The Operating Partnership's only dilutive securities outstanding for the
six and three months ended June 30, 1998 were stock options issued under the
Company's stock incentive plan. The effect of the stock options was to increase
weighted average units outstanding by 347,662 and 378,943 units for the six and
three months ended June 30, 1998, respectively. Such dilution was computed using
the treasury stock method.
8
<PAGE> 11
AMB PROPERTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
7. PRO FORMA INFORMATION
The following summary unaudited pro forma financial information for the six
and three months ended June 30, 1997 has been prepared as if the Formation
Transactions, the IPO (as described in Note 1) and property acquisitions and
dispositions during the year ended December 31, 1997 had occurred on January 1,
1997. The pro forma financial information does not purport to present the
consolidated results that would have occurred if the aforementioned transactions
had been consummated on January 1, 1997, nor does it purport to be indicative of
the consolidated results of operations for future periods.
<TABLE>
<CAPTION>
FOR THE SIX FOR THE THREE
MONTHS ENDED MONTHS ENDED
JUNE 30, 1997 JUNE 30, 1997
------------- -------------
<S> <C> <C>
Total revenues.................................... $ 139,232 $ 70,610
Income from operations before minority
interests....................................... 49,809 25,482
Net income........................................ 48,479 24,462
Income Per Unit
Basic........................................... $ 0.55 $ 0.28
=========== ===========
Diluted......................................... $ 0.55 $ 0.28
=========== ===========
Weighted Average Units Outstanding
Basic........................................... 88,416,676 88,416,676
=========== ===========
Diluted......................................... 88,416,676 88,416,676
=========== ===========
</TABLE>
8. SUBSEQUENT EVENTS
On July 27, 1998, the Company sold 4,000,000 shares of 8.5% Series A
cumulative redeemable preferred stock for $100,000 in an underwritten public
offering. The net proceeds of $96,850 from the offering were used to repay
borrowings under the Credit Facility, for property acquisitions and for other
general corporate purposes.
9
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of the consolidated financial
condition and results of operations should be read in conjunction with the Notes
to Consolidated Financial Statements. Statements contained herein which are not
historical facts may be forward looking statements. Forward-looking statements
can be identified by the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "should," "seeks," "approximately," "intends,"
"plans," "pro forma," "estimates," or "anticipates" or the negative thereof or
other variations thereof or comparable terminology, or by discussions of
strategy, plans or intentions. Forward-looking statements involve numerous risks
and uncertainties and should not be relied upon as predictions of future events,
and there can be no assurance that the events or circumstances reflected in such
forward-looking statements will be achieved or occur. The following factors,
among others, could cause actual results and future events to differ materially
from those set forth or contemplated in the forward-looking statements: defaults
or non-renewal of leases, increased interest rates and operating costs, failure
to obtain necessary outside financing, difficulties in identifying properties to
acquire and in effecting acquisitions, failure to successfully integrate
acquired properties and operations, risks and uncertainties affecting property
development and construction (including, without limitation, construction
delays, cost overruns, inability to obtain necessary permits and public
opposition to such activities), the Company's failure to qualify and maintain
its status as a real estate investment trust under the Internal Revenue Code of
1986, as amended, environmental uncertainties, risks related to natural
disasters, financial market fluctuations, changes in real estate and zoning laws
and increases in real property tax rates. The success of the Company also
depends upon economic trends generally, including interest rates, income tax
laws, governmental regulation, legislation, population changes and those risk
factors discussed in the section entitled "Business -- Business Risks" in the
Company's Annual Report on Form 10-K for fiscal year ended December 31, 1997.
Readers are cautioned not to place undue reliance on forward-looking statements,
which reflect management's analysis only and speak only as of the date hereof.
THE OPERATING PARTNERSHIP
The Operating Partnership is a fully integrated real estate company engaged
in the ownership, operation, management, acquisition, renovation, expansion and
development of industrial buildings and community shopping centers in target
markets nationwide.
INDUSTRIAL AND RETAIL PROPERTIES BY REGION
AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
INDUSTRIAL PROPERTIES RETAIL PROPERTIES TOTAL
------------------------------ --------------------------- ---------------------------------
NUMBER RENTABLE NUMBER RENTABLE NUMBER RENTABLE
OF SQUARE % OF OF SQUARE % OF OF BUILDINGS SQUARE % OF
REGION BUILDINGS FEET TOTAL CENTERS FEET TOTAL AND CENTERS FEET TOTAL
------ --------- ---------- ----- ------- --------- ----- ------------ ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Eastern.............. 77 9,864,840 20.7% 4 1,272,968 18.6% 81 11,137,808 20.4%
Midwestern........... 103 11,868,394 24.9 4 710,833 10.4 107 12,579,227 23.1
Southern............. 142 13,169,885 27.6 12 1,957,051 28.6 154 15,126,936 27.7
Western.............. 141 12,772,141 26.8 17 2,907,986 42.4 158 15,680,127 28.8
--- ---------- ----- -- --------- ----- --- ---------- -----
Total....... 463 47,675,260 100.0% 37 6,848,838 100.0% 500 54,524,098 100.0%
=== ========== ===== == ========= ===== === ========== =====
</TABLE>
ACQUISITION AND DEVELOPMENT ACTIVITY
During the second quarter, the Operating Partnership invested $180.4
million in operating properties, consisting of 48 industrial buildings
aggregating 3.7 million square feet, including $29.7 million for the Operating
Partnership's share of co-investments with its Institutional Alliance
Partners(TM) and $62.0 million of properties purchased from its Institutional
Alliance Partners(TM).
The Operating Partnership initiated five new development projects during
the quarter, with a total estimated cost of $81.4 million upon completion in
projects aggregating 1.6 million square feet. As of June 30, 1998, the Operating
Partnership had 13 industrial projects under development with a total estimated
10
<PAGE> 13
investment of $227.1 million upon completion in 5.2 million square feet, and
three retail projects under development representing an estimated investment of
$81.5 million upon completion in 654,400 square feet.
At June 30, 1998, the Operating Partnership owned and operated a total of
500 industrial buildings and retail centers totaling 54.5 million square feet in
28 markets nationwide. In addition, the Operating Partnership operated 4.6
million square feet of property on behalf of investment management clients.
INCREASED PRESENCE IN KEY MARKETS
The Operating Partnership continued to execute its research-based target
market strategy by selectively expanding its presence in key markets nationwide.
DALLAS: The Operating Partnership increased its presence in this major
distribution market by 27% to 4.8 million square feet with the addition of
1.0 million square feet of existing industrial space. In addition, the
Operating Partnership currently has three development projects underway in
the Dallas/Fort Worth market, including two initiated in the second quarter
and the 205,000 square foot air cargo facility on the tarmac of the
Dallas/Forth Worth Airport which was initiated in the first quarter of 1998
and is 100% pre-leased.
NORTHERN NEW JERSEY: The Operating Partnership increased its portfolio in
this active distribution market by 35% with the addition of 626,500 square
feet in a new industrial development project with Development Alliance
Partner(TM) Trammell Crow.
BALTIMORE/WASHINGTON, D.C.: The Operating Partnership doubled its presence
in this key distribution market with the addition of 963,100 square feet in
seven industrial buildings. The Operating Partnership now owns 1.9 million
square feet in this market.
Further investments in existing properties in excess of 400,000 square feet
were made in existing Operating Partnership markets, including Minneapolis
(516,000 square feet), Atlanta (469,100 square feet), and Houston (418,700
square feet).
STRATEGIC ALLIANCE PROGRAMS(TM)
The Operating Partnership has been a leader in systematically forming
alliances with local and regional real estate experts through its Strategic
Alliance Programs(TM).
DEVELOPMENT ALLIANCE PROGRAM(TM): The Operating Partnership's strategy for
its Development Alliance Program(TM) is to enhance its development
capability by forming alliances with development firms with a strong local
presence and expertise.
During the second quarter, the Operating Partnership initiated two
development projects with Development Alliance Partner(TM) Trammell Crow: a
$29.0 million investment in a 626,500 square foot project adjacent to the
New Jersey Turnpike and a $17.3 million investment in a 443,200 square foot
project in Orlando Central Park (the dominant industrial park in Orlando).
The Operating Partnership added two new Development Alliance Partners(TM)
during the quarter: Gale & Wentworth, one of New Jersey's most prominent
real estate organizations, who will source, develop, and manage industrial
projects in New Jersey; and National Development of New England, one of the
premier commercial developers in New England, with whom the Operating
Partnership initiated a 415,000 square foot industrial project during the
quarter.
UPREIT ALLIANCE PROGRAM(TM): Through its UPREIT Alliance Program(TM), the
Operating Partnership issues operating partnership units in exchange for
properties, thus providing additional growth for the portfolio. The
Operating Partnership expanded its UPREIT Alliance Program(TM) in the
second quarter through the acquisition of a 153,600 square foot industrial
property in Alsip, Illinois (a submarket of Chicago) and a 269,800 square
foot property in Atlanta. The Operating Partnership believes that UPREIT
Alliance Partners(TM), who can benefit from a tax advantaged transaction
structure, have been, and will continue to be, an attractive source of new
acquisitions.
11
<PAGE> 14
INSTITUTIONAL ALLIANCE PROGRAM(TM): The Operating Partnership's strategy
for its Institutional Alliance Program(TM) is to form institutional
alliances through the co-investment program of AMB Investment Management to
provide access to private capital, including during those times when the
public markets are less attractive. Two acquisitions were made through this
program during the second quarter, with a total acquisition cost of $59.4
million, of which $29.7 million was co-invested by the Operating
Partnership: a 1,019,200 square foot industrial warehouse portfolio in
Dallas/Fort Worth and a 516,000 square foot portfolio in Minneapolis. The
Operating Partnership's long-standing relationships with institutional
investors is also a source of new acquisitions. During the quarter, the
Operating Partnership invested $62.0 million in industrial properties
totaling 1.6 million square feet through such relationships.
During the quarter, the Operating Partnership initiated a comprehensive
branding program intended to support the expansion of the Strategic Alliance
Programs(TM) and to establish consistency for all customers and users of AMB
services. The Company intends to continue its program of managing its
relationships with local vendors to take advantage of the economies of scale of
a nationwide portfolio.
RESULTS OF OPERATIONS
Because the Operating Partnership commenced operations on November 26, 1997
upon consummation of the Formation Transactions and the IPO, a discussion of its
results as compared to 1997 is not applicable; however, a separate discussion of
the historical operations of the Properties for the comparative periods prior to
the IPO is presented below. The historical results of operations of the
Properties for periods prior to November 26, 1997 include Properties that were
managed by the Predecessor and exclude the results of four properties that were
contributed to the Operating Partnership in the Formation Transactions that were
not previously managed by the Predecessor.
The historical property financial data presented herein show significant
increases in revenues and expenses principally attributable to substantial
portfolio growth. As a result, the Operating Partnership does not believe the
year-to-year financial data are comparable to prior periods. Therefore, the
analysis below shows (i) changes resulting from Properties that were owned as of
January 1, 1997, excluding development projects, (the "Same Store Properties")
and (ii) changes attributable to acquisition and development activity during
1997 and 1998. For the comparison between the six and three month periods ended
June 30, 1998 and 1997, the Same Store Properties consist of properties
aggregating 30.5 million square feet. The Operating Partnership's future
financial condition and results of operations, including rental revenues, may be
impacted by the acquisition of additional properties. No assurance can be given
that the past trends of revenues, expenses or income of the Operating
Partnership will continue in the future at their historical rates, and any
variation therefrom may be material.
PROPERTIES -- SIX AND THREE MONTHS ENDED JUNE 30, 1998 AND 1997
Rental revenues. Rental revenues, including straight-line rents, tenant
reimbursements and other property related income, increased by $49.5 and $28.5
million, or 44% and 50%, for the six and three months ended June 30, 1998, to
$160.8 and $85.0 million as compared with the same periods in 1997.
Approximately $7.0 and $3.5 million, or 14% and 12% of this increase, was
attributable to Same Store Properties, with the remaining $42.5 and $25.0
million attributable to Properties acquired in 1997 and 1998, respectively. The
growth in rental revenues in Same Store Properties resulted primarily from the
incremental effect of rental rate increases, changes in occupancy and
reimbursement of expenses. During the trailing 12 months ended June 30, 1998,
such increase in average base rents (cash basis) was 12.1% on 7.0 million square
feet leased.
Property operating expenses and real estate taxes. Property operating
expenses, including asset management costs and real estate taxes, increased by
$8.2 and $4.6 million, or 24% and 26%, for the six and three months ended June
30, 1998, to $42.5 and $22.3 million as compared with the same periods in 1997.
Same Store Properties operating expenses decreased by approximately $0.6 and
$0.2 million, while operating expenses attributable to Properties acquired in
1998 and 1997 added $8.8 and $4.8 million, respectively. The change in Same
Store Properties operating expenses and real estate taxes relates to increases
in Same Store Properties real estate taxes and insurance expense of
approximately $0.2 and $0.1 million from 1997 to 1998,
12
<PAGE> 15
offset by decreases in Same Store Properties other property operating expenses
(excluding real estate taxes and insurance) of approximately $0.8 and $0.3
million from 1997 to 1998. The decrease in other property operating expenses is
attributable to lower asset management costs in 1998 as compared to 1997
resulting from the change in ownership structure.
LIQUIDITY AND CAPITAL RESOURCES
The Operating Partnership expects that its principal sources of working
capital and funding for acquisitions, developments, expansion and renovation of
Properties will include its Credit Facility, permanent secured debt financing,
proceeds from public and private unsecured debt offerings, proceeds from public
and private equity offerings (including issuances of Units) and cash flows
provided by operations. Management believes that its sources of working capital
and its ability to access private and public debt and equity capital are
adequate to continue to meet liquidity requirements for the foreseeable future.
CAPITAL RESOURCES
The Operating Partnership has a $500 million unsecured revolving credit
agreement with Morgan Guaranty Trust Company of New York, as agent, and a
syndicate of twelve other banks. The Credit Facility has a term of three years
and is subject to a fee that accrues on the daily average undrawn funds, which
varies between 15 and 25 basis points (currently 15 basis points) of the undrawn
funds based on the Company's credit rating. The Operating Partnership uses the
Credit Facility principally for acquisitions and for general working capital
requirements. Borrowings under the Credit Facility bear interest at LIBOR plus
90 to 120 basis points (currently LIBOR plus 90 basis points), depending on the
Company's debt rating at the time of such borrowings. As of June 30, 1998, the
outstanding balance on the Credit Facility was $87.0 million and bore interest
at LIBOR plus 90 basis points (6.59% as of such date). Monthly debt service
payments on the Credit Facility are interest only. The Credit Facility matures
in November 2000. The total amount available under the Credit Facility
fluctuates based upon the borrowing base, as defined in the agreement governing
the Credit Facility. At June 30, 1998, the maximum amount available under the
Credit Facility was approximately $413.0 million. In addition, in April 1998,
the Company obtained a $50.0 unsecured acquisition facility from NationsBank,
bearing interest at LIBOR plus 90 basis points (6.59% at June 30, 1998). The
$50.0 unsecured acquisition facility was repaid in July 1998.
In April 1998, the Operating Partnership received credit ratings for its
unsecured debt of Baa1 from Moody's Investors Service, BBB from Standard &
Poor's Corporation and BBB+ from Duff & Phelps Credit Rating Co. As a result of
the receipt of the investment-grade credit ratings, the interest rate on the
Credit Facility was reduced by 20 basis points to the current rate of LIBOR plus
90 basis points.
In June 1998, the Operating Partnership issued $400,000 aggregate principal
amount of unsecured notes ("Senior Debt Securities") in an underwritten public
offering, the net proceeds of which were used to repay amounts outstanding under
the Credit Facility. The Senior Debt Securities mature in June 2008, June 2015
and June 2018 and bear interest at a weighted average rate of 7.18%, which is
payable in June and December of each year, commencing in December 1998. The 2015
notes are putable and callable in June 2005.
In connection with the Formation Transactions and property acquisitions
consummated subsequent thereto, the Operating Partnership has assumed various
mortgages and other secured debt. As of June 30, 1998, the aggregate principal
amount of such secured debt was $575.6 million, excluding unamortized debt
premiums of $16.8 million. The secured debt bears interest at rates varying from
4.00% to 10.38% per annum (with a weighted average of 7.91%) and final maturity
dates ranging from November 1998 to January 2014.
As of June 30, 1998, the Operating Partnership's total outstanding debt was
approximately $1.1 billion, including unamortized debt premiums of approximately
$16.8 million. See Notes to Consolidated Financial Statements. The total amount
of debt to be repaid during the remainder of 1998 is approximately $16.9
million, including scheduled principal amortization of approximately $3.3
million.
In order to maintain financial flexibility and facilitate the rapid
deployment of capital through market cycles, the Operating Partnership presently
intends to operate with a debt-to-total market capitalization ratio of less than
45%. Additionally, the Operating Partnership presently intends to continue to
structure its balance
13
<PAGE> 16
sheet in order to maintain an investment grade rating on its senior unsecured
debt. As of June 30, 1998, the Operating Partnership's debt-to-total market
capitalization ratio was approximately 34.2%.
LIQUIDITY
As of June 30, 1998, the Operating Partnership had approximately $29.2
million in cash and cash equivalents and $413.0 million of additional available
borrowings under the Credit Facility. Additionally, on July 20, 1998, the
Company sold $100 million of Series A preferred stock in an underwritten public
offering, the net proceeds of which were contributed to the Operating
Partnership by the Company and used to repay outstanding borrowings on its
Credit Facility.
The Operating Partnership intends to use cash from operations and available
borrowings under its Credit Facility as well as net proceeds from future debt or
equity offerings, if any, to fund property acquisitions, development activities,
and capital expenditures and to provide for general working capital
requirements.
On June 19, 1998, the Operating Partnership declared a quarterly cash
distribution of $0.3425 per unit, payable on July 9, 1998 to unitholders of
record on June 30, 1998.
The anticipated size of the Operating Partnership's distributions, using
only cash from operations, will not allow it to retire all of its debt as it
comes due. Therefore, the Company intends to also repay maturing debt with net
proceeds from future debt and/or equity financings. No assurance can be given,
however, that future financings will be available to the Operating Partnership
or that the terms of any such financings will be favorable from the Operating
Partnership's perspective.
CAPITAL COMMITMENTS
In addition to recurring capital expenditures and costs to renew or
re-tenant space, the Operating Partnership is currently in the process of
renovating, expanding or developing 16 projects at a total estimated cost of
$308.6 million upon completion. The Operating Partnership presently expects to
fund these expenditures with cash from operations, borrowings under the Credit
Facility or debt or equity issuances. Other than these capital items, the
Operating Partnership has no material capital commitments. During the period
from January 1, 1998 to June 30, 1998, the Operating Partnership invested $415.5
million in 104 industrial buildings, aggregating 10.2 million rentable square
feet. The acquisitions were funded through borrowings under the Credit Facility,
cash, debt assumption of approximately $99.6 million, co-investments by
Institutional Alliance Partners(TM) of approximately $60.3 million and the
issuance of LP Units with a value of approximately $28.2 million at the date of
issuance. The Operating Partnership expects that its funds from operations and
borrowings under its Credit Facility will be sufficient to meet expected capital
commitments for the next 12 months.
YEAR 2000 COMPLIANCE
Many computer programs have been written using two digits rather than four
to define the applicable year. Computer programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. This "year 2000 issue" could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices or engage in similar normal
business activities.
The Operating Partnership's current financial systems adequately provide
for a four-digit year and management believes the year 2000 issue will not
materially affect its business operations or financial condition. Additionally,
the Operating Partnership does not expect that the year 2000 issue will
materially affect its operations due to problems encountered by its suppliers,
customers and lenders.
FUNDS FROM OPERATIONS
Management believes that Funds from Operations ("FFO"), as defined by
NAREIT, is an appropriate measure of performance for an equity REIT. While FFO
is a relevant and widely used measure of operating performance of REITs, it does
not represent cash flow from operations or net income as defined by GAAP,
14
<PAGE> 17
and it should not be considered as an alternative to those indicators in
evaluating liquidity or operating performance. Further, FFO as disclosed by
other REITs may not be comparable.
The following table reflects the calculation of the Operating Partnership's
FFO for the six and three months ended June 30, 1997 and 1998. The 1997 FFO was
prepared on a pro forma basis (giving effect to the completion of the Formation
Transactions, the IPO, and certain 1997 property acquisitions and dispositions)
as if they had occurred on January 1, 1997 (dollars in thousands).
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------------ ------------------------------
1997 (PRO FORMA) 1998 1997 (PRO FORMA) 1998
---------------- ----------- ---------------- -----------
<S> <C> <C> <C> <C>
Income from operations before minority
interests............................ $ 25,482 $ 30,382 $ 49,809 $ 59,570
Real estate related depreciation and
amortization:
Total depreciation and
amortization...................... 11,472 13,516 23,238 25,302
Furniture, fixtures and equipment
depreciation...................... (43) (111) (86) (215)
FFO attributable to minority
interests(1)(2)...................... (400) (1,513) (951) (2,088)
----------- ----------- ----------- -----------
FFO(1)................................. $ 36,511 $ 42,274 $ 72,010 $ 82,569
=========== =========== =========== ===========
Weighted average units outstanding
(diluted)............................ 88,416,676 89,886,673 88,416,676 89,362,932
=========== =========== =========== ===========
</TABLE>
- ---------------
(1) The White Paper on Funds from Operations approved by the Board of Governors
of the National Association of Real Estate Investment Trusts ("NAREIT") in
March 1995 (the "White Paper") defines Funds from Operations as net income
(loss) (computed in accordance with GAAP), excluding gains (or losses) from
debt restructuring and sales of properties, plus real estate related
depreciation and amortization. Management considers FFO an appropriate
measure of performance of an equity REIT because it is predicated on cash
flow analyses. The Operating Partnership computes FFO in accordance with
standards established by the White Paper, which may differ from the
methodology for calculating FFO utilized by other REITs and, accordingly,
may not be comparable to such other REITs. FFO should not be considered as
an alternative to net income (determined in accordance with GAAP) as an
indicator of financial performance or to cash flow from operating activities
(determined in accordance with GAAP) as a measure of liquidity, nor is it
indicative of funds available to fund cash needs, including the ability to
make distributions.
(2) Represents FFO attributable to minority interests in consolidated joint
ventures for the period presented, which has been computed as minority
interests' share of net income plus minority interests' share of real
estate-related depreciation and amortization of the consolidated joint
ventures for such period.
TENANT RETENTION RATES AND RENT INCREASES
The following table sets forth information relating to tenant retention
rates and rent increases on renewal and re-tenanted space for the Industrial
Properties and the Retail Properties for the periods presented.
<TABLE>
<CAPTION>
YEARS ENDED FOR THE THREE FOR THE SIX
DECEMBER 31, MONTHS ENDED MONTHS ENDED
-------------------- JUNE 30, JUNE 30, WEIGHTED
1995 1996 1997 1998 1998 AVERAGE
---- ---- ---- ------------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Industrial Properties
Retention rate.......... 67.9% 79.2% 69.5% 88.1% 82.5% 74.7%
Rent increases.......... 4.8% 4.7% 13.0% 21.2% 13.6% 11.4%
Retail Properties
Retention rate.......... 63.5% 88.4% 87.8% 82.8% 84.7% 83.3%
Rent increases.......... 3.2% 5.4% 10.1% 20.3% 23.2% 15.9%
</TABLE>
15
<PAGE> 18
RECURRING TENANT IMPROVEMENTS AND LEASING COMMISSIONS PER SQUARE FOOT LEASED
The table below summarizes for the Industrial Properties and the Retail
Properties, separately, the recurring tenant improvements and leasing
commissions per square foot leased for the periods presented. The recurring
tenant improvements and leasing commissions represent costs incurred to lease
space after the initial lease term of the initial tenant, excluding costs
incurred to relocate tenants as part of a re-tenanting strategy. The tenant
improvements and leasing commissions set forth below are not necessarily
indicative of future tenant improvements and leasing commissions.
<TABLE>
<CAPTION>
YEARS ENDED FOR THE THREE FOR THE SIX
DECEMBER 31, MONTHS ENDED MONTHS ENDED
--------------------- JUNE 30, JUNE 30, WEIGHTED
1995 1996 1997 1998 1998 AVERAGE
----- ----- ----- ------------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Industrial Properties
Expenditures for renewed square foot
leased.............................. $0.91 $0.93 $1.05 $0.69 $0.72 $0.89
Expenditures for re-tenanted square
foot leased......................... 1.75 1.97 1.62 2.69 2.32 1.82
Weighted average.................... 1.32 1.29 1.30 1.00 0.99 1.23
Retail Properties
Expenditures for renewed square foot
leased.............................. $5.53 $4.72 $4.25 $1.19 $1.55 $3.52
Expenditures for re-tenanted square
foot leased......................... 5.37 6.53 7.92 2.00 4.50 7.10
Weighted average.................... 5.46 5.61 6.41 1.25 1.78 5.04
</TABLE>
OCCUPANCY AND AVERAGE BASE RENT
The table below sets forth weighted average occupancy rates and average
base rent per square foot, based on square feet leased, of the Industrial
Properties and the Retail Properties for the periods presented.
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------- AS OF
1995 1996 1997 JUNE 30, 1998
------ ------ ------ -------------
<S> <C> <C> <C> <C>
Industrial Properties
Occupancy rate at period end...................... 97.3% 97.2% 95.7% 95.1%
Average base rent per square foot (1)............. $ 3.43 $ 3.81 $ 4.26 $ 4.38
Retail Properties
Occupancy rate at period end...................... 92.4% 92.4% 96.1% 95.0%
Average base rent per square foot (1)............. $10.46 $11.32 $11.98 $11.85
</TABLE>
- ---------------
(1) Average base rent per square foot represents the total annualized
contractual base rental revenue for the period divided by the average
occupied square feet during the period.
16
<PAGE> 19
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of June 30, 1998, there were no pending legal proceedings to which the
Operating Partnership is a party or of which any of its Properties is the
subject, the adverse determination of which in the view of management would be
anticipated to have a material adverse effect upon the Operating Partnership's
financial condition and results of operations.
ITEM 2. CHANGES IN SECURITIES
During the three months ended June 30, 1998, the Operating Partnership
issued 99,395 limited partner interests ("LP Units") in consideration for the
acquisition of certain properties. Holders of the LP Units may redeem part or
all of their LP Units for cash, or at the election of the Operating Partnership,
exchange such LP Units for shares of Common Stock on a one-for-one basis. This
redemption/exchange right may not be exercised prior to April 1999.
The issuance of LP Units in connection with the aforementioned acquisitions
constituted private placements of securities which were exempt from the
registration requirement of the Securities Act of 1933, as amended, pursuant to
Section 4(2) and Rule 506 of Regulation D promulgated thereunder.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
17
<PAGE> 20
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4.1(1) Form of Second Amended and Restated Agreement of Limited
Partnership of AMB Property, L.P.
4.2(2) Indenture by and among the Registrant, the Company and State
Street Bank and Trust Company of California, N.A., as
trustee.
4.3(2) First Supplemental Indenture, by and among the Company, the
Registrant and State Street Bank and Trust Company of
California, N.A., as trustee; Second Supplemental Indenture,
by and among the Company, the Registrant and State Street
Bank and Trust Company of California, N.A., as trustee; and
Third Supplemental Indenture, by and among the Company, the
Registrant and State Street Bank and Trust Company of
California, N.A., as trustee.
4.4(2) Specimen of 7.10% Notes due 2008.
4.5(2) Specimen of 7.50% Notes due 2018.
4.6(2) Specimen of 6.90% Reset Put Securities due 2015.
10.1(3) Amended Credit Agreement between AMB Property, L.P. and
NationsBank of Texas, N.A. dated April 16, 1998 deleting
subsidiary guarantees.
27.1(3) Financial Data Schedule -- AMB Property, L.P.
</TABLE>
- ---------------
(1) Previously filed as an exhibit to Registration Statement on Form S-11 (No.
333.58107) and incorporated herein by reference.
(2) Previously filed as an exhibit to Registration Statement on Form S-11 (No.
333.49163) and incorporated herein by reference.
(3) Filed herewith.
(b) Reports on Form 8-K:
None.
18
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMB PROPERTY, L.P.
Registrant
By: AMB Property Corporation,
its general partner
Date August 14, 1998 By: /s/ HAMID R. MOGHADAM
------------------------------------
Hamid R. Moghadam
President and Chief Executive
Officer,
Director (Principal Executive
Officer)
Date August 14, 1998 And: /s/ S. DAVIS CARNIGLIA
-----------------------------------
S. Davis Carniglia
Chief Financial Officer,
Managing Director
(Principal Financial Officer)
Date August 14, 1998 And: /s/ MICHAEL A. COKE
-----------------------------------
Michael A. Coke
Director of Financial Management
And Reporting, Chief Accounting
Officer (Principal Accounting
Officer)
19
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibits Description
- -------- -----------
<S> <C>
10.1 Amended Credit Agreement between AMB Property, L.P. and
NationsBank of Texas, N.A. dated April 16, 1998 deleting
subsidiary guarantees.
27.1 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.1
- --------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
dated as of April 16, 1998
Between
AMB PROPERTY, L.P.
and
NATIONSBANK OF TEXAS, N.A.
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1. DEFINITIONS ...................................................................... 1
SECTION 1.1 Definitions ............................................................. 1
SECTION 1.2 Accounting Terms and Determinations ..................................... 4
SECTION 1.3 Types of Borrowings ..................................................... 4
SECTION 1.4 Effect of Incorporation by Reference .................................... 4
ARTICLE 2. THE CREDIT ....................................................................... 5
SECTION 2.1 Commitment to Lend ...................................................... 5
SECTION 2.2 Notice of Borrowing ..................................................... 5
SECTION 2.3 [Reserved.] ............................................................. 5
SECTION 2.4 Notes ................................................................... 5
SECTION 2.5 Maturity of Loans ....................................................... 5
SECTION 2.6 Interest Rates .......................................................... 6
SECTION 2.7 Loan Fee ................................................................ 6
SECTION 2.8 Mandatory Expiration .................................................... 6
SECTION 2.9 [Reserved.] ............................................................. 6
SECTION 2.10 Optional Prepayments .................................................... 6
SECTION 2.11 General Provisions as to Payments ....................................... 6
SECTION 2.12 Funding Losses .......................................................... 6
SECTION 2.13 Computation of Interest and Fees ........................................ 6
SECTION 2.14 Use of Proceeds ......................................................... 6
ARTICLE 3. CONDITIONS ....................................................................... 7
SECTION 3.1 Closing ................................................................. 7
SECTION 3.2 Borrowings .............................................................. 9
ARTICLE 4. REPRESENTATIONS AND WARRANTIES ................................................... 10
ARTICLE 5. AFFIRMATIVE AND NEGATIVE COVENANTS ............................................... 11
ARTICLE 6. DEFAULTS ......................................................................... 11
SECTION 6.1 Events of Default ....................................................... 11
SECTION 6.2 Rights and Remedies ..................................................... 11
SECTION 6.3 Notice of Default ....................................................... 12
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE 7. [Reserved].........................................................................12
ARTICLE 8. CHANGE IN CIRCUMSTANCES............................................................12
ARTICLE 9. MISCELLANEOUS......................................................................12
SECTION 9.1 Notices...................................................................12
SECTION 9.2 No Waivers................................................................12
SECTION 9.3 Expenses; Indemnification.................................................12
SECTION 9.4 Set-Offs..................................................................13
SECTION 9.5 Amendments and Waivers....................................................13
SECTION 9.6 Successors and Assigns....................................................13
SECTION 9.7 [Reserved]................................................................13
SECTION 9.8 Governing Law; Submission to Jurisdiction.................................13
SECTION 9.9 Marshaling; Recapture.....................................................14
SECTION 9.10 Counterparts; Integration; Effectiveness..................................14
SECTION 9.11 WAIVER OF JURY TRIAL......................................................14
SECTION 9.12 Survival..................................................................14
SECTION 9.13 Domicile of Loans.........................................................14
SECTION 9.14 Limitation of Liability...................................................14
SECTION 9.15 Recourse..................................................................15
SECTION 9.16 Confidentiality...........................................................15
SECTION 9.17 Effect of Loan Documents on Existing Credit Agreement.....................16
</TABLE>
EXHIBITS
Exhibit A Note
Exhibit B [Reserved]
Exhibit C [Reserved]
Exhibit D [Reserved]
Exhibit E Subsidiary Guaranty
-ii-
<PAGE> 4
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT is dated as of April 16, 1998 by
and between AMB PROPERTY, L.P., a Delaware limited partnership (the "Borrower"),
and NATIONSBANK OF TEXAS, N.A. ("Lender").
RECITALS
WHEREAS, Borrower and MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Agent, COMMERZBANK AKTIENGESELLSCHAFT, LOS ANGELES BRANCH, FLEET NATIONAL
BANK, NATIONSBANK OF TEXAS, N.A. and PNC BANK, NATIONAL ASSOCIATION, as
Co-Agents, and certain other banks entered into that certain revolving credit
facility upon the terms and conditions set forth in that certain Second Amended
and Restated Revolving Credit Agreement, dated as of November 26, 1997 (the
"Existing Credit Agreement"), and
WHEREAS, the Borrower and the Lender wish to enter into a
revolving three month bridge credit facility upon the terms and conditions set
forth in this Revolving Credit Agreement (the "Agreement"), as hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties hereby agree as follows:
AGREEMENT
This Agreement shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and assigns, and shall be
deemed to be effective as of the date hereof.
ARTICLE 1.
DEFINITIONS
SECTION 1.1 Definitions. Any term capitalized in this Agreement and not
defined herein shall have the definition given to it in Section 1.1 of the
Existing Credit Agreement, subject to the terms of Section 1.4 of this
Agreement. Subject to the terms of Section 1.4, any such definition is hereby
incorporated herein by this reference. The following terms, as used herein,
shall have the following meanings:
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<PAGE> 5
"Agreement" means this Revolving Credit Agreement, as the same
may from time to time hereafter be modified, supplemented or amended, as
permitted herein.
"Applicable Lending Office" means, (i) in the case of Domestic
Loans, Lender's Domestic Lending Office and (ii) in the case of EuroDollar
Loans, Lender's Euro-Dollar Lending Office.
"Applicable Margin" means 1.10% with respect to each
Euro-Dollar Loan and 0.125% with respect to each Base Rate Loan; provided that
from and after the Adjustment Date, the provisions of the definition of
"Applicable Margin" in the Existing Credit Agreement shall be incorporated
herein by reference and shall be applied, as those provisions require, to
increase, and only to increase, the Applicable Margin.
"Closing Date" means April 21, 1998.
"Commitment" means, with respect to this Agreement the amount of
Fifty Million Dollars ($50,000,000).
"Domestic Lending Office" means Lender's office located at its
address set forth on the signature pages hereto or such other office as Lender
may hereafter designate as its Domestic Lending Office by notice to the
Borrower.
"Effective Date" means the date this Agreement becomes effective
in accordance with Section 9.10.
"Euro-Dollar Lending Office" means Lender's office, branch or
affiliate located at its address set forth on the signature pages hereto, or
such other office, branch or affiliate of Lender as it may hereafter designate
as its Euro-Dollar Lending Office by notice to the Borrower.
"General Partner Guaranty" means the Unconditional Guaranty
Agreement of the General Partner dated as of April 16, 1998 delivered to the
Lender in connection with this Agreement.
"Interest Period"
(1) with respect to each Euro-Dollar Borrowing shall have the
meaning given to it in the Existing Credit Agreement except that the Interest
Period shall be the period commencing on the date of such Borrowing and ending
one month thereafter, subject to the provisos set forth in the Existing Credit
Agreement.
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(2) with respect to each Base Rate Borrowing, the period
commencing on the date of such Borrowing and ending 30 days thereafter, subject
to the provisos set forth in the Existing Credit Agreement.
"Loan" means any loan made under the terms of this Agreement.
"Loan Amount" Shall mean the amount of Fifty Million Dollars
($50,000,000).
"Loan Documents" means this Agreement, the Notes, the General
Partner Guaranty and the Subsidiary Guaranties.
"Maturity Date" shall have the meaning set forth in Section 2.8.
"Maximum Loan Amount" means the Loan Amount, as the Loan Amount
may be reduced pursuant to Section 2.10(c).
"Notes" means promissory notes of the Borrower, substantially in
the form of Exhibit A hereto, evidencing the obligation of the Borrower to repay
the Loans, as the same may be amended, supplemented, modified or restated from
time to time, and "Note" means any one of such promissory notes issued
hereunder.
"Obligations" means all obligations, liabilities and
indebtedness of every nature of the Borrower, from time to time owing to Lender
under or in connection with this Agreement or any other Loan Document.
"Origination Fee" means .125% of the total Commitment, due and
payable on the Closing Date.
"Prime Rate" means the rate of interest publicly announced by
Lender in Dallas, Texas from time to time as its Prime Rate.
"Reference Bank" means the principal London offices of Lender.
"Subsidiary Guaranty" shall mean a guaranty, in substantially
the form of Exhibit E attached hereto, executed by each Subsidiary Guarantor.
"Term" has the meaning set forth in Section 2.8.
"Unused Facility" shall mean the amount, calculated daily, by
which the Commitment exceeds the sum of the outstanding principal amount of the
Loans.
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SECTION 1.2 Accounting Terms and Determinations. The provisions of
Section 1.2 of the Existing Credit Agreement are hereby incorporated into this
Agreement by this reference.
SECTION 1.3 Types of Borrowings. The provisions of Section 1.3 of the
Existing Credit Agreement are hereby incorporated into this Agreement by this
reference.
SECTION 1.4 Effect of Incorporation by Reference. For purposes of
application, interpretation, or enforcement of this Agreement, whenever a
provision of this Agreement incorporates a provision of the Existing Credit
Agreement by reference, the incorporated provision shall be read to apply to
this Agreement rather than to the Existing Credit Agreement and the terms used
in the provision so incorporated herein shall be read to apply to this
Agreement. Specifically, but not by way of limitation, when used in any
provision in the Existing Credit Agreement as incorporated herein by reference,
the following terms, as they are incorporated herein by reference and for
purposes of this Agreement, shall have following meanings: "Agreement" means
this Agreement; "Loan" or "Loans" shall mean the Loan or Loans made under the
terms of this Agreement; "Bank," "Banks," "Agent," or "Morgan" shall mean
Lender; "Note" or "Notes" shall mean the Note or Notes evidencing the Loan
referred to in this Agreement; and "Borrower" shall mean Borrower as it is
borrowing under the terms of this Agreement. Any term capitalized in any term of
the Existing Credit Agreement incorporated herein by reference and defined in
this Agreement shall for purposes of this Agreement have the meaning given to it
in this Agreement; any exhibit referred to in any provision of the Existing
Credit Agreement incorporated herein by reference shall be deemed, to refer to
any exhibit of the corresponding letter attached to this Agreement; and any
cross-reference to any section of the Existing Credit Agreement made in any
provision of the Existing Credit Agreement incorporated herein by reference
shall be deemed to refer to any provision with the corresponding number in this
Agreement. Any provisions of the Existing Credit Agreement incorporated herein
by reference shall, as they are applied to this Agreement, survive the Existing
Credit Agreement.
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ARTICLE 2.
THE CREDIT
SECTION 2.1 Commitment to Lend. During the Term, Lender agrees, on the
terms and conditions set forth in this Agreement, to make Loans to the Borrower
pursuant to this Section from time to time in amounts such that the aggregate
principal amount of Loans by Lender at any one time outstanding shall not exceed
the amount of the Commitment. The aggregate amount of Loans to be made hereunder
shall not exceed the Maximum Loan Amount. At no time shall there be more than
five Euro-Dollar Loans outstanding. Each Borrowing under this subsection (a)
shall be in an aggregate principal amount of not less than $5,000,000, or an
integral multiple of $1,000,000 in excess thereof (except that any such
Borrowing may be in the aggregate amount available in accordance with Section
3.2(c)). Upon the expiration of the Term, Lender shall have no further
obligation to make loans to Borrower. Within the foregoing limits, the Borrower
may borrow under this Section, repay, or to the extent required by Section 2.9
or permitted by Section 2. 10, prepay Loans and reborrow at any time during the
Term.
SECTION 2.2 Notice of Borrowing. The Borrower shall give Lender notice
(a "Notice of Borrowing") not later than 1:00 p.m. (Dallas, Texas time) (y) one
(1) Domestic Business Day before each Base Rate Borrowing, or (z) three (3)
Euro-Dollar Business Days before each Euro-Dollar Borrowing, as applicable,
specifying those matters set forth in Section 2.2(a) through 2.2(d) of the
Existing Loan Agreement.
SECTION 2.3 [Reserved.]
SECTION 2.4 Notes. The provisions of Section 2.4 of the Existing Credit
Agreement are hereby incorporated into this Agreement by this reference.
SECTION 2.5 Maturity of Loans. Each Loan included in any Borrowing
shall mature, and the principal amount thereof shall be due and payable, on the
last day of the Interest Period applicable to such Borrowing.
SECTION 2.6 Interest Rates. The provisions of Section 2.6(a) through
(d) of the Existing Credit Agreement are hereby incorporated into this Agreement
by this reference; except that any reference to an Interest Period of longer
than for intervals of three months therein shall mean Interest Periods and
Intervals of one month.
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SECTION 2.7 Loan Fee. Borrower shall pay Leader a fee equal to 0.10%
of each Borrowing at the time of and as a condition precedent to each Borrowing.
SECTION 2.8 Mandatory Expiration. The term (the "Term") of the
Commitment shall terminate and expire on the date which is three months after
the Closing Date (or, if such date is not a Domestic Business Day, then the next
succeeding Domestic Business Day) (the "Maturity Date"). Upon the date of the
termination of the Term, any Loans then outstanding (together with accrued
interest thereon) shall be due and payable.
SECTION 2.9 [Reserved.]
SECTION 2.10 Optional Prepayments. The provisions of Section 2.10 of
the Existing Credit Agreement are hereby incorporated into this Agreement by
this reference.
SECTION 2.11 General Provisions as to Payments. The provisions of
Section 2.11 (a) of the Existing Credit Agreement are hereby incorporated into
this Agreement by reference, except that references therein to "New York City"
shall mean Dallas, Texas.
SECTION 2.12 Funding Losses. The provisions of Section 2.12 of the
Existing Credit Agreement are hereby incorporated into this Agreement by
reference.
SECTION 2.13 Computation of Interest and Fees. The provisions of
Section 2.13 of the Existing Credit Agreement are hereby incorporated into this
Agreement by reference.
SECTION 2.14 Use of Proceeds. The provisions of Section 2.14 of the
Existing Credit Agreement are hereby incorporated into this Agreement by
reference.
ARTICLE 3.
CONDITIONS
SECTION 3.1 Closing. The closing hereunder shall occur on the date (the
"Closing Date") when each of the following conditions is satisfied (or waived by
the Lender), each document to be dated the Closing Date unless otherwise
indicated:
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<PAGE> 10
(a) the Borrower shall have executed and delivered to the Lender
a Note dated on or before the Closing Date complying with the provisions of
Section 2.4;
(b) the Borrower and Lender shall have executed and delivered to
the Lender a duly executed original of this Agreement;
(c) the General Partner shall have executed and delivered the
Guaranty and AMB Property II, L.P. and Long Gate LLC shall each have executed
and delivered a Subsidiary Guaranty;
(d) Lender shall have received an enforceability opinion of
Latham & Watkins, New York and California counsel for the Borrower, and opinions
as to the due authority, execution and delivery of the Loan Documents (other
than any Subsidiary Guaranty) by Latham & Watkins and Ballard Spahr Andrews &
Ingersoll, in each case reasonably acceptable to the Lender, and its counsel;
(e) Lender shall have received all documents Lender may
reasonably request relating to the existence of the Borrower, the General
Partner and any Subsidiary Guarantor, the authority for and the validity of this
Agreement and the other Loan Documents, and any other matters relevant hereto,
all in form and substance reasonably satisfactory to the Lender;
(f) Lender shall have received all certificates, agreements and
other documents referred to in this Section 3.1 and Section 3.2, unless
otherwise specified, in sufficient counterparts, satisfactory in form and
substance to the Lender in its sole discretion;
(g) Borrower, the General Partner and each Subsidiary Guarantor
shall have taken all actions required to authorize the execution and delivery of
this Agreement and the other Loan Documents to which it is a party and the
performance thereof by the Borrower, the General Partner and such Subsidiary
Guarantors, as applicable;
(h) [Reserved];
(i) Lender shall have received a Consolidated balance sheet of
the Borrower, the General Partner, and their Consolidated Subsidiaries dated
December 31, 1997 and the related Consolidated statements of the Borrower's
financial position for the fiscal year then ended, audited by Arthur Andersen &
Co., L.L.P.;
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(j) [Reserved];
(k) Lender shall have received for its account (i) the
Origination Fee, (ii) all fees due and payable pursuant to Section 2.7 hereof on
or before the Closing Date, and (ii) the reasonable fees and expenses accrued
through the Closing Date of Sheppard, Mullin, Richter & Hampton LLP;
(1) Lender shall have received copies of all consents, licenses
and approvals, if any, required in connection with the execution, delivery and
performance by the Borrower, the General Partner and any Subsidiary Guarantor,
and the validity and enforceability, of the Loan Documents, or in connection
with any of the transactions contemplated thereby, and such consents, licenses
and approvals shall be in full force and effect in all material respects;
(m) [Reserved];
(n) [Reserved];
(o) [Reserved];
(p) [Reserved];
(q) [Reserved);
(r) Lender shall have received a compliance certificate from
Borrower's chief financial officer or chief accounting officer certifying
compliance with Section 5.9 hereof containing such information as is required by
Section 5.1(c)(i) and (ii);
(s) [Reserved];
(t) (Reserved];
(u) [Reserved]; and
(v) Borrower (or the General Partner, as applicable) shall have
received at least one (1) Investment Grade Rating, from either S&P or Moody's,
or Borrower shall have received the prior written informed consent of Agent and
Banks, consenting to Borrower's entering into this Agreement and incurring the
recourse debt referred to in this Agreement, in compliance with the terms of
Section 5.16 of the Existing Credit Agreement.
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SECTION 3.2 Borrowings. The obligation of Lender to make a Loan on the
occasion of any Borrowing is subject to the satisfaction of the following
conditions:
(a) the Closing Date shall have occurred on or prior to April
30, 1998;
(b) receipt by Lender of a Notice of Borrowing as required by
Section 2.2;
(c) immediately after such Borrowing, the aggregate outstanding
principal amount of the Loans will not exceed the Maximum Loan Amount;
(d) immediately after such Borrowing, the aggregate outstanding
principal amount of the Loans will not exceed the aggregate amount of
the Commitment (as reduced pursuant to Section 2.10(c)).
(e) immediately before and after such Borrowing, no Default or
Event of Default shall have occurred and be continuing both before and
after giving effect to the making of such Loans;
(f) the representations and warranties of the Borrower contained
in this Agreement shall be true and correct in all material respects
on and as of the date of such Borrowing both before and after giving
effect to the making of such Loans;
(g) no law or regulation shall have been adopted, no order,
judgment or decree of any governmental authority shall have been
issued, and no litigation shall be pending or threatened, which does
or, with respect to any threatened litigation, seeks to enjoin,
prohibit or restrain, the making or repayment of the Loans or the
consummation of the transactions contemplated by this Agreement;
(h) no event, act or condition shall have occurred after the
Closing Date which, in the reasonable judgment of the Lender, has had
or is likely to have a Material Adverse Effect;
(i) Lender shall have theretofore received duly and validly
executed Subsidiary Guaranties from each Wholly-Owned Subsidiary that
owns a Borrowing Base Property;
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(j) receipt by Lender of a certificate of the chief financial
officer or the chief accounting officer of the Borrower certifying
that as of the date of such Borrowing, the Borrower is in compliance
with Section 5.9 and containing such information as is required by
Section 5.1(c)(i) and (ii);
(k) receipt by Lender of a certificate of the chief financial
officer or the chief accounting officer of the Borrower certifying
that Borrower shall receive the proceeds of the Loan and will use the
proceeds of such Loan for Approved Uses; and
(1) Lender shall have received for its account all fees due and
payable pursuant to Section 2.7 hereof on account of the Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in clauses
(c), (d), (e), (f), (g) and (i) of this Section.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to make the Loan, the Borrower
makes each representation and warranty made in Article 4 of the Existing Credit
Agreement as if it had been made in and as to this Agreement and the Loan
Documents executed in conjunction with this Agreement, and as if it had been
made as of the Closing Date. For that purpose, the provisions of Article 4 of
the Existing Credit Agreement are hereby incorporated into this Agreement by
this reference. Such representations and warranties, shall survive the Closing
Date, the execution and delivery of the other Loan Documents and the making of
the Loans.
ARTICLE 5.
AFFIRMATIVE AND NEGATIVE COVENANTS
The provisions of Article 5 of the Existing Credit Agreement are
hereby incorporated into this Agreement by this reference. The Borrower
covenants and agrees that so long as Lender has any Commitment hereunder or any
Obligations remain unpaid, Borrower will comply with all of the Affirmative and
Negative Covenants of Article 5 of the Existing Credit Agreement as if they had
been made in conjunction with this Agreement.
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ARTICLE 6.
DEFAULTS
SECTION 6.1 Events of Default. The provisions of Section 6.1 of the
Existing Credit Agreement are hereby incorporated into this Agreement by
reference. In addition, to the extent not otherwise provided, any Event of
Default under the Existing Credit Agreement, or by Borrower, General Partner or
any Subsidiary Guarantor under any other debt or obligation, shall be an Event
of Default under this Agreement.
SECTION 6.2 Rights and Remedies. The provisions of Section 6.2 of the
Existing Credit Agreement are hereby incorporated into this Agreement by
reference. Upon the occurrence of any Event of Default described in
Sections 6.1(f) or (g), the Commitment shall immediately terminate and the
unpaid principal amount of, and any and all accrued interest on, the Loan and
any and all accrued fees and other Obligations hereunder shall automatically
become immediately due and payable, with all additional interest from time to
time accrued thereon and without presentation, demand, or protest or other
requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and notice of acceleration), all of which are hereby expressly waived by the
Borrower; and upon the occurrence and during the continuance of any other Event
of Default, the Lender may, by written notice to the Borrower, terminate the
Commitments, and may, in addition to the exercise of all rights and remedies
permitted Lender at law or equity, declare the unpaid principal amount of and
any and all accrued and unpaid interest on the Loans and any and all accrued
fees and other Obligations hereunder to be, and the same shall thereupon be,
immediately due and payable with all additional interest from time to time
accrued thereon and without presentation, demand, or protest or other
requirements of any kind other than as provided in the Loan Documents
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and notice of
acceleration), all of which are hereby expressly waived by the Borrower to the
extent permitted by law.
SECTION 6.3 Notices of Default. The provisions of Section 6.3 of the
Existing Credit Agreement are hereby incorporated into this Agreement by
reference.
ARTICLE 7.
(Reserved]
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ARTICLE 8.
CHANGE IN CIRCUMSTANCES
The provisions of Article 8 of the Existing Credit Agreement are
hereby incorporated into this Agreement by reference.
ARTICLE 9.
MISCELLANEOUS
SECTION 9.1 Notices. The provisions of Section 9.1 of the Existing
Credit Agreement are hereby incorporated into this Agreement by reference.
SECTION 9.2 No Waivers. The provisions of Section 9.2 of the Existing
Credit Agreement are hereby incorporated into this Agreement by reference.
SECTION 9.3 Expenses; Indemnification.
(a) The Borrower shall pay (i) all reasonable out-of-pocket
expenses of Lender, including, without limitation, fees and disbursements of
Sheppard, Mullin, Richter & Hampton LLP, counsel for Lender, as well as fees and
disbursements of internal counsel, in connection with the preparation and
administration of this Agreement, the Loan Documents and the documents and
instruments referred to therein, and further modifications of the Facility in
connection therewith, the administration of the Loans, any waiver or consent
hereunder or any amendment or modification hereof or any Default or Event of
Default hereunder, and (ii) if an Event of Default occurs, all reasonable
out-of-pocket expenses incurred by Lender, including fees and disbursements of
counsel for Lender, in connection with the enforcement of the Loan Documents and
the instruments referred to therein and such Event of Default and collection,
bankruptcy, insolvency and other enforcement proceedings resulting therefrom.
(b) The provisions of Section 9.3(b) of the Existing Credit
Agreement are hereby incorporated into this Agreement by reference.
(c) The provisions of Section 9.3(c) of the Existing Credit
Agreement are hereby incorporated into this Agreement by reference.
SECTION 9.4 [Reserved.]
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SECTION 9.5 Amendments and Waivers. Any provision of this Agreement or
the Notes or other Loan Documents may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and Lender.
SECTION 9.6 Successors and Assigns. The provisions of Section 9.6 of
the Existing Credit Agreement are hereby incorporated into this Agreement by
reference.
SECTION 9.7 [Reserved.]
SECTION 9.8 Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA.
(b) Any legal action or proceeding with respect to this
Agreement or any other Loan Document and any action for enforcement of any
judgment in respect thereof may be brought in the courts of the State of
California or of the United States of America for the Northern District of
California, and, by execution and delivery of this Agreement, the Borrower
hereby accepts for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts and
appellate courts from any thereof. The Borrower irrevocably consents to the
service of process out of any of the aforementioned courts in any such action or
proceeding by the hand delivery or mailing of copies thereof by registered or
certified mail, postage prepaid, to the Borrower at its address set forth below.
The Borrower hereby irrevocably waives, to the extent permitted by applicable
law, any objection which it may now or hereafter have to the laying of venue of
any of the aforesaid actions or proceedings arising out of or in connection with
this Agreement or any other Loan Document brought in the courts referred to
above and hereby further irrevocably waives, to the extent permitted by
applicable law, and agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought in an
inconvenient forum. Nothing herein shall affect the right of Lender or any
holder of a Note to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Borrower in any
other jurisdiction.
SECTION 9.9 Marshaling; Recapture. The provisions of Section 9.9 of the
Existing Credit Agreement are hereby incorporated into this Agreement by
reference.
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SECTION 9.10 Counterparts; Integration; Effectiveness. The provisions
of Section 9.10 of the Existing Credit Agreement are hereby incorporated into
this Agreement by reference.
SECTION 9.11 WAIVER OF JURY TRIAL. BORROWER AND LENDER HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 9.12 Survival. The provisions of Section 9.12 of the Existing
Credit Agreement are hereby incorporated into this Agreement by reference.
SECTION 9.13 Domicile of Loans. Lender may transfer and carry the Loans
at, to or for the account of any domestic or foreign branch office, subsidiary
or affiliate of Lender.
SECTION 9.14 Limitation of Liability. No claim may be made by the
Borrower or any other Person against Lender or the affiliates, directors,
officers, employees, attorneys or agent of any of them for any consequential or
punitive damages in respect of any claim for breach of contract or any other
theory of liability arising out of or related to the transactions contemplated
by this Agreement or by the other Loan Documents, or any act, omission or event
occurring in connection therewith; and the Borrower hereby waives, releases and
agrees not to sue upon any claim for any such damages, whether or not accrued
and whether or not known or suspected to exist in its favor.
SECTION 9.15 Recourse. All obligations, covenants and agreements of
Borrower contained in or evidenced by this Agreement, the Notes and any Loan
Document shall be fully recourse to Borrower and each and every asset of
Borrower. Notwithstanding the foregoing, no recourse under or upon any
obligation, covenant, or agreement contained in this Agreement or the Note or
any Loan Document shall be had against any officer, director, limited partner,
shareholder or employee of Borrower or of the General Partner (each, a
"NonRecourse Party") and no such Non-Recourse Party shall be personally liable
for payment of the Loans or other amounts due in respect thereof (all such
liability being expressly waived and released by Lender) in no event shall the
foregoing limitation on recourse with respect to any Non-Recourse Party be
deemed to limit (a) the liability of the General Partner under the General
Partner Guaranty, which shall be fully recourse to the General Partner and each
and every asset of the General Partner or (b) the liability of any Subsidiary
Guarantor under any Subsidiary Guaranty, which shall be fully recourse to each
such Subsidiary Guarantor and each and every asset of each such Subsidiary
Guarantor.
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SECTION 9.16 Confidentiality. Lender and Borrower agree that they shall
maintain confidentiality with regard to nonpublic information concerning the
parties to the Loan Documents obtained pursuant to this Agreement and shall not
disclose the existence or term of the Loan Documents, provided the parties shall
not be precluded from making disclosure regarding such information: (i) the
parties' counsel, accountants and other professional advisors (who are, in each
case, subject to this confidentiality agreement), (ii) to officers, directors,
employees, agents and partners of the parties who need to know such information
(who are, in each case, subject to this confidentiality agreement), (iii) in
response to a subpoena or order of a court or governmental agency, (iv) as to
Lender, to any entity participating or considering participating in any credit
made under this Agreement, to any affiliate of Lender (including but not limited
to NationsBanc Montgomery Securities, LLC), to any person having regulatory
authority over Lender, and to any other person as necessary or appropriate in
Lender's reasonable judgment, provided, Lender shall, to the extent applicable,
require that any such entity be subject to this Section 9.16, however, Lender
shall have no duty to monitor any such person and shall have no liability in the
event that any such person violates this Section 9.16, (v) in connection with
the enforcement of this Agreement, the Notes or the other Loan Documents, or
(vi) as required by law, GAAP or applicable regulation. In connection with
enforcing its rights pursuant to this Section 9.16, the parties shall be
entitled to the equitable remedies of specific performance and injunctive relief
against the other parties which shall breach the confidentiality provisions of
this Section 9.16.
SECTION 9.17 Effect of Loan Documents on Existing Credit Agreement.
Nothing herein contained shall modify, amend, or alter the terms and conditions
of the Existing Credit Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly Executed by their respective authorized officers as of the
day and year first above written.
AMB PROPERTY, L.P.,
a Delaware limited partnership
By: AMB PROPERTY CORPORATION, a Maryland
corporation, its sole general partner
By: /s/ JOHN T. ROBERTS, JR.
-----------------------------------------
Name: John T. Roberts, Jr.
---------------------------------------
Title: VP Capital Markets, Treasurer
--------------------------------------
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
505 Montgomery Street
San Francisco, CA 94111
Attention: Chief Financial Officer
Facsimile No.: (415) 393-9001
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<PAGE> 20
NATIONSBANK OF TEXAS, N.A.
By: /s/ DONALD H. MOSES
-----------------------------------------
Name: Donald H. Moses
---------------------------------------
Title: Senior Vice President
--------------------------------------
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
DOMESTIC AND EURO-DOLLAR LENDING OFFICE:
NationsBank of Texas, N.A
901 Main Street, 51st Floor
Dallas, Texas 75202-3714
Attention: John Hall
Facsimile: (214) 508-0085
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EXHIBIT A
FORM OF NOTE
NOTE
$_______________ San Francisco, California
___________________, 1998
For value received, AMB Property, L.P., a Delaware limited
partnership (the "Borrower"), promises to pay to the order of NationsBank of
Texas, N.A. (the "Lender"), for the account of its Applicable Lending Office,
the unpaid principal amount of each Loan made by the Lender to the Borrower
pursuant to the Credit Agreement referred to below on the last day of the
Interest Period relating to such Loan. The Borrower promises to pay interest on
the unpaid principal amount of each such Loan on the dates and at the rate or
rates provided for in the Credit Agreement. All such payments of principal and
interest shall be made in lawful money of the United States in Federal or other
immediately available funds at the office of Lender at 901 Main Street, 51st
Floor, Dallas, Texas 75202-3714.
All Loans made by the Lender, the respective types and
maturities thereof and all repayments of the principal thereof shall be recorded
by the Lender and, if the Lender so elects in connection with any transfer or
enforcement hereof, appropriate notations to evidence the foregoing information
with respect to each such Loan then outstanding may be endorsed by the Lender on
the schedule attached hereto, or on a continuation of such schedule attached to
and made a part hereof; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
A-1
<PAGE> 22
This note is one of the Notes referred to in the Revolving
Credit Agreement dated as of April 16, 1998 between the Borrower and NationsBank
of Texas, N.A. (the "Credit Agreement"). Terms defined in the Credit Agreement
are used herein with the same meanings. Reference is made to the Credit
Agreement for provisions for the prepayment hereof and the acceleration of the
maturity hereof.
All obligations, covenants and agreements contained or evidenced
in this Note, shall be fully recourse to Borrower and each and every asset of
Borrower. Notwithstanding the foregoing, no recourse under or upon any
obligation, covenant, or agreement contained in this Note shall be had against
any Non-Recourse Party (as defined in the Credit Agreement) and no such
Non-Recourse Party shall be personally liable for payment of the Loans or other
amounts due in respect thereof (all such liability being expressly waived and
released by Lender). In no event shall the foregoing limitation on recourse with
respect to any Non-Recourse Party be deemed to limit (a) the liability of the
General Partner under the General Partner Guaranty, which shall be fully
recourse to the General Partner and each and every asset of the General Partner
or (b) the liability of any Subsidiary Guarantor under any Subsidiary Guaranty,
which shall be fully recourse to each such Subsidiary Guarantor and each and
every asset of each such Subsidiary Guarantor.
AMB PROPERTY, L.P.
By: AMB PROPERTY CORPORATION, a
Maryland corporation, its sole
general partner
By:
-----------------------------
-----------------------------
[Printed Name and Title]
By:
-----------------------------
-----------------------------
[Printed Name and Title]
A-2
<PAGE> 23
Note (Cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
-------------------------------
Amount of
Amount of Type of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
A-3
<PAGE> 24
EXHIBIT B
(Reserved)
B-1
<PAGE> 25
EXHIBIT C
[Reserved]
C-1
<PAGE> 26
EXHIBIT D
[Reserved]
D-1
<PAGE> 27
EXHIBIT E
SUBSIDIARY GUARANTY
E-1
<PAGE> 28
UNCONDITIONAL GUARANTY AGREEMENT
THIS UNCONDITIONAL GUARANTY AGREEMENT (this "Guaranty"), dated
as of April 16, 1998 is made jointly and severally by AMB PROPERTY II, L.P. and
LONG GATE LLC (each, a "Guarantor" and collectively, the "Guarantors") for the
benefit of NATIONSBANK OF TEXAS, N.A. ("Lender"), and is made with reference to
that certain Revolving Credit Agreement (the "Credit Agreement"), dated as of
April 16, 1998 among AMB Property, L.P. (the "Borrower"), and Lender.
Capitalized terms not otherwise defined in this Guaranty shall
have the meanings ascribed to them in the Credit Agreement.
WITNESSETH:
WHEREAS, pursuant to the terms of the Credit Agreement, Lender
has agreed to make loans (collectively, the "Loan") to the Borrower from time to
time in amounts such that the aggregate principal amount outstanding shall not
exceed Fifty Million Dollars (the "Loan Amount") to be used by the Borrower for
the Approved Uses;
WHEREAS: (i) Guarantors are Wholly-Owned Subsidiaries of the
Borrower that own (or will own) certain Borrowing Base Properties as that term
is defined in the Existing Credit Agreement and Guarantor's will be the direct
and indirect beneficiary of the Borrower's rights and obligations under the
Credit Agreement and (ii) pursuant to the Credit Agreement, it is a condition of
the Loans that the Guarantors execute and deliver this Guaranty; and
WHEREAS, in order to induce Lender to make the Loans to
Borrower, and to satisfy one of the conditions contained in the Credit Agreement
with respect thereto, the Guarantors have agreed to enter into this Guaranty.
NOW THEREFORE, in consideration of the premises and the direct
and indirect benefits to be derived from the making of the Loan by Lender to the
Borrower, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Guarantors hereby agree as
follows:
1. Each Guarantor, on behalf of itself and its successors and
assigns, hereby irrevocably, absolutely, and unconditionally guarantees the full
and punctual
-1-
<PAGE> 29
payment when due, whether at stated maturity or otherwise, of all Obligations
now or hereafter existing under Credit Agreement, the Notes, or under any of the
other Loan Documents (such obligations being the "Guaranteed Obligations"), and
any and all reasonable costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements) incurred by Leader in enforcing
its rights under this Guaranty.
2. It is agreed that the obligations of each Guarantor hereunder
are primary and this Guaranty shall be enforceable against each Guarantor and
its successors and assigns without the necessity for any suit or proceeding of
any kind or nature whatsoever brought by Lender against the Borrower or its
respective successors or assigns or any other party or against any security for
the payment and performance of the Guaranteed Obligations and, except as set
forth in the Credit Agreement and the Notes, without the necessity of any notice
of non-payment or non-observance or of any notice of acceptance of this Guaranty
or of any notice or demand to which either Guarantor might otherwise be entitled
(including, without limitation, diligence, presentment, notice of maturity,
extension of time, change in nature or form of the Guaranteed Obligations,
acceptance of further security, release of further security, imposition or
agreement arrived at as to the amount of or the terms of the Guaranteed
Obligations, notice of adverse change in the Borrower's financial condition or
the condition of the Borrowing Base Properties and any other fact which might
materially increase the risk to the Guarantors), all of which each Guarantor
hereby expressly waives; and each Guarantor hereby expressly agrees that the
validity of this Guaranty and the obligations of each Guarantor hereunder shall
in no way be terminated, affected, diminished, modified or impaired by reason of
the assertion of or the failure to assert by Lender against the Borrower or its
respective successors or assigns, any of the rights or remedies reserved to
Lender pursuant to the provisions of the Loan Documents. Each Guarantor hereby
agrees that any notice or directive given at any time to Lender which is
inconsistent with the waiver in the immediately preceding sentence shall be void
and may be ignored by Leader, and, in addition, may not be pleaded or
introduced as evidence in any litigation relating to this Guaranty for the
reason that such pleading or introduction would be at variance with the written
terms of this Guaranty, unless Lender has specifically agreed otherwise in a
writing, signed by a duly authorized officer. Each Guarantor specifically
acknowledges and agrees that the foregoing waivers are of the essence of this
transaction and that, but for this Guaranty and such waivers, Lender would not
permit the assumption of the Credit Agreement by, or make the Loan to, the
Borrower.
3. Each Guarantor hereby waives, and covenants and agrees that
it will not at any time insist upon, plead or in any manner whatsoever claim or
take the benefit or advantage of, any and all appraisal, valuation, stay,
extension,
-2-
<PAGE> 30
marshaling-of-assets or redemption laws, or right of homestead or exemption
whether now or at any time hereafter in force, which may delay, prevent or
otherwise affect the performance by any Guarantor of its obligations under, or
the enforcement by Lender of, this Guaranty. Each Guarantor further covenants
and agrees not to set up or claim any defense, counterclaim, offset, set-off or
other objection of any kind to any action, suit or proceeding in law, equity or
otherwise, or to any demand or claim that may be instituted or made by Lender
other than the defense of the actual timely payment and performance by the
Borrower of the Guaranteed Obligations hereunder or any defense to which
Borrower is otherwise entitled. Each Guarantor represents, warrants and agrees
that, as of the date hereof, its obligations under this Guaranty are not subject
to any counterclaims, offsets or defenses against Lender of any kind.
4. The provisions of this Guaranty are for the benefit of Lender
and its successors and permitted assigns, and nothing herein contained shall
impair as between the Borrower and Lender the obligations of the Borrower under
the Loan Documents.
5. This Guaranty shall be a continuing, unconditional and
absolute guaranty and the liability of each Guarantor hereunder shall in no way
be terminated, affected, modified, impaired or diminished by reason of the
happening, from time to time, of any of the following, although without notice
or the further consent of either Guarantor:
(a) any assignment, amendment, modification or waiver of
or change in any of the terms, covenants, conditions or
provisions of any of the Guaranteed Obligations or the Loan
Documents or the invalidity or unenforceability of any of the
foregoing; or
(b) any extension of time that may be granted by Lender
to the Borrower, any guarantor, or their respective successors
or assigns, heirs, executors, administrators or personal
representatives; or
(c) any action which Lender may take or fail to take
under or in respect of any of the Loan Documents or by reason of
any waiver of, or failure to enforce any of the rights,
remedies, powers or privileges available to Lender under this
Guaranty or available to Lender at law, equity or otherwise, or
any action on the part of Lender granting indulgence or
extension in any form whatsoever; or
-3-
<PAGE> 31
(d) any sale, exchange, release, or other disposition of
any property pledged, mortgaged or conveyed, or any property in
which Lender has been granted a lien or security interest to
secure any indebtedness of the Borrower to Lender; or
(e) any release of any person or entity who may be liable
in any manner for the payment and collection of any amounts owed
by the Borrower to Leader (including any guarantor); or
(f) the application of any sums by whomsoever paid or
however realized to any amounts owing by the Borrower to Lender
under the Loan Documents in such manner as Lender shall
determine in its sole discretion; or
(g) the Borrower's or any guarantor's voluntary or
involuntary liquidation, dissolution, sale of all or
substantially all of their respective assets and liabilities,
appointment of a trustee, receiver, liquidator, sequestrator or
conservator for all or any part of the Borrower's or such
guarantor's assets, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition
or readjustment or the commencement of other similar proceedings
affecting the Borrower or any guarantor or any of the assets of
any of them, including, without limitation, (i) the release or
discharge of the Borrower or any guarantor from the payment and
performance of their respective obligations under any of the
Loan Documents by operation of law, or (ii) the impairment,
limitation or modification of the liability of the Borrower or
any guarantor in bankruptcy, or of any remedy for the
enforcement of the Guaranteed Obligations under any of the Loan
Documents, or any guarantor's liability under any guaranty
(including the liability of each Guarantor under this Guaranty),
resulting from the operation of any present or future provisions
of the Bankruptcy Code or other present or future federal, state
or applicable statute or law or from the decision in any court;
or
(h)any improper disposition by the Borrower of the
proceeds of the Loan, it being acknowledged by Guarantors that
Lender shall be entitled to honor any request made by the
Borrower for a disbursement of such proceeds and that Lender
shall have no obligation to see the proper disposition by the
Borrower of such proceeds.
6. Each Guarantor hereby agrees that if at any time all or any
part of any payment at any time received by Lender from the Borrower under any
of the Notes
-4-
<PAGE> 32
or other Loan Documents or any Guarantor under or with respect to this Guaranty
is or must be rescinded or returned by Lender for any reason whatsoever
(including, without limitation, the insolvency, bankruptcy or reorganization of
the Borrower or any Guarantor), then each Guarantor's obligations hereunder
shall, to the extent of the payment rescinded or returned, be deemed to have
continued in existence notwithstanding such previous receipt by Lender, and each
Guarantor's obligations hereunder shall continue to be effective or reinstated,
as the case may be, as to such payment, as though such previous payment to
Lender had never been made. In addition, if any court of competent jurisdiction
determines that the incurrence by either Guarantor of its obligations under this
Guaranty or the payment by either Guarantor of its obligations hereunder is or
would be voidable as a fraudulent transfer or conveyance under section 548 of
the Bankruptcy Code, any analogous state law, or any other law relating to
debtor protection or creditors' rights, the obligation of that Guarantor
hereunder shall automatically be reduced to the maximum amount (if any) of the
obligation that the Guarantor could incur or pay without such incurrence or
payment being subject to avoidance as a fraudulent transfer or conveyance.
7. Until this Guaranty is terminated pursuant to the terms
hereof, the Guarantors (i) shall have no right of subrogation against the
Borrower or any entity comprising same or each other by reason of any payments
or acts of performance by any Guarantor in compliance with the obligations of
each Guarantor hereunder; (ii) hereby waive any right to enforce any remedy
which any Guarantor now or hereafter shall have against the Borrower or any
entity comprising same or each other by reason of any one or more payment or
acts of performance in compliance with the obligations of any Guarantor
hereunder; and (iii) shall subordinate any liability or indebtedness of the
Borrower or any guarantor or any entity comprising same now or hereafter held by
any Guarantor to the obligations of the Borrower under the Loan Documents.
8. Each Guarantor hereby represents and warrants on its own
behalf to Lender with the knowledge that Lender is relying upon the same, as
follows:
(a) as of the date hereof, such Guarantor is a direct
Wholly-Owned Subsidiary of the Borrower and is familiar with the
financial condition of Borrower;
(b) based upon such relationship, such Guarantor has
determined that it is in its best interest to enter into this
Guaranty;
-5-
<PAGE> 33
(c) this Guaranty is necessary and convenient to the
conduct, promotion and attainment of such Guarantor's business,
and is in furtherance of such Guarantor's business purposes;
(d) the benefits to be derived by such Guarantor from the
Borrower's access to funds made possible by the Loan Documents
are at least equal to the obligations of such Guarantor
undertaken pursuant to this Guaranty;
(e) Each Guarantor is solvent and has full partnership or
limited liability company (as applicable) power and legal right
to enter into this Guaranty and to perform its obligations under
the terms hereof and (i) such Guarantor is organized and validly
existing under the laws of the state of its formation and in
each state in which it owns or leases real property except where
the failure to do so in each State in which it owns or leases
real property would not have a Material Adverse Effect on such
Guarantor, (ii) such Guarantor has complied with all provisions
of applicable law in connection with all aspects of this
Guaranty, and (iii) the person executing this Guaranty on behalf
of such Guarantor has all the requisite power and authority to
execute and deliver this Guaranty; and
(f) this Guaranty has been duly executed by each
Guarantor and constitutes the legal, valid and binding
obligation of such Guarantor, enforceable against it in
accordance with its terms except as enforceability may be
limited by applicable insolvency, bankruptcy or other laws
affecting creditors' rights generally or general principles of
equity whether such enforceability is considered in a proceeding
in equity or at law.
9. Each of the Guarantors and Lender acknowledges and agrees
that this Guaranty is a guaranty of payment and not of collection and
enforcement in respect of any Guaranteed Obligations.
10. Subject to the terms and conditions of the Credit Agreement,
and in conjunction therewith, Lender may assign any or all of its rights under
this Guaranty.
11. Each Guarantor agrees, upon the written request of Lender,
to execute and deliver to Lender, from time to time, any modification or
amendment hereto or any additional instruments or documents reasonably
considered necessary by Lender or its counsel to cause this Guaranty to be,
become or remain valid and effective in accordance with its terms or in order to
implement more fully the intent of
-6-
<PAGE> 34
this Guaranty, provided, that, any such modification, amendment, additional
instrument or document shall not increase any Guarantor's obligations or
diminish its rights hereunder.
12. The representations and warranties of the each Guarantor set
forth in this Guaranty shall survive until this Guaranty shall terminate in
accordance with the terms hereof.
13. This Guaranty together with the Credit Agreement and the
other Loan Documents contains the entire agreement among the parties and
supersedes all prior agreements relating to the Loan and may not be modified,
amended, supplemented or discharged except by a written agreement signed by each
Guarantor and Lender.
14. If all or any portion of any provision contained in this
Guaranty shall be determined to be invalid, illegal or unenforceable in any
respect for any reason, such provision or portion thereof shall be deemed
stricken and severed from this Guaranty and the remaining provisions and
portions thereof shall continue in full force and effect.
15. This Guaranty may be executed in counterparts which together
shall constitute the same instrument.
16. In order for any demand, request or notice to the respective
parties hereto to be effective, such demand, request or notice shall be given,
in writing, by delivering the same personally or by nationally recognized
overnight courier service or by mailing, by certified or registered mail,
postage prepaid or by telecopying the same, addressed to such party at the
address set forth below or to such other address as may be identified by any
party in a written notice to the others. Any such demand, request or notice sent
as aforesaid shall be deemed to have been received by the party to whom it is
addressed upon delivery, if personally delivered and on the actual receipt
thereof, if sent by certified or registered mail or by telecopier, and when
transmitted, if sent by telex:
If to the Borrower
or any Guarantor: AMB Property, L.P.
505 Montgomery Street
San Francisco, California 94111
Attention: Chief Financial Officer
-7-
<PAGE> 35
If to Lender: NationsBank of Texas, N.A.
901 Main Street 51st Floor
Dallas, Texas 75202-3714
Attention: John Hall
17. This Guaranty shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of Lender and its
successors and assigns.
18. The failure of Lender to enforce any right or remedy
hereunder, or promptly to enforce any such right or remedy, shall not constitute
a waiver thereof, nor give rise to any estoppel against Lender, nor excuse any
Guarantor from its obligations hereunder. Any waiver of any such right or remedy
to be enforceable against Lender must be expressly set forth in a writing signed
by Lender.
19. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAWS OF THE STATE OF CALIFORNIA.
(b) Any legal action or proceeding with respect to this
Guaranty and any action for enforcement of any judgment in respect thereof may
be brought in the courts of the State of California or of the United States of
America for the Northern District of California, and, by execution and delivery
of this Guaranty, Guarantor hereby accepts for itself and in respect of its
property, generally and unconditionally, the non-exclusive jurisdiction of the
aforesaid courts and appellate courts from any thereof. Each Guarantor
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to Guarantor at the address for
notices set forth herein. Guarantor hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with this
Guaranty brought in the courts referred to above and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such action
or proceeding brought in any such court has been brought in an inconvenient
forum. Nothing herein shall affect the right of Lender to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against any Guarantor in any other jurisdiction.
-8-
<PAGE> 36
(c) EACH OF THE GUARANTORS AND LENDER EACH HEREBY WAIVES ITS
RIGHTS TO A JURY TRIAL OF ANY AND ALL CLAIMS OR CAUSES OF ACTION BASED UPON OR
ARISING OUT OF THIS GUARANTY. IT IS HEREBY ACKNOWLEDGED BY EACH GUARANTOR THAT
THE WAIVER OF A JURY TRIAL IS A MATERIAL INDUCEMENT FOR LENDER TO ACCEPT THIS
GUARANTY AND THAT THE LOAN MADE BY LENDER ARE MADE IN RELIANCE UPON SUCH WAIVER.
EACH GUARANTOR FURTHER WARRANTS AND REPRESENTS THAT SUCH WAIVER HAS BEEN
KNOWINGLY AND VOLUNTARILY MADE, FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN
THE EVENT OF LITIGATION, THIS GUARANTY MAY BE FILED BY LENDER IN COURT AS A
WRITTEN CONSENT TO A NON-JURY TRIAL.
(d) Each Guarantor does hereby further covenant and agree
with Lender that each Guarantor may be joined in any action against the Borrower
in connection with the Loan Documents and that recovery may be had against the
Guarantors in such action or in any independent action against either or both of
Guarantors (with respect to the Guaranteed Obligations), without Lender first
pursuing or exhausting any remedy or claim against the Borrower or its
successors or assigns. Each Guarantor also agrees that, in an action brought
with respect to the Guaranteed Obligations in any jurisdiction, it shall be
conclusively bound by the judgment in any such action by Lender (wherever
brought) against the Borrower or its successors or assigns, as if each Guarantor
were a party to such action, even though one or both of Guarantors were not
joined as parties in such action.
(e) Each Guarantor hereby jointly and severally agrees to
pay all expenses (including, without limitation, attorneys' fees and
disbursements) which may be incurred by Lender in connection with the
enforcement of its rights under this Guaranty, whether or not suit is initiated;
provided, however, that such expenses shall be paid by Lender if a final
judgment in favor of both Guarantors (or one Guarantor if only a single
Guarantor was a party to the action in which such judgment was rendered) is
rendered by a court of competent jurisdiction (the "Enforcement Costs").
Moreover, both Guarantors covenant and agree to indemnify and save Lender
harmless of and from, and defend it against, all losses, costs, liabilities,
expenses, damages or claims arising by reason of any Guarantor's failure to
perform its obligations hereunder (the "Indemnification Costs").
20. All obligations, covenants and agreements of the Guarantors
contained in or evidenced by this Guaranty shall be fully recourse (jointly and
severally) to the Guarantors and each and every asset of the Guarantors.
-9-
<PAGE> 37
21. Each of the Guarantors acknowledges and agrees that it has
jointly and severally guaranteed to Lender, the prompt and unconditional payment
of the Guaranteed Obligations, the Enforcement Costs and the Indemnification
Costs. Each Guarantor acknowledges and agrees that Lender, in its sole
discretion, may enforce this Guaranty against either (or both) of the Guarantors
for the entire amount of the Guaranteed Obligations without first or ever making
a demand upon or commencing or pursuing an action against the other Guarantor,
the Borrower or any other guarantor.
22. All of Lender's rights and remedies under each of the Loan
Documents or under this Guaranty are intended to be distinct, separate and
cumulative and no such right or remedy therein or herein mentioned is intended
to be in exclusion of or a waiver of any other right or remedy available to
Lender.
23. This Guaranty shall remain in full force and effect until
the payment in full of all of the Guaranteed Obligations at which time (subject
to Section 6 above) the Guarantors' obligations hereunder shall be deemed fully
discharged, and the Guarantors shall have no further liability under this
Guaranty.
IN WITNESS WHEREOF, the undersigned have caused this Guaranty to
be duly executed and delivered as of the date first set forth above.
GUARANTORS:
AMB PROPERTY II, L.P.
By:
-----------------------------
-----------------------------
[Printed Name and Title]
LONG GATE LLC
By:
-----------------------------
-----------------------------
[Printed Name and Title]
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 29,167
<SECURITIES> 0
<RECEIVABLES> 36,318
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 65,485
<PP&E> 2,929,724
<DEPRECIATION> 29,252
<TOTAL-ASSETS> 3,033,106
<CURRENT-LIABILITIES> 84,508
<BONDS> 1,129,430
0
0
<COMMON> 0
<OTHER-SE> 1,742,490
<TOTAL-LIABILITY-AND-EQUITY> 3,033,106
<SALES> 0
<TOTAL-REVENUES> 160,799
<CGS> 0
<TOTAL-COSTS> 101,229
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,561
<INCOME-PRETAX> 59,570
<INCOME-TAX> 0
<INCOME-CONTINUING> 59,570
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,911
<EPS-PRIMARY> 0.65
<EPS-DILUTED> 0.65
</TABLE>
