AMB PROPERTY LP, 10-K, 2000-03-30

AMB PROPERTY LP
10-K, 2000-03-30
REAL ESTATE

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

FORM 10-K
------------------------
(MARK ONE)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 001-14245

AMB PROPERTY, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C>
DELAWARE 94-3285362
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
</TABLE>

<TABLE>
<S> <C>
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)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

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 [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

State the aggregate market value of the voting stock held by non-affiliates
of the Registrant: Not applicable. No market for the Registrant's partnership
units exists and, therefore, a market value for such units cannot be determined.

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates by reference AMB Property Corporation's Proxy
Statement for its Annual Meeting of Stockholders which the Registrant
anticipates will be filed no later than 120 days after the end of AMB Property
Corporation's fiscal year pursuant to Regulation 14A.

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PART I

ITEM 1. BUSINESS

GENERAL

AMB Property, L.P., a Delaware limited partnership, is one of the leading
owners and operators of industrial real estate nationwide. Our investment
strategy is to become a leading provider of High Throughput Distribution, or
HTD, properties located near key passenger and air cargo airports, key
interstate highways and ports in major metropolitan areas, such as Atlanta,
Chicago, Dallas/Fort Worth, Northern New Jersey, the San Francisco Bay Area and
Southern California. Within each of our markets, we focus our investments in in-
fill submarkets. In-fill submarkets are characterized by supply constraints on
the availability of land for competing projects. High Throughput Distribution
facilities are designed to serve the high-speed, high-volume freight handling
needs of today's supply chain, as opposed to functioning as long-term storage
facilities. We believe that the rapid growth of the air-freight business, the
outsourcing of supply chain management to third party logistics companies and
e-commerce are indicative of the changes that are occurring in the supply chain
and the manner in which goods are distributed. We intend to focus our investment
activities primarily on industrial properties that we believe will benefit from
these changes.

As of December 31, 1999, we owned and operated 724 industrial buildings and
9 community shopping centers, totaling approximately 66.8 million rentable
square feet, located in 24 markets nationwide. As of December 31, 1999, these
properties were 95.9% leased. As of December 31, 1999, through our subsidiary,
AMB Investment Management, we also managed 46 industrial properties and retail
centers, aggregating approximately 4.6 million rentable square feet, which were
97.4% leased, on behalf of various institutional investors. In addition, we have
invested in 36 industrial buildings, totaling approximately 4.0 million rentable
square feet, through an unconsolidated joint venture.

During 1999, we initiated a plan to dispose of substantially all of our
retail centers. In three separate transactions with BPP Retail, LLC, a
co-investment entity between Burnham Pacific and the California Public
Employees' Retirement System, we disposed of a total of 25 retail centers,
aggregating approximately 4.3 million rentable square feet, for an aggregate
price of $560.3 million. We also disposed of an additional five retail centers,
totaling approximately 1.1 million rentable square feet, during 1999. As of
December 31, 1999, we had four additional retail centers, aggregating
approximately 1.2 million rentable square feet, which were held for divestiture.

In addition, during 1999, we disposed of 15 industrial buildings,
aggregating approximately 1.2 million rentable square feet, for an aggregate
price of approximately $39.6 million. As of December 31, 1999, we had four
industrial buildings, aggregating approximately 0.3 million rentable square
feet, which were held for divestiture. Over the next few years, we currently
intend to dispose of non-strategic assets and redeploy the resulting capital
into High Throughput Distribution properties that better fit our current
investment focus.

During 1999, as part of our Institutional Alliance Program, we formed AMB
Institutional Alliance Fund I, L.P., a multi-investor fund including 14 pension
funds, as of December 31, 1999, foundations and endowments that co-invested with
us. As of December 31, 1999, the Alliance Fund I had a total equity commitment
from third party investors totaling $150 million, which, when combined with debt
financings and our investment, creates a total committed capitalization of
approximately $375 million. The Alliance Fund I's investment objectives parallel
our strategy of acquiring and developing industrial distribution facilities in
major U.S. cities near airports, ports and key interstate highways. We also
formed AIG AMB Greenfield Investment Alliance, L.L.C., a joint venture with AIG
Global Real Estate Investment Corp. Each of AMB and AIG Global Real Estate
Investment Corp. committed $50 million to the Greenfield Alliance to acquire and
develop environmentally impaired properties in major U.S. markets, with
particular emphasis on acquiring undervalued industrial properties with
environmental issues located near major airports, ports and intermodal
locations.

We are engaged in the acquisition, ownership, operation, management,
renovation, expansion and development of primarily industrial properties in
target industrial markets nationwide. As of December 31, 1999, AMB Property
Corporation owned an approximate 95.0% general partnership interest in us,
excluding

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preferred units. As the sole general partner of the operating partnership, AMB
Property Corporation has the full, exclusive and complete responsibility and
discretion in our day-to-day management and control.

AMB Property Corporation is self-administered and self-managed and expects
that it has qualified and will continue to qualify as a real estate investment
trust for federal income tax purposes beginning with the year ending December
31, 1997. Because AMB Property Corporation is a self-administered and
self-managed real estate investment trust, our own employees perform our
administrative and management functions, rather than our relying on an outside
manager for these services. The principal executive office of AMB Property, L.P.
is located at 505 Montgomery Street, San Francisco, California 94111, and our
telephone number is (415) 394-9000. We also maintain a regional office in
Boston, Massachusetts. As of December 31, 1999, we employed 145 individuals, 109
at our San Francisco headquarters and 36 in our Boston office.

Unless the context otherwise requires, the terms "we," "us," "our" and
"AMB" refer to AMB Property, L.P. and our controlled subsidiaries. The following
marks are registered trademarks of AMB Property Corporation, our general
partner: AMB(R); Customer Alliance Program(R); Development Alliance Partners(R);
Development Alliance Program(R); Institutional Alliance Partners(R); Management
Alliance Partners(R); Management Alliance Program(R); UPREIT Alliance
Partners(R); and UPREIT Alliance Program(R). The following are unregistered
trademarks of AMB Property Corporation, our general partner: Broker Alliance
Partners(TM); Broker Alliance Program(TM); Customer Alliance Partners(TM);
eSpace(TM); HTD(TM); High Throughput Distribution(TM); Institutional Alliance
Program(TM); iSpace(TM); Strategic Alliance Partners(TM); and Strategic Alliance
Programs(TM).

OPERATING STRATEGIES

We are a full-service real estate company with in-house expertise in
acquisitions, development and redevelopment, asset management and leasing,
finance and accounting and market research. We have long-standing relationships
with many real estate management and development firms across the country
through our Strategic Alliance Programs, which provide local property
management, leasing and development services to us on a fee basis or in
development partnerships. We believe that real estate is fundamentally a local
business and that the most effective way for a national company such as us to
operate is by forging alliances with the best available partners in each of our
markets.

STRATEGIC ALLIANCE PROGRAMS

Our Strategic Alliance Programs are designed to build value by creating
mutually beneficial relationships. We believe that our strategy of forming
strategic alliances with local and regional real estate experts improves our
operating efficiency and flexibility, strengthens customer satisfaction and
retention and provides us with growth opportunities. Additionally, our strategic
alliances with institutional investors enhance our access to private capital and
our ability to finance transactions.

Our six Strategic Alliance Programs can be grouped into two categories:

- Operating Alliances, which allow us to form relationships with local or
regional real estate experts, thereby becoming their ally rather than
their competitor; and

- Investment Alliances, which allow us to establish relationships with a
variety of capital sources.

OPERATING ALLIANCES

Broker Alliance Program: Through our Broker Alliance Program, we work
closely with top local leasing companies in each of our markets, which brokers
provide us with access to high quality customers and local market knowledge.

Customer Alliance Program: Through our Customer Alliance Program, we seek
to build long-term working relationships with major customers. We are committed
to working with our customers, particularly our larger customers with multi-site
requirements, to make their property searches as efficient as possible.

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Development Alliance Program: Our strategy for the Development Alliance
Program is to form alliances with local development firms to jointly acquire,
renovate and develop properties to serve our customers' needs.

Management Alliance Program: Our strategy for the Management Alliance
Program is to develop close relationships with, and outsource property
management to, local property management firms that we believe to be among the
best in each of our markets. Our alliances with local property management firms
increase our flexibility, reduce our overhead expenses and improve our customer
service. In addition, these alliances provide us with local market information
related to customer activity and investment opportunities.

INVESTMENT ALLIANCES

Institutional Alliance Program: Our strategy for the Institutional Alliance
Program is to form alliances with institutional investors, which provide us with
access to private capital, including during those times when the public markets
are less attractive, and also provide us with a source of incremental fee income
and investment returns. This program allows our Institutional Alliance Partners
the opportunity to co-invest with us and to receive professional investment
management of their real estate assets.

UPREIT Alliance Program: Through our UPREIT Alliance Program, we issue our
limited partnership units to certain property owners in exchange for properties,
thus providing additional growth for the portfolio.

NATIONAL PROPERTY COMPANY

We own properties in 24 industrial markets throughout the U.S. We believe
that our national strategy enables us to:

- increase or decrease investments in certain regions to take advantage of
the relative strengths in different real estate markets;

- retain and accommodate customers as they consolidate or expand; and

- build brand awareness as well as customer loyalty through the delivery of
consistent service and quality product.

RESEARCH-DRIVEN, SELECT MARKET FOCUS

Within each of our markets, we focus on acquiring, redeveloping and
operating industrial properties in in-fill submarkets and within close proximity
to major passenger and air cargo airports, seaports or major highway systems. As
the strength of these markets continues to grow and the demand for well-located
properties increases, we believe that we will benefit from an upward pressure on
rents resulting from the increased demand combined with the relative lack of new
available space. Our decisions regarding the deployment of capital are
experience- and research-driven, and are based on thorough qualitative and
quantitative research and analysis of local markets. We employ a dedicated
research department using proprietary analyses, databases and systems.

We intend to focus our investment activities on HTD properties located in
the six largest industrial markets in the U.S., which dominate national
warehouse distribution activities -- Atlanta, Chicago, Dallas/ Fort Worth,
Northern New Jersey, the San Francisco Bay Area and Southern California -- as
well as properties located near major passenger and air cargo airports, seaports
or convenient to major highway systems. We also invest in selected regional
distribution markets including Boston, Houston, Miami, Minneapolis, Seattle and
Baltimore/Washington, D.C. We focus on these established industrial markets
because we believe they offer large and broadly diversified customer bases that
provide greater demand for properties over market cycles than secondary markets.
The in-fill submarkets in which we invest within these markets also typically
have significant barriers to new construction, including geographic or
regulatory supply constraints, and these markets typically benefit from an
access to large labor supplies and well-developed transportation networks. In
addition, we believe that these markets will benefit from the changes occurring
in the supply chain.

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DISCIPLINED INVESTMENT PROCESS

Over our 17-year history, we have established a disciplined approach to the
investment process. The investment process is subject to the overall policy
direction of our management's investment committee. The stages in the investment
process are highly integrated, with investment committee review at critical
points in the process.

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

On an annual basis, each regional manager, with input from our research
department and the support of the acquisition officer with responsibility for
the applicable market, prepares a strategic plan for each of our significant
markets, which plan is presented to and reviewed by our investment committee.
Each strategic plan reviews the conformity of each of our properties with our
investment strategy and provides the basis for our acquisition and divestiture
strategies. We intend, over time, to strategically divest properties that do not
conform with our current investment focus.

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

FINANCING STRATEGY

In order to maintain financial flexibility and facilitate the rapid
deployment of capital over market cycles, we intend to operate with a
debt-to-total market capitalization ratio of approximately 45% or less, although
our organizational documents do not limit the amount of indebtedness that we may
incur. Additionally, we intend to continue to structure our balance sheet in
order to maintain investment-grade ratings. We also intend to keep the majority
of our assets unencumbered to facilitate such ratings. As of December 31, 1999,
our debt-to-total market capitalization ratio was approximately 35.2% and our
debt-to-total book capitalization ratio was approximately 35.9%. We calculate
our debt-to-total market capitalization ratio by adding our share of
consolidated debt to our share of unconsolidated joint venture debt and dividing
by our total market capitalization, including preferred stock and preferred
units. We calculate our debt-to-total book capitalization ratio by dividing our
share of total debt by the sum of our total debt plus total equity and preferred
stock recorded at book value.

We have 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 bears interest at a rate equal to LIBOR plus 90 to
120 basis points, depending upon our then current debt rating (currently LIBOR
plus 90 basis points). We presently plan to use available borrowings under our
unsecured credit facility for property acquisitions, developments and for
general corporate purposes. As of December 31, 1999, the available borrowings
under our unsecured credit facility were $417.0 million. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Item 14. Note 5 of Notes to
Consolidated Financial Statements" included in this report.

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under our unsecured credit facility, other forms of secured or unsecured
financing, proceeds from equity or debt offerings by us or AMB Property
Corporation (including issuances of units by us or a subsidiary or shares of
stock of AMB Property Corporation) and proceeds from divestitures of properties.
Additionally, our co-investment program will also serve as a significant source
of capital for acquisitions and developments.

AMB INVESTMENT MANAGEMENT

AMB Investment Management, Inc., a Maryland corporation, provides real
estate investment management services on a fee basis to clients. We hold all of
the non-voting preferred stock of AMB Investment Management, representing an
approximate 95% economic interest in AMB Investment Management. All of the
common stock of AMB Investment Management, representing an approximate 5%
economic interest in AMB Investment Management, is owned by AMB Property
Corporation's current or former executive officers and a former executive
officer of AMB Investment Management. AMB Investment Management, Inc. conducts
its operations through AMB Investment Management Limited Partnership, a Maryland
limited partnership, of which it is the sole general partner. We intend to grow
this business through our co-investment program.

We co-invest with clients of AMB Investment Management, to the extent such
clients newly commit investment capital, through partnerships, limited liability
companies or joint ventures. We currently use a co-investment formula with each
client whereby we will own at least a 20% interest in all ventures. During 1999,
we consummated two co-investments. The first was a separate account
co-investment venture, in which we own an approximate 50% interest, with total
gross book value at December 31, 1999 of approximately $159.7 million. The
second was a co-investment fund, in which we owned at December 31, 1999 an
approximate 25% interest, with total gross book value at December 31, 1999 of
approximately $98.5 million. In general, we control all significant operating
and investment decisions in our co-investment entities.

STRATEGIES FOR GROWTH

We intend to achieve our objectives of long-term sustainable growth in net
operating income, or NOI, and maximization of long-term value principally by
growth through:

- operations, resulting from rent increases, maintenance of above-average
occupancy rates and implementation of expense controls;

- continued property acquisitions and capital redeployment through
strategic divestitures of properties; and

- renovation, expansion and development of selected properties.

GROWTH THROUGH OPERATIONS

We seek to generate internal growth through rent increases on existing
space and renewal on re-tenanted space, by maintaining a high occupancy rate of
our properties and by controlling expenses by capitalizing on the economies of
owning, operating and growing a large national portfolio. As of December 31,
1999, our industrial properties and retail centers owned as of that date were
95.9% leased and 92.4% leased, respectively. During the 12 months ended December
31, 1999, we increased average base rental rates (on a cash basis) by 12.5% from
the expiring rent for that space, on leases entered into or renewed during such
period, representing 7.7 million rentable square feet. Annualized base rent
represents the monthly contractual amount under existing leases at the end of
the year, multiplied by 12. This amount excludes expense reimbursements, rental
abatements and percentage rents.

GROWTH THROUGH ACQUISITIONS AND CAPITAL REDEPLOYMENT

We believe that our significant acquisition experience, our alliance-based
operating strategy and our extensive network of property acquisition sources
will continue to provide opportunities for external growth. We believe that our
relationship with third party local property management firms through our
Management

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Alliance Program also will create acquisition opportunities as such managers
market properties on behalf of sellers. Our operating structure also enables us
to acquire properties through our UPREIT Alliance Program in exchange for our
limited partnership units, thereby enhancing our attractiveness to owners and
developers seeking to transfer properties on a tax-deferred basis. In addition
to acquisitions, we seek to redeploy capital from non-strategic assets into
properties that better fit our current investment focus.

Between January 1, 1999 and December 31, 1999, we disposed of 29 retail
centers and 15 industrial buildings and re-invested approximately $471.9 million
(including our share of co-investments) in:

- 154 industrial buildings, aggregating approximately 8.4 million rentable
square feet; and

- $7.8 million in an unconsolidated limited partnership joint venture for
the development of an industrial property, totaling approximately 0.5
million rentable square feet upon completion.

Of the total investment during such period, we invested approximately
$235.0 million through our UPREIT Alliance Program, approximately $59.0 million
through our Institutional Alliance Program, $39.1 million through our Management
Alliance Program, and $8.9 million through our Development Alliance Program.

We are generally in various stages of negotiations for a number of
acquisitions, which may include acquisitions of individual properties, large
multi-property portfolios and other real estate companies. There can be no
assurance that we will consummate any of these acquisitions. Such acquisitions,
if we consummate them, may be material individually or in the aggregate. Sources
of capital for acquisitions may include undistributed cash flow from operations,
borrowings under our unsecured credit facility, other forms of secured or
unsecured financing, issuances of debt or equity securities by us or AMB
Property Corporation (including issuances of units by us or a subsidiary or
shares of stock of AMB Property Corporation), proceeds from divestitures of
properties, and assumption of debt related to the acquired properties.

GROWTH THROUGH DEVELOPMENT

We believe that renovation and expansion of value-added properties and
development of well-located, high-quality industrial properties should continue
to provide us with attractive opportunities for increased cash flow and a higher
rate of return than we may obtain from the purchase of fully leased, renovated
properties. Value-added properties are typically characterized as properties
with available space or near-term leasing exposure, properties that are
well-located but require redevelopment or renovation, and occasionally
undeveloped land acquired in connection with another property that provides an
opportunity for development. Value-added properties require significant
management attention and/or capital investment to maximize their return. We have
developed the in-house expertise to create value through acquiring and managing
value-added properties and believe our national market presence and expertise
will enable us to continue to generate and capitalize on these opportunities.
Through our Development Alliance Program, we have established strategic
alliances with national and regional developers to enhance our development
capabilities.

The multidisciplinary backgrounds of our employees provide us with the
skills and experience to capitalize on strategic renovation, expansion and
development opportunities. Several of our managers have extensive experience in
real estate development, both with us and with national development firms. We
generally pursue development projects in joint ventures with local developers.
In this way, we leverage the development skill, access to opportunities and
capital of such developers, transferring a significant amount of the development
risk to them and eliminating the need and expense of an in-house development
staff. Under a typical joint venture agreement with a Development Alliance
Partner, we would fund 95% of the construction costs and our partner would fund
5%. Upon completion, we generally would purchase our partner's interest in the
joint venture.

As of December 31, 1999, we had committed to invest approximately $306.4
million to develop approximately 4.3 million rentable square feet. Approximately
$257.2 million of this investment is through our Development Alliance Program.
See "Development Pipeline."

FACTORS THAT MAY AFFECT FUTURE FINANCIAL RESULTS

See: "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Factors that May Affect Future Financial Results"
for a complete discussion of the various risks which could adversely affect us.

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ITEM 2. PROPERTIES

The properties that we owned as of December 31, 1999 are divided into two
operating divisions. We have broken down these two operating divisions into 24
identifiable markets. We have provided this breakdown for external reporting
purposes only. It reflects the key markets of interest to our unitholders and
noteholders and does not reflect how we are operationally managed. See "Item 14.
Note 13 of Notes to Consolidated Financial Statements" for segment information
related to our operations.

INDUSTRIAL PROPERTIES

At December 31, 1999, we owned 724 industrial buildings aggregating
approximately 65.2 million rentable square feet, located in 24 markets
nationwide. Our industrial properties accounted for $306.0 million, or 93.9%, of
our annualized base rent derived from our properties as of December 31, 1999.
Our industrial properties were 95.9% leased to over 2,240 customers as of the
same date, the largest of which accounted for no more than 1.6% of our
annualized base rent from our industrial properties.

Property Characteristics. Our industrial properties, which consist
primarily of warehouse distribution facilities suitable for single or multiple
customers, are typically comprised of multiple buildings. The following table
identifies characteristics of our typical industrial buildings:

<TABLE>
<CAPTION>
TYPICAL BUILDING TYPICAL RANGE
---------------- -------------
<S> <C> <C> <C> <C>
Rentable square feet.......................... 100,000 75,000 - 200,000
Clear height.................................. 24 ft 16 - 32 ft.
Building depth................................ 200 ft 120 - 300 ft.
Truck court depth............................. 110 ft 90 - 130 ft.
Loading dock & grade.......................... Dock or Dock & Grade
Parking spaces per 1,000 square feet.......... 1.0 0.5 - 2.0
Doors per 1,000 square feet................... 0.2 0.1 - 2.0
Square footage per customer................... 35,000 15,000 - 150,000
Office finish................................. 8% 3% - 20%
Site coverage................................. 40% 35% - 50%
</TABLE>

Lease Terms. Our industrial properties are typically subject to lease on a
"triple net basis," defined as leases in which customers pay their proportionate
share of real estate taxes, insurance and operating costs, or subject to leases
on a "modified gross basis," defined as leases in which customers pay expenses
over certain threshold levels. Lease terms typically range from three to ten
years, with an average of seven years, excluding renewal options. The majority
of the industrial leases do not include renewal options.

Overview of Major Target Markets. Our industrial properties are located
near key passenger and air cargo airports, key interstate highways and ports in
major metropolitan areas, such as Atlanta, Chicago, Dallas/Fort Worth, Northern
New Jersey, the San Francisco Bay Area and Southern California. We believe our
industrial properties' strategic location, transportation network and
infrastructure, and large consumer and manufacturing bases support strong demand
for industrial space. According to statistics published by CB Richard
Ellis/Torto Wheaton Research, the national hub markets listed above are six of
the nation's eight largest warehouse markets and, as of December 31, 1999,
comprised 42% of the warehouse inventory of the 47 industrial markets tracked by
them. According to statistics published by Regional Financial Associates, as of
December 31, 1999, the combined population of these markets was approximately
44.2 million, and the amount of per capita warehouse space was 19.0% above the
average for those 47 industrial markets.

Within these metropolitan areas, our industrial properties are concentrated
in in-fill locations (which are characterized by limited new construction
opportunities due to high population densities and low levels of available land
that could be developed into competitive industrial properties) within
established, relatively large submarkets (markets within a metropolitan area in
which the competitive environment for one or more property types is largely
dependent upon the supply of such property type in such market rather than the
supply of such property type in other portions of such metropolitan area) which
we believe should provide a higher rate of occupancy and rent growth than
properties located elsewhere. These in-fill locations are

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typically near major passenger and air cargo facilities, seaports or convenient
to major highways and rail lines, and are proximate to a diverse labor pool.
There is typically broad demand for industrial space in these centrally located
submarkets due to a diverse mix of industries and types of industrial uses,
including warehouse distribution, light assembly and manufacturing. We generally
avoid locations at the periphery of metropolitan areas where there are fewer
supply constraints. Small metropolitan areas or cities without a heavy
concentration of warehouse activity typically have few, if any,
supply-constrained locations (those areas typified by significant population
densities, a limited number of existing industrial customers and a low
availability of land which could be developed into competitive space for
additional industrial customers).

INDUSTRIAL PROPERTY SUMMARY

As of December 31, 1999, the 724 industrial buildings were diversified
across 24 markets nationwide. The average age of our industrial properties is 12
years (since the property was built or substantially renovated), which we
believe should result in lower operating costs over the long term. The following
table represents properties in which we own a fee simple interest or a
controlling interest (consolidated), and excludes properties in which we only
own a non-controlling interest (unconsolidated).
<TABLE>
<CAPTION>
PERCENTAGE PERCENTAGE
TOTAL OF TOTAL ANNUALIZED OF TOTAL
NUMBER OF RENTABLE RENTABLE PERCENTAGE BASE RENT ANNUALIZED NUMBER
INDUSTRIAL PROPERTIES BUILDINGS SQUARE FEET SQUARE FEET LEASED (000'S)(1) BASE RENT OF LEASES
--------------------- --------- ----------- ----------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
HUB MARKETS:
Atlanta....................... 45 4,318,509 6.6% 95.3% $ 18,083 5.9% 149
Chicago....................... 81 7,397,815 11.3% 94.6% 28,096 9.2% 168
Dallas/Ft. Worth.............. 62 5,328,753 8.2% 95.0% 19,320 6.3% 174
Northern New Jersey........... 19 4,025,575 6.2% 94.2% 18,291 6.0% 37
San Francisco Bay Area........ 118 7,547,866 11.6% 97.4% 56,108 18.3% 325
Southern California........... 85 6,711,564 10.3% 97.4% 29,362 9.6% 184
--- ---------- ----- ----- -------- ----- -----
Subtotal/Weighted Average... 410 35,330,082 54.2% 95.8% 169,260 55.3% 1,037
OTHER MARKETS:
Austin........................ 6 735,240 1.1% 100.0% 5,054 1.7% 22
Baltimore/Washington D.C...... 59 4,075,570 6.3% 95.3% 24,463 8.0% 287
Boston........................ 39 4,549,181 7.0% 99.0% 19,506 6.4% 61
Charlotte..................... 12 831,974 1.3% 94.1% 3,735 1.2% 30
Cincinnati.................... 6 811,774 1.3% 94.9% 2,541 0.9% 10
Columbus...................... 2 465,433 0.7% 100.0% 1,363 0.5% 2
Denver........................ 2 63,080 0.1% 88.3% 263 0.1% 16
Houston....................... 22 1,951,787 3.0% 88.2% 6,272 2.0% 109
Memphis....................... 19 2,259,162 3.5% 93.7% 9,231 3.0% 58
Miami......................... 31 2,703,635 4.1% 98.4% 16,683 5.5% 123
Minneapolis................... 42 4,442,700 6.8% 97.6% 17,460 5.7% 206
New Orleans................... 5 411,689 0.6% 100.0% 1,906 0.6% 50
Orlando....................... 18 1,678,910 2.6% 94.9% 6,242 2.0% 78
Portland...................... 5 676,104 1.0% 100.0% 2,863 0.9% 10
Sacramento.................... 1 182,437 0.3% 100.0% 725 0.2% 1
San Diego..................... 5 276,167 0.4% 77.3% 1,643 0.5% 14
Seattle....................... 37 3,483,298 5.3% 98.8% 16,154 5.3% 127
Wilmington.................... 3 266,141 0.4% 54.0% 636 0.2% 4
--- ---------- ----- ----- -------- ----- -----
Subtotal/Weighted Average... 314 29,864,282 45.8% 96.1% 136,740 44.7% 1,208
--- ---------- ----- ----- -------- ----- -----
Total/Weighted
Average............... 724 65,194,364 100.0% 95.9% $306,000 100.0% 2,245
=== ========== ===== ===== ======== ===== =====

<CAPTION>
ANNUALIZED
BASE RENT
PER LEASED
INDUSTRIAL PROPERTIES SQUARE FOOT
--------------------- -----------
<S> <C>
HUB MARKETS:
Atlanta....................... $4.40
Chicago....................... 4.02
Dallas/Ft. Worth.............. 3.82
Northern New Jersey........... 4.82
San Francisco Bay Area........ 7.63
Southern California........... 4.49
-----
Subtotal/Weighted Average... 5.00
OTHER MARKETS:
Austin........................ 6.87
Baltimore/Washington D.C...... 6.30
Boston........................ 4.33
Charlotte..................... 4.77
Cincinnati.................... 3.30
Columbus...................... 2.93
Denver........................ 4.72
Houston....................... 3.64
Memphis....................... 4.36
Miami......................... 6.27
Minneapolis................... 4.03
New Orleans................... 4.63
Orlando....................... 3.92
Portland...................... 4.23
Sacramento.................... 3.97
San Diego..................... 7.69
Seattle....................... 4.69
Wilmington.................... 4.43
-----
Subtotal/Weighted Average... 4.77
-----
Total/Weighted
Average............... $4.89
=====
</TABLE>

- ---------------
(1) Annualized base rent represents the monthly contractual amount under
existing leases at December 31, 1999, multiplied by 12. This amount excludes
expense reimbursements and rental abatements.

9
<PAGE> 10

INDUSTRIAL PROPERTY CUSTOMER INFORMATION

Largest Industrial Property Customers. Our 25 largest industrial property
customers by annualized base rent are set forth in the table below.

<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
NUMBER AGGREGATE AGGREGATE ANNUALIZED AGGREGATE
OF RENTABLE LEASED BASE RENT ANNUALIZED
INDUSTRIAL CUSTOMER NAME(1) PROPERTIES SQUARE FEET SQUARE FEET(2) (000S) BASE RENT(3)
--------------------------- ---------- ----------- -------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Webvan Group, Inc..................... 3 991,598 1.5% $ 4,825 1.6%
Challenge Air Cargo................... 2 277,673 0.4% 2,562 0.8%
Norwest Mortgage, Inc................. 1 202,920 0.3% 2,461 0.8%
International Paper Company........... 4 446,422 0.7% 2,317 0.8%
Air Express International............. 2 265,996 0.4% 1,957 0.6%
Rite Aid.............................. 2 524,840 0.8% 1,779 0.6%
Exel Logistics........................ 2 471,296 0.7% 1,737 0.6%
Dell USA, L.P......................... 1 285,000 0.4% 1,700 0.6%
Home Depot USA, Inc................... 3 476,026 0.7% 1,697 0.6%
Sequus Pharmaceuticals................ 1 129,449 0.2% 1,687 0.6%
Federal Express Corporation........... 3 198,735 0.3% 1,658 0.5%
Sage Enterprises...................... 3 245,289 0.4% 1,652 0.5%
C&S Wholesale Grocers, Inc............ 1 167,812 0.3% 1,634 0.5%
Acer America.......................... 2 271,487 0.4% 1,612 0.5%
Office Depot.......................... 3 402,298 0.6% 1,567 0.5%
AM Cosmetics.......................... 1 326,500 0.5% 1,501 0.5%
Wakefern Food Corporation............. 1 419,900 0.6% 1,491 0.5%
Boise Cascade Corporation............. 2 400,655 0.6% 1,478 0.5%
Bradlees Stores, Inc.................. 1 600,000 0.9% 1,453 0.5%
Boeing Company........................ 2 207,345 0.3% 1,413 0.5%
United States Postal Service.......... 2 433,359 0.7% 1,372 0.4%
Eagle Hardware & Garden, Inc.......... 1 304,801 0.5% 1,310 0.4%
Cosmair, Inc.......................... 1 303,843 0.5% 1,291 0.4%
Fujitsu America....................... 2 179,628 0.3% 1,271 0.4%
Schmalbach-Lubeca..................... 2 339,104 0.5% 1,265 0.4%
--------- ---- ------- ----
Total/Weighted Average...... 8,871,976 13.6% $44,690 14.6%
========= ==== ======= ====
</TABLE>

- ---------------
(1) Customer(s) may be a subsidiary of or an entity affiliated with the named
customer.

(2) Computed as aggregate rentable square feet divided by the aggregate leased
square feet of our industrial properties.

(3) Computed as annualized base rent divided by the aggregate annualized base
rent of our industrial properties.

10
<PAGE> 11

INDUSTRIAL PROPERTY LEASE EXPIRATIONS

The following table summarizes the lease expirations for our industrial
properties for leases in place as of December 31, 1999, without giving effect to
the exercise of renewal options or termination rights, if any, at or prior to
the scheduled expirations.

<TABLE>
<CAPTION>
ANNUALIZED
RENTABLE PERCENTAGE ANNUALIZED RENT OF PERCENTAGE OF
SQUARE OF TOTAL RENT OF EXPIRING ANNUALIZED
NUMBER OF FOOTAGE OF RENTABLE EXPIRING LEASES RENT OF
LEASES EXPIRING SQUARE LEASES PER SQUARE EXPIRING
YEAR OF LEASE EXPIRATION(5) EXPIRING LEASES FOOTAGE(4) (000S)(2) FOOT(3) LEASES(2)
--------------------------- --------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
2000(4)........................ 567 10,080,536 16.1% $ 48,926 $4.85 14.5%
2001........................... 483 10,234,133 16.3% 54,996 5.37 16.3%
2002........................... 480 11,653,935 18.6% 61,013 5.24 18.1%
2003........................... 277 8,962,349 14.3% 47,785 5.33 14.2%
2004........................... 245 8,673,811 13.8% 50,034 5.77 14.8%
2005........................... 70 3,373,938 5.4% 18,611 5.52 5.5%
2006........................... 41 2,040,777 3.3% 12,375 6.06 3.7%
2007........................... 19 1,910,431 3.0% 10,471 5.48 3.1%
2008........................... 21 1,523,820 2.4% 10,560 6.93 3.1%
2009........................... 30 2,639,741 4.2% 14,624 5.54 4.3%
Thereafter..................... 17 1,552,025 2.5%_ 7,590 4.89 2.3%
----- ---------- ----- --------- ----- -----
Total/Weighted
Average............ 2,250 62,645,496 100.0% $ 336,985 $5.38 100.0%
===== ========== ===== ========= ===== =====
</TABLE>

- ---------------
(1) Schedule includes executed leases that commence after December 31, 1999.
Schedule excludes leases expiring prior to January 1, 2000.

(2) Calculated as monthly rent at expiration multiplied by 12.

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

(4) Includes leases encompassing 488,800 square feet which are on a
month-to-month basis.

(5) Represents percentage of total square footage of expiring leases.

RETAIL PROPERTIES

At December 31, 1999, we owned 9 retail centers aggregating approximately
1.6 million rentable square feet, 5 of which are grocer-anchored. Our retail
properties accounted for $20.0 million, or 6.1%, of annualized base rent derived
from our properties as of December 31, 1999. Our retail properties were 92.4%
leased to over 240 customers, the largest of which accounted for 5.3% of
annualized base rent from our retail properties as of such date. Our retail
properties have an average age of six years since built, expanded or renovated.

During 1999, we initiated a plan to dispose of substantially all of our
retail centers. In three separate transactions with BPP Retail, LLC, we disposed
of a total of 25 retail centers, aggregating approximately 4.3 million rentable
square feet, for an aggregate price of $560.3 million. We also disposed of an
additional five retail centers, totaling approximately 1.1 million rentable
square feet, during 1999. As of December 31, 1999, we had four additional retail
centers, aggregating approximately 1.2 million rentable square feet, which were
held for divestiture.

11
<PAGE> 12

RETAIL PROPERTY SUMMARY

Rentable square footage occupied by anchor customers accounted for 61.9% of
the aggregate square footage of our retail properties as of December 31, 1999.
Annualized base rent as of such date for our 25 largest customers was
approximately $10.2 million, representing approximately 51.1% of annualized base
rent for all of our retail properties. Annualized base rent for the remaining
retail customers was approximately $9.8 million as of the same date,
representing approximately 48.9% of the annualized base rent for all of our
retail properties. The following table sets forth, on a market basis, the
rentable square footage leased to anchor customers and non-anchor customers as
of December 31, 1999, and represents properties in which we own a fee simple
interest or a controlling interest (consolidated), and excludes properties in
which we only own a non-controlling interest (unconsolidated).

<TABLE>
<CAPTION>
LEASED AVERAGE
ANCHOR TOTAL BASE RENT
RENTABLE RENTABLE PERCENTAGE ANNUALIZED NUMBER PER SQUARE
RETAIL PROPERTIES SQUARE FEET SQUARE FEET LEASED BASE RENT(1) OF LEASES FOOT(2)
----------------- ----------- ----------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Around Lenox.................... 60,632 120,891 77.0% $ 1,540 13 $16.55
Howard & Western S.C. .......... 26,421 76,870 49.2% 515 5 13.63
Kendall Mall(3)(6).............. 194,550 299,582 97.2% 4,174 46 14.34
Manhattan Village S.C.(3)(6).... 225,791 424,112 99.2% 7,016 99 16.68
Mazzeo Drive.................... 88,420 88,420 100.0% 717 1 8.11
Northridge Plaza(3)(4).......... 124,650 182,049 90.9% 1,347 18 8.14
Palm Aire(3)(4)(6).............. 59,203 118,301 83.2% 1,071 22 10.88
Springs Gate(3)(5).............. n/a n/a n/a n/a n/a n/a
The Plaza at Delray(3)(6)....... 237,517 331,846 97.2% 3,642 43 11.29
--------- --------- ----- ------- --- ------
Total/Weighted
Average............. 1,017,184 1,642,071 92.4% $20,022 247 $13.19
========= ========= ===== ======= === ======
</TABLE>

- ---------------
(1) Annualized base rent means the monthly contractual amount under existing
leases at December 31, 1999, multiplied by 12. This amount excludes expense
reimbursements, rental abatements and percentage rents.

(2) Calculated as total Annualized Base Rent divided by total rentable square
feet actually leased as of December 31, 1999.

(3) We hold an interest in this property through a joint venture interest in a
limited partnership.

(4) This property is being redeveloped. All calculations are based on rentable
square feet existing as of December 31,1999.

(5) This property consists of land held for future development.

(6) This property is being held for divestiture as of December 31, 1999.

12
<PAGE> 13

OPERATING AND LEASING STATISTICS

TOTAL PORTFOLIO SUMMARY

The following table summarizes key operating and leasing statistics for all
of our properties as of and for the year ended December 31, 1999.

<TABLE>
<CAPTION>
INDUSTRIAL RETAIL TOTAL
----------- ---------- -----------
<S> <C> <C> <C>
Square feet owned at December 31, 1999(1).... 65,194,364 1,642,071 66,836,435
Occupancy percentage at December 31, 1999.... 95.9% 92.4% 95.9%
Lease expirations as percentage of annual
base rent (next 12 months)................. 14.5% 14.1% 14.5%
Weighted average lease term.................. 6 years 14 years 7 years
Tenant retention:
-- Year.................................... 72.0% 40.8% 72.0%
-- Trailing average (1/01/97 to
12/31/99)............................... 72.4% 84.0% 72.8%
Rent increases on renewals and rollovers:
-- Year.................................... 12.9% 6.8% 12.5%
Same store cash basis net operating income
growth(2)(3):
-- Year.................................... 5.9% 5.5% 5.9%
Second generation tenant improvements and
leasing commissions per sq. ft.:
-- Year:
Renewals................................ $ 1.22 $ 1.26 $ 1.22
Re-tenanted............................. 2.74 2.55 2.74
----------- ---------- -----------
Weighted average................... $ 1.64 $ 1.37 $ 1.64
=========== ========== ===========
-- Trailing average (1/01/97 to
12/31/99)............................... $ 1.41 $ 3.72 $ 1.50
=========== ========== ===========
Recurring capex(4)
-- Year.................................... $ 26,466 $ 823 $ 27,289
=========== ========== ===========
</TABLE>

- ---------------
(1) In addition to owned square feet, we manage, through our subsidiary, AMB
Investment Management, 3.7 million, 0.7 million, and 0.1 million additional
square feet of industrial, retail, and other properties, respectively. We
also have an investment in 4.0 million square feet of industrial properties
through our investment in an unconsolidated joint venture.

(2) Consists of industrial buildings and retail centers aggregating 35.1 million
and 0.7 million square feet, respectively, that have been owned by us since
January 1, 1998, and excludes development properties prior to stabilization.
See "Item 14. Note 15 of Notes to Consolidated Financial Statements" for
total property net operating income by segment.

(3) Net operating income, or NOI, consists of rental revenues, including
reimbursements and excluding straight-line rents, less property level
operating expenses.

(4) Includes leasing costs and building improvements.

13
<PAGE> 14

SAME STORE SUMMARY

The following table summarizes key operating and leasing statistics for our
same store properties as of and for the year ended December 31, 1999. For an
explanation of our same store properties, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Results of
Operations."

<TABLE>
<CAPTION>
INDUSTRIAL RETAIL(1) TOTAL
---------- --------- ----------
<S> <C> <C> <C>
Square feet in same store pool................... 35,128,748 723,694 35,852,442
Occupancy percentage at December 31, 1999........ 96.2% 98.4% 96.2%
Tenant retention:
-- Year........................................ 69.2% 5.9% 69.1%
Rent increases on renewals and rollovers:
-- Year........................................ 12.8% 6.8% 12.7%
Cash basis net operating income growth(2)
-- Year:
Revenues.................................... 4.3% 5.9% 4.3%
Expenses.................................... (0.6)% 6.8% 0.0%
NOI....................................... 5.9% 5.5% 5.9%
</TABLE>

- ---------------
(1) Adjusted to remove the effects of divested properties.

(2) Net operating income, or NOI, consists of rental revenues, including
reimbursements and excluding straight-line rents, less property level
operating expenses.

HISTORICAL OCCUPANCY RATES, AVERAGE BASE RENTS, RENT INCREASES AND TENANT
RETENTION RATES

The following table sets forth weighted average occupancy rates and average
base rents based on square feet leased of our industrial properties and retail
centers as of and for the periods presented. The following table also sets forth
information relating to tenant retention rates and average rent increases (cash
basis) on renewal and re-tenanted space for our industrial properties and retail
properties for the periods presented.

<TABLE>
<CAPTION>
INDUSTRIAL RETAIL TOTAL
---------- ------ -----
<S> <C> <C> <C>
OCCUPANCY RATES:
1997................................................... 95.7% 96.1% 95.8%
1998................................................... 96.0% 94.6% 95.8%
1999................................................... 95.9% 92.4% 95.9%
AVERAGE BASE RENT(1):
1997................................................... $4.26 $11.98 n/a
1998................................................... $4.55 $11.98 n/a
1999................................................... $4.89 $13.19 n/a
RENTAL INCREASES:
1997................................................... 13.0% 10.1% 11.0%
1998................................................... 14.6% 13.3% 14.3%
1999................................................... 12.9% 6.8% 12.5%
TENANT RETENTION RATES:
1997................................................... 69.5% 87.8% 70.3%
1998................................................... 74.8% 84.1% 75.4%
1999................................................... 72.0% 40.8% 72.0%
</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 leased for the period.

14
<PAGE> 15

SAME STORE SUMMARY

- ---------------
(1) Adjusted to remove the effects of divested properties.

(2) Net operating income, or NOI, consists of rental revenues, including
reimbursements and excluding straight-line rents, less property level
operating expenses.

HISTORICAL OCCUPANCY RATES, AVERAGE BASE RENTS, RENT INCREASES AND TENANT
RETENTION RATES

14
<PAGE> 16

RECURRING TENANT IMPROVEMENTS AND LEASING COMMISSIONS PER SQUARE FOOT LEASED

The table below summarizes for our industrial properties and retail
properties, separately, the recurring tenant improvements and leasing
commissions per square feet 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 customer, excluding costs
incurred to relocate customers 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>
YEAR ENDED DECEMBER 31,
----------------------- WEIGHTED
1997 1998 1999 AVERAGE
----- ----- ----- --------
<S> <C> <C> <C> <C>
INDUSTRIAL PROPERTIES:
Expenditures per renewed square foot leased..... $1.05 $0.92 $1.22 $1.07
Expenditures per re-tenanted square foot
leased....................................... 1.62 2.08 2.74 2.22
----- ----- ----- -----
Weighted average................................ $1.30 $1.10 $1.64 $1.39
===== ===== ===== =====
RETAIL PROPERTIES:
Expenditures per renewed square foot leased..... $4.25 $1.34 $1.26 $2.26
Expenditures per re-tenanted square foot
leased....................................... 7.92 9.99 2.55 7.66
----- ----- ----- -----
Weighted average................................ $6.41 $2.64 $1.37 $4.01
===== ===== ===== =====
TOTAL PROPERTIES:
Expenditures per renewed square foot leased..... $1.23 $0.95 $1.22 $1.11
Expenditures per re-tenanted square foot
leased....................................... 2.23 2.47 2.74 2.48
----- ----- ----- -----
Weighted average................................ $1.68 $1.18 $1.64 $1.50
===== ===== ===== =====
</TABLE>

15
<PAGE> 17

DEVELOPMENT PIPELINE

The following table sets forth the properties owned by us as of December
31, 1999 which were undergoing renovation, expansion or new development. No
assurance can be given that any of such projects will be completed on schedule
or within budgeted amounts.

INDUSTRIAL DEVELOPMENT PROJECTED DELIVERIES
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
ESTIMATED ESTIMATED ESTIMATED
DEVELOPMENT ALLIANCE STABILIZATION SQUARE FEET AT TOTAL
PROJECT LOCATION PARTNER(TM) DATE(1) COMPLETION INVESTMENT(2)
------- -------- -------------------- ------------- -------------- -------------
<C> <S> <C> <C> <C> <C> <C>
2000 DELIVERIES
1. Suwanee Creek (phase I)........ Atlanta, GA Seefried Properties January 2000 249,000 $ 8,500
2. North Great SW Industrial
Park........................... Dallas, TX Trammell Crow March 2000 215,000 10,500
Company
3. Hempstead Highway (phase I).... Houston, TX Cypress Realty May 2000 292,000 11,500
4. Northwest Crossing (phase I)... Houston, TX Trammell Crow June 2000 178,000 6,900
Company
5. Orlando Central Park (phase
I)............................. Orlando, FL Trammell Crow July 2000 306,000 12,100
Company
6. Suwanee Creek (phase II)....... Atlanta, GA Seefried Properties July 2000 241,000 8,000
7. South River Park (phase II).... Cranbury, NH Trammell Crow August 2000 281,000 13,300
Company
8. Cabot Business Park (phase
I)............................. Mansfield, MA National Development September 2000 98,000 8,900
of NE
9. Cabot Business Park (phase
II)............................ Mansfield, MA National Development December 2000 186,000 9,600
of NE
--------- --------
Total 2000 Deliveries.......... 2,046,000 89,300(5)
2001 DELIVERIES
10. DFWII/Air Cargo................ Dallas/Fort Trammell Crow February 2001 189,000 17,600
Worth, TX Company
11. Pico Rivera (phase I).......... Pico Rivera, CA Majestic Realty February 2001 520,000 24,300
12. LA Media Tech Center (phase
I)............................. Los Angeles, CA Legacy Partners April 2001 399,000 40,200
13. Pier I(6)...................... San Francisco, CA None June 2001 152,000 40,600
14. Port Northwest Industrial Park
(phase I)...................... Houston, TX Dienna Nelson September 2001 364,200 12,400
Augustine
15. Portland Air Cargo............. Portland, OR Trammell Crow December 2001 159,500 11,800
Company
--------- --------
Total 2001 Deliveries.......... 1,783,700 146,900(5)
--------- --------
Total Scheduled
Deliveries(3).................. 3,829,700(4) $236,200(3)
========= ========
</TABLE>

- ---------------
(1) Estimated stabilization date represents management's current estimate of
when capital improvements for repositioning, development, and redevelopment
programs will have been completed and in effect for a period of time
sufficient to achieve market occupancy.

(2) Represents total estimated cost of renovation, expansion or development,
including initial acquisition costs, debt and equity carry, and partner
earnouts. The estimates are based on our current estimates and forecasts and
are therefore subject to change.

(3) Excludes 305 acres of land and other acquisition costs totaling
approximately $32.0 million which represents future phases of current
projects which have not been committed to, or for which final project
planning has not been completed, and other land inventory.

(4) Of such space, 24.9% was leased as of December 31, 1999.

(5) As of December 31, 1999, amounts funded to date for deliveries in 2000 and
2001 are approximately $64.4 million and $49.2 million, respectively.

(6) This project represents a redevelopment of an industrial warehouse into
office space. We will locate our corporate headquarters in approximately
one-third of the space.

16
<PAGE> 18

RETAIL DEVELOPMENT PROJECTED DELIVERIES
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
DEVELOPMENT ESTIMATED ESTIMATED ESTIMATED
ALLIANCE STABILIZATION SQUARE FEET AT TOTAL
PROJECT(1) LOCATION PARTNER(TM) DATE(2) COMPLETION INVESTMENT(3)
---------- -------- ----------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
2000 DELIVERIES
1. Around Lenox............. Atlanta, GA Alpine Partners August 2000 121,000 $24,100
2001 DELIVERIES
2. Howard & Western......... Chicago, IL None January 2001 89,000 8,600
3. Northridge............... Fort Lauderdale, FL Lefmark April 2001 259,000 37,500
------- -------
Total 2001
Deliveries.......... 348,000 46,100
------- -------
Total Scheduled
Deliveries(4)....... 469,000(5) $70,200(6)
======= =======
</TABLE>

- ---------------
(1) Excludes one project that is held for divestiture.

(2) Estimated stabilization date represents management's current estimate of
when capital improvements for repositioning, development, and redevelopment
program will have been completed and in effect for a period of time
sufficient to achieve market occupancy.

(3) Represents total estimated cost of renovation, expansion or development,
including initial acquisition costs, debt and equity carry, and partner
earnouts. The estimates are based on our current estimates and forecasts and
are therefore subject to change.

(4) Excludes 39 acres of land and other acquisition costs totaling approximately
$14.9 million which represents further phases of current projects which have
not been committed to, or for which final project planning has not been
completed, and other land inventory.

(5) Of such space, 76% was leased as of December 31, 1999.

(6) As of December 31, 1999, approximately $50.9 million has been funded.

PROPERTIES HELD THROUGH JOINT VENTURES, LIMITED LIABILITY COMPANIES AND
PARTNERSHIPS

Consolidated:

As of December 31, 1999, we held interests in 21 joint ventures, limited
liability companies and partnerships with certain unaffiliated third parties
through which 27 properties were held that are consolidated in our consolidated
financial statements. Pursuant to the existing agreements with respect to each
joint venture, we hold a greater than 50% interest in 17 of the joint ventures,
a 50% interest in two joint ventures, and less than 50% interest in two joint
ventures. In certain cases such agreements provide that we are a limited partner
or that the other party to the joint venture is principally responsible for
day-to-day management of the property (though in all such cases, we have
approval rights with respect to significant decisions involving the underlying
properties). Under the agreements governing the joint ventures, we and the other
party to the joint venture may be required to make additional capital
contributions, and subject to certain limitations, the joint ventures may incur
additional debt. Such agreements also impose certain restrictions on the
transfer of joint venture interests by us or the other party to the joint
venture, and provide certain rights to us and/or the other party to the joint
venture to sell its interest to the joint venture or to the other venturer on
terms specified in the agreement. All of the joint ventures terminate in 2024 or
later, but may end earlier if a joint venture ceases to hold any interest in or
have any obligations relating to the property held by the joint venture.

17
<PAGE> 19

The following table sets forth certain information regarding our properties
owned through consolidated joint ventures as of December 31, 1999.

INDUSTRIAL CONSOLIDATED JOINT VENTURES
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
JV PARTNERS'
JV PARTNERS' SHARE OF
GROSS BOOK SHARE FUNDS FROM
PROPERTIES SQUARE FEET VALUE(1) DEBT OF DEBT OPERATIONS
---------- ----------- ---------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT CO-INVESTORS(2)
1. Corporate Park/Hickory Hill............ 858,322 $ 27,627 $ 16,400 $ 8,200 50%
2. Garland Industrial..................... 1,018,637 34,279 19,600 9,800 50%
3. Jamesburg.............................. 821,712 47,540 23,500 11,750 50%
4. Minnetonka Industrial.................. 515,915 28,447 12,669 6,167 50%
5. South Point Business Park.............. 343,536 21,788 10,725 5,363 50%
--------- -------- -------- --------
Subtotal.......................... 3,558,122 159,681 82,894 41,280
ALLIANCE FUND I(3)
6. Concord Industrial Portfolio........... 246,087 15,744 -- -- 75%
7. Diablo Industrial Park................. 312,255 14,328 -- -- 75%
8. Gateway Corporate Center............... 430,603 43,229 -- -- 75%
9. Gateway North.......................... 266,476 25,189 -- -- 75%
--------- -------- -------- --------
Subtotal.......................... 1,255,421 98,490 80,000(8) 64,000(8)
DEVELOPMENT ALLIANCE JOINT VENTURES(4)(5)
10. LA Media Tech Center(6)................ 399,000 35,258 4,651 2,365 51%
11. Cabot Business Park (phase I and II)... 284,000 10,634 -- -- 10%
12. DFW II/Air Cargo....................... 189,000 5,996 -- -- 5%
13. Portland Air Cargo(7).................. 159,500 -- -- -- 5%
14. North Great SW Industrial Park......... 215,000 9,366 -- -- 5%
15. Northwest Crossing Distribution
Center................................... 178,000 6,371 -- -- 5%
16. Orlando Central Park (phase I)......... 306,000 11,614 -- -- 5%
17. South River Park (phase I and II)...... 626,000 24,640 -- -- 5%
--------- -------- -------- --------
Subtotal.......................... 2,356,500 103,879 4,651 2,365
OTHER JOINT VENTURES
18. Nippon Express......................... 148,941 6,361 -- -- 27%
19. Metric Center.......................... 397,440 44,390 -- -- 13%
20. Chancellor............................. 201,600 6,456 2,860 283 10%
--------- -------- -------- --------
Subtotal.......................... 747,981 57,207 2,860 283
--------- -------- -------- --------
Total............................. 7,918,024 $419,257 $170,405 $107,928
========= ======== ======== ========
</TABLE>

- ---------------
(1) Represents the book value of the property (before accumulated depreciation)
owned by the joint venture entity and excludes net other assets.

(2) These properties are owned by a single co-investment joint venture partner
that is a client of AMB Investment Management.

(3) Represents a property held by the Alliance Fund I which is co-invested with
a private institutional real estate investment trust.

(4) Represents estimated square feet at completion of development project.

(5) Excludes projected building square footage on 86.4 acres of land
representing future phases of current projects which have not been committed
to, or for which final planning has not been completed.

(6) Represents a development project with a Development Alliance Partner in
which a separate account co-investor also has an interest. The Development
Alliance Partner's share of funds from operations is 2%.

(7) Represents our investment in a ground leased property.

(8) Represents a credit facility held by the Alliance Fund I. As of December 31,
1999, our projected ownership upon final closing of the Alliance Fund I was
estimated to be 20%.

18
<PAGE> 20

RETAIL CONSOLIDATED JOINT VENTURES
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
GROSS BOOK JV PARTNERS' JV PARTNERS'
PROPERTIES SQUARE FEET VALUE(1) DEBT SHARE OF DEBT SHARE OF FFO
---------- ----------- ---------- ------- ------------- ------------
<S> <C> <C> <C> <C> <C>
DEVELOPMENT ALLIANCE JOINT VENTURES(2)
1. Around Lenox.......................... 120,000 $ 19,585 $17,489 $ 1,027 10%
2. Northridge Plaza...................... 259,000 25,525 -- -- 0%
3. Palm Aire(3).......................... 133,000 17,325 7,139 1,021 0%
4. Springs Gate.......................... --(4) 14,906 -- -- 0%
--------- -------- ------- -------
Subtotal......................... 512,000 77,341 24,628 2,048
OTHER JOINT VENTURES
5. Kendall Mall.......................... 299,582 36,260 24,330 10,055 29%
6. Manhattan Village..................... 424,112 83,463 -- -- 10%
7. Plaza Delray.......................... 331,846 36,010 22,814 4,528 2%
--------- -------- ------- -------
Subtotal......................... 1,055,540 157,733 47,144 14,583
--------- -------- ------- -------
Total............................ 1,567,540 $233,074 $71,772 $16,631
========= ======== ======= =======
</TABLE>

- ---------------
(1) Represents the book value of the property (before accumulated depreciation)
owned by the joint venture entity and excludes net other assets.

(2) Represents estimated square feet at completion of development project.

(3) Included as part of retail properties held for divestiture.

(4) Represents 39 acres of land for future phases of current projects which have
not been committed to, or for which final project planning has not been
completed.

We account for all of the above investments on a consolidated basis for
financial reporting purposes because of our ability to exercise control over
significant aspects of the investment as well as our significant economic
interest in the investments. See "Item 14. Note 2 of the Notes to Consolidated
Financial Statements."

Unconsolidated:

As of December 31, 1999, we held interests in two equity investment joint
ventures that are unconsolidated in our financial statements. The management and
control over significant aspects of these investments are with the third party
joint venture partner.

UNCONSOLIDATED JOINT VENTURES
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
AMB'S AMB'S AMB'S
TOTAL TOTAL OWNERSHIP SHARE OF
PROPERTIES MARKET SQUARE FEET INVESTMENT PERCENTAGE DEBT
---------- ------ ----------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
OPERATING JOINT VENTURES
1. Elk Grove Du Page.................. Chicago 4,046,721 $58,602 56.1% $18,754
DEVELOPMENT ALLIANCE JOINT VENTURES(1)
2. Pico Rivera........................ Southern California 520,000 7,789 50.0% 3,986
--------- ------- -------
Total......................... 4,566,721 $66,391 $22,740
========= ======= =======
</TABLE>

- ---------------
(1) Represents estimated square feet at completion of development project.

19
<PAGE> 21

SECURED DEBT

As of December 31, 1999, we had $696.9 million of indebtedness secured by
deeds of trust on 17 properties. As of December 31, 1999, the total gross
investment value of those properties secured by debt was $1.4 billion. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Item 14. Note 5 of Notes to
Consolidated Financial Statements" included in this report. We believe that as
of December 31, 1999, the value of the properties securing the respective
obligations in each case exceeded the principal amount of the outstanding
obligations.

ITEM 3. LEGAL PROCEEDINGS

Neither we nor any of the properties is subject to any material litigation.
To our knowledge, there is no material litigation threatened against any of
them, other than routine litigation arising in the ordinary course of business,
which we generally expect to be covered by liability insurance, or to have an
immaterial effect on our financial results.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

20
<PAGE> 22

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

There is no established public trading market for our partnership units. As
of December 31, 1999, we had outstanding 94,711,319 partnership units,
consisting of 88,903,630 general partnership units (consisting of 84,903,630
common units and 4,000,000 8 1/2% Series A Cumulative Redeemable Preferred
Units) held by AMB Property Corporation and 5,807,689 limited partnership units
(consisting of 4,507,689 common units and 1,300,000 8 5/8% Series B Cumulative
Redeemable Preferred Units). Subject to certain terms and conditions, the
limited partnership units are redeemable by the holders or, at the option of AMB
Property Corporation, exchangeable on a one-for-one basis for shares of the
common stock of AMB Property Corporation. As of December 31, 1999, there were 53
holders of our common partnership units (including AMB Property Corporation's
general partnership interest). As of the same date, AMB Property Corporation was
the only holder of the 8 1/2% Series A Cumulative Redeemable Preferred Units and
there was one holder of the 8 5/8% Series B Cumulative Redeemable Preferred
Units.

During 1999, we issued an aggregate of 626,713 limited partnership common
units in connection with the acquisition of certain properties, as follows: (1)
on February 9, 1999, an aggregate of 1,034 limited partnership units with an
aggregate value of approximately $0.02 million were issued to two corporations
and twelve individuals; (2) on April 30, 1999, an aggregate of 390,633 limited
partnership units with an aggregate value of approximately $9.4 million were
issued to two corporations and twelve individuals; (3) on May 21, 1999, an
aggregate of 18,638 limited partnership units with an aggregate value of
approximately $0.5 million were issued to a limited liability company; (4) on
May 26, 1999, an aggregate of 212,766 limited partnership units with an
aggregate value of approximately $5.0 million were issued to a limited liability
company; and (5) on September 30, 1999, an aggregate of 3,642 limited
partnership units with an aggregate value of approximately $0.1 million were
issued to five partnerships. Holders of limited partnership units may redeem
part or all of their units for cash, or at the election of AMB Property
Corporation, exchange their units for shares of the common stock of AMB Property
Corporation on a one-for-one basis. The issuance of limited partnership units in
connection with the acquisitions discussed above constituted private placements
of securities which were exempt from the registration requirements of the
Securities Act of 1933 pursuant to Section 4(2) and Rule 506 of Regulation D.

Set forth below are the distributions per limited partnership unit paid by
us during the period from November 26, 1997 through December 31, 1999.

<TABLE>
<CAPTION>
YEAR DISTRIBUTION
---- ------------
<S> <C>
1997
4th Quarter (from 11/21/97)............................... $0.1340
1998
1st Quarter............................................... 0.3425
2nd Quarter............................................... 0.3425
3rd Quarter............................................... 0.3425
4th Quarter............................................... 0.3425
1999
1st Quarter............................................... 0.3500
2nd Quarter............................................... 0.3500
3rd Quarter............................................... 0.3500
4th Quarter............................................... 0.3500
</TABLE>

21
<PAGE> 23

ITEM 6. SELECTED FINANCIAL AND OTHER DATA

SELECTED OPERATING PARTNERSHIP FINANCIAL AND OTHER DATA

The following table sets forth selected consolidated historical financial
and other data for AMB Property, L.P. on an historical basis for the years ended
December 31, 1997, 1998 and 1999 and on a pro forma basis for 1997.

<TABLE>
<CAPTION>
AS OF AND FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------------
OPERATING PARTNERSHIP
------------------------------------------------------
HISTORICAL(1) PRO FORMA(2)
------------- ------------
1997 1997 1998 1999
------------- ------------ ---------- ----------
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT AMOUNTS)
<S> <C> <C> <C> <C>
OPERATING DATA:
Total revenues.................................... $ 27,110 $ 284,674 $ 358,887 $ 448,183
Income from operations before minority
interests....................................... 9,291 103,903 123,750 158,851
Net income available to common unitholders........ 9,174 102,606 113,838 176,392
Net income common per unit:
Basic(3)........................................ 0.10 1.16 1.27 1.94
Diluted(3)...................................... 0.10 1.16 1.26 1.94
Distributions per common unit..................... -- 1.37 1.37 1.40
Distributions per preferred unit(4)............... -- -- 0.99 2.13
OTHER DATA:
EBITDA(5)......................................... $ 195,218 $ 252,353 $ 318,319
Funds from Operations(6).......................... 147,409 170,407 191,147
Cash flows provided by (used in):
Operating activities............................ 131,621 177,180 190,391
Investing activities............................ (607,768) (793,366) 63,732
Financing activities............................ 553,199 604,202 (240,721)
BALANCE SHEET DATA:
Investments in real estate at cost................ $2,442,999 $3,369,060 $3,249,452
Total assets...................................... 2,506,255 3,562,885 3,621,550
Total consolidated debt(7)........................ 685,652 1,368,196 1,270,037
Our share of total debt........................... 672,945 1,348,107 1,168,218
Partners' capital................................. 1,717,398 1,914,257 1,983,549
</TABLE>

- ---------------
(1) The historical 1997 results represent our historical financial and other
data for the period from November 26, 1997 to December 31, 1997.

(2) Pro forma 1997 financial and other data has been prepared as if our
formation transactions, our initial public offering (as described in "Item
14. Note 1 of Notes to Consolidated Financial Statements") and certain
property acquisitions and divestitures in 1997 had occurred on January 1,
1997.

(3) Basic and diluted net income per unit equals the pro forma net income
divided by 88,416,676 and 88,698,719 units, respectively, for 1997,
89,493,394 and 89,852,187 units, respectively, for 1998, and 90,792,310 and
90,867,934 units, respectively, for 1999.

(4) Distributions for the period commencing on July 27, 1998, the date of the
Series A Preferred Unit issuance.

(5) EBITDA is computed as income from operations before divestiture of
properties and minority interests plus interest expense, income taxes,
depreciation and amortization. We believe that in addition to cash flows and
net income, EBITDA is a useful financial performance measure for assessing
the operating performance of an equity real estate investment trust, such as
our general partner, because, together with net income and cash flows,
EBITDA provides investors with an additional basis to evaluate the ability
of a real estate investment trust to incur and service debt and to fund
acquisitions and other capital expenditures. Includes an adjustment to
reflect our pro rata share of EBITDA in unconsolidated joint ventures.
EBITDA is not a measurement of operating performance calculated in
accordance with U.S. generally accepted accounting principles and should not
be considered as a substitute for operating income, net income, cash flows
from operations or other statement of operations or cash flow data prepared
in accordance with U.S. generally accepted accounting principles. EBITDA may
not be indicative of our historical operating results nor be predictive of
potential future results. While EBITDA is frequently used as a measure of
operations and the ability to meet debt service requirements, it is not
necessarily comparable to other similarly titled captions of other real
estate investment trusts.

(6) Funds from Operations, or FFO, is defined as income from operations before
minority interests, gains or losses from sale of real estate and
extraordinary losses plus real estate depreciation and adjustment to derive
our pro rata share of the funds from operations of unconsolidated joint
ventures, less minority interests' pro rata share of the funds from
operations of consolidated joint ventures and perpetual preferred stock
dividends. In accordance with the National Association of Real Estate
Investment Trust ("NAREIT") White Paper on funds from operations, we include
the effects of straight-line rents in funds from operations. We believe that
funds from operations is an appropriate measure of performance for an equity
real estate investment trust. While funds from operations is a relevant and
widely used measure of operating performance of real estate investment
trusts, it does not represent cash flow from operations or net income as
defined by U.S. generally accepted accounting principles, and it should not
be considered as an alternative to these indicators in evaluating liquidity
or operating performance. Further, funds from operations as disclosed by
other real estate investment trusts may not be comparable.

(7) Secured debt includes unamortized debt premiums of approximately $18,286,
$15,217 and $10,106 as of December 31, 1997, 1998 and 1999, respectively.
See "Item 14. Notes 2 and 6 of Notes to Consolidated Financial Statements."

22
<PAGE> 24

SELECTED PROPERTY FINANCIAL AND OTHER DATA

For comparative purposes, the table that follows provides selected
historical financial and other data of our properties. The historical results of
the properties for 1997 include the results achieved by us for the period from
November 26, 1997 to December 31, 1997 and the results achieved by the prior
owners of the properties for the period from January 1, 1997 to November 25,
1997. The historical results of operations of the properties for periods prior
to November 26, 1997 include properties that were managed by our general
partner's predecessor and exclude the results of four properties that were
contributed to us in our formation transactions that were not previously managed
by our general partner's predecessor. See "Item 14. Note 1 of Notes to
Consolidated Financial Statements" for a description of our formation
transactions. In addition, the historical results of operations include the
results of properties acquired after November 26, 1997, from the date of
acquisition of such properties to December 31, 1997.

<TABLE>
<CAPTION>
AS OF AND FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------
OPERATING PARTNERSHIP
------------------------------------------------------
PROPERTIES COMBINED(1) HISTORICAL(2) PRO FORMA(3)
----------------------- ------------- ------------
1995 1996 1997 1997 1998 1999
---------- ---------- ------------- ------------ ---------- ----------
(IN THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Rental revenues.................... $ 106,180 $ 166,415 $ 233,856 $282,665 $ 354,658 $ 439,658
BALANCE SHEET DATA:
Investment in real estate at
cost............................. 1,018,681 1,616,091 2,442,999 3,369,060 3,249,452
Secured debt(4).................... 254,067 522,634 535,652 734,196 707,037
PROPERTY DATA:
Industrial Properties
Property net operating
income(5)...................... 137,955 187,218 269,339
Total rentable square footage at
end of period.................. 21,598 29,609 37,329 56,611 65,194
Occupancy rate at end of
period......................... 97.3% 97.2% 95.7% 96.0% 95.9%
Retail Properties
Property net operating
income(5)...................... 64,716 79,025 62,396
Total rentable square footage at
end of period.................. 3,299 5,282 6,216 6,985 1,642
Occupancy rate at end of
period......................... 92.4% 92.4% 96.1% 94.6% 92.4%
</TABLE>

- ---------------
(1) Represents the properties' combined historical financial and other data for
the years ended December 31, 1995 and 1996. The historical results of
operations of the properties for periods prior to November 26, 1997 include
properties that were managed by our general partner's predecessor and
exclude the results of four properties that were contributed to us in our
formation transactions that were not previously managed by our general
partner's predecessor. See "Item 14. Note 1 of Notes to Consolidated
Financial Statements" for a description of our formation transactions.

(2) The historical results of the properties for 1997 include our results for
the period from November 26, 1997 (commencement date) to December 31, 1997
and the results achieved by the prior owners of the properties for the
period from January 1, 1997 to November 25, 1997.

(3) The pro forma financial and other data has been prepared as if our formation
transactions, our initial public offering (see "Item 14. Note 1 of Notes to
Consolidated Financial Statements"), and certain 1997 property acquisitions
and divestitures had occurred on January 1, 1997.

(4) Secured debt as of December 31, 1997, 1998 and 1999 includes unamortized
debt premiums of approximately $18,286, $15,217 and $10,106, respectively.
See "Item 14. Notes 2 and 6 of Notes to Consolidated Financial Statements."

(5) Property net operating income is defined as rental revenue, including
reimbursements and straight-line rents, less property level operating
expenses and excluding depreciation, amortization and interest expense.
Internal asset management costs totaling $7,659 for 1998 have been
reclassified from property operating expenses to general and administrative
expenses to conform with current year presentation. See "Item 14. Note 15 of
Notes to Consolidated Financial Statements."

23
<PAGE> 25

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

You should read the following discussion and analysis of our consolidated
financial condition and results of operations in conjunction with the Notes to
Consolidated Financial Statements. Statements contained in this discussion which
are not historical facts may be forward-looking statements. You can identify
forward-looking statements by the use of forward-looking terminology such as
"believes," "expects," "may," "will," "should," "seeks," "approximately,"
"intends," "plans," "pro forma," "estimates" or "anticipates" or the negative of
these words and phrases or similar words or phrases. You can also identify
forward-looking statements by discussions of strategy, plans or intentions.
Forward-looking statements involve numerous risks and uncertainties and you
should not rely upon them as predictions of future events. There is no assurance
that the events or circumstances reflected in forward-looking statements will be
achieved or occur. Forward-looking statements are necessarily dependent on
assumptions, data or methods that may be incorrect or imprecise and we may not
be able to realize them. The 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 by tenants, increased interest rates and operating costs, our failure to
obtain necessary outside financing, difficulties in identifying properties to
acquire and in effecting acquisitions, our failure to successfully integrate
acquired properties and operations, our failure to divest of properties we have
contracted to sell or to timely reinvest proceeds from any such divestitures,
risks and uncertainties affecting property development and construction
(including construction delays, cost overruns, our inability to obtain necessary
permits and public opposition to these activities), environmental uncertainties,
risks related to natural disasters, financial market fluctuations, changes in
real estate and zoning laws and increases in real property tax rates. Our
success 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 "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Factors that
May Affect Future Financial Results" in this report. We caution you not to place
undue reliance on forward-looking statements, which reflect our analysis only
and speak only as of the date of this report or the dates indicated in the
statements.

GENERAL

We commenced operations on November 26, 1997. See "Item 14. Note 1 of Notes
to Consolidated Financial Statements" for a discussion of our formation
transactions.

RESULTS OF OPERATIONS

The analysis below shows changes in our results of operations for the years
ended December 31, 1999, 1998 and 1997, which include changes attributable to
acquisitions, divestitures and development activity, and the changes resulting
from properties that we owned during both the current and prior year reporting
periods, excluding development properties prior to being stabilized (generally
defined as 95.0% leased). We refer to these properties as the "same store
properties". For the comparison between the years ended December 31, 1999 and
1998, and the years ended December 31, 1998 and 1997, the same store properties
consist of properties aggregating approximately 35.9 and 31.1 million square
feet, respectively. The properties acquired in 1998 consisted of 230 buildings,
aggregating approximately 19.2 million square feet, and the 1999 acquisitions
consisted of 154 buildings, aggregating approximately 8.4 million square feet.
In 1999, property divestitures consisted of 30 retail centers and 15 industrial
buildings, aggregating approximately 6.6 million square feet. There were no
property divestitures in 1998. The historical results of operations of the
properties for the period prior to November 26, 1997 (the commencement of our
operations) include properties that were managed by our general partner's
predecessor, an investment manager, and exclude the results of four properties
that were contributed to us in our formation transactions that our general
partner's predecessor did not previously manage. Our future financial condition
and results of operations, including rental revenues, may be impacted by the
acquisitions of additional properties. Our future revenues and expenses may vary
materially from their historical rates.

24
<PAGE> 26

YEARS ENDED DECEMBER 31, 1999 AND 1998 (DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
RENTAL REVENUES 1999 1998 $ CHANGE % CHANGE
--------------- ------ ------ -------- --------
<S> <C> <C> <C> <C>
Same store................................... $212.9 $206.1 $ 6.8 3.3%
1998 acquisitions............................ 117.8 55.9 61.9 110.7%
1999 acquisitions............................ 35.4 -- 35.4 --
Developments................................. 33.0 28.4 4.6 16.2%
Divestitures................................. 40.6 64.3 (23.7) (36.9)%
------ ------ ------ -----
Total.............................. $439.7 $354.7 $ 85.0 24.0%
====== ====== ====== =====
</TABLE>

Rental revenues, including straight-line rents, tenant reimbursements and
other property related income, increased by $85.0 million, or 24.0%, for the
year ended December 31, 1999 to $439.7 million as compared with the same period
in 1998. Approximately $6.8 million, or 8.0%, of this increase was attributable
to same store properties. The growth in rental revenues in same store properties
resulted primarily from the incremental effect of rental rate increases, changes
in occupancy rates and reimbursement of expenses, offset by a decrease in
straight-line rents. During the year ended December 31, 1999, the increase in
base rents (cash basis) for same store properties was 12.7% on 6.8 million
square feet leased.

<TABLE>
<CAPTION>
INVESTMENT MANAGEMENT AND OTHER INCOME 1999 1998 $ CHANGE % CHANGE
-------------------------------------- ---- ---- -------- --------
<S> <C> <C> <C> <C>
Equity earnings in unconsolidated joint
ventures....................................... $4.7 $2.7 $2.0 74.1%
Investment management income..................... 1.0 0.1 0.9 900.0%
Other............................................ 2.8 1.4 1.4 100.0%
---- ---- ---- -----
Total.................................. $8.5 $4.2 $4.3 102.4%
==== ==== ==== =====
</TABLE>

Other revenues, including equity in earnings of unconsolidated joint
ventures, investment management income, and interest income, totaled $8.5
million for the year ended December 31, 1999 as compared to $4.2 million for the
year ended December 31, 1998. The $4.3 million increase was primarily
attributable to the earnings from our equity investment in our unconsolidated
joint ventures, acquisition fees related to the Alliance Fund I and an increase
in interest income as a result of higher cash balances.

<TABLE>
<CAPTION>
PROPERTY OPERATING EXPENSES 1999 1998 $ CHANGE % CHANGE
--------------------------- ------ ----- -------- --------
<S> <C> <C> <C> <C>
Rental expenses............................... $ 51.7 $40.2 $11.5 28.6%
Real estate taxes............................. 56.2 48.2 8.0 16.6%
------ ----- ----- -----
Property operating expenses................. $107.9 $88.4 $19.5 22.1%
====== ===== ===== =====

Same store.................................... $ 50.2 $50.1 $ 0.1 0.2%
1998 acquisitions............................. 27.3 12.6 14.7 116.7%
1999 acquisitions............................. 9.3 -- 9.3 --
Developments.................................. 9.5 7.9 1.6 20.3%
Divestitures.................................. 11.6 17.8 (6.2) (34.8)%
------ ----- ----- -----
Total............................... $107.9 $88.4 $19.5 22.1%
====== ===== ===== =====
</TABLE>

Property operating expenses increased by $19.5 million, or 22.1%, for the
year ended December 31, 1999, to $107.9 million, as compared with the same
period in 1998. Internal asset management costs of $7.7 million for 1998 have
been reclassified to general and administrative expenses to conform with current
year presentation. Same store properties' operating expenses increased by $0.1
million for the year ended December 31, 1999. The change in same store
properties' operating expenses primarily relates to increases in

25
<PAGE> 27

same store properties' real estate taxes of approximately $1.0 million for the
year ended December 31, 1999, offset by decreases in same store properties'
insurance of $0.9 million.

<TABLE>
<CAPTION>
OTHER EXPENSES 1999 1998 $ CHANGE % CHANGE
-------------- ------ ------ -------- --------
<S> <C> <C> <C> <C>
General and administrative expense........... $ 25.2 $ 19.6 $ 5.6 28.6%
Interest expense............................. 88.7 69.7 19.0 27.3%
Depreciation expense......................... 67.5 57.4 10.1 17.6%
------ ------ ----- ----
Total.............................. $181.4 $146.7 $34.7 23.7%
====== ====== ===== ====
</TABLE>

General and administrative expense increased by $5.6 million, or 28.6%, for
the year ended December 31, 1999, to $25.2 million, as compared with the same
period in 1998. Internal asset management costs of $7.7 million for 1998 have
been reclassified from property operating expenses to general and administrative
expenses to conform with the current year presentation. The increase was
primarily attributable to additional staffing that resulted from the growth in
our portfolio, with the remainder of the increase due to the change in our
accounting policy for capitalizing internal acquisition costs. Effective during
the second quarter of 1998, we changed our policy to expense all internal
acquisition costs in accordance with EITF 97-11. The increase in interest
expense was primarily due to higher interest rates and a full year of interest
expense in 1999 attributable to the $400.0 million unsecured senior debt
securities and the increase in depreciation was due to the growth in our real
estate acquisitions in 1998 and 1999.

YEARS ENDED DECEMBER 31, 1998 AND 1997 (DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
RENTAL REVENUES 1998 1997 $ CHANGE % CHANGE
--------------- ------ ------ -------- --------
<S> <C> <C> <C> <C>
Same store................................... $211.2 $201.6 $ 9.6 4.8%
Acquisitions and development................. 143.5 81.1 62.4 76.9%
------ ------ ----- ----
Total.............................. $354.7 $282.7 $72.0 25.5%
====== ====== ===== ====
</TABLE>

Rental revenues, including straight-line rents, tenant reimbursements and
other property related income, increased by $72.0 million, or 25.5%, for the
year ended December 31, 1998. Approximately $9.6 million, or 13.3%, of this
increase, was attributable to same store properties with the remaining $62.4
million primarily attributable to properties acquired in 1998 and properties
under development. The growth in rental revenues in same store properties
resulted primarily from the incremental effect of rental rate increases and
changes in occupancy and reimbursement of expenses. During the year ended
December 31, 1998, the increase in average base rents (cash basis) was 14.3% on
7.7 million square feet leased.

<TABLE>
<CAPTION>
PROPERTY OPERATING EXPENSES 1998 1997 $ CHANGE % CHANGE
--------------------------- ----- ----- -------- --------
<S> <C> <C> <C> <C>
Same store..................................... $54.4 $55.1 $(0.7) (1.3)%
Acquisitions and development................... 34.0 26.4 7.6 28.8%
----- ----- ----- ----
Total................................ $88.4 $81.5 $ 6.9 8.5%
===== ===== ===== ====
</TABLE>

Property operating expenses increased by $6.9 million, or 8.5%, for the
year ended December 31, 1998, to $88.4 million, as compared to the same period
in 1997. Internal asset management costs of $7.7 million for 1998 have been
reclassified to general and administrative expenses to conform with current year
presentation. Same store properties' operating expenses decreased by $0.7
million for the year ended December 31, 1998, while operating expenses
attributable to properties acquired in 1998 and properties under development
amounted to $7.6 million. The change in same store properties' operating
expenses relates to increases in same store properties real estate taxes of
approximately $1.0 million, offset by decreases in other property operating
expenses, including insurance expenses and property management fees of
approximately $1.7 million.

<TABLE>
<CAPTION>
GENERAL AND ADMINISTRATIVE EXPENSES 1998 1997 $ CHANGE % CHANGE
----------------------------------- ----- ----- -------- --------
<S> <C> <C> <C> <C>
General and administrative expenses............ $19.6 $19.4 $0.2 1.0%
===== ===== ==== ===
</TABLE>

Our general and administrative expenses increased by $0.2 million for the
year ended December 31, 1998, after reclassifying internal asset management
costs of $7.7 million for 1998 from property operating expenses

26
<PAGE> 28

to general and administrative expenses, as compared to our general partner's
predecessor's investment management expenses of $19.4 million for the period
from January 1, 1997 to November 25, 1997. Investment management expenses of our
general partner's predecessor consisted primarily of salaries and other general
and administrative expenses. The decrease is primarily attributable to the
change in operations from an investment manager to a fully integrated real
estate company and the formation of AMB Investment Management.

LIQUIDITY AND CAPITAL RESOURCES

We currently expect that our principal sources of working capital and
funding for acquisitions, development, expansion and renovation of our
properties will include cash flow from operations, borrowings under our
unsecured credit facility, other forms of secured and unsecured financing,
proceeds from equity or debt offerings by us or AMB Property Corporation
(including issuances of limited partnership units by us or a subsidiary or
shares of stock of AMB Property Corporation) and net proceeds from divestiture
of properties. We presently believe that our sources of working capital and our
ability to access private and public debt and equity capital are adequate for us
to continue to meet liquidity requirements for the foreseeable future.

Capital Resources

Property Divestitures. On March 9, 1999, we signed three separate
definitive agreements with BPP Retail, LLC, a co-investment entity between
Burnham Pacific and the California Public Employees' Retirement System, pursuant
to which, if fully consummated, BPP Retail would have acquired up to 28 of our
retail shopping centers, totaling approximately 5.1 million square feet, for an
aggregate price of $663.4 million. The sale of three of the properties was
subject to the consent of one of our joint venture partners, which did not
consent to the sale of these properties. As a result, the price with respect to
the 25 remaining properties, totaling approximately 4.3 million square feet, was
approximately $560.3 million. We intend to dispose of the remaining three
properties or our interests in the joint ventures through which we hold such
properties. We are including these properties in properties held for divestiture
in our financial statements.

Pursuant to the agreements, BPP Retail acquired the 25 retail centers in
three separate transactions. Pursuant to the closing of the first transaction,
which occurred on June 15, 1999, BPP Retail acquired nine retail shopping
centers, totaling approximately 1.4 million square feet, for an aggregate price
of approximately $207.4 million. We used the proceeds from the first transaction
to repay secured debt related to the properties divested, to partially repay
amounts outstanding under our unsecured credit facility, to pay transactions
expenses, to acquire certain properties and for general corporate purposes. This
divestiture resulted in an approximate net gain of $10.3 million, which is net
of extraordinary loss consisting of prepayment penalties with an offset for the
write-off of debt premiums related to the indebtedness extinguished. On August
4, 1999, the second transaction with BPP Retail closed. Pursuant to the closing
of the second transaction, BPP Retail acquired 12 of our retail shopping
centers, totaling approximately 2.0 million square feet, for an aggregate price
of approximately $245.8 million. We used the proceeds from the second
transaction to repay secured debt related to the properties divested, to
partially repay amounts outstanding under our unsecured credit facility, to pay
transaction expenses, to acquire certain properties and for general corporate
purposes. This divestiture resulted in an approximate net gain of $20.2 million,
which is net of extraordinary loss consisting of prepayment penalties with an
offset for the write-off of debt premiums related to the indebtedness
extinguished. On December 1, 1999, the third transaction with BPP Retail closed.
BPP Retail acquired the remaining four retail centers, totaling approximately
0.9 million square feet, for an aggregate price of approximately $107.2 million.
We used the proceeds from the third divestiture to partially repay amounts
outstanding under our unsecured credit facility, to pay transaction expenses,
for potential acquisitions and for general corporate purposes. This divestiture
resulted in an approximate gain of $9.1 million.

In addition, we entered into a definitive agreement, subject to a financing
condition, with Burnham Pacific, pursuant to which, if fully consummated,
Burnham Pacific would have acquired up to six additional retail centers,
totaling approximately 1.5 million square feet, for an aggregate price of
approximately $284.4 million. On June 30, 1999, this agreement was terminated
pursuant to its terms as a result of Burnham Pacific's decision not to waive the
financing condition.

27
<PAGE> 29

In the fourth quarter of 1999, we disposed of three of the retail
properties that were initially under contract with Burnham Pacific to an
institutional investor for whom AMB Investment Management provides asset
management services. The properties aggregated approximately 0.4 million square
feet and were sold for an aggregate price of approximately $96.3 million. In
addition, we disposed of another of these properties, aggregating approximately
0.6 million square feet, to an unaffiliated third party for an aggregate price
of approximately $58.1 million. The divestitures of these four properties
resulted in an approximate net gain of $14.9 million, which is net of
extraordinary gain consisting of write-offs of debt premiums with an offset for
prepayment penalties related to the indebtedness extinguished. We currently
intend to dispose of one of the remaining two retail properties or our interest
in the joint venture which holds such property.

In addition, during 1999, we disposed of 15 industrial buildings and one
other retail center, aggregating approximately 1.3 million square feet, for an
aggregate price of approximately $49.4 million. These divestitures resulted in
an aggregate approximate net loss of $3.4 million.

As of December 31, 1999, the net carrying values of the industrial
properties and retail centers held for divestiture were $12.8 million and $168.5
million, respectively. Certain of the properties held for divestiture are
subject to indebtedness, which totaled $54.3 million as of December 31, 1999.
These divestitures are subject to negotiation of acceptable terms and other
customary conditions. We intend to use the proceeds from these transactions to
pay expenses incurred in connection with the divestitures, to repay the secured
debt related to the properties divested, to partially repay amounts outstanding
under our unsecured credit facility, for potential acquisitions and for general
corporate purposes. There can be no assurance that we will dispose of any of the
properties held for divestiture in a timely manner.

Credit Facilities. We have 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 our credit rating. We use 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 our debt rating at the time of the
borrowings. As of December 31, 1999, the outstanding balance on the credit
facility was $83.0 million and bore interest at a weighted average interest rate
of 6.7%. Monthly debt service payments on the credit facility are interest only.
The credit facility matures in November 2000. At December 31, 1999, the
remaining amount available under the credit facility was approximately $417.0
million.

In addition, we have $80.0 million of unsecured debt held through our
investment in the Alliance Fund I. The debt is secured by the unfunded capital
commitments of the investors in the Alliance REIT I, a limited partner in the
Alliance Fund I. The debt bears interest of LIBOR plus 87.5 basis points and
matures in April 2001. As of December 31, 1999, the loan bore interest at 6.7%
(based on 30-day LIBOR of 5.8%).

Debt and Equity Activities. On May 5, 1999, AMB Property II, L.P., one of
our subsidiaries, issued and sold 1,595,337 7.75% Series D Cumulative Redeemable
Preferred Limited Partnership Units at a price of $50.00 per unit in a private
placement. Distributions are cumulative from the date of original issuance and
are payable quarterly in arrears at a rate per unit equal to $3.875 per annum.
The Series D Preferred Units are redeemable by AMB Property II, L.P. on or after
May 5, 2004, subject to certain conditions, for cash at a redemption price equal
to $50.00 per unit, plus accumulated and unpaid distributions thereon, if any,
to the redemption date. The Series D Preferred Units are exchangeable, at
specified times and subject to certain conditions, on a one-for-one basis, for
shares of AMB Property Corporation's Series D Preferred Stock. AMB Property II,
L.P. used the net proceeds of approximately $77.8 million to make a loan to us
in the amount of approximately $20.1 million and to purchase an unconsolidated
joint venture interest for a price of approximately $57.7 million from us. The
loan was repaid in full on August 31, 1999. We used the funds to repay
borrowings under our unsecured credit facility and for general corporate
purposes.

On August 31, 1999, AMB Property II, L.P. issued and sold 220,440 7.75%
Series E Cumulative Redeemable Preferred Limited Partnership Units at a price of
$50.00 per unit in a private placement. Distributions are cumulative from the
date of original issuance and are payable quarterly in arrears at a rate
28
<PAGE> 30

per unit equal to $3.875 per annum. The Series E Preferred Units are redeemable
by AMB Property II, L.P. on or after August 31, 2004, subject to certain
conditions, for cash at a redemption price equal to $50.00 per unit, plus
accumulated and unpaid distributions thereon, if any, to the redemption date.
The Series E Preferred Units are exchangeable, at specified times and subject to
certain conditions, on a one-for-one basis, for shares of AMB Property
Corporation's Series E Preferred Stock. AMB Property II, L.P. used the gross
proceeds of approximately $11.0 million to pay placement fees, for transaction
expenses and to repay approximately $10.8 million in loans made to it by us. We
used the funds to pay approximately $10.0 million in partial repayment of
amounts outstanding under our unsecured credit facility and for general
corporate purposes.

On February 9, 1999, we issued an aggregate of 1,034 limited partnership
units with an aggregate value of approximately $0.02 million to two corporations
and twelve individuals. On April 30, 1999, we issued an aggregate of 390,633
limited partnership units with an aggregate value of approximately $9.4 million
to two corporations and twelve individuals. On May 21, 1999, we issued 18,638
limited partnership units with a value of approximately $0.5 million to a
limited liability company. On May 26, 1999, we issued 212,766 limited
partnership units with a value of approximately $5.0 million to a limited
liability company. On September 30, 1999, we issued an aggregate of 3,642
limited partnership units with an aggregate value of $0.09 million to five
partnerships. All of these limited partnership units were issued in partial
consideration for the acquisition of properties.

Holders of limited partnership units may redeem part or all of their
limited partnership units for cash, or at the election of AMB Property
Corporation, exchange their limited partnership units for shares of AMB Property
Corporation's common stock on a one-for-one basis. The issuance of limited
partnership units in connection with the acquisitions discussed above
constituted private placements of securities which were exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) of the
Securities Act and Rule 506 of Regulation D.

During 1999, 31,109 limited partnership units were redeemed for cash and
535,753 limited partnership units were redeemed for shares of AMB Property
Corporation's common stock.

During the fourth quarter of 1999, AMB Property Corporation's Board of
Directors approved a stock repurchase program for the repurchase of up to $50.0
million worth of its common stock. During 1999, AMB Property Corporation
repurchased a total of 1,443,600 shares of its common stock in the open market,
for an aggregate purchase price of $27.3 million (including commissions). The
average price per share was $18.913. In January 2000, AMB Property Corporation's
Board of Directors approved an increase in the stock repurchase program, thereby
authorizing the repurchase of an aggregate of up to $100.0 million worth of its
common stock. AMB Property Corporation's stock repurchase program will expire on
the second anniversary of the first purchase made thereunder. AMB Property
Corporation canceled the repurchased shares and, inasmuch as the canceled shares
represent indirect interests in us held by AMB Property Corporation, 1,443,6000
general partnership units were canceled.

At the time of AMB Property Corporation's initial public offering,
4,237,750 shares of common stock, known as performance shares, were placed in
escrow by certain of investors, which were subject to advisory agreements with
our general partner's predecessor that included incentive fee provisions. On
January 7, 2000, 2,771,824 shares of common stock were released from escrow to
these investors and 1,465,926 shares of common stock were returned to AMB
Property Corporation and cancelled. Inasmuch as the cancelled shares of common
stock represent indirect interests in us that were reallocated from AMB Property
Corporation (thereby decreasing the number of shares of common stock
outstanding) to other unitholders (thereby increasing the number of limited
partnership units owned by partners other than AMB Property Corporation), the
total number of outstanding partnership units did not change as a result of this
reallocation. This reallocation did not change the amount of fully diluted
shares of common stock and limited partnership units outstanding.

Market Capitalization. As of December 31, 1999, the aggregate principal
amount of our secured debt was $696.9 million, excluding unamortized debt
premiums of $10.1 million. The secured debt bears interest at rates varying from
4.0% to 10.4% per annum (with a weighted average of 7.8%) and final maturity
dates ranging from May 2000 to April 2014. All of the secured debt bears
interest at fixed rates, except for two loans

29
<PAGE> 31

with an aggregate principal amount of $10.4 million at December 31, 1999, which
bear interest at variable rates. As of December 31, 1999, the estimated fair
value of the secured debt was approximately $684.0 million.

In order to maintain financial flexibility and facilitate the rapid
deployment of capital through market cycles, we presently intend to operate with
a total debt-to-total market capitalization ratio of approximately 45% or less.
Additionally, we presently intend to continue to structure our balance sheet in
order to maintain an investment grade rating on our senior unsecured debt.

The tables below summarize our debt maturities and capitalization as of
December 31, 1999 (in thousands, except share amounts and percentages).

<TABLE>
<CAPTION>
DEBT
- ------------------------------------------------------------------------------------------------------
ALLIANCE FUND I UNSECURED UNSECURED
SECURED UNSECURED SENIOR DEBT CREDIT TOTAL
DEBT DEBT SECURITIES FACILITY DEBT
-------- --------------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C>
2000........................... $ 45,128 $ -- $ -- $83,000 $ 128,128
2001........................... 38,218 80,000 -- -- 118,218
2002........................... 56,037 -- -- -- 56,037
2003........................... 75,394 -- -- -- 75,394
2004........................... 91,042 -- -- -- 91,042
2005........................... 70,131 -- 100,000 -- 170,131
2006........................... 134,330 -- -- -- 134,330
2007........................... 48,143 -- -- -- 48,143
2008........................... 127,747 -- 175,000 -- 302,747
2009........................... 1,811 -- -- -- 1,811
Thereafter..................... 8,950 -- 125,000 -- 133,950
-------- -------- -------- ------- ----------
Subtotal..................... 696,931 80,000 400,000 83,000 1,259,931
Unamortized premiums......... 10,106 -- -- -- 10,106
-------- -------- -------- ------- ----------
Total consolidated
debt............... 707,037 80,000 400,000 83,000 1,270,037
Our share of unconsolidated
joint venture debt........... 22,740 -- -- -- 22,740
-------- -------- -------- ------- ----------
Total debt........... 729,777 80,000 400,000 83,000 1,292,777
Joint venture partners' share
of consolidated joint venture
debt......................... (60,559) (64,000) -- -- (124,559)
-------- -------- -------- ------- ----------
Our share of total debt... $669,218 $ 16,000 $400,000 $83,000 $1,168,218
======== ======== ======== ======= ==========
Weighed average interest
rate......................... 7.8%(1) 6.7% 7.2% 6.7% 7.5%
Weighed average maturity (in
years)....................... 5.9(1) 1.3 10.9 0.9 6.8
</TABLE>

- ---------------
(1) Does not include unconsolidated joint venture debt. The weighted average
interest and maturity for the two unconsolidated joint venture debts were
6.9% and 6.2 years, respectively.

<TABLE>
<CAPTION>
MARKET EQUITY
- --------------------------------------------------------------------------------------
SHARES/UNITS
SECURITY OUTSTANDING MARKET PRICE MARKET VALUE
-------- ------------ ------------ ------------
<S> <C> <C> <C>
Common stock.............................. 85,133,041 $19.94 $1,697,340
Common limited partnership units.......... 4,507,689 19.94 89,872
---------- ----------
Total........................... 89,640,730 $1,787,212
========== ==========
</TABLE>

30
<PAGE> 32

<TABLE>
<CAPTION>
PREFERRED UNITS
- --------------------------------------------------------------------------------
DIVIDEND LIQUIDATION REDEMPTION
SECURITY RATE PREFERENCE PROVISIONS
-------- -------- ----------- -------------
<S> <C> <C> <C>
Series A preferred units.............. 8.50% $100,000 July 2003
Series B preferred units.............. 8.63% 65,000 November 2003
Series C preferred units.............. 8.75% 110,000 November 2003
Series D preferred units.............. 7.75% 79,767 May 2004
Series E preferred units.............. 7.75% 11,022 August 2004
---- --------
Weighted Average/Total.............. 8.41% $365,789
==== ========
</TABLE>

<S> <C>
<CAPTION>
CAPITALIZATION RATIOS
- ------------------------------------------------------------------
<S> <C>
Total debt-to-total market capitalization................... 37.5%
Our share of total debt-to-total market capitalization...... 35.2%
Total debt plus preferred-to-total market capitalization.... 48.1%
Our share of total debt plus preferred-to-total market
capitalization............................................ 46.2%
Our share of total debt-to-total book capitalization........ 35.9%
</TABLE>

Liquidity

As of December 31, 1999, we had approximately $137.0 million in cash and
cash equivalents and $417.0 million of additional available borrowings under our
unsecured credit facility. We intend to use cash flow from operations,
borrowings under our unsecured credit facility, other forms of secured and
unsecured financing, proceeds from future debt or equity offerings by us or AMB
Property Corporation (including issuances of limited partnership units by us or
a subsidiary or shares of stock of AMB Property Corporation) and proceeds from
divestitures of properties to fund acquisitions, development activities and
capital expenditures and to provide for general working capital requirements.

On March 5, 1999, we declared a quarterly cash distribution of $0.35 per
limited partnership unit, for the quarter ended March 31, 1999, payable on April
15, 1999, to unitholders of record as of March 31, 1999. On March 5, 1999, we
declared a cash distribution of $0.5313 per unit on our Series A Preferred
Units, for the three-month period ended April 14, 1999, payable on April 15,
1999, to unitholders of record as of March 31, 1999. On March 5, 1999, we
declared a cash distribution of $1.0781 per unit on our Series B Preferred
Units, for the three-month period ended April 14, 1999, payable on April 15,
1999, to unitholders of record as of March 31, 1999. On March 5, 1999, AMB
Property II, L.P. declared a cash distribution of $1.0938 per unit on its Series
C Preferred Units, for the three-month period ended April 14, 1999, payable on
April 15, 1999, to unitholders of record as of March 31, 1999.

On June 4, 1999, we declared a quarterly cash distribution of $0.35 per
limited partnership unit, for the quarter ended June 30, 1999, payable on July
15, 1999, to unitholders of record as of July 6, 1999. On June 4, 1999, we
declared a cash distribution of $0.5313 per unit on our Series A Preferred
Units, for the three-month period ended July 14, 1999, payable on July 15, 1999,
to unitholders of record as of July 6, 1999. On June 4, 1999, we declared a cash
distribution of $1.0781 per unit on our Series B Preferred Units, for the
three-month period ended July 14, 1999, payable on July 15, 1999, to unitholders
of record as of July 6, 1999. On June 4, 1999, AMB Property II, L.P. declared a
cash distribution of $1.0938 per unit on its Series C Preferred Units, for the
three-month period ended October 14, 1999, payable on October 15, 1999, to
unitholders of record as of October 5, 1999. On June 4, 1999, AMB Property II,
L.P. declared a cash distribution of $0.5382 per unit on its Series D Preferred
Units, for the period from May 5, 1999 to June 24, 1999, payable on June 25,
1999, to unitholders of record as of June 15, 1999.

On September 10, 1999, we declared a quarterly cash distribution of $0.35
per limited partnership unit, for the quarter ended September 30, 1999, payable
on October 15, 1999, to unitholders of record as of October 5, 1999. On
September 10, 1999, we declared a cash distribution of $0.5313 per unit on our
Series A Preferred Units, for the three-month period ended October 14, 1999,
payable on October 15, 1999, to

31
<PAGE> 33

unitholders of record as of October 5, 1999. On September 10, 1999, we declared
a cash distribution of $1.0781 per unit on our Series B Preferred Units, for the
three-month period ended October 14, 1999, payable on October 15, 1999, to
unitholders of record as of October 5, 1999. On September 10, 1999, AMB Property
II, L.P. declared a cash distribution of $1.0938 and $0.9688 per unit on its
Series C Preferred Units and Series D Preferred Units, respectively, for the
three-month periods ended October 14, 1999 and September 24, 1999, respectively,
payable on October 15, 1999 and September 25, 1999, respectively, to unitholders
of record as of October 5, 1999 and September 15, 1999, respectively. On
September 10, 1999, AMB Property II, L.P. declared a cash distribution of
$0.3264 per unit on its Series E Preferred Units, for the period from August 31,
1999 to October 14, 1999, payable on October 15, 1999, to unitholders of record
as of October 5, 1999.

On December 10, 1999, we declared a quarterly cash distribution of $0.35
per limited partnership unit, for the quarter ended December 31, 1999, payable
on December 28, 1999, to unitholders of record as of December 17, 1999. On
December 10, 1999, we declared a cash distribution of $0.5313 per unit on our
Series A Preferred Units, for the three-month period ended January 14, 2000,
payable on January 17, 2000, to unitholders of record as of January 5, 2000. On
December 10, 1999, we declared a cash distribution of $1.0781 per unit on our
Series B Preferred Units, for the three-month period ended January 14, 2000,
payable on January 17, 2000, to unitholders of record as of January 5, 2000. On
December 10, 1999, AMB Property II, L.P. declared a cash distribution of
$1.0938, $0.9688 and $0.9688 per unit on its Series C Preferred Units, Series D
Preferred Units and Series E Preferred Units, respectively, for the three-month
periods ended January 14, 2000, December 24, 1999 and January 14, 2000,
respectively, payable on January 17, 2000, December 27, 1999 and January 17,
2000, respectively, to unitholders of record as of January 5, 2000, December 15,
1999 and January 5, 2000, respectively.

On February 29, 2000, we declared a quarterly cash distribution of $0.37
per limited partnership unit, for the quarter ending March 31, 2000, payable on
April 17, 2000, to unitholders of record as of April 5, 2000. On February 29,
2000, we declared a cash distribution of $0.5313 per unit on our Series A
Preferred Units, for the three-month period ending April 14, 2000, payable on
April 17, 2000, to unitholders of record as of April 5, 2000. On February 29,
2000, we declared a cash distribution of $1.0781 per unit on our Series B
Preferred Units, for the three-month period ending April 14, 2000, payable on
April 17, 2000, to unitholders of record as of April 5, 2000. On February 29,
2000, AMB Property II, L.P. declared a cash distribution of $1.0938, $0.9688 and
$0.9688 per unit on its Series C Preferred Units, Series D Preferred Units and
Series E Preferred Units, respectively, for the three-month periods ending April
14, March 24, and April 14, 2000, respectively, payable on April 17, March 25,
and April 17, 2000, respectively, to unitholders of record as of April 5, March
15, and April 5, 2000.

The anticipated size of our distributions, using only cash from operations,
will not allow us to retire all of our debt as it comes due. Therefore, we
intend to also repay maturing debt with net proceeds from future debt
financings, equity financings and/or property divestitures. However, we may not
be able to obtain future financings on favorable terms or at all.

Capital Commitments

In addition to recurring capital expenditures and costs to renew or
re-tenant space, as of December 31, 1999, our development pipeline included 18
projects representing a total estimated investment of $306.4 million upon
completion. Of this total, approximately $164.5 million had been funded as of
December 31, 1999, approximately $141.9 million is estimated to be required to
complete projects under construction as of December 31, 1999, and the remainder
represents estimated investments in either projects where construction has not
yet begun or future phases of projects under construction. We presently expect
to fund these expenditures with cash flow from operations, borrowings under our
unsecured credit facility, debt or equity issuances and net proceeds from
property divestitures. Other than these capital items, we have no material
capital commitments.

During the period from January 1, 1999 to December 31, 1999, we invested
$471.9 million in 154 industrial buildings, aggregating approximately 8.4
million square feet. We funded these acquisitions and

32
<PAGE> 34

development projects through proceeds from the divestiture of properties,
borrowings under our unsecured credit facility, limited partnership unit
issuances, cash and debt assumption.

YEAR 2000 COMPLIANCE

We conducted a comprehensive company-wide test of our financial and
non-financial systems to ensure that our systems would adequately handle the
year 2000 issues. We also surveyed our property managers to determine if our
HVAC, security, lighting and other building systems at our properties were year
2000 compliant. As a result of our efforts, we experienced no significant
problems with any of our financial or non-financial systems, nor did any of the
systems at our properties malfunction, at the turn of the century. In addition,
we have not experienced any significant year 2000 issues with respect to our
third party suppliers. We will continue to monitor our systems and those at our
properties for potential imbedded year 2000 problems. The costs incurred by us
in connection with our year 2000 compliance program have been, and are expected
to remain, immaterial to our financial position, results of operations and cash
flows.

FUNDS FROM OPERATIONS

We believe that Funds from Operations, or FFO, as defined by the National
Association of Real Estate Investment Trusts, is an appropriate measure of
performance for an equity real estate investment trust, such as our general
partner. While funds from operations is a relevant and widely used measure of
operating performance of real estate investment trusts, it does not represent
cash flow from operations or net income as defined by U.S. generally accepted
accounting principles, and it should not be considered as an alternative to
those indicators in evaluating liquidity or operating performance. Further,
funds from operations as disclosed by other real estate investment trusts may
not be comparable.

The following table reflects the calculation of our funds from operations
for the fiscal years ended December 31, 1997, 1998 and 1999 (dollars in
thousands, except share and per share data). The 1997 funds from operations was
prepared on a pro forma basis (giving effect to the completion of our formation

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<PAGE> 35

transactions, AMB Property Corporation's initial public offering and certain
1997 property acquisitions and divestitures as if they had occurred on January
1, 1997).

<TABLE>
<CAPTION>
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
Income from operations before minority
interests................................. $ 103,903 $ 123,750 $ 158,851
Real estate depreciation and amortization:
Total depreciation and amortization....... 45,886 57,464 67,505
Furniture, fixtures and equipment
depreciation and ground lease
amortization........................... (173) (463) (1,002)
FFO attributable to minority
interests(1)(2)........................... (2,207) (6,915) (22,075)
Adjustments to derive FFO in unconsolidated
joint ventures(3):
Our share of net income................... -- (1,750) (4,701)
Our share of FFO.......................... -- 2,739 6,677
Series A preferred unit distributions....... -- (3,639) (8,500)
Series B preferred unit distributions....... -- (779) (5,608)
----------- ----------- -----------
FFO(1)...................................... $ 147,409 $ 170,407 $ 191,147
=========== =========== ===========
FFO per common unit:
Basic.................................. $ 1.67 $ 1.90 $ 2.11
=========== =========== ===========
Diluted................................ $ 1.66 $ 1.90 $ 2.10
=========== =========== ===========
Weighted average common units:
Basic.................................. 88,416,676 89,493,394 90,792,310
=========== =========== ===========
Diluted(4)............................. 88,698,719 89,852,187 90,867,934
=========== =========== ===========
</TABLE>

- ---------------
(1) Funds from Operations, or FFO, is defined as income from operations before
minority interests, gains or losses from sale of real estate and
extraordinary losses plus real estate depreciation and adjustment to derive
our pro rata share of the funds from operations of unconsolidated joint
ventures, less minority interests' pro rata share of the funds from
operations of consolidated joint ventures and perpetual preferred stock
dividends. In accordance with the NAREIT White Paper on funds from
operations, we include the effects of straight-line rents in funds from
operations. Further, we do not adjust funds from operations to eliminate the
effects of non-recurring charges.

(2) Represents funds from operations attributable to minority interests in
consolidated joint ventures for the periods presented, which has been
computed as minority interests' share of net income before disposal of
properties plus minority interests' share of real estate-related
depreciation and amortization of the consolidated joint ventures for such
periods. These minority interests are not convertible into shares of AMB
Property Corporation's common stock. In addition, the amount includes
minority interest held by the Series C, D, and E preferred unit holders.

(3) Represents our pro rata share of funds from operations in unconsolidated
joint ventures for the periods presented, which has been computed as our
share of net income plus our share of real estate-related depreciation and
amortization of the unconsolidated joint venture for such periods.

(4) Includes the dilutive effect of stock options for the purchase of shares of
AMB Property Corporation's common stock.

FACTORS THAT MAY AFFECT FUTURE FINANCIAL RESULTS

Our operations involve various risks that could have adverse consequences
to us. These risks include, among others:

GENERAL REAL ESTATE RISKS

THERE ARE FACTORS OUTSIDE OF OUR CONTROL THAT AFFECT THE PERFORMANCE AND VALUE
OF OUR PROPERTIES

Real property investments are subject to varying degrees of risk. The
yields available from equity investments in real estate depend on the amount of
income earned and capital appreciation generated by the related properties as
well as the expenses incurred in connection with the properties. If our
properties do not generate income sufficient to meet operating expenses,
including debt service and capital expenditures, our ability to make
distributions to our unitholders and payments to our noteholders could be
adversely affected.

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<PAGE> 36

Income from, and the value of, our properties may be adversely affected by the
general economic climate, local conditions such as oversupply of industrial
space or a reduction in demand for industrial space, the attractiveness of our
properties to potential customers, competition from other properties, our
ability to provide adequate maintenance and insurance and an increase in
operating costs. In addition, revenues from properties and real estate values
are also affected by factors such as the cost of compliance with regulations,
the potential for liability under applicable laws (including changes in tax
laws), interest rate levels and the availability of financing. Our income would
be adversely affected if a significant number of customers were unable to pay
rent or if we were unable to rent our industrial space on favorable terms.
Certain significant expenditures associated with an investment in real estate
(such as mortgage payments, real estate taxes and maintenance costs) generally
do not decline when circumstances cause a reduction in income from the property.

WE MAY BE UNABLE TO RENEW LEASES OR RELET SPACE AS LEASES EXPIRE

We are subject to the risks that leases may not be renewed, space may not
be relet, or the terms of renewal or reletting (including the cost of required
renovations) may be less favorable than current lease terms. Leases on a total
of approximately 32.4% of the leased square footage of our properties as of
December 31, 1999 will expire on or prior to December 31, 2001, with leases on
16.1% of the leased square footage of our properties as of December 31, 1999
expiring during the 12 months ending December 31, 2000. In addition, numerous
properties compete with our properties in attracting customers to lease space,
particularly with respect to retail centers. The number of competitive
commercial properties in a particular area could have a material adverse effect
on our ability to lease space in our properties and on the rents that we are
able to charge. Our financial condition, results of operations, cash flow and
our ability to make distributions to our unitholders and payments to our
noteholders could be adversely affected if we are unable to promptly relet or
renew the leases for all or a substantial portion of expiring leases, if the
rental rates upon renewal or reletting is significantly lower than expected, or
if our reserves for these purposes prove inadequate.

REAL ESTATE INVESTMENTS ARE ILLIQUID

Because real estate investments are relatively illiquid, our ability to
vary our portfolio promptly in response to economic or other conditions is
limited. The limitations in the Internal Revenue Code and related regulations on
a real estate investment trust holding property for sale, which limitations are
applicable to us as a subsidiary of AMB Property Corporation, may affect our
ability to sell properties without adversely affecting distributions to our
unitholders and payments to our noteholders. The relative illiquidity of our
holdings, Internal Revenue Code prohibitions and related regulations could
impede our ability to respond to adverse changes in the performance of our
investments and could adversely affect our financial condition, results of
operations, cash flow and our ability to make distributions to our unitholders
and payments to our noteholders.

A SIGNIFICANT NUMBER OF OUR PROPERTIES ARE LOCATED IN CALIFORNIA

Our properties located in California as of December 31, 1999 represented
approximately 22.7% of the aggregate square footage of our properties as of
December 31, 1999 and approximately 29.1% of our annualized base rent.
Annualized base rent means the monthly contractual amount under existing leases
at December 31, 1999, multiplied by 12. This amount excludes expense
reimbursements and rental abatements. Our revenue from, and the value of, our
properties located in California may be affected by a number of factors,
including local real estate conditions (such as oversupply of or reduced demand
for commercial properties) and the local economic climate. Business layoffs,
downsizing, industry slowdowns, changing demographics and other factors may
adversely impact the local economic climate. A downturn in either the California
economy or in California real estate conditions could adversely affect our
financial condition, results of operations, cash flow and our ability to make
distributions to our unitholders and payments to our noteholders. Certain of our
properties are also subject to possible loss from seismic activity. During 1999,
we sold 10 of the 11 retail centers that we owned in California, eight of which
were sold to BPP Retail and two to an institutional investor for whom AMB
Investment Management provides asset management services. Accordingly, as of
December 31, 1999, 22.7% of our properties based on aggregate square footage and
29.1% of our properties based on annualized base rent were located in
California.

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<PAGE> 37

OUR PROPERTIES ARE CURRENTLY CONCENTRATED IN THE INDUSTRIAL SECTOR

Our properties are currently concentrated predominantly in the industrial
real estate sector. Our concentration in a certain property type may expose us
to the risk of economic downturns in this sector to a greater extent than if our
portfolio also included other property types. As a result of such concentration,
economic downturns in the industrial real estate sector could have an adverse
effect on our financial condition, results of operations, cash flow and ability
to make distributions to our unitholders and payments to our noteholders.

SOME POTENTIAL LOSSES ARE NOT COVERED BY INSURANCE

We carry comprehensive liability, fire, extended coverage and rental loss
insurance covering all of our properties, with policy specifications and insured
limits which we believe are adequate and appropriate under the circumstances
given relative risk of loss, the cost of such coverage and industry practice.
There are, however, certain losses that are not generally insured because it is
not economically feasible to insure against them, including losses due to riots
or acts of war. Certain losses such as losses due to floods or seismic activity
may be insured subject to certain limitations including large deductibles or
co-payments and policy limits. If an uninsured loss or a loss in excess of
insured limits occurs with respect to one or more of our properties, we could
lose the capital we invested in the properties, as well as the anticipated
future revenue from the properties and, in the case of debt which is with
recourse to us, we would remain obligated for any mortgage debt or other
financial obligations related to the properties. Any such liability could
adversely affect our financial condition, results of operations, cash flow and
ability to make distributions to our unitholders and payments to our
noteholders.

A number of our properties are located in areas that are known to be
subject to earthquake activity, including California where, as of December 31,
1999, 209 industrial buildings aggregating 14.7 million rentable square feet
(representing 22.0% of our properties based on aggregate square footage and
26.9% based on annualized base rent) and 1 retail center aggregating 0.4 million
rentable square feet (representing 0.6% of our properties based on aggregate
square footage and 2.2% based on annualized base rent) are located. We carry
replacement cost earthquake insurance on all of our properties located in areas
historically subject to seismic activity, subject to coverage limitations and
deductibles which we believe are commercially reasonable. This insurance
coverage also applies to the properties managed by AMB Investment Management,
with a single aggregate policy limit and deductible applicable to those
properties and our properties. We own 100% of the non-voting preferred stock of
AMB Investment Management, Inc.. Through an annual analysis prepared by outside
consultants, we evaluate our earthquake insurance coverage in light of current
industry practice and determine the appropriate amount of earthquake insurance
to carry. We may incur material losses in excess of insurance proceeds and we
may not be able to continue to obtain insurance at commercially reasonable
rates.

WE ARE SUBJECT TO RISKS AND LIABILITIES IN CONNECTION WITH PROPERTIES OWNED
THROUGH JOINT VENTURES, LIMITED LIABILITY COMPANIES AND PARTNERSHIPS

As of December 31, 1999, we had ownership interests in 21 joint ventures,
limited liability companies or partnerships with third parties, as well as
interests in two unconsolidated entities. As of December 31, 1999, we owned 27
(excluding the two unconsolidated joint ventures) of our properties through
these entities. We may make additional investments through these ventures in the
future and presently plan to do so with clients of AMB Investment Management and
certain Development Alliance Partners, who share certain approval rights over
major decisions. Partnership, limited liability company or joint venture
investments may involve risks such as the following:

- our partners, co-members or joint venturers might become bankrupt (in
which event we and any other remaining general partners, members or joint
venturers would generally remain liable for the liabilities of the
partnership, limited liability company or joint venture);

- our partners, co-members or joint venturers might at any time have
economic or other business interests or goals which are inconsistent with
our business interests or goals;
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<PAGE> 38

- our partners, co-members or joint venturers may be in a position to take
action contrary to our instructions, requests, policies or objectives;
and

- agreements governing joint ventures, limited liability companies and
partnerships often contain restrictions on the transfer of a joint
venturer's, member's or partner's interest or "buy-sell" or other
provisions which may result in a purchase or sale of the interest at a
disadvantageous time or on disadvantageous terms.

We will, however, generally seek to maintain sufficient control of our
partnerships, limited liability companies and joint ventures to permit us to
achieve our business objectives. Our organizational documents do not limit the
amount of available funds that we may invest in partnerships, limited liability
companies or joint ventures. The occurrence of one or more of the events
described above could have an adverse effect on our financial condition, results
of operations, cash flow and ability to make distributions to our unitholders
and payments to our noteholders.

WE MAY BE UNABLE TO CONSUMMATE ACQUISITIONS ON ADVANTAGEOUS TERMS

We intend to continue to acquire primarily industrial properties.
Acquisitions of properties entail risks that investments will fail to perform in
accordance with expectations. Estimates of the costs of improvements necessary
for us to bring an acquired property up to market standards may prove
inaccurate. In addition, there are general investment risks associated with any
new real estate investment. Further, we anticipate significant competition for
attractive investment opportunities from other major real estate investors with
significant capital including both publicly traded real estate investment trusts
and private institutional investment funds. We expect that future acquisitions
will be financed through a combination of borrowings under our unsecured credit
facility, proceeds from equity or debt offerings by us or AMB Property
Corporation (including issuances of limited partnership units by us or a
subsidiary or shares of stock by AMB Property Corporation), and proceeds from
property divestitures, which could have an adverse effect on our cash flow. We
may not be able to acquire additional properties. Our inability to finance any
future acquisitions on favorable terms or the failure of acquisitions to conform
with our expectations or investment criteria, or our failure to timely reinvest
the proceeds from property divestitures could adversely affect our financial
condition, results of operations, cash flow and ability to make distributions to
our unitholders and payments to our noteholders.

WE MAY BE UNABLE TO COMPLETE RENOVATION AND DEVELOPMENT ON ADVANTAGEOUS TERMS

The real estate development business, including the renovation and
rehabilitation of existing properties, involves significant risks. These risks
include the following:

- we may not be able to obtain financing on favorable terms for development
projects and we may not complete construction on schedule or within
budget, resulting in increased debt service expense and construction
costs and delays in leasing such properties and generating cash flow;

- we may not be able to obtain, or we may experience delays in obtaining,
all necessary zoning, land-use, building, occupancy and other required
governmental permits and authorizations;

- new or renovated properties may perform below anticipated levels,
producing cash flow below budgeted amounts;

- substantial renovation as well as new development activities, regardless
of whether or not they are ultimately successful, typically require a
substantial portion of management's time and attention which could divert
management's time from our day-to-day operations; and

- activities that we finance through construction loans involve the risk
that, upon completion of construction, we may not be able to obtain
permanent financing or we may not be able to obtain permanent financing
on advantageous terms.

These risks could have an adverse effect on our financial condition,
results of operations, cash flow and ability to make distributions to our
unitholders and payments to our noteholders.

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<PAGE> 39

WE MAY BE UNABLE TO COMPLETE DIVESTITURES ON ADVANTAGEOUS TERMS

We intend to dispose of properties from time to time that do not conform
with our current investment strategy or that we have otherwise determined should
be divested, including, as of December 31, 1999, four retail centers,
aggregating approximately 1.2 million square feet, and four industrial buildings
aggregating approximately 0.3 million square feet, which are held for
divestiture. Our ability to dispose of properties on advantageous terms is
dependent upon factors beyond our control, including competition from other
owners (including other real estate investment trusts) that are attempting to
dispose of industrial and retail properties and the availability of financing on
attractive terms for potential buyers of our properties. Our inability to
dispose of properties on favorable terms and/or our inability to redeploy the
proceeds of property divestitures in accordance with our investment strategy
could adversely our financial condition, results of operations, cash flow and
ability to make distributions to our unitholders and payments to our
noteholders.

DEBT FINANCING

WE COULD INCUR MORE DEBT

We and AMB Property Corporation operate with a policy of incurring debt,
either directly or through our subsidiaries, only if upon such incurrence our
debt-to-total market capitalization ratio would be approximately 45% or less.
The aggregate amount of indebtedness that we may incur under our policy varies
directly with the valuation of AMB Property Corporation's capital stock and the
number of shares of capital stock outstanding. Accordingly, we would be able to
incur additional indebtedness under our policy as a result of increases in the
market price per share of AMB Property Corporation's common stock or other
outstanding classes of capital stock, and future issuance of shares of AMB
Property Corporation's capital stock. In spite of this policy, neither our nor
AMB Property Corporation's organizational documents contain any limitation on
the amount of indebtedness that they may incur. Accordingly, AMB Property
Corporation's board of directors could alter or eliminate this policy. If we
change this policy, we could become more highly leveraged, resulting in an
increase in debt service that could adversely affect our financial condition,
results of operations, cash flow and ability to make distributions to our
unitholders and payments to our noteholders.

SCHEDULED DEBT PAYMENTS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION

We are subject to risks normally associated with debt financing, including
the risks that cash flow will be insufficient to make distributions to our
unitholders and payments to our noteholders, that we will be unable to refinance
existing indebtedness on our properties (which in all cases will not have been
fully amortized at maturity) and that the terms of refinancing will not be as
favorable as the terms of existing indebtedness.

As of December 31, 1999, we had total debt outstanding of approximately
$1.3 billion including:

- approximately $696.9 million of secured indebtedness (excluding
unamortized debt premiums) with an average maturity of six years and a
weighted average interest rate of 7.8%;

- approximately $80.0 million outstanding under the unsecured credit
facility related to the Alliance Fund I, with a maturity date of April
2001 and a weighted average interest rate of 6.7%;

- approximately $83.0 million outstanding under our unsecured $500.0
million credit facility with a maturity date of November 2000 and a
weighted average interest rate of 6.7%; and

- $400.0 million aggregate principal amount of unsecured senior debt
securities with maturities in June 2008, 2015 and 2018 and a weighted
average interest rate of 7.2%.

With the proceeds from the first, second and third transactions with BPP
Retail, we repaid approximately $50.7 million of secured indebtedness relating
to the properties divested and made payments under our unsecured credit facility
in the amount of approximately $225.0 million.

If we are unable to refinance or extend principal payments due at maturity
or pay them with proceeds of other capital transactions, we expect that our cash
flow will not be sufficient in all years to pay distributions to our unitholders
and payments to our noteholders and to repay all such maturing debt.
Furthermore, if

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<PAGE> 40

prevailing interest rates or other factors at the time of refinancing (such as
the reluctance of lenders to make commercial real estate loans) result in higher
interest rates upon refinancing, the interest expense relating to that
refinanced indebtedness would increase. This increased interest expense would
adversely affect our financial condition, results of operations, cash flow and
ability to make distributions to our unitholders and payments to our
noteholders. In addition, if we mortgage one or more of our properties to secure
payment of indebtedness and we are unable to meet mortgage payments, the
property could be foreclosed upon or transferred to the mortgagee with a
consequent loss of income and asset value. A foreclosure on one or more of our
properties could adversely affect our financial condition, results of
operations, cash flow and ability to make distributions to our unitholders and
payments to our noteholders.

RISING INTEREST RATES COULD ADVERSELY AFFECT OUR CASH FLOW

As of December 31, 1999, we had $83.0 million and $80.0 million outstanding
under our unsecured credit facility and the unsecured credit facility related to
the Alliance Fund I, respectively. In addition, we may incur other variable rate
indebtedness in the future. Increases in interest rates on this indebtedness
could increase our interest expense, which would adversely affect our financial
condition, results of operations, cash flow and ability to make distributions to
our unitholders and payments to our noteholders. Accordingly, we may in the
future engage in transactions to limit our exposure to rising interest rates.

WE ARE DEPENDENT ON EXTERNAL SOURCES OF CAPITAL

In order for AMB Property Corporation to qualify as a real estate
investment trust under the Internal Revenue Code, AMB Property Corporation is
required each year to distribute to its stockholders at least 95% of its real
estate investment trust taxable income (determined without regard to the
dividends-paid deduction and by excluding any net capital gain). Because of this
distribution requirement, we may not be able to fund all future capital needs,
including capital needs in connection with acquisitions, from cash retained from
operations. As a result, to fund capital needs, we rely on third-party sources
of capital, which we may not be able to obtain on favorable terms or at all. Our
access to third-party sources of capital depends upon a number of factors,
including general market conditions and the market's perception of our growth
potential and our current and potential future earnings and cash distributions
and the market price of the shares of AMB Property Corporation's capital stock.
Additional debt financing may substantially increase our leverage.

WE COULD DEFAULT ON CROSS-COLLATERALIZED AND CROSS-DEFAULTED DEBT

As of December 31, 1999, we had 16 non-recourse secured loans which are
cross-collateralized by 17 properties. As of December 31, 1999, we had $196.5
million (not including unamortized debt premium) outstanding on these loans. If
we default on any of these loans, we will be required to repay the aggregate of
all indebtedness, together with applicable prepayment charges, to avoid
foreclosure on all the cross-collateralized properties within the applicable
pool. Foreclosure on our properties, or our inability to refinance our loans on
favorable terms, could adversely impact our financial condition, results of
operations, cash flow and ability to make distributions to our unitholders and
payments to our noteholders. In addition, our credit facilities and our senior
debt securities contain certain cross-default provisions which are triggered in
the event that our other material indebtedness is in default. These
cross-default provisions may require us to repay or restructure the credit
facilities and the senior debt securities in addition to any mortgage or other
debt which is in default, which could adversely affect our financial condition,
results of operations, cash flow and ability to make distributions to our
unitholders and payments to our noteholders.

CONTINGENT OR UNKNOWN LIABILITIES COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION

AMB Property Corporation's predecessors have been in existence for varying
lengths of time up to 17 years. At the time of our formation we acquired the
assets of these entities subject to all of their potential existing liabilities.
There may be current liabilities or future liabilities arising from prior
activities that we are not aware of and therefore are not disclosed in this
report. AMB Property Corporation assumed these liabilities as the surviving
entity in the various merger and contribution transactions that occurred at the
time of our formation. Existing liabilities for indebtedness generally were
taken into account in connection with the
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<PAGE> 41

allocation of our limited partnership units and/or shares of AMB Property
Corporation's common stock in the formation transactions, but no other
liabilities were taken into account for these purposes. We do not have recourse
against AMB Property Corporation's predecessors or any of their respective
stockholders or partners or against any individual account investors with
respect to any unknown liabilities. Unknown liabilities might include the
following:

- liabilities for clean-up or remediation of undisclosed environmental
conditions;

- claims of customers, vendors or other persons dealing with AMB Property
Corporation's predecessors prior to the formation transactions that had
not been asserted prior to the formation transactions;

- accrued but unpaid liabilities incurred in the ordinary course of
business;

- tax liabilities; and

- claims for indemnification by the officers and directors of AMB Property
Corporation's predecessors and others indemnified by these entities.

Certain customers may claim that the formation transactions gave rise to a
right to purchase the premises that they occupy. We do not believe any such
claims would be material. See "-- Government Regulations -- We Could Encounter
Costly Environmental Problems" below regarding the possibility of undisclosed
environmental conditions potentially affecting the value of our properties.
Undisclosed material liabilities in connection with the acquisition of
properties, entities and interests in properties or entities could adversely
affect our financial condition, results of operations, cash flow and ability to
make distributions to our unitholders and payments to our noteholders.

CONFLICTS OF INTEREST

SOME OF AMB PROPERTY CORPORATION'S EXECUTIVE OFFICERS ARE INVOLVED IN OTHER REAL
ESTATE ACTIVITIES AND INVESTMENTS

Some of the executive officers of AMB Property Corporation, our general
partner, own interests in real estate-related businesses and investments. These
interests include minority ownership of AMB Institutional Housing Partners, a
residential housing finance company, and ownership of AMB Development, Inc. and
AMB Development, L.P., developers which own property that we believe is not
suitable for ownership by us. AMB Development, Inc. and AMB Development, L.P.
have agreed not to initiate any new development projects following AMB Property
Corporation's initial public offering in November 1997. These entities have also
agreed that they will not make any further investments in industrial or retail
properties other than those currently under development at the time of AMB
Property Corporation's initial public offering. AMB Institutional Housing
Partners, AMB Development, Inc. and AMB Development, L.P. continue to use the
name "AMB" pursuant to royalty-free license arrangements. The continued
involvement in other real estate-related activities by some of AMB Property
Corporation's executive officers and directors could divert management's
attention from our day-to-day operations. Most of AMB Property Corporation's
executive officers have entered into non-competition agreements with AMB
Property Corporation pursuant to which they have agreed not to engage in any
activities, directly or indirectly, in respect of commercial real estate, and
not to make any investment in respect of industrial real estate, other than
through ownership of not more than 5% of the outstanding shares of a public
company engaged in such activities or through the existing investments referred
to in this report. State law may limit AMB Property Corporation's ability to
enforce these agreements.

We could also, in the future, subject to the unanimous approval of the
disinterested members of AMB Property Corporation's board of directors with
respect to such transaction, acquire property from executive officers, enter
into leases with executive officers, and/or engage in other related activities
in which the interests pursued by AMB Property Corporation's executive officers
may not be in the best interests of our unitholders or noteholders.

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<PAGE> 42

CERTAIN OF AMB PROPERTY CORPORATION'S EXECUTIVE OFFICERS AND DIRECTORS MAY HAVE
CONFLICTS OF INTEREST WITH US IN CONNECTION WITH OTHER PROPERTIES THAT THEY OWN
OR CONTROL

As of December 31, 1999, AMB Development, L.P. owns interests in 11 retail
development projects in the U.S., 10 of which consist of a single free-standing
Walgreens drugstore and one of which consists of a free-standing Walgreens
drugstore, a ground lease to McDonald's and a 14,000 square foot retail center.
In addition, Messrs. Abbey, Moghadam and Burke, each a founder and director of
AMB Property Corporation, own less than 1% interests in two partnerships which
own office buildings in various markets; these interests have negligible value.
Luis A. Belmonte, an executive officer of AMB Property Corporation, owns less
than a 10% interest, representing an estimated value of $75,000, in a limited
partnership which owns an office building located in Oakland, California.

In addition, several of our executive officers individually own:

- less than 1% interests in the stocks of certain publicly-traded real
estate investment trusts;

- certain interests in and rights to developed and undeveloped real
property located outside the United States; and

- certain other de minimis holdings in equity securities of real estate
companies.

Thomas W. Tusher, a member of AMB Property Corporation's board of
directors, is a limited partner in a partnership in which Messrs. Abbey,
Moghadam and Burke are general partners and which owns a 75% interest in an
office building. Mr. Tusher owns a 20% interest in the partnership, valued as of
December 31, 1999 at approximately $1.2 million. Messrs. Abbey, Moghadam and
Burke each have an approximately 26.7% interest in the partnership, each valued
as of December 31, 1999 at approximately $1.6 million.

We believe that the properties and activities set forth above generally do
not directly compete with any of our properties. However, it is possible that a
property in which an executive officer or director of AMB Property Corporation,
or an affiliate of an executive officer or director of AMB Property Corporation,
has an interest may compete with us in the future if we were to invest in a
property similar in type and in close proximity to that property. In addition,
the continued involvement by AMB Property Corporation's executive officers and
directors in these properties could divert management's attention from our
day-to-day operations. Our policy prohibits us from acquiring any properties
from AMB Property Corporation's executive officers or their affiliates without
the approval of the disinterested members of AMB Property Corporation's board of
directors with respect to that transaction.

AMB PROPERTY CORPORATION'S DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT
STOCKHOLDERS COULD ACT IN A MANNER THAT IS NOT IN THE BEST INTEREST OF OUR
LIMITED PARTNERS OR NOTEHOLDERS

As of March 10, 2000, AMB Property Corporation's three largest
stockholders, Cohen & Steers Capital Management, Inc. (with respect to various
client accounts for which Cohen & Steers Capital Management, Inc. serves as
investment advisor), Southern Company Services, Inc. and Capital Research and
Management Company (with respect to various client accounts for which Capital
Research and Management Company serves as investment advisor) beneficially owned
approximately 16.9% of AMB Property Corporation's outstanding common stock. In
addition, AMB Property Corporation's executive officers and directors
beneficially owned approximately 5.8% of AMB Property Corporation's outstanding
common stock as of March 10, 2000, and will have influence on AMB Property
Corporation's and our management and operation and, as stockholders of AMB
Property Corporation, will have influence on the outcome of any matters
submitted to a vote of AMB Property Corporation's stockholders. This influence
might be exercised in a manner that is inconsistent with the interests of our
limited partners and our noteholders. Although there is no understanding or
arrangement for these directors, officers and stockholders and their affiliates
to act in concert, these parties would be in a position to exercise significant
influence over AMB Property Corporation's and our affairs if they choose to do
so.

41
<PAGE> 43

WE COULD SUFFER LOSSES IF WE FAIL TO ENFORCE THE TERMS OF CERTAIN AGREEMENTS

As holders of shares of AMB Property Corporation's common stock and
performance units, certain of AMB Property Corporation's directors and officers
could have a conflict of interest with respect to their obligations as directors
and officers to vigorously enforce the terms of certain of the agreements
relating to our formation transactions. The potential failure to enforce the
material terms of those agreements could result in a monetary loss to us and AMB
Property Corporation, which loss could have a material adverse effect on our
financial condition, results of operations, cash flow and ability to make
distributions to our unitholders and payments to our noteholders.

WE COULD CHANGE OUR INVESTMENT AND FINANCING POLICIES

Subject to AMB Property Corporation's current investment policy to maintain
its qualification as a real estate investment trust (unless a change is approved
by the board of directors of AMB Property Corporation under certain
circumstances), AMB Property Corporation's board of directors will determine our
investment and financing policies, our growth strategy and our debt,
capitalization, distribution and operating policies. Although AMB Property
Corporation's board of directors has no present intention to revise or amend
these strategies and policies, it may do so at any time and any such changes
could adversely affect our financial condition or results of operations,
including our ability to make distributions to our unitholders or payments to
our noteholders.

WE COULD INVEST IN REAL ESTATE MORTGAGES

We may invest in mortgages, and may do so as a strategy for ultimately
acquiring the underlying property. In general, investments in mortgages include
the risks that borrowers may not be able to make debt service payments or pay
principal when due, that the value of the mortgaged property may be less than
the principal amount of the mortgage note secured by the property and that
interest rates payable on the mortgages may be lower than our cost of funds to
acquire these mortgages. In any of these events, our funds from operations and
our ability to make distributions to our unitholders and payments to our
noteholders could be adversely affected. Funds from operations means income
(loss) from operations before disposal of real estate properties, minority
interests and extraordinary items plus depreciation and amortization, excluding
depreciation of furniture, fixtures and equipment less funds from operations
attributable to minority interests in consolidated joint ventures which are not
convertible into shares of AMB Property Corporation's common stock.

GOVERNMENT REGULATIONS

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

COSTS OF COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT

Under the Americans with Disabilities Act, places of public accommodation
must meet certain federal requirements related to access and use by disabled
persons. Compliance with the Americans with Disabilities Act might require us to
remove structural barriers to handicapped access in certain public areas where
such removal is "readily achievable." If we fail to comply with the Americans
with Disabilities Act, we might be required to pay fines to the government or
damages to private litigants. The impact of application of the Americans with
Disabilities Act to our properties, including the extent and timing of required
renovations, is uncertain. If we are required to make unanticipated expenditures
to comply with the Americans with Disabilities Act, our cash flow and the
amounts available for distributions to our unitholders and payments to our
noteholders may be adversely affected.

WE COULD ENCOUNTER COSTLY ENVIRONMENTAL PROBLEMS

Federal, state and local laws and regulations relating to the protection of
the environment impose liability on a current or previous owner or operator of
real estate for contamination resulting from the presence or discharge of
hazardous or toxic substances or petroleum products at the property. A current
or previous owner
42
<PAGE> 44

may be required to investigate and clean up contamination at or migrating from a
site. These laws typically impose liability and clean-up responsibility without
regard to whether the owner or operator knew of or caused the presence of the
contaminants. Even if more than one person may have been responsible for the
contamination, each person covered by the environmental laws may be held
responsible for all of the clean-up costs incurred. In addition, third parties
may sue the owner or operator of a site for damages based on personal injury,
property damage and/or other costs, including investigation and clean-up costs,
resulting from environmental contamination present at or emanating from that
site.

Environmental laws also govern the presence, maintenance and removal of
asbestos. These laws require that owners or operators of buildings containing
asbestos properly manage and maintain the asbestos, that they adequately inform
or train those who may come into contact with asbestos and that they undertake
special precautions, including removal or other abatement in the event that
asbestos is disturbed during renovation or demolition of a building. These laws
may impose fines and penalties on building owners or operators for failure to
comply with these requirements and may allow third parties to seek recovery from
owners or operators for personal injury associated with exposure to asbestos
fibers. Some of our properties may contain asbestos-containing building
materials.

Some of our properties are leased or have been leased, in part, to owners
and operators of dry cleaners that operate on-site dry cleaning plants, to
owners and operators of gas stations or to owners or operators of other
businesses that use, store or otherwise handle petroleum products or other
hazardous or toxic substances. Some of these properties contain, or may have
contained, underground storage tanks for the storage of petroleum products and
other hazardous or toxic substances. These operations create a potential for the
release of petroleum products or other hazardous or toxic substances. Some of
our properties are adjacent to or near other properties that have contained or
currently contain underground storage tanks used to store petroleum products or
other hazardous or toxic substances. In addition, certain of our properties are
on, or are adjacent to or near other properties upon which others, including
former owners or tenants of the properties, have engaged or may in the future
engage in activities that may release petroleum products or other hazardous or
toxic substances. From time to time, we may acquire properties, or interests in
properties, with known adverse environmental conditions where we believe that
the environmental liabilities associated with these conditions are quantifiable
and the acquisition will yield a superior risk-adjusted return. In connection
with certain of the divested properties, we have agreed to remain responsible
for, and to bear the cost of, remediating or monitoring certain environmental
conditions on the properties.

All of our properties were subject to a Phase I or similar environmental
assessments by independent environmental consultants at the time of acquisition
or shortly after acquisition. Phase I assessments are intended to discover and
evaluate information regarding the environmental condition of the surveyed
property and surrounding properties. Phase I assessments generally include an
historical review, a public records review, an investigation of the surveyed
site and surrounding properties, and preparation and issuance of a written
report, but do not include soil sampling or subsurface investigations and
typically do not include an asbestos survey. We may perform additional Phase II
testing if recommended by the independent environmental consultant. Phase II
testing may include the collection and laboratory analysis of soil and
groundwater samples, completion of surveys for asbestos-containing building
materials, and any other testing that the consultant considers prudent in order
to test for the presence of hazardous materials. Some of the environmental
assessments of our properties do not contain a comprehensive review of the past
uses of the properties and/or the surrounding properties.

We have formed a limited liability company with AIG Global Real Estate
Investment Corp. to acquire, develop, manage and operate environmentally
impaired properties in target markets nationwide. We are the managing member of
this venture. We and AIG have each committed $50 million to this venture. This
venture currently intends to invest primarily in industrial properties located
near major airports, ports and in-fill areas with known and quantifiable
environmental issues, as well as, to a more limited extent, well-located,
value-added retail properties. Environmental issues for each property are
evaluated and quantified prior to acquisition. Phase I environmental assessments
are performed on the property; Phase II testing is completed, if necessary, to
supplement existing environmental data on the property; and detailed remedial
cost estimates are prepared by independent third party engineers. Our and AIG
Global Real Estate Investment Corp.'s risk
43
<PAGE> 45

management teams then review the various environmental reports and determine
whether the property is appropriate for acquisition. The costs of environmental
investigation, clean-up and monitoring are underwritten into the cost of the
acquisition and appropriate environmental insurance is obtained for the
property.

None of the environmental assessments of our properties has revealed any
environmental liability that we believe would have a material adverse effect on
our financial condition or results of operations taken as a whole, and we are
not aware of any such material environmental liability. Nonetheless, it is
possible that the assessments do not reveal all environmental liabilities and
that there are material environmental liabilities of which we are unaware or
that known environmental conditions may give rise to liabilities that are
materially greater than anticipated. Moreover, future laws, ordinances or
regulations may impose material environmental liability and the current
environmental condition of our properties may be affected by tenants, by the
condition of land, by operations in the vicinity of the properties (such as
releases from underground storage tanks), or by third parties unrelated to us.
If the costs of compliance with environmental laws and regulations now existing
or adopted in the future exceed our budgets for these items, our financial
condition, results of operations, cash flow and ability to make distributions to
our unitholders and payments to our noteholders could be adversely affected.

OUR FINANCIAL CONDITION COULD BE ADVERSELY AFFECTED IF WE FAIL TO COMPLY WITH
OTHER REGULATIONS

Our properties are also subject to various federal, state and local
regulatory requirements such as state and local fire and life safety
requirements. If we fail to comply with these requirements, we might incur fines
by governmental authorities or be required to pay awards of damages to private
litigants. We believe that our properties are currently in substantial
compliance with all such regulatory requirements. However, these requirements
may change or new requirements may be imposed which could require significant
unanticipated expenditures by us. Any such unanticipated expenditures could have
an adverse effect on our financial condition, results of operations, cash flow
and ability to make distributions to our unitholders and payments to our
noteholders.

FEDERAL INCOME TAX RISKS

CERTAIN PROPERTY TRANSFERS MAY GENERATE PROHIBITED TRANSACTION INCOME

From time to time, we may transfer or otherwise dispose of some of our
properties. Under the Internal Revenue Code, any gain resulting from transfers
of properties that are held as inventory or primarily for sale to customers in
the ordinary course of business is treated as income from a prohibited
transaction that is subject to a 100% penalty tax. Since we acquire properties
for investment purposes, we believe that any transfer or disposal of property by
us would not be deemed by the Internal Revenue Service to be a prohibited
transaction with any resulting gain allocable to us being subject to a 100%
penalty tax. However, whether property is held for investment purposes is a
question of fact that depends on all the facts and circumstances surrounding the
particular transaction and the Internal Revenue Service may contend that certain
transfers or disposals of properties by us are prohibited transactions. While we
believe that the Internal Revenue Service would not prevail in any such dispute,
any adverse finding by the Internal Revenue Service that a transfer or
disposition of property constituted a prohibited transaction would subject us to
a 100% penalty tax on any gain allocable to us from the prohibited transaction.

WE MAY INVEST IN HIGHLY SPECULATIVE EARLY-STAGE COMPANIES IN WHICH WE MAY LOSE
OUR ENTIRE INVESTMENT OR WHICH MAY JEOPARDIZE AMB PROPERTY CORPORATION'S STATUS
AS A REAL ESTATE INVESTMENT TRUST

From time to time, we may invest in early-stage companies that we believe
will enhance our understanding of changes occurring in the movement of goods,
which may, in turn, sharpen our real estate investment focus, create real estate
provider relationships with growth companies and provide the potential for
significant returns on invested capital. We currently expect that each of these
investments will generally be in the amount of $10.0 million or less. As a
result, we believe that the amounts of our investments in early-stage companies
are immaterial, both individually and in the aggregate. However, these
investments are highly speculative and it is possible that we may lose our
entire investment in an early-stage company. We believe

44
<PAGE> 46

that our investments in these companies have been structured so that AMB
Property Corporation currently qualifies as a real estate investment trust under
the Internal Revenue Code. However, if the value of these investments, either
individually or in the aggregate, appreciate significantly, it may adversely
affect AMB Property Corporation's ability to continue to qualify as a real
estate investment trust, unless we are able to restructure or dispose of our
holdings on a timely basis. To date, we have invested approximately $14.0
million in early-stage companies. One of these investments, in an initial amount
of $5.0 million, has appreciated to a market value in excess of $35.0 million at
December 31, 1999, if it were freely tradable.

WE ARE DEPENDENT ON OUR GENERAL PARTNER'S KEY PERSONNEL

We depend on the efforts of the executive officers of our general partner.
While we believe that AMB Property Corporation could find suitable replacements
for these key personnel, the loss of their services or the limitation of their
availability could adversely affect our financial condition, results of
operations, cash flow and ability to make distributions to our unitholders and
payments to our noteholders. AMB Property Corporation does not have employment
agreements with any of its executive officers.

WE MAY BE UNABLE TO MANAGE OUR GROWTH

Our business has grown rapidly and continues to grow through property
acquisitions. If we fail to effectively manage our growth, our financial
condition, results of operations, cash flow and ability to make distributions to
our unitholders and payments to our noteholders could be adversely affected.

AMB INVESTMENT MANAGEMENT, INC. AND HEADLANDS REALTY CORPORATION

WE DO NOT CONTROL THE ACTIVITIES OF AMB INVESTMENT MANAGEMENT, INC. AND
HEADLANDS REALTY CORPORATION

We own 100% of the non-voting preferred stock of AMB Investment Management,
Inc. and Headlands Realty Corporation (representing approximately 95% of the
economic interest in each entity). Certain of AMB Property Corporation's current
and former executive officers and a former executive officer of AMB Investment
Management, Inc. own all of the outstanding voting common stock of AMB
Investment Management, Inc. (representing approximately 5% of the economic
interest in AMB Investment Management, Inc.). Certain of AMB Property
Corporation's current and former executive officers and a director of Headlands
Realty Corporation own all of the outstanding voting common stock of Headlands
Realty Corporation (representing approximately 5% of the economic interest in
Headlands Realty Corporation). The ownership structure of AMB Investment
Management, Inc. and Headlands Realty Corporation permits us to share in the
income of those corporations while allowing AMB Property Corporation to maintain
its status as a real estate investment trust. We receive substantially all of
the economic benefit of the businesses carried on by AMB Investment Management,
Inc. and Headlands Realty Corporation through our right to receive dividends.
However, we are not able to elect the directors or officers of AMB Investment
Management, Inc. and Headlands Realty Corporation and, as a result, we do not
have the ability to influence their operation or to require that their boards of
directors declare and pay cash dividends on the non-voting stock of AMB
Investment Management, Inc. and Headlands Realty Corporation held by us. The
boards of directors and management of AMB Investment Management, Inc. and
Headlands Realty Corporation might implement business policies or decisions that
would not have been implemented by persons controlled by us and that may be
adverse to the interests of our unitholders and noteholders or that may
adversely impact our financial condition, results of operations, cash flow and
ability to make distributions to our unitholders and payments to our
noteholders. In addition, AMB Investment Management, Inc. and Headlands Realty
Corporation are subject to tax on their income, reducing their cash available
for distribution to us.

AMB INVESTMENT MANAGEMENT, INC. MAY NOT BE ABLE TO GENERATE SUFFICIENT FEES

Fees earned by AMB Investment Management, Inc. depend on various factors
affecting the ability to attract and retain investment management clients and
the overall returns achieved on managed assets. These factors are beyond our
control. AMB Investment Management, Inc.'s failure to attract investment
management clients or achieve sufficient overall returns on managed assets could
reduce its ability to make

45
<PAGE> 47

distributions on the stock owned by us and could also limit co-investment
opportunities to us. This would limit our ability to generate rental revenues
from such co-investments and use the co-investment program as a source to
finance property acquisitions and leverage acquisition opportunities.

ITEM 7A. QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk includes the rising interest rates in
connection with our unsecured credit facility, the unsecured debt of the
Alliance Fund I and other variable rate borrowings and our ability to incur more
debt without unitholder or noteholder approval, thereby increasing our debt
service obligations, which could adversely affect our cash flows. See "Item 7:
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- Capital Resources -- Market
Capitalization."

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See "Item 14. Exhibits, Financial Statement Schedules, and Reports of Form
8-K."

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEMS 10, 11, 12 AND 13.

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT, EXECUTIVE COMPENSATION,
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT, AND CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by Item 10, Item 11, Item 12 and Item 13 will be
contained in a definitive proxy statement for AMB Property Corporation's Annual
Meeting of Stockholders which we anticipate will be filed no later than 120 days
after the end of AMB Property Corporation's fiscal year pursuant to Regulation
14A and accordingly these items have been omitted in accordance with General
Instruction G(3) to Form 10-K.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1) and (2) FINANCIAL STATEMENTS AND SCHEDULES:

The following consolidated financial information is included as a separate
section of this report on Form 10-K.

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.................... F-1
Consolidated Balance Sheets as of December 31, 1998 and
1999...................................................... F-2
Consolidated Statements of Operations for the period from
inception (November 26, 1997) to December 31, 1997 and for
the years ended December 31, 1998 and 1999................ F-3
Consolidated Statements of Cash Flows for the period from
inception (November 26, 1997) to December 31, 1997 and for
the years ended December 31, 1998 and 1999................ F-4
Consolidated Statements of Partners' Capital for the period
from inception (November 26, 1997) to December 31, 1997
and for the years ended December 31, 1998 and 1999........ F-5
Notes to Consolidated Financial Statements.................. F-6
Schedule III -- Real Estate and Accumulated Depreciation.... S-1
</TABLE>

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<PAGE> 48

All other schedules are omitted since the required information is not
present in amounts sufficient to require submission of the schedule or because
the information required is included in the financial statements and notes
thereto.

(a)(3) EXHIBITS:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
3.1 Third Amended and Restated Agreement of Limited Partnership
of AMB Property, L.P. (incorporated by reference to Exhibit
99.1 of AMB Property Corporation's Registration Statements
on Form S-3 (No. 333-68291).
4.1 Indenture dated as of June 30, 1998 by and among the
Registrant, AMB Property Corporation and State Street Bank
and Trust Company of California, N.A., as trustee
(incorporated by reference to Exhibit 4.1 of the
Registrant's Registration Statement on Form S-11 (No.
333-49163)).
4.2 First Supplemental Indenture dated as of June 30, 1998 by
and among the Registrant, AMB Property Corporation and State
Street Bank and Trust Company of California, N.A., as
trustee (incorporated by reference to Exhibit 4.2 to the
Registrant's Registration Statement Form S-11 (No.
333-49163)).
4.3 Second Supplemental Indenture dated as of June 30, 1998 by
and among the Registrant, AMB Property Corporation and State
Street Bank and Trust Company of California, N.A., as
trustee (incorporated by reference to Exhibit 4.3 to the
Registrant's Registration Statement on Form S-11 (No.
333-49163)).
4.4 Third Supplemental Indenture dated as of June 30, 1998 by
and among the Registrant, AMB Property Corporation and State
Street Bank and Trust Company of California, N.A., as
trustee (incorporated by reference to Exhibit 4.4 to the
Registrant's Registration Statement on Form S-11 (No.
333-49163)).
4.5 Specimen of 7.10% Notes due 2008 (included in the First
Supplemental Indenture incorporated by reference as Exhibit
4.2 to the Registrant's Registration Statement on Form S-11
(No. 333-49163)).
4.6 Specimen of 7.50% Notes due 2018 (included in the Second
Supplemental Indenture incorporated by reference as Exhibit
4.3 to the Registrant's Registration Statement on Form S-11
(No. 333-49163)).
4.7 Specimen of 6.90% Reset Put Securities due 2015 (included in
the Third Supplemental Indenture incorporated by reference
as Exhibit 4.4 to the Registrant's Registration Statement on
Form S-11 (No. 333-49163)).
10.1 Second Amended and Restated Credit Agreement, dated November
26, 1997 (incorporated by reference to Exhibit 10.3 of AMB
Property Corporation's Annual Report on Form 10-K for the
year ended December 31, 1998).
10.2 Amendment to Second Amended and Restated Revolving Credit
Agreement made as of May 29, 1998 (incorporated by reference
to Exhibit 10.4 of AMB Property Corporation's Annual Report
on Form 10-K for the year ended December 31, 1998).
10.3 Second Amendment to Second Amended and Restated Revolving
Credit Agreement made as of September 30, 1998 (incorporated
by reference to Exhibit 10.5 of AMB Property Corporation's
Annual Report on Form 10-K for the year ended December 31,
1998).
10.4 Form of Change in Control and Noncompetition Agreement
between AMB Property Corporation and Executive Officers
(incorporated by reference to Exhibit 10.6 of AMB Property
Corporation's Annual Report on Form 10-K for the year ended
December 31, 1998).
10.5 The First Amended and Restated 1997 Stock Option and
Incentive Plan of AMB Property Corporation (incorporated by
reference to Exhibit 10.7 of AMB Property Corporation's
Annual Report on Form 10-K for the year ended December 31,
1998).
</TABLE>

47
<PAGE> 49

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.6 The First Amendment to the First Amended Restated Stock
Option and Incentive Plan of AMB Property Corporation
(incorporated by reference to Exhibit 10.8 of AMB Property
Corporation's Annual Report on Form 10-K for the year ended
December 31, 1998).
10.7 Agreement for Purchase and Exchange entered into as of March
9, 1999 by and among AMB Property, L.P., AMB Property II,
L.P., Long Gate, L.L.C. and BPP Retail, LLC, regarding the
transaction which closed on June 15, 1999 (incorporated by
reference to Exhibit 10.1 of the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999).
10.8 Agreement for Purchase and Exchange entered into as of March
9, 1999 by and among AMB Property, L.P., AMB Property II,
L.P., Long Gate, L.L.C. and BPP Retail, LLC, regarding the
transaction which closed on August 4, 1999 (incorporated by
reference to Exhibit 10.2 of the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999).
10.9 Agreement for Purchase and Exchange entered into as of March
9, 1999 by and among AMB Property, L.P., AMB Property II,
L.P., Long Gate, L.L.C. and BPP Retail, LLC, regarding the
transaction which closed on December 1, 1999 (incorporated
by reference to Exhibit 10.3 of the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999).
10.10 Second Amended and Restated 1997 Stock Option and Incentive
Plan (incorporated by reference to Exhibit 10.5 of the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999).
10.11 Fifth Amended and Restated Agreement of Limited Partnership
of AMB Property II, L.P., dated August 31, 1999
(incorporated by reference to Exhibit 10.1 of the
Registrant's Current Report on Form 8-K filed on September
14, 1999).
10.12 Credit Agreement, dated as of September 27, 1999, by and
among AMB Institutional Alliance Fund I, L.P., AMB
Institutional Alliance REIT I, Inc., the Lenders and Issuing
Bank party thereto, BT Realty Resources, Inc. and The Chase
Manhattan Bank. (incorporated by reference to Exhibit 10.2
of the Registrant's Quarterly Report on Report Form 10-Q for
the quarter ended September 30, 1999).
10.13 Third Amendment to Second Amended and Restated Revolving
Credit Agreement made as of March 22, 1999.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP.
24.1 Powers of Attorney (included in Part IV of this Form 10-K).
27.1 Financial Data Schedule -- AMB Property, L.P.
</TABLE>

(b) REPORTS ON FORM 8-K:

- The Registrant filed a Current Report on Form 8-K on October 15, 1999,
regarding the acquisition of certain properties during 1999.

- The Registrant filed Amendment No. 1 to Current Report on Form 8-K on
December 1, 1999, regarding the acquisition of certain properties during
1999.

- The Registrant filed a Current Report on Form 10-K on December 15, 1999,
regarding the closing of the third transaction with BPP Retail, LLC.

See Item 14(a)(3) above.

(d) FINANCIAL STATEMENT SCHEDULES:

See Item 14(a)(1) and (2) above.

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<PAGE> 50

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 on March 29, 2000.

AMB PROPERTY, L.P.
By: AMB Property Corporation,
its General Partner

By: /s/ HAMID R. MOGHADAM
------------------------------------
Hamid R. Moghadam
Chairman of the Board and
Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of AMB Property Corporation, the general partner of AMB Property,
L.P., hereby severally constitute Hamid R. Moghadam, W. Blake Baird, David S.
Fries and Michael A. Coke, and each of them singly, our true and lawful
attorneys with full power to them, and each of them singly, to sign for us and
in our names in the capacities indicated below, the Form 10-K filed herewith and
any and all amendments to said Form 10-K, and generally to do all such things in
our names and in our capacities as officers and directors to enable AMB
Property, L.P. to comply with the provisions of the Securities Exchange Act of
1934, and all requirements of the Securities and Exchange Commission, hereby
ratifying and confirming our signatures as they may be signed by our said
attorneys, or any of them, to said Form 10-K and any and all amendments thereto.

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities as officers or directors of its general partner
and on the dates indicated.

<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>

/s/ HAMID R. MOGHADAM Chairman of the Board and Chief March 29, 2000
- ------------------------------------- Executive Officer
Hamid R. Moghadam (Principal Executive Officer)

/s/ W. BLAKE BAIRD President March 29, 2000
- -------------------------------------
W. Blake Baird

/s/ DOUGLAS D. ABBEY Director March 29, 2000
- -------------------------------------
Douglas D. Abbey

/s/ T. ROBERT BURKE Director March 29, 2000
- -------------------------------------
T. Robert Burke

/s/ DANIEL H. CASE III Director March 29, 2000
- -------------------------------------
Daniel H. Case III

/s/ ROBERT H. EDELSTEIN, PH.D. Director March 29, 2000
- -------------------------------------
Robert H. Edelstein, Ph.D.

/s/ LYNN M. SEDWAY Director March 29, 2000
- -------------------------------------
Lynn M. Sedway

/s/ JEFFREY L. SKELTON, PH.D. Director March 29, 2000
- -------------------------------------
Jeffrey L. Skelton, Ph.D.

Director March 29, 2000
- -------------------------------------
Thomas W. Tusher
</TABLE>

49
<PAGE> 51

<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ CARYL B. WELBORN, ESQ. Director March 29, 2000
- -------------------------------------
Caryl B. Welborn, Esq.

/s/ MICHAEL A. COKE Chief Financial Officer and Managing March 29, 2000
- ------------------------------------- Director (Principal Financial and
Michael A. Coke Accounting Officer)
</TABLE>

50
<PAGE> 52

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the General Partner of
AMB Property, L.P.:

We have audited the accompanying consolidated balance sheets of AMB
Property, L.P., a Delaware limited partnership, and subsidiaries as of December
31, 1999 and 1998, and the related consolidated statements of operations,
partners' capital, and cash flows for the years ended December 31, 1999 and
1998, and for the period from inception (November 26, 1997) to December 31,
1997. These financial statements and the schedule referred to below are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of AMB Property, L.P. and
subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for the years ended December 31, 1999 and 1998,
and for the period from inception (November 26, 1997) to December 31, 1997, in
conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to the
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not a required part of the basic
financial statements. This information has been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.

ARTHUR ANDERSEN LLP

San Francisco, California
January 18, 2000

F-1
<PAGE> 53

AMB PROPERTY, L.P.

CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1998 AND 1999
(IN THOUSANDS, EXCEPT UNIT AMOUNTS)

ASSETS

<TABLE>
<CAPTION>
1998 1999
---------- ----------
<S> <C> <C>
Investments in real estate:
Land and improvements..................................... $ 740,680 $ 714,916
Buildings and improvements................................ 2,445,104 2,349,221
Construction in progress.................................. 183,276 185,315
---------- ----------
Total investments in properties................... 3,369,060 3,249,452
Accumulated depreciation and amortization................. (58,404) (103,558)
---------- ----------
Net investments in properties.......................... 3,310,656 3,145,894
Investment in unconsolidated joint ventures................. 57,655 66,357
Properties held for divestiture, net........................ 115,050 181,201
---------- ----------
Net investments in real estate......................... 3,483,361 3,393,452
Cash and cash equivalents................................... 19,910 33,312
Restricted cash and cash equivalents........................ 5,227 103,707
Other assets................................................ 54,387 91,079
---------- ----------
Total assets...................................... $3,562,885 $3,621,550
========== ==========

LIABILITIES AND PARTNERS' CAPITAL
Debt:
Secured debt.............................................. $ 734,196 $ 707,037
Alliance Fund I unsecured debt............................ -- 80,000
Unsecured senior debt securities.......................... 400,000 400,000
Unsecured credit facility................................. 234,000 83,000
---------- ----------
Total debt........................................ 1,368,196 1,270,037
Other liabilities........................................... 104,305 89,371
---------- ----------
Total liabilities................................. 1,472,501 1,359,408
Commitments and contingencies (note 13).....................
Minority interests.......................................... 176,127 278,593
Partners' capital:
General Partner, 85,688,109 and 84,903,630 units
outstanding, respectively, and 4,000,000 Series A
preferred units with a $100,000 liquidation
preference............................................. 1,765,360 1,829,259
Limited Partners, 4,447,839 and 4,507,689 units
outstanding, respectively, and 1,300,000 Series B
preferred units with a $65,000 liquidation
preference............................................. 148,897 154,290
---------- ----------
Total partners' capital........................... 1,914,257 1,983,549
---------- ----------
Total liabilities and partners' capital........... $3,562,885 $3,621,550
========== ==========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-2
<PAGE> 54

AMB PROPERTY, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM INCEPTION (NOVEMBER 26, 1997) TO DECEMBER 31, 1997 AND
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT AMOUNTS)

<TABLE>
<CAPTION>
1997 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
REVENUES
Rental revenues................................... $ 26,465 $ 354,658 $ 439,658
Investment management and other income............ 645 4,229 8,525
----------- ----------- -----------
Total revenues............................ 27,110 358,887 448,183
OPERATING EXPENSES
Property operating expenses....................... 5,312 40,197 51,739
Real estate taxes................................. 3,587 48,218 56,184
General and administrative........................ 1,197 19,588 25,223
Interest, including amortization.................. 3,528 69,670 88,681
Depreciation and amortization..................... 4,195 57,464 67,505
----------- ----------- -----------
Total operating expenses.................. 17,819 235,137 289,332
----------- ----------- -----------
Income from operations before minority
interests.................................... 9,291 123,750 158,851
Minority interests' share of net income........... (117) (5,494) (19,614)
----------- ----------- -----------
Net income before gain from divestiture of real
estate....................................... 9,174 118,256 139,237
Gain from divestiture of real estate.............. -- -- 53,753
----------- ----------- -----------
Net income before extraordinary items.......... 9,174 118,256 192,990
Extraordinary items............................... -- -- (2,490)
----------- ----------- -----------
Net income..................................... 9,174 118,256 190,500
Series A preferred unit distributions............. -- (3,639) (8,500)
Series B preferred unit distributions............. -- (779) (5,608)
----------- ----------- -----------
Net income available to common unitholders..... $ 9,174 $ 113,838 $ 176,392
=========== =========== ===========
Income available to common unitholders attributable
to:
General partner................................... $ 8,634 $ 108,954 $ 167,603
Limited partners.................................. 540 4,884 8,789
----------- ----------- -----------
$ 9,174 $ 113,838 $ 176,392
=========== =========== ===========
BASIC INCOME PER COMMON UNIT
Before extraordinary items........................ $ 0.10 $ 1.27 $ 1.97
Extraordinary items............................... -- -- (0.03)
----------- ----------- -----------
Net income available to common unitholders..... $ 0.10 $ 1.27 $ 1.94
=========== =========== ===========
DILUTED INCOME PER COMMON UNIT
Before extraordinary items........................ $ 0.10 $ 1.26 $ 1.97
Extraordinary items............................... -- -- (0.03)
----------- ----------- -----------
Net income available to common unitholders..... $ 0.10 $ 1.26 $ 1.94
=========== =========== ===========
WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
Basic............................................. 88,416,676 89,493,394 90,792,310
=========== =========== ===========
Diluted........................................... 88,698,719 89,852,187 90,867,934
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-3
<PAGE> 55

AMB PROPERTY, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (NOVEMBER 26, 1997)
TO DECEMBER 31, 1997 AND
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999
(IN THOUSANDS)

<TABLE>
<CAPTION>
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................................. $ 9,174 $ 118,256 $ 190,500
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................. 4,195 57,464 67,505
Straight-line rents....................................... (901) (10,921) (10,847)
Amortization of debt premiums and financing costs......... (266) (2,730) (3,009)
Minority interests' share of net income................... 117 5,494 19,614
Gain on divestiture of real estate........................ -- -- (53,753)
Non-cash portion of extraordinary items................... -- -- (6,058)
Equity in (earnings) loss of AMB Investment Management.... (61) 313 875
Equity in earnings of unconsolidated joint ventures....... -- (1,730) (4,701)
Changes in assets and liabilities:
Other assets............................................ (9,972) (9,377) 5,199
Other liabilities....................................... (2,106) 20,411 (14,934)
--------- --------- ---------
Net cash provided by operating activities.......... 180 177,180 190,391
CASH FLOWS FROM INVESTING ACTIVITIES
Change in restricted cash and cash equivalents.............. (8,074) 2,847 (98,480)
Cash paid for property acquisitions......................... -- (564,304) (399,891)
Additions to land, building, development costs and other
first generation improvements............................. (232,807) (125,180) (152,643)
Additions to second generation building improvements and
lease costs............................................... -- (12,733) (27,289)
Acquisition of interest in unconsolidated joint ventures.... -- (67,376) (7,789)
Distributions received from unconsolidated joint ventures... -- 11,451 3,787
Net proceeds from divestiture of real estate................ -- -- 746,037
Reduction of payable to affiliates in connection with
Formation Transactions.................................... -- (38,071) --
--------- --------- ---------
Net cash (used in) provided by investing
activities....................................... (240,881) (793,366) 63,732
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock.................................... 317,009 -- 732
Borrowings on unsecured credit facility..................... 150,000 745,000 327,000
Borrowings on Alliance Fund I unsecured debt................ -- -- 80,000
Borrowings on secured debt.................................. 850 58,725 36,174
Payments on unsecured credit facility....................... (182,000) (661,000) (478,000)
Payments on secured debt.................................... (516) (79,380) (117,463)
Payment of financing fees................................... (900) (7,704) (242)
Net proceeds from issuance of senior debt securities........ -- 399,166 --
Net proceeds from issuance of Series A preferred stock...... -- 96,100 --
Net proceeds from issuance of Series B & C preferred
units..................................................... -- 167,924 --
Net proceeds from issuance of Series D & E preferred
units..................................................... -- -- 88,476
Contributions from investors of the Alliance Fund I......... -- -- 14,611
Distributions paid to common and preferred unitholders...... (11,848) (91,593) (165,551)
Distributions to minority interests, including preferred
units..................................................... -- (23,036) (26,458)
--------- --------- ---------
Net cash provided by (used in) financing
activities....................................... 272,595 604,202 (240,721)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents........ 31,894 (11,984) 13,402
Cash and cash equivalents at beginning of period............ -- 31,894 19,910
--------- --------- ---------
Cash and cash equivalents at end of period.................. $ 31,894 $ 19,910 $ 33,312
========= ========= =========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE> 56

AMB PROPERTY, L.P.

CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL

FOR THE PERIOD FROM INCEPTION (NOVEMBER 26, 1997) TO DECEMBER 31, 1997 AND
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999
(IN THOUSANDS, EXCEPT UNIT AMOUNTS)
<TABLE>
<CAPTION>
GENERAL PARTNER LIMITED PARTNERS
------------------------------------------------ --------------------------------------------
PREFERRED UNITS COMMON UNITS PREFERRED UNITS COMMON UNITS
-------------------- ------------------------ -------------------- --------------------
UNITS AMOUNT UNITS AMOUNT UNITS AMOUNT UNITS AMOUNT
--------- ------- ---------- ---------- --------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inception
(November 26, 1997)....... -- $ -- -- $ -- -- $ -- -- $ --
Contributions............... -- -- 85,645,102 1,670,902 -- -- 2,542,163 49,169
Net income.................. -- -- -- 8,634 -- -- -- 540
Distributions............... -- -- -- (11,506) -- -- -- (341)
--------- ------- ---------- ---------- --------- ------- --------- -------
Balance at
December 31, 1997......... -- -- 85,645,102 1,668,030 -- -- 2,542,163 49,368
Contributions............... 4,000,000 96,100 43,007 930 1,300,000 62,190 1,905,676 44,619
Net income.................. -- 3,639 -- 108,954 -- 779 -- 4,884
Reallocation of interests... -- -- -- 7,215 -- -- -- (7,215)
Distributions............... -- (3,639) -- (115,869) -- (779) -- (4,949)
--------- ------- ---------- ---------- --------- ------- --------- -------
Balance at
December 31, 1998......... 4,000,000 96,100 85,688,109 1,669,260 1,300,000 62,190 4,447,839 86,707
Comprehensive income:
Net income................ -- 8,500 -- 167,603 -- 5,608 -- 8,789
Unrealized gain on
securities.............. -- -- -- 28,993 -- -- -- 5,048
Total comprehensive
income................
Contributions............... -- -- -- -- -- -- 595,603 14,094
Issuance of common limited
partnership units in
connection with issuance
of restricted stock....... -- -- 98,368 2,215 -- -- -- --
Retirement of common limited
partnership units in
connection with retirement
of common stock........... -- -- (1,443,600) (27,300) -- -- --
Issuance of common limited
partnership units in
connection with issuance
of stock options.......... -- -- 25,000 526 -- -- -- --
Conversion of operating
partnership units......... -- -- 535,753 11,053 -- -- (535,753) (12,761)
Deferred compensation....... -- -- -- (3,080) -- -- -- --
Deferred compensation
amortization.............. -- -- -- 952 -- -- -- --
Reallocation of interests... -- -- -- 3,451 -- -- -- (3,451)
Distributions............... -- (8,500) -- (120,514) -- (5,608) -- (6,326)
--------- ------- ---------- ---------- --------- ------- --------- -------
Balance at
December 31, 1999......... 4,000,000 $96,100 84,903,630 $1,733,159 1,300,000 $62,190 4,507,689 $92,100
========= ======= ========== ========== ========= ======= ========= =======

TOTAL
----------
<S> <C>
Inception
(November 26, 1997)....... $ --
Contributions............... 1,720,071
Net income.................. 9,174
Distributions............... (11,847)
----------
Balance at
December 31, 1997......... 1,717,398
Contributions............... 203,839
Net income.................. 118,256
Reallocation of interests... --
Distributions............... (125,236)
----------
Balance at
December 31, 1998......... 1,914,257
Comprehensive income:
Net income................
Unrealized gain on
securities..............
Total comprehensive
income................ 224,541
Contributions............... 14,094
Issuance of common limited
partnership units in
connection with issuance
of restricted stock....... 2,215
Retirement of common limited
partnership units in
connection with retirement
of common stock........... (27,300)
Issuance of common limited
partnership units in
connection with issuance
of stock options.......... 526
Conversion of operating
partnership units......... (1,708)
Deferred compensation....... (3,080)
Deferred compensation
amortization.............. 952
Reallocation of interests... --
Distributions............... (140,948)
----------
Balance at
December 31, 1999......... $1,983,549
==========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE> 57

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE, PER UNIT AND UNIT AMOUNTS, AND PROPERTY STATISTICS)

1. ORGANIZATION AND FORMATION OF COMPANY

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 elected to be taxed as a real estate investment trust ("REIT") under
Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the
"Code"), commencing with its taxable year ended December 31, 1997, and believes
its current organization and method of operation will enable it to maintain its
status as a REIT. 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 primarily industrial properties in
target industrial 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, $0.01 par value per share (the "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 LP 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
the Common Stock, for $21.00 per share, resulting in gross offering proceeds of
approximately $338,100. The net proceeds of approximately $300,032 were used to
repay indebtedness, to purchase interests from certain investors who elected not
to receive Common Stock or LP Units in connection with the Formation
Transactions, to fund property acquisitions and for general corporate working
capital requirements.

As of December 31, 1999, the Company owned an approximate 95.0% general
partner interest in the Operating Partnership, excluding preferred units. The
remaining 5.0% limited partner interest is owned by non-affiliated investors.
For local law purposes, certain properties are owned through limited
partnerships and limited liability companies. 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. Net operating results of the Operating Partnership are allocated
after preferred unit distributions based on the respective partners' ownership
interest.

In connection with the Formation Transactions, the Operating Partnership
formed AMB Investment Management, Inc., a Maryland corporation ("AMB Investment
Management"). The Operating Partnership holds 100% of AMB Investment
Management's non-voting preferred stock (representing a 95% economic interest
therein). Certain current and former executive officers of the Company and a
former executive officer of AMB Investment Management collectively hold 100% of
AMB Investment Management's voting common stock (representing a 5% economic
interest therein). AMB Investment Management was formed to succeed the
Predecessor's investment management business of providing real estate investment
management services on a fee basis to clients. The Operating Partnership also
owns 100% of the non-voting preferred stock of Headlands Realty Corporation, a
Maryland corporation (representing a 95% economic interest therein). Certain
executive officers of the Company and a director of Headlands Realty Corporation
collectively own 100% of the voting common stock of Headlands Realty Corporation
(representing a 5% economic interest therein). Headlands Realty Corporation
primarily invests in properties and interests in entities that engage in

F-6
<PAGE> 58
AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE, PER UNIT AND UNIT AMOUNTS, AND PROPERTY STATISTICS)

the management, leasing and development of properties and similar activities.
The Operating Partnership accounts for its investment in AMB Investment
Management and Headlands Realty Corporation using the equity method of
accounting.

As of December 31, 1999, the Company owned 724 industrial buildings and 9
retail centers located in 24 markets throughout the United States. As of
December 31, 1999, the industrial properties, principally warehouse distribution
buildings, encompassed approximately 65.2 million rentable square feet and were
95.9% leased to over 2,240 tenants. As of December 31, 1999, the retail centers,
principally grocer-anchored community shopping centers, encompassed
approximately 1.6 million rentable square feet and were 92.4% leased to over 240
tenants.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Generally Accepted Accounting Principles

These consolidated financial statements have been prepared in accordance
with generally accepted accounting principles using the accrual method of
accounting. 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.

Principles of Consolidation

The accompanying consolidated financial statements include the financial
position, results of operations and cash flows of the Operating Partnership and
subsidiaries, and 21 joint ventures (the "Joint Ventures"), through which 27
properties are held and in which the Operating Partnership has a controlling
interest. Third party equity interests in the Operating Partnership and the
Joint Ventures are reflected as minority interests in the consolidated financial
statements. The Operating Partnership also has two non-controlling limited
partnership interests of 56.1% and 50.0% in two separate unconsolidated real
estate joint ventures, which are accounted for under the equity method. All
significant intercompany amounts have been eliminated.

Basis of Presentation

The consolidated financial statements for 1998 and 1999 represent the
results of operations of the Operating Partnership for the years ended December
31, 1998 and 1999. The consolidated financial statements for 1997 include the
results of operations of the Operating Partnership for the period from November
26, 1997 (the commencement of operations) to December 31, 1997.

Investments in Real Estate

Investments in real estate are stated at the lower of depreciated cost or
net realizable value. Net realizable value for financial reporting purposes is
reviewed for impairment on a property-by-property basis whenever events or
changes in circumstances indicate that the carrying amount of a property may not
be recoverable. Impairment is recognized when estimated expected future cash
flows (undiscounted and without interest charges) are less than the carrying
amount of the property. To the extent an impairment has occurred, the excess of
the carrying amount of the property over its estimated fair value is charged to
income.

F-7
<PAGE> 59
AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE, PER UNIT AND UNIT AMOUNTS, AND PROPERTY STATISTICS)

Depreciation and amortization are calculated using the straight-line method
over the estimated useful lives of the investments. The estimated lives and
depreciation and amortization expenses are as follows:

<TABLE>
<CAPTION>
DEPRECIATION AND
AMORTIZATION EXPENSES
----------------------------
ESTIMATED LIVES 1997 1998 1999
------------------------- ------ ------- -------
<S> <C> <C> <C> <C>
Land improvements..................... 40 $ -- $ -- $ --
Building costs........................ 40 4,012 54,417 54,668
Building improvements:
Roof/HVAC/parking lots.............. 10 18 346 1,106
Plumbing/signage.................... 7 2 26 144
Painting and other.................. 5 18 668 2,546
Tenant improvements................... Term of the related lease 1 782 4,091
Lease commissions..................... Term of the related lease 102 761 3,902
------ ------- -------
Total real estate depreciation... 4,153 57,000 66,457
Other amortization.................... Various 42 464 1,048
------ ------- -------
Total depreciation and
amortization................... $4,195 $57,464 $67,505
====== ======= =======
</TABLE>

The cost of buildings and improvements includes the purchase price of the
property or interest in property, legal fees and acquisition costs, and
interest, property taxes, partner earnouts, and other costs incurred during the
period of construction. Project costs directly associated with the development
and construction of a real estate project are capitalized as construction in
progress.

Expenditures for maintenance and repairs are charged to operations as
incurred. Significant renovations or betterments that extend the economic useful
life of assets are capitalized.

Cash and Cash Equivalents

Cash and cash equivalents include cash held in financial institutions and
other highly liquid short-term investments with original maturities of three
months or less.

Restricted Cash and Cash Equivalents

Restricted cash and cash equivalents include cash held in escrow in
connection with property purchases, Section 1031 exchange funds and capital
improvements.

Deferred Financing Costs

Costs incurred in connection with financing are capitalized and amortized
to interest expense on a straight-line basis over the term of the related loan.
As of December 31, 1998 and 1999, deferred financing fees were $7,318 and
$6,659, respectively, net of accumulated amortization of $772 and $2,187,
respectively. Such amounts are included in Other Assets on the Consolidated
Balance Sheets.

Investments in Equity Securities

In 1999, the Company adopted SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities. In accordance with SFAS No. 115,
certain of the Company's marketable equity securities are considered
available-for-sale investments and are carried at market value in Other Assets
on the Consolidated Balance Sheets, with the difference between cost and market
value recorded as a component of Accumulated Other Comprehensive Income in
Partners' Capital. The adoption of SFAS No. 115 had no impact on prior year
financial statements.

Debt Premiums

In connection with the Formation Transactions, the Operating Partnership
assumed certain secured debt with an aggregate principal value of $517,031 and
an estimated 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

F-8
<PAGE> 60
AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE, PER UNIT AND UNIT AMOUNTS, AND PROPERTY STATISTICS)

into interest expense over the term of the related debt instrument using the
effective interest method. As of December 31, 1998 and 1999, the unamortized
debt premium was $15,217 and $10,106, respectively.

Minority Interests

Minority interests in the Operating Partnership represent the limited
partnership interests in a subsidiary of the Operating Partnership and interests
held by certain third parties in 21 joint ventures, through which 27 properties
are held, that are consolidated for financial reporting purposes. Such
investments are consolidated because (i) the Operating Partnership owns a
majority interest or (ii) the Operating Partnership exercises significant
control through the ability to control major operating decisions such as
approval of budgets, selection of property managers and changes in financing.

On September 24, 1999 and December 22, 1999, AMB Institutional Alliance
REIT I, Inc. (the "Alliance REIT") issued and sold shares of its capital stock
to fourteen third party investors. The Alliance REIT has elected to be taxed as
a REIT under the Code, commencing with its tax year ending December 31, 1999.
The Alliance REIT acquired a limited partnership interest in AMB Institutional
Alliance Fund I, L.P. (the "Alliance Fund I"), which is engaged in the
acquisition, ownership, operation, management, renovation, expansion and
development of primarily industrial buildings in target industrial markets
nationwide. The Operating Partnership is the managing general partner of the
Alliance Fund I and, together with an affiliate of the Company, owns
approximately 25.0% of the partnership interests in the Alliance Fund I. Upon
final closing, it is currently expected that the Operating Partnership, together
with an affiliate of the Company, will own 20% of the Alliance Fund I. The
Operating Partnership consolidates the Alliance Fund I for financial reporting
purposes because the Operating Partnership is the sole managing general partner
of the Alliance Fund I and, as a result, controls all of its major operating
decisions.

The following table distinguishes the minority interest ownership held by
certain joint venture partners, separate account co-investors, the Alliance Fund
I, the Series C Preferred Unit holders' interest in a subsidiary of the
Operating Partnership, the Series D Preferred Unit holders' interest in a
subsidiary of the Operating Partnership and the Series E Preferred Unit holders'
interest in a subsidiary of the Operating Partnership as of and for the year
ended December 31, 1999.

<TABLE>
<CAPTION>
MINORITY INTEREST
MINORITY INTEREST SHARE OF NET INCOME
EQUITY AS OF FOR THE YEAR ENDED
DECEMBER 31, 1999 DECEMBER 31, 1999
----------------- -------------------
<S> <C> <C>
Joint venture partners............................ $ 18,868 $ 1,871
Separate account co-investors..................... 51,143 3,461
Alliance Fund I................................... 14,259 389
Series C preferred units (liquidation preference
of
$110,000)....................................... 105,847 9,624
Series D preferred units (liquidation preference
of
$79,767)........................................ 77,688 3,949
Series E preferred units (liquidation preference
of
$11,022)........................................ 10,788 320
-------- -------
Total................................... $278,593 $19,614
======== =======
</TABLE>

Revenues

The Operating Partnership, as a lessor, retains substantially all of the
benefits and risks of ownership of the properties and accounts for its leases as
operating leases. Rental income is recognized on a straight-line basis over the
term of the leases.

Reimbursements from tenants for real estate taxes and other recoverable
operating expenses are recognized as revenue in the period the applicable
expenses are incurred. Differences between estimated and actual amounts are
recognized in the subsequent year.

F-9
<PAGE> 61
AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE, PER UNIT AND UNIT AMOUNTS, AND PROPERTY STATISTICS)
to the properties divested, to partially repay amounts outstanding under the
Operating Partnership's unsecured credit facility, to pay transaction expenses,
to acquire certain properties and for general corporate purposes. This
divestiture resulted in an approximate net gain of $10,300, which is net of
extraordinary loss consisting of prepayment penalties with an offset for the
write-off of debt premiums related to the indebtedness extinguished. On August
4, 1999, the second transaction with BPP Retail closed. Pursuant to the closing
of

F-11
<PAGE> 62
AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE, PER UNIT AND UNIT AMOUNTS, AND PROPERTY STATISTICS)

the second transaction, BPP Retail acquired 12 of the Operating Partnership's
retail shopping centers, totaling approximately 2.0 million square feet, for an
aggregate price of approximately $245,800. The Operating Partnership used the
proceeds from the second transaction to repay secured debt related to the
properties divested, to partially repay amounts outstanding under the Operating
Partnership's unsecured credit facility, to pay transaction expenses, to acquire
certain properties and for general corporate purposes. This divestiture resulted
in an approximate net gain of $20,200, which is net of extraordinary loss
consisting of prepayment penalties with an offset for the write-off of debt
premiums related to the indebtedness extinguished. On December 1, 1999, the
third transaction with BPP Retail closed. BPP Retail acquired the remaining four
retail centers, totaling approximately 0.9 million square feet, for an aggregate
price of approximately $107,193. The Operating Partnership used the proceeds
from the third divestiture to partially repay amounts outstanding under the
Operating Partnership unsecured credit facility, to pay transaction expenses,
for potential acquisitions and for general corporate purposes. This divestiture
resulted in an approximate gain of $9,087.

In addition, the Operating Partnership entered into a definitive agreement,
subject to a financing condition, with BPP, pursuant to which, if fully
consummated, BPP would have acquired up to six additional retail centers,
totaling approximately 1.5 million square feet, for an aggregate price of
approximately $284,400. On June 30, 1999, this agreement was terminated pursuant
to its terms as a result of BPP's decision not to waive the financing condition.

In the fourth quarter of 1999, the Operating Partnership disposed of three
of the retail properties that were originally under contract with BPP to an
institutional investor for whom AMB Investment Management provides asset
management services. The properties aggregated approximately 0.4 million square
feet and were sold for an aggregate price of approximately $96,290. In addition,
the Operating Partnership disposed of another of these properties, aggregating
approximately 0.6 million square feet, to an unaffiliated third party for an
aggregate price of approximately $58,062. The divestiture of these four
properties resulted in an approximate net gain of $14,938, which is net of
extraordinary gain consisting of write-offs of debt premiums with an offset for
prepayment penalties related to the indebtedness extinguished. The Operating
Partnership currently intends to dispose of one of the remaining two retail
properties or its interest in the joint venture which holds such property.

In addition, during 1999, the Operating Partnership disposed of 15
industrial buildings and one other retail center, aggregating approximately 1.3
million square feet, for an aggregate price of approximately $49,403. These
divestitures resulted in an aggregate approximate net loss of $3,385.

Properties Held for Divestiture. As of December 31, 1999, the properties
held for divestiture consisted of four retail centers and four industrial
buildings, with an aggregate net carrying value of $181,201. The net carrying
values of the retail centers and industrial properties held for divestiture were
$168,451 and $12,750, respectively, as of December 31, 1999. Certain of the
properties held for divestiture are subject to indebtedness, which totaled
$54,283 as of December 31, 1999. The divestitures of the properties are subject
to negotiation of acceptable terms and other customary conditions.

The following summarizes the condensed results of operations of the
properties held for divestiture for the years ended December 31, 1998 and 1999:

<TABLE>
<CAPTION>
PROPERTIES HELD FOR DIVESTITURE
-------------------------------------------------------
INDUSTRIAL RETAIL TOTAL
--------------- ----------------- -----------------
1998 1999 1998 1999 1998 1999
------ ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Income..................................... $1,283 $1,442 $21,462 $23,170 $22,745 $24,612
Property operating expenses................ 213 261 6,838 7,338 7,051 7,599
------ ------ ------- ------- ------- -------
Net operating income..................... $1,070 $1,181 $14,624 $15,832 $15,694 $17,013
====== ====== ======= ======= ======= =======
</TABLE>

F-12
<PAGE> 63
AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE, PER UNIT AND UNIT AMOUNTS, AND PROPERTY STATISTICS)

5. REAL ESTATE ACQUISITION AND DEVELOPMENT ACTIVITY

During 1999, the Operating Partnership acquired $471,905 in operating
properties, consisting of 154 industrial buildings, aggregating approximately
8.4 million square feet. The Operating Partnership also initiated eight new
development projects, aggregating approximately 1.7 million square feet, with a
total estimated cost of $130,900 upon completion. Seven development projects,
aggregating approximately 1.7 million square feet, were completed during the
year, at a total aggregate cost of $68,900. As of December 31, 1999, the
Operating Partnership had 18 projects, aggregating approximately 4.3 million
square feet, in its development pipeline, with a total estimated cost of
$306,400 upon completion. The Operating Partnership funded these acquisitions
and development projects through proceeds from the divestitures of properties,
borrowings under the unsecured credit facility, LP Unit issuances, cash and debt
assumption.

6. DEBT

As of December 31, 1998 and 1999, debt consisted of the following:

<TABLE>
<CAPTION>
1998 1999
---------- ----------
<S> <C> <C>
Secured debt, varying coupon interest rates from 4.0% to
10.4%, due May 2000 to April 2014......................... $ 718,979 $ 696,931
Alliance Fund I unsecured debt, variable interest at LIBOR
plus 87.5 basis points (6.7% at December 31, 1999), due
April 2001................................................ -- 80,000
Unsecured senior debt securities, weighted average interest
rate of 7.2%, due June 2008, 2015 and 2018................ 400,000 400,000
Unsecured credit facility, variable interest at LIBOR plus
90 to 120 basis points (6.7% at December 31, 1999), due
November 2000............................................. 234,000 83,000
---------- ----------
Subtotal............................................... 1,352,979 1,259,931
Unamortized debt premiums.............................. 15,217 10,106
---------- ----------
Total consolidated debt........................... $1,368,196 $1,270,037
========== ==========
</TABLE>

Secured debt generally requires monthly principal and interest payments.
The secured debt is secured by deeds of trust on certain properties. As of
December 31, 1998 and 1999, the total gross investment value of those properties
secured by debt was $1,458,652 and $1,385,476, respectively. All of the secured
debt bears interest at fixed rates, except for two loans with an aggregate
principal amount of $9,155 and $10,442 at December 31, 1998 and 1999,
respectively, 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. As of December 31, 1999, the estimated
fair value of the secured debt was approximately $684,000.

The unsecured debt of the Alliance Fund I represents a loan secured by the
unfunded capital commitments of the third party investors in the Alliance REIT.
See Note 2 for a discussion of the Alliance REIT and the Alliance Fund I.

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. The senior debt securities are subject to various financial and
non-financial covenants.

The Operating Partnership has a $500,000 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 an original 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. The credit facility has various
financial and non-financial covenants.

Capitalized interest related to construction projects for the year ended
December 31, 1998 was $7,192 and for the year ended December 31, 1999 was
$10,872.

F-13
<PAGE> 64
AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE, PER UNIT AND UNIT AMOUNTS, AND PROPERTY STATISTICS)

The scheduled maturities of the Operating Partnership's total debt,
excluding unamortized debt premiums, as of December 31, 1999, are as follows:

<TABLE>
<CAPTION>
UNSECURED
SECURED ALLIANCE FUND I SENIOR DEBT UNSECURED
DEBT UNSECURED DEBT SECURITIES CREDIT FACILITY TOTAL DEBT
-------- --------------- --------------- --------------- ----------
<S> <C> <C> <C> <C> <C>
2000...................... $ 45,128 $ -- $ -- $83,000 $ 128,128
2001...................... 38,218 80,000 -- -- 118,218
2002...................... 56,037 -- -- -- 56,037
2003...................... 75,394 -- -- -- 75,394
2004...................... 91,042 -- -- -- 91,042
2005...................... 70,131 -- 100,000 -- 170,131
2006...................... 134,330 -- -- -- 134,330
2007...................... 48,143 -- -- -- 48,143
2008...................... 127,747 -- 175,000 -- 302,747
2009...................... 1,811 -- -- -- 1,811
Thereafter................ 8,950 -- 125,000 -- 133,950
-------- ------- -------- ------- ----------
Subtotal........ $696,931 $80,000 $400,000 $83,000 $1,259,931
======== ======= ======== ======= ==========
</TABLE>

7. LEASING ACTIVITY

Future minimum rental income due under noncancelable leases with tenants in
effect at December 31, 1999 is as follows:

<TABLE>
<S> <C>
2000..................................................... $ 335,508
2001..................................................... 289,289
2002..................................................... 232,604
2003..................................................... 176,902
2004..................................................... 128,513
Thereafter............................................... 382,119
----------
$1,544,935
==========
</TABLE>

In addition to minimum rental payments, certain tenants pay reimbursements
for their pro rata share of specified operating expenses, which amounted to
$5,267 for the period from November 26, 1997 to December 31, 1997, and $68,071
and $81,055 for the years ended December 31, 1998 and 1999, respectively. These
amounts are included as rental income and operating expenses in the accompanying
Consolidated Statements of Operations. Certain of the leases also provide for
the payment of additional rent based on a percentage of the tenant's revenues.
For the period from November 26, 1997 to December 31, 1997 and for the years
ended December 31, 1998 and 1999, the Operating Partnership recognized
percentage rent revenues of $185, $1,870 and $1,997, respectively. Some leases
contain options to renew. No individual tenant accounts for greater than 1.5% of
rental revenues.

8. INCOME TAXES

As a partnership, the allocated share of income of the Operating
Partnership is included in the income tax returns of the partners. Accordingly,
no accounting for income taxes is required in the accompanying consolidated
financial statements. State and local taxes are not material.

The Operating Partnership declared distributions per unit of $0.13, $1.37
and $1.40 for the period from inception (November 26, 1997) to December 31, 1997
and for the years ended December 31, 1998 and 1999,

F-14
<PAGE> 65
AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE, PER UNIT AND UNIT AMOUNTS, AND PROPERTY STATISTICS)

respectively. The following is a summary of distributions per unit which
represent a return of capital measured using generally accepted accounting
principles:

<TABLE>
<CAPTION>
DISTRIBUTION PER UNIT 1997 1998 1999
--------------------- ----- ----- -----
<S> <C> <C> <C>
From book net income........................................ $0.10 $1.27 $1.94
Representing return of capital.............................. 0.03 0.10 0.54
----- ----- -----
Total Distributions......................................... $0.13 $1.37 $1.40
===== ===== =====
</TABLE>

The following reconciles net income available to common unitholders to
taxable income available to common unitholders for the period from inception
(November 26, 1997) to December 31, 1997 and for the years ended December 31,
1998 and 1999:

<TABLE>
<CAPTION>
1997 1998 1999
------- -------- --------
<S> <C> <C> <C>
Net income available to common unitholders.......... $ 9,174 $113,838 $176,392
Add: Book depreciation and amortization........... 4,195 57,464 67,505
Less: Tax depreciation and amortization........... (5,515) (51,620) (69,264)
Book/tax difference on gain on divestiture
of real
estate.................................... -- -- (15,471)
Other book/tax differences, net(1).......... 3,450 (18,064) (12,011)
------- -------- --------
Taxable income available to common unitholders...... $11,304 $101,618 $147,150
======= ======== ========
</TABLE>

- ---------------
(1) Primarily represents difference in timing of recognition of rent and debt
premium amortization.

9. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

The Operating Partnership has a 56.1% and a 50.0% non-controlling limited
partnership interest in two separate unconsolidated equity investment joint
ventures, which were purchased in June 1998 and September 1999, respectively.
The unconsolidated joint ventures own an aggregate of 36 industrial buildings,
totaling approximately 4.0 million square feet. For the years ended December 31,
1998 and 1999, the Operating Partnership's share of net operating income was
$1,818 and $7,983, respectively, and, as of December 31, 1998 and 1999, the
Operating Partnership's share of the unconsolidated joint ventures debt was
$20,186 and $22,740, respectively, with a weighted average interest rate of 6.9%
and a weighted average maturity of 6.2 years.

10. PARTNERS' CAPITAL

On February 9, 1999, the Operating Partnership issued an aggregate of 1,034
LP Units with an aggregate value of approximately $25 to two corporations and
twelve individuals. On April 30, 1999, the Operating Partnership issued an
aggregate of 390,633 LP Units with an aggregate value of approximately $9,377 to
two corporations and twelve individuals. On May 21, 1999, the Operating
Partnership issued 18,638 LP Units with a value of approximately $451 to a
limited liability company. On May 26, 1999, the Operating Partnership issued
212,766 LP Units with a value of approximately $5,000 to a limited liability
company. On September 30, 1999, the Operating Partnership issued an aggregate of
3,642 LP Units with an aggregate value of $86 to five partnerships. All of these
LP Units were issued in partial consideration for the acquisition of properties.

Holders of LP Units may redeem part or all of their LP Units for cash, or
at the election of the Company, exchange their LP Units for shares of the
Company's common stock on a one-for-one basis. The issuance of LP Units in
connection with the acquisitions discussed above constituted private placements
of securities which were exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) of the Securities Act and Rule 506 of
Regulation D.

During 1999, 31,109 LP Units were redeemed for cash and 535,753 LP Units
were redeemed for shares of the Company's Common Stock.

F-15
<PAGE> 66
AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE, PER UNIT AND UNIT AMOUNTS, AND PROPERTY STATISTICS)

During the fourth quarter of 1999, the Company's Board of Directors
approved a stock repurchase program for the repurchase of up to $50,000 worth of
its Common Stock. During 1999, the Company repurchased a total of 1,443,600
shares of its Common Stock in the open market, for an aggregate purchase price
of $27,300 (including commissions). The average price per share was $18.913. In
January 2000, the Company's Board of Directors approved an increase in the stock
repurchase program, thereby authorizing the repurchase of an aggregate of up to
$100,000 worth of its Common Stock. The Company's stock repurchase program will
expire on the second anniversary of the first purchase made thereunder. The
Company canceled the repurchased shares and, inasmuch as the canceled shares
represent indirect interests in us held by the Company, 1,443,600 general
partnership units were canceled.

At the time of the Company's IPO, 4,237,750 shares of Common Stock, known
as Performance Shares, were placed in escrow by certain investors of the
Company, which were subject to advisory agreements with the Company's
Predecessor that included incentive fee provisions. On January 7, 2000,
2,771,824 shares of Common Stock were released from escrow to these investors
and 1,465,926 shares of Common Stock were returned to the Company and cancelled.
Inasmuch as the cancelled shares of Common Stock represent indirect interests in
the Operating Partnership that were reallocated from the Company (thereby
decreasing the number of shares of Common Stock outstanding) to other
unitholders (thereby increasing the number of LP Units owned by partners other
than the Company), the total number of outstanding partnership units did not
change as a result of this reallocation. This reallocation did not change the
amount of fully diluted shares of Common Stock and LP Units outstanding.

On March 5, 1999, the Operating Partnership declared a quarterly cash
distribution of $0.35 per LP Unit, for the quarter ended March 31, 1999, payable
on April 15, 1999, to unitholders of record as of March 31, 1999. On March 5,
1999, the Operating Partnership declared a cash distribution of $0.5313 per unit
on its Series A Preferred Units, for the three month period ended April 14,
1999, payable on April 15, 1999, to unitholders of record as of March 31, 1999.
On March 5, 1999, the Operating Partnership declared a cash distribution of
$1.0781 per unit on its Series B Preferred Units, for the three month period
ended April 14, 1999, payable on April 15, 1999, to unitholders of record as of
March 31, 1999. On March 5, 1999, AMB Property II, L.P. declared a cash
distribution of $1.0938 per unit on its Series C Preferred Units, for the three
month period ended April 14, 1999, payable on April 15, 1999, to unitholders of
record as of March 31, 1999.

On June 4, 1999, the Operating Partnership declared a quarterly cash
distribution of $0.35 per LP Unit, for the quarter ended June 30, 1999, payable
on July 15, 1999, to unitholders of record as of July 6, 1999. On June 4, 1999,
the Operating Partnership declared a cash distribution of $0.5313 per unit on
its Series A Preferred Units, for the three month period ended July 14, 1999,
payable on July 15, 1999, to unitholders of record as of July 6, 1999. On June
4, 1999, the Operating Partnership declared a cash distribution of $1.0781 per
unit on its Series B Preferred Units, for the three month period ended July 14,
1999, payable on July 15, 1999, to unitholders of record as of July 6, 1999. On
June 4, 1999, AMB Property II, L.P. declared a cash distribution of $1.0938 per
unit on its Series C Preferred Units, for the three month period ended October
14, 1999, payable on October 15, 1999, to unitholders of record as of October 5,
1999. On June 4, 1999, AMB Property II, L.P. declared a cash distribution of
$0.5382 per unit on its Series D Preferred Units, for the period from May 5,
1999 to June 24, 1999, payable on June 25, 1999, to unitholders of record as of
June 15, 1999.

On September 10, 1999, the Operating Partnership declared a quarterly cash
distribution of $0.35 per LP Unit, for the quarter ended September 30, 1999,
payable on October 15, 1999, to unitholders of record as of October 5, 1999. On
September 10, 1999, the Operating Partnership declared a cash distribution of
$0.5313 per unit on its Series A Preferred Units, for the three month period
ended October 14, 1999, payable on October 15, 1999, to unitholders of record as
of October 5,1999. On September 10, 1999, the Operating Partnership declared a
cash distribution of $1.0781 per unit on its Series B Preferred Units, for the
three month period ended October 14, 1999, payable on October 15, 1999, to
unitholders of record as of October 5, 1999. On September 10, 1999, AMB Property
II, L.P. declared a cash distribution of $1.0938 and $0.9688 per

F-16
<PAGE> 67
AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE, PER UNIT AND UNIT AMOUNTS, AND PROPERTY STATISTICS)

unit on its Series C Preferred Units and Series D Preferred Units, respectively,
for the three month periods ended October 14, 1999 and September 24, 1999,
respectively, payable on October 15, 1999 and September 25, 1999, respectively,
to unitholders of record as of October 5, 1999 and September 15, 1999,
respectively. On September 10, 1999, AMB Property II, L.P. declared a cash
distribution of $0.3264 per unit on its Series E Preferred Units, for the period
from August 31, 1999 to October 14, 1999, payable on October 15, 1999, to
unitholders of record as of October 5, 1999.

On December 10, 1999, the Operating Partnership declared a quarterly cash
distribution of $0.35 per LP Unit, for the quarter ended December 31, 1999,
payable on December 28, 1999, to unitholders of record as of December 17, 1999.
On December 10, 1999, the Operating Partnership declared a cash distribution of
$0.5313 per unit on its Series A Preferred Units, for the three month period
ended January 14, 2000, payable on January 17, 2000, unitholders of record as of
January 5, 2000. On December 10, 1999, the Operating Partnership declared a cash
distribution of $1.0781 per unit on its Series B Preferred Units, for the three
month period ended January 14, 2000, payable on January 17, 2000, to unitholders
of record as of January 5, 2000. On December 10, 1999, AMB Property II, L.P.
declared a cash distribution of $1.0938, $0.9688 and $0.9688 per unit on its
Series C Preferred Units, Series D Preferred Units and Series E Preferred Units,
respectively, for the three month periods ended January 14, 2000, December 24,
1999 and January 14, 2000, respectively, payable on January 17, 2000, December
27, 1999 and January 17, 2000, respectively, to unitholders of record as of
January 5, 2000, December 15, 1999 and January 5, 2000, respectively.

11. STOCK INCENTIVE PLAN, 401(K) PLAN AND DEFERRED COMPENSATION PLAN

Stock Incentive Plan

In November 1997, the Company established a Stock Option and Incentive Plan
(the "Stock Incentive Plan") for the purpose of attracting and retaining
eligible officers, directors and employees. The Stock Incentive Plan was amended
on March 5, 1999 to increase the number of shares reserved for issuance
thereunder and to amend various other provisions, including removal of
provisions permitting the repricing of options granted under the Stock Incentive
Plan. The Company's stockholders approved the amendments to the Stock Incentive
Plan on May 7, 1999. The Company has reserved for issuance an aggregate of
8,950,000 shares of Common Stock under the Stock Incentive Plan. As of December
31, 1999, the Company had 4,509,561 non-qualified options outstanding to certain
directors, officers and employees. Each option is exchangeable for one share of
the Company's Common Stock and has a weighted average exercise price equal to
$21.44. Each option's exercise price is equal to the Company's market price at
the date of grant. The options had an original ten-year term and vest pro rata
in annual installments over a three or four-year period from the date of grant.

The Operating Partnership applies APB Opinion No. 25, Accounting for Stock
Issued to Employees, and related interpretations in accounting for the Stock
Incentive Plan. Opinion No. 25 measures compensation cost using the intrinsic
value based method of accounting. Under this method, compensation cost is the
excess, if any, of the quoted market price of the stock at the date of grant
over the amount an employee must pay to acquire the stock. As of December 31,
1999, $1,340 has been recognized as compensation expense for the Stock Incentive
Plan.

As permitted by SFAS 123, Accounting Stock-based Compensation, the
Operating Partnership has not changed the method of accounting for stock options
but has provided the additional required disclosures. Had compensation cost for
the Operating Partnership's stock-based compensation plans been determined based
on the fair value at the grant dates for awards under those plans consistent
with the method of SFAS No. 123, the Operating Partnership's pro forma net
income available to common unitholders would have been reduced by $1,767 and
$3,166 and pro forma basic and diluted earnings per unit would have been reduced
to $1.25 and $1.24, and $1.92 and $1.92, respectively, for the years ended
December 31, 1998 and 1999. The impact on pro forma net income and earnings per
unit for 1997 was not material.

F-17
<PAGE> 68
AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE, PER UNIT AND UNIT AMOUNTS, AND PROPERTY STATISTICS)

The fair value of each option grant was estimated at the date of grant
using the Black-Scholes option-pricing model with the following assumptions used
for grants in 1997, 1998 and 1999, respectively: dividend yield of 6.5%, 6.3%
and 7.2%, expected volatility of 18.8%, 23.1% and 18.5%, risk-free interest rate
of 5.9%, 4.9% and 5.4%, and expected lives of 10 years for each year.

Following is a summary of the option activity for the years ended December
31, 1997, 1998 and 1999:

<TABLE>
<CAPTION>
WEIGHTED REMAINING
SHARES UNDER AVERAGE CONTRACTUAL
OPTION (000S) EXERCISE PRICE LIFE
------------- -------------- -----------
<S> <C> <C> <C>
Outstanding, 11/26/97................................ -- -- --
Granted.............................................. 3,154 $21.00 10 years
Exercised............................................ -- -- --
Forfeited............................................ (10) -- --
------ ------ ----------
Outstanding, 12/31/97................................ 3,144 21.00 10 years
Granted.............................................. 1,508 21.69 10 years
Exercised............................................ -- -- --
Forfeited............................................ (268) -- --
------ ------ ----------
Outstanding, 12/31/98................................ 4,384 21.40 9.4 years
Granted.............................................. 451 22.24 10.0 years
Exercised............................................ (25) -- --
Forfeited............................................ (300) -- --
------ ------ ----------
Outstanding, 12/31/99................................ 4,510 $21.44 9.4 years
====== ====== ==========
Options exercisable at year-end...................... 1,832 $21.05
====== ======
Fair value of options granted during the year........ $ 1.88
======
</TABLE>

In 1997, under the Stock Incentive Plan, the Company sold 5,712 restricted
shares of its Common Stock to certain independent directors for $0.01 per share
in cash. In 1998 and 1999, under the Stock Incentive Plan the Company issued
43,007 and 100,000 restricted shares, respectively, to certain officers of the
Company as part of the Performance Pay Program and in connection with employment
with the Company. As of December 31, 1999, 1,633 shares of restricted stock have
been forfeited. The outstanding restricted shares are subject to a repurchase
right held by the Company, which lapses over a period of three to five years.
The repurchase right lapses fully on January 1, 2002 for shares issued in 1997
and 1998, and lapses fully on January 20, 2004 for those shares issued in 1999.

401(k) Plan

In November 1997, the Operating Partnership established a Section 401(k)
Savings/Retirement Plan (the "Section 401(k) Plan"), which is a continuation of
the Section 401(k) plan of the Predecessor, to cover eligible employees of the
Operating Partnership and any designated affiliate. During 1999, the Section
401(k) Plan permitted eligible employees of the Operating Partnership to defer
up to 10% of their annual compensation, subject to certain limitations imposed
by the Code. Beginning in 2000, eligible employees may defer up to 20% of their
annual compensation, subject to certain limitations imposed by the Code. The
employees' elective deferrals are immediately vested and non-forfeitable upon
contribution to the Section 401(k) Plan. During 1999, the Operating Partnership
matched the employee contributions to the Section 401(k) Plan in an amount equal
to 50% of the first 3.5% of annual compensation deferred by each employee.
Beginning in 2000, the Operating Partnership intends to match the employee
contributions to the Section 401(k) Plan in an amount equal to 50% of the first
5.5% of annual compensation deferred by each employee and may also make
discretionary contributions to the Section 401(k) Plan. As of December 31, 1998
and 1999, the Operating Partnership's accrual for 401(k) matches was $153 and
$180, respectively. Such amounts were included in Other Liabilities on the
Consolidated Balanced Sheets.

F-18
<PAGE> 69
AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE, PER UNIT AND UNIT AMOUNTS, AND PROPERTY STATISTICS)

Deferred Compensation Plan

Effective September 1, 1999, the Operating Partnership established a
Non-Qualified Deferred Compensation Plan for management of the Operating
Partnership and certain of its affiliates. The plan enables participants to
defer income up to 25% of annual base pay and up to 100% of annual bonuses on a
pre-tax basis. The Operating Partnership may make discretionary matching
contributions to participant accounts at any time. The Operating Partnership
made no such discretionary matching contributions in 1999. The participants'
elective deferrals and any matching contributions are immediately 100% vested.
As of December 31, 1999, the total amount of compensation deferred by was $159.

12. SUPPLEMENTAL INFORMATION TO STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1997 1998 1999
----------- --------- --------
<S> <C> <C> <C>
Cash paid for interest.......................... $ 2,509 $ 68,209 $ 89,627
Non-cash transactions:
Acquisitions of properties.................... $ 2,438,634 $ 901,284 $471,905
Assumption of debt............................ (717,613) (221,017) (57,480)
Cash acquired................................. (43,978) -- --
Other assumed assets and liabilities.......... (13,862) -- --
Minority interests' contribution, including
units issued............................... (64,358) (115,963) (14,534)
Units issued.................................. (1,370,391) -- --
----------- --------- --------
Net cash paid, net of cash acquired............. $ 228,432 $ 564,304 $399,891
=========== ========= ========
</TABLE>

13. COMMITMENTS AND CONTINGENCIES

Litigation

In the normal course of business, from time to time, the Operating
Partnership is involved in legal actions relating to the ownership and
operations of its properties. In management's opinion, the liabilities, if any,
that may ultimately result from such legal actions are not expected to have a
materially adverse effect on the consolidated financial position, results of
operations or cash flows of the Operating Partnership.

Environmental Matters

The Operating Partnership follows the policy of monitoring its properties
for the presence of hazardous or toxic substances. The Operating Partnership is
not aware of any environmental liability with respect to the properties that
would have a material adverse effect on the Operating Partnership's business,
assets or results of operations; however, there can be no assurance that such a
material environmental liability does not exist. The existence of any such
material environmental liability would have an adverse effect on the Operating
Partnership's results of operations and cash flow.

General Uninsured Losses

The Operating Partnership carries comprehensive liability, fire, flood,
environmental, extended coverage and rental loss insurance with policy
specifications, limits and deductibles that the Operating Partnership believes
are adequate and appropriate under the circumstances given the relative risk of
loss, the cost of such coverage and industry practice. There are, however,
certain types of extraordinary losses that may be either uninsurable or not
economically insurable. Certain of the properties are located in areas that are
subject to earthquake activity; therefore, the Operating Partnership has
obtained limited earthquake insurance on those properties. Should an uninsured
loss occur, the Operating Partnership could lose its investment in, and
anticipated profits and cash flows from, a property.

F-19
<PAGE> 70
AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE, PER UNIT AND UNIT AMOUNTS, AND PROPERTY STATISTICS)

14. QUARTERLY FINANCIAL DATA (UNAUDITED)

Selected quarterly financial data for 1998 and 1999 are as follows:

<TABLE>
<CAPTION>
QUARTER
------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 1998 YEAR
1998 ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues........................ $ 75,785 $ 85,014 $ 94,061 $ 104,027 $ 358,887
Income from operations before
minority interests............ 29,188 30,382 31,802 32,378 123,750
Minority interests' share of net
income........................ (462) (1,196) (1,427) (2,409) (5,494)
----------- ----------- ----------- ----------- -----------
Net income.................... 28,726 29,186 30,375 29,969 118,256
Series A preferred unit
distributions................. -- -- (1,514) (2,125) (3,639)
Series B preferred unit
distributions................. -- -- -- (779) (779)
----------- ----------- ----------- ----------- -----------
Net income available to common
unitholders................ $ 28,726 $ 29,186 $ 28,861 $ 27,065 $ 113,838
=========== =========== =========== =========== ===========
NET INCOME PER COMMON UNIT(1)
Basic......................... $ 0.33 $ 0.33 $ 0.32 $ 0.30 $ 1.27
=========== =========== =========== =========== ===========
Diluted....................... $ 0.32 $ 0.32 $ 0.32 $ 0.30 $ 1.26
=========== =========== =========== =========== ===========
WEIGHTED AVERAGE COMMON UNITS
OUTSTANDING
Basic......................... 88,428,969 89,539,010 89,675,763 90,329,831 89,493,394
=========== =========== =========== =========== ===========
Diluted....................... 88,839,192 89,886,673 90,053,107 90,629,776 89,852,187
=========== =========== =========== =========== ===========
</TABLE>

F-20
<PAGE> 71
AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE, PER UNIT AND UNIT AMOUNTS, AND PROPERTY STATISTICS)

<TABLE>
<CAPTION>
QUARTER
------------------------------------------------------
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 1999 YEAR
1999 ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues........................ $ 109,572 $ 115,377 $ 111,784 $ 111,450 $ 448,183
Income from operations before
minority interests............ 34,575 41,446 42,055 40,775 158,851
Minority interests' share of net
income........................ (3,821) (4,560) (5,621) (5,621) (19,614)
----------- ----------- ----------- ----------- -----------
Net income before gain from
divestiture of real
estate..................... 30,754 36,886 36,434 35,163 139,237
Gain from divestiture of real
estate........................ -- 11,525 21,532 20,696 53,753
Extraordinary items............. -- (1,509) (1,347) 366 (2,490)
----------- ----------- ----------- ----------- -----------
Net income.................... 30,754 46,902 56,619 56,225 190,500
Series A preferred unit
distributions................. (2,125) (2,125) (2,125) (2,125) (8,500)
Series B preferred unit
distributions................. (1,402) (1,402) (1,402) (1,402) (5,608)
----------- ----------- ----------- ----------- -----------
Net income available to common
unitholders................ $ 27,227 $ 43,375 $ 53,092 $ 52,698 $ 176,392
=========== =========== =========== =========== ===========
BASIC INCOME PER COMMON UNIT(1)
Before extraordinary items.... $ 0.30 $ 0.50 $ 0.60 $ 0.58 $ 1.97
Extraordinary items........... -- (0.02) (0.02) -- (0.03)
----------- ----------- ----------- ----------- -----------
Net income available to
common unitholders....... $ 0.30 $ 0.48 $ 0.58 $ 0.58 $ 1.94
=========== =========== =========== =========== ===========
DILUTED INCOME PER COMMON
UNIT(1)
Before extraordinary items.... $ 0.30 $ 0.50 $ 0.60 $ 0.58 $ 1.97
Extraordinary items........... -- (0.02) (0.02) -- (0.03)
----------- ----------- ----------- ----------- -----------
Net income available to
common unitholders....... $ 0.30 $ 0.48 $ 0.58 $ 0.58 $ 1.94
=========== =========== =========== =========== ===========
WEIGHTED AVERAGE COMMON UNITS
OUTSTANDING
Basic......................... 90,449,529 90,861,822 91,078,726 90,779,163 90,792,310
=========== =========== =========== =========== ===========
Diluted....................... 90,469,105 91,044,028 91,179,441 90,779,163 90,867,934
=========== =========== =========== =========== ===========
</TABLE>

- ---------------
(1) The sum of quarterly financial data may vary from the annual data due to
rounding.

F-21
<PAGE> 72
AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE, PER UNIT AND UNIT AMOUNTS, AND PROPERTY STATISTICS)

15. SEGMENT INFORMATION

The Operating Partnership has two reportable segments: industrial
properties and retail properties. The industrial properties consist primarily of
warehouse distribution facilities suitable for single or multiple tenants and
are typically comprised of multiple buildings which are leased to tenants
engaged in various types of businesses. The retail properties are generally
leased to one or more anchor tenants, such as grocery and drug stores, and
various retail businesses. The Operating Partnership evaluates performance based
upon property net operating income of the combined properties in each segment.
The accounting policies of the segments are the same as those described in the
summary of significant accounting policies. Significant information used by the
Operating Partnership for the reportable segments for the years ended December
31, 1997, 1998 and 1999 are as follows:

<TABLE>
<CAPTION>
INDUSTRIAL RETAIL TOTAL
PROPERTIES PROPERTIES PROPERTIES
---------- ---------- ----------
<S> <C> <C> <C>
Rental revenues:(1)
1997.......................................... $ 16,898 $ 9,567 $ 26,465
1998.......................................... 248,134 106,524 354,658
1999.......................................... 352,861 86,797 439,658
Property net operating income:(2)
1997.......................................... 11,056 6,510 17,566
1998.......................................... 187,218 79,025 266,243
1999.......................................... 269,339 62,396 331,735
Gross additions to investment in properties:(3)
1997.......................................... 686,821 140,087 826,908
1998.......................................... 916,503 9,558 926,061
1999.......................................... 820,656 29,173 849,829
Investment in properties:(4)
1997.......................................... 1,639,321 803,678 2,442,999
1998.......................................... 2,574,940 794,120 3,369,060
1999.......................................... 3,177,283 72,169 3,249,452
</TABLE>

- ---------------
(1) Includes straight-line rents of $1,407, $10,921 and $10,848 for years ended
December 31, 1997, 1998 and 1999, respectively.

(2) Property net operating income is defined as rental revenues, including
reimbursements and straight-line rents, less property level operating
expenses and excluding depreciation, amortization and interest expense.

(3) Represents cost incurred during the year for land, building, building
improvements, tenant improvements, leasing costs and other related real
estate costs. Amounts are before divestiture of properties of $814,825 for
the year ended December 31, 1999. There were no property divestitures in
1997 or 1998.

(4) Excludes net properties held for divestiture of $0, $115,050 and $181,201 as
of December 31, 1997, 1998 and 1999, respectively.

F-22
<PAGE> 73
AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE, PER UNIT AND UNIT AMOUNTS, AND PROPERTY STATISTICS)

The Operating Partnership uses property net operating income as an
operating performance measure. The following is a reconciliation between total
reportable segment revenue and property net operating income to consolidated
revenues and net income:

<TABLE>
<CAPTION>
1997 1998 1999
------- -------- --------
<S> <C> <C> <C>
REVENUES
Total rental revenues for reportable segments............... $26,465 $354,658 $439,658
Investment management and other income...................... 645 4,229 8,525
------- -------- --------
Total consolidated revenues............................ $27,110 $358,887 $448,183
======= ======== ========
NET INCOME
Property net operating income for reportable segments....... $17,566 $266,243 $331,735
Investment management and other income...................... 645 4,229 8,525
Less:
General and administrative................................ 1,197 19,588 25,223
Interest expense.......................................... 3,528 69,670 88,681
Depreciation and amortization............................. 4,195 57,464 67,505
Minority interests........................................ 117 5,494 19,614
------- -------- --------
Net income before gain from divestiture of real
estate............................................... 9,174 118,256 139,237
Gain from divestiture of real estate........................ -- -- 53,753
Extraordinary items......................................... -- -- (2,490)
------- -------- --------
Net income............................................. $ 9,174 $118,256 $190,500
======= ======== ========
</TABLE>

16. NEW ACCOUNTING PRONOUNCEMENT

On June 15, 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging Activities.
The Statement establishes accounting and reporting standards requiring that
every derivative instrument (including certain derivative instruments embedded
in other contracts) be recorded on the balance sheet as either an asset or
liability measured at its fair value. The Statement requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement and requires that a company must formally document,
designate and assess the effectiveness of transactions that receive hedge
accounting.

Statement No. 133 may become effective for the Operating Partnership
beginning with the 2001 fiscal year and may not be applied retroactively.
Management does not expect the impact of Statement No. 133 to be material to the
financial statements. However, the Statement could increase volatility in
earnings and other comprehensive income.

17. SUBSEQUENT EVENTS (UNAUDITED)

On February 29, 2000, the Operating Partnership declared a quarterly cash
distribution of $0.37 per LP Unit, for the quarter ending March 31, 2000,
payable on April 17, 2000, to unitholders of record as of April 5, 2000. On
February 29, 2000, the Operating Partnership declared a cash distribution of
$0.5313 per unit on its Series A Preferred Units, for the three month period
ending April 14, 2000, payable on April 17, 2000, to unitholders of record as of
April 5, 2000. On February 29, 2000, the Operating Partnership declared a cash
distribution of $1.0781 per unit on its Series B Preferred Units, for the three
month period ending April 14, 2000, payable on April 17, 2000, to unitholders of
record as of April 5, 2000. On February 29, 2000, AMB Property II, L.P. declared
a cash distribution of $1.0938, $0.9688 and $0.9688 per unit on its Series C
Preferred Units, Series D Preferred Units and Series E Preferred Units,
respectively, for the three month periods ending April 14, March 24, and April
14, 2000, respectively, payable on April 17, March 25, and April 17, 2000,
respectively, to unitholders of record as of April 5, March 15, and April 5,
2000.

F-23
<PAGE> 74

AMB PROPERTY, L.P.

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT NUMBER OF BUILDINGS/CENTERS)
<TABLE>
<CAPTION>
INITIAL COST TO COMPANY COSTS
----------------------- CAPITALIZED
NO. OF ENCUMBRANCES BUILDING & SUBSEQUENT TO
PROPERTY BLDGS./ CTRS. LOCATION TYPE (1) LAND IMPROVEMENTS ACQUISITION
-------- ------------- -------- ---- ------------ -------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Acer Distribution Center........... 1 CA IND $ -- $ 3,146 $ 9,479 $ 500
Activity Distribution Center....... 4 CA IND 5,148 3,736 11,248 155
Addison Technology Center.......... 1 TX IND -- 899 2,696 166
Alsip Industrial................... 1 IL IND -- 1,200 3,744 100
Alvarado Business Center........... 10 CA IND -- 7,906 23,757 1,723
AMB O'Hare Rosemont................ 14 IL IND -- 2,717 8,995 411
Amwiler-Gwinnett Industrial
Portfolio......................... 9 GA IND 13,590 6,641 19,964 1,075
Anaheim Industrial................. 1 CA IND -- 1,457 4,341 313
Ardenwood Corporate Park........... 4 CA IND 9,756 7,321 22,002 (280)
Artesia Industrial Portfolio....... 27 CA IND 53,927 23,860 71,620 3,505
Atlanta South...................... 9 GA IND -- 8,047 24,180 790
Beacon Industrial Park............. 8 FL IND 17,522 10,466 31,437 4,935
Belden Avenue...................... 3 IL IND -- 5,019 15,186 187
Beltway Distribution............... 1 VA IND -- 4,800 15,159 --
Bensenville........................ 13 IL IND 40,307 20,799 62,438 3,212
Blue Lagoon........................ 2 FL IND 11,457 4,945 14,875 75
Bonnie Lane Industrial............. 2 IL IND -- 884 2,732 --
Boston Industrial Portfolio........ 20 MA IND 21,032 28,518 85,799 5,883
Braemar Business Center............ 2 MA IND -- 1,422 4,613 447
Brightseat Road.................... 1 MD IND -- 1,557 4,841 359
Britannia Business Park............ 2 FL IND -- 3,199 9,637 258
Broward Business Park.............. 5 FL IND -- 1,886 5,659 245
Broward Turnpike Center............ 1 FL IND -- 682 2,046 29
Burnsville Business Center......... 1 MN IND -- 932 2,796 115
Cabot Business Park................ 17 MA IND -- 17,231 51,726 2,121
Carson Industrial.................. 12 CA IND -- 4,231 10,418 2,477
Cascade............................ 4 OR IND -- 2,825 7,860 1,710
Chancellor......................... 1 FL IND 2,839 1,587 4,802 66
Chancellor Square.................. 3 FL IND 16,150 7,575 22,721 1,134
Chemway Industrial Portfolio....... 5 NC IND -- 2,875 8,625 388
Chicago Industrial................. 2 IL IND 3,143 1,574 4,761 342

<CAPTION>
GROSS AMOUNT CARRIED AT 12/31/99
------------------------------------- YEAR OF
BUILDING & TOTAL COSTS ACCUMULATED CONSTRUCTION/ DEPRECIABLE
PROPERTY LAND IMPROVEMENTS (2)(3) DEPRECIATION ACQUISITION LIFE (YEARS)
-------- -------- ------------ ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Acer Distribution Center........... $ 3,146 $ 9,979 $ 13,125 $ 444 1997 5-40
Activity Distribution Center....... 3,736 11,404 15,140 512 1997 5-40
Addison Technology Center.......... 899 2,862 3,761 127 1998 5-40
Alsip Industrial................... 1,200 3,844 5,044 170 1998 5-40
Alvarado Business Center........... 7,906 25,480 33,386 1,128 1997 5-40
AMB O'Hare Rosemont................ 2,717 9,406 12,123 410 1999 5-40
Amwiler-Gwinnett Industrial
Portfolio......................... 6,641 21,039 27,680 936 1997 5-40
Anaheim Industrial................. 1,457 4,654 6,111 207 1997 5-40
Ardenwood Corporate Park........... 7,321 21,722 29,043 982 1997 5-40
Artesia Industrial Portfolio....... 23,860 75,125 98,985 3,345 1997 5-40
Atlanta South...................... 8,047 24,970 33,016 1,116 1997 5-40
Beacon Industrial Park............. 10,466 36,372 46,838 1,583 1997 5-40
Belden Avenue...................... 5,019 15,373 20,392 689 1997 5-40
Beltway Distribution............... 4,800 15,159 19,959 675 1999 5-40
Bensenville........................ 20,831 65,618 86,449 2,922 1997 5-40
Blue Lagoon........................ 4,945 14,949 19,894 672 1997 5-40
Bonnie Lane Industrial............. 884 2,732 3,615 122 1999 5-40
Boston Industrial Portfolio........ 28,518 91,682 120,200 4,062 1998 5-40
Braemar Business Center............ 1,422 5,059 6,482 219 1998 5-40
Brightseat Road.................... 1,557 5,200 6,757 228 1997 5-40
Britannia Business Park............ 3,199 9,895 13,095 443 1997 5-40
Broward Business Park.............. 1,886 5,904 7,790 263 1998 5-40
Broward Turnpike Center............ 682 2,076 2,758 93 1998 5-40
Burnsville Business Center......... 932 2,912 3,844 130 1998 5-40
Cabot Business Park................ 17,231 53,847 71,078 2,402 1998 5-40
Carson Industrial.................. 4,231 12,896 17,127 579 1999 5-40
Cascade............................ 2,825 9,570 12,396 419 1998 5-40
Chancellor......................... 1,587 4,868 6,456 218 1997 5-40
Chancellor Square.................. 7,575 23,854 31,429 1,062 1998 5-40
Chemway Industrial Portfolio....... 2,875 9,013 11,888 402 1998 5-40
Chicago Industrial................. 1,574 5,103 6,676 226 1997 5-40
</TABLE>

S-1
<PAGE> 75

AMB PROPERTY, L.P.

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
AS OF DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT NUMBER OF BUILDINGS/CENTERS)
<TABLE>
<CAPTION>
INITIAL COST TO COMPANY COSTS
----------------------- CAPITALIZED
NO. OF ENCUMBRANCES BUILDING & SUBSEQUENT TO
PROPERTY BLDGS./ CTRS. LOCATION TYPE (1) LAND IMPROVEMENTS ACQUISITION
-------- ------------- -------- ---- ------------ -------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Circle Freeway..................... 1 OH IND -- 530 1,591 241
Columbia Business Center........... 9 MD IND 4,594 3,856 11,736 247
Concord Industrial Portfolio....... 10 CA IND -- 3,719 11,647 272
Corporate Park/Hickory Hill........ 7 TN IND 16,400 6,789 20,366 472
Corporate Square................... 6 MN IND -- 4,024 12,113 396
Corridor........................... 1 MD IND 2,486 996 3,019 18
Crysen Industrial.................. 1 DC IND 3,303 1,425 4,275 650
D/FW Int'l Air Cargo............... 1 TX IND -- -- 19,683 --
Deerfield Commerce Center.......... 3 FL IND -- 711 2,133 37
Diablo Industrial Park............. 16 CA IND -- 3,449 10,730 15
Dixie Highway...................... 2 KY IND -- 1,700 5,149 94
Dock's Corner...................... 1 NJ IND -- 2,050 6,190 49,046
Dock's Corner II................... 1 NJ IND -- 2,272 6,917 338
Dowe Industrial Center............. 2 CA IND -- 2,665 8,034 52
East Valley Warehouse.............. 1 WA IND -- 6,813 20,511 646
East Walnut Drive.................. 1 CA IND -- 964 2,918 28
Edenvale Business Center........... 1 MN IND 1,467 919 2,411 554
Elk Grove Village Industrial....... 11 IL IND -- 7,713 23,179 748
Elmwood Business Park.............. 5 LA IND -- 4,163 12,488 399
Empire Drive....................... 1 KY IND -- 1,590 4,815 244
Executive Drive.................... 1 IL IND -- 1,399 4,236 321
Fairway Drive Industrial........... 3 CA IND -- 3,219 9,677 5,604
Fontana Industrial................. 2 CA IND -- 2,197 6,653 2,357
Garland Industrial................. 20 TX IND 19,600 8,161 24,484 1,634
Gateway Commerce................... 5 MD IND 15,579 4,083 12,336 424
Gateway Corporate Center........... 9 WA IND -- 10,369 32,201 (75)
Gateway North...................... 6 WA IND -- 6,124 18,941 7
Glen Ellyn Road.................... 1 IL IND -- 850 2,549 266
Greater Dallas Industrial
Portfolio......................... 8 TX IND -- 10,425 31,451 3,899
Greater Houston Portfolio.......... 14 TX IND -- 6,197 18,592 1,141

<CAPTION>
GROSS AMOUNT CARRIED AT 12/31/99
------------------------------------- YEAR OF
BUILDING & TOTAL COSTS ACCUMULATED CONSTRUCTION/ DEPRECIABLE
PROPERTY LAND IMPROVEMENTS (2)(3) DEPRECIATION ACQUISITION LIFE (YEARS)
-------- -------- ------------ ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Circle Freeway..................... 530 1,832 2,363 80 1998 5-40
Columbia Business Center........... 3,856 11,983 15,839 535 1999 5-40
Concord Industrial Portfolio....... 3,719 11,919 15,637 528 1999 5-40
Corporate Park/Hickory Hill........ 6,789 20,838 27,627 934 1998 5-40
Corporate Square................... 4,024 12,509 16,534 559 1997 5-40
Corridor........................... 996 3,037 4,033 136 1999 5-40
Crysen Industrial.................. 1,425 4,925 6,350 215 1998 5-40
D/FW Int'l Air Cargo............... -- 19,683 19,683 665 1999 5-40
Deerfield Commerce Center.......... 711 2,170 2,880 97 1998 5-40
Diablo Industrial Park............. 3,449 10,745 14,194 480 1999 5-40
Dixie Highway...................... 1,700 5,243 6,943 235 1997 5-40
Dock's Corner...................... 5,125 52,161 57,286 1,936 1997 5-40
Dock's Corner II................... 2,272 7,255 9,527 322 1997 5-40
Dowe Industrial Center............. 2,665 8,086 10,751 363 1997 5-40
East Valley Warehouse.............. 6,813 21,157 27,970 945 1999 5-40
East Walnut Drive.................. 964 2,947 3,910 132 1997 5-40
Edenvale Business Center........... 919 2,966 3,884 131 1998 5-40
Elk Grove Village Industrial....... 7,713 23,927 31,640 1,069 1997 5-40
Elmwood Business Park.............. 4,163 12,887 17,049 576 1998 5-40
Empire Drive....................... 1,590 5,059 6,649 225 1997 5-40
Executive Drive.................... 1,399 4,557 5,956 201 1997 5-40
Fairway Drive Industrial........... 3,219 15,282 18,500 625 1999 5-40
Fontana Industrial................. 2,197 9,009 11,206 379 1997 5-40
Garland Industrial................. 8,161 26,118 34,279 1,159 1998 5-40
Gateway Commerce................... 4,083 12,760 16,844 569 1999 5-40
Gateway Corporate Center........... 10,369 32,126 42,496 1,436 1999 5-40
Gateway North...................... 6,124 18,948 25,072 847 1999 5-40
Glen Ellyn Road.................... 850 2,815 3,665 124 1998 5-40
Greater Dallas Industrial
Portfolio......................... 9,995 35,781 45,775 1,547 1997 5-40
Greater Houston Portfolio.......... 6,197 19,733 25,930 876 1998 5-40
</TABLE>

S-2
<PAGE> 76

AMB PROPERTY, L.P.

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
AS OF DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT NUMBER OF BUILDINGS/CENTERS)
<TABLE>
<CAPTION>
INITIAL COST TO COMPANY COSTS
----------------------- CAPITALIZED
NO. OF ENCUMBRANCES BUILDING & SUBSEQUENT TO
PROPERTY BLDGS./ CTRS. LOCATION TYPE (1) LAND IMPROVEMENTS ACQUISITION
-------- ------------- -------- ---- ------------ -------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Greenwood Industrial............... 3 MD IND -- 4,729 14,188 771
Harvest Business Park.............. 3 WA IND -- 2,371 7,153 293
Hewlett-Packard Distribution....... 1 CA IND 3,276 1,668 5,043 41
Hintz Road......................... 1 IL IND -- 420 1,259 38
Holton Drive....................... 1 KY IND -- 2,633 7,899 140
Houston Service Center............. 3 TX IND -- 3,800 11,401 1,166
Industrial Drive................... 1 OH IND -- 1,743 5,230 181
Interchange........................ 2 TN IND 7,288 3,523 10,570 344
International Multifoods........... 1 CA IND -- 1,613 4,879 97
Itasca Industrial Portfolio........ 6 IL IND -- 6,416 19,289 1,854
Jamesburg.......................... 3 NJ IND 23,500 11,700 35,101 740
Janitrol........................... 1 OH IND -- 1,797 5,390 241
Junction Industrial Park........... 4 CA IND -- 7,875 23,975 233
Kent Centre........................ 4 WA IND -- 3,042 9,165 619
Kingsport Industrial Park.......... 7 WA IND 17,071 7,919 23,798 (162)
L.A. County Industrial Portfolio... 6 CA IND -- 9,671 29,082 630
Lake Michigan Industrial
Portfolio......................... 2 IL IND -- 2,886 8,699 113
Laurelwood......................... 2 CA IND -- 2,750 8,538 113
Lincoln Industrial Center.......... 1 TX IND -- 671 2,052 188
Linden Industrial.................. 1 NJ IND -- 900 2,753 --
Linder Skokie...................... 1 IL IND -- 2,938 8,854 873
Lisle Industrial................... 1 IL IND -- 2,290 6,911 42
Locke Drive........................ 1 MA IND -- 1,074 3,227 66
Lonestar........................... 7 TX IND 17,000 7,129 21,428 318
Los Nietos......................... 4 CA IND -- 2,518 7,624 --
Mahwah Corporate Center............ 7 NJ IND -- 10,421 31,263 775
Meadow Lane........................ 1 NJ IND -- 838 2,594 --
MBC Industrial..................... 4 CA IND 12,377 5,892 17,716 84
Marietta Industrial................ 3 GA IND -- 1,830 5,489 280
Meadowridge........................ 3 MD IND -- 3,716 11,147 121
Melrose Park....................... 1 IL IND -- 2,936 9,190 39

<CAPTION>
GROSS AMOUNT CARRIED AT 12/31/99
------------------------------------- YEAR OF
BUILDING & TOTAL COSTS ACCUMULATED CONSTRUCTION/ DEPRECIABLE
PROPERTY LAND IMPROVEMENTS (2)(3) DEPRECIATION ACQUISITION LIFE (YEARS)
-------- -------- ------------ ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Greenwood Industrial............... 4,729 14,959 19,688 665 1998 5-40
Harvest Business Park.............. 2,371 7,446 9,817 332 1997 5-40
Hewlett-Packard Distribution....... 1,668 5,084 6,752 228 1997 5-40
Hintz Road......................... 420 1,297 1,716 58 1998 5-40
Holton Drive....................... 2,633 8,039 10,672 361 1997 5-40
Houston Service Center............. 3,800 12,567 16,367 553 1998 5-40
Industrial Drive................... 1,743 5,410 7,153 242 1997 5-40
Interchange........................ 3,523 10,914 14,437 488 1998 5-40
International Multifoods........... 1,613 4,976 6,589 223 1997 5-40
Itasca Industrial Portfolio........ 6,416 21,143 27,560 931 1997 5-40
Jamesburg.......................... 11,700 35,841 47,541 1,607 1998 5-40
Janitrol........................... 1,797 5,631 7,427 251 1997 5-40
Junction Industrial Park........... 7,875 24,208 32,083 1,084 1999 5-40
Kent Centre........................ 3,042 9,784 12,826 433 1997 5-40
Kingsport Industrial Park.......... 7,919 23,636 31,556 1,066 1997 5-40
L.A. County Industrial Portfolio... 9,671 29,712 39,383 1,331 1997 5-40
Lake Michigan Industrial
Portfolio......................... 2,886 8,811 11,697 395 1997 5-40
Laurelwood......................... 2,750 8,651 11,401 385 1997 5-40
Lincoln Industrial Center.......... 671 2,240 2,910 98 1997 5-40
Linden Industrial.................. 900 2,753 3,653 123 1999 5-40
Linder Skokie...................... 2,938 9,727 12,665 428 1997 5-40
Lisle Industrial................... 2,290 6,952 9,243 312 1997 5-40
Locke Drive........................ 1,074 3,293 4,366 148 1998 5-40
Lonestar........................... 7,129 21,745 28,875 976 1997 5-40
Los Nietos......................... 2,518 7,624 10,141 343 1999 5-40
Mahwah Corporate Center............ 10,421 32,038 42,459 1,435 1998 5-40
Meadow Lane........................ 838 2,594 3,432 116 1999 5-40
MBC Industrial..................... 5,892 17,800 23,692 801 1997 5-40
Marietta Industrial................ 1,830 5,770 7,599 257 1998 5-40
Meadowridge........................ 3,716 11,268 14,984 506 1998 5-40
Melrose Park....................... 2,936 9,229 12,166 411 1997 5-40
</TABLE>

S-3
<PAGE> 77

AMB PROPERTY, L.P.

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
AS OF DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT NUMBER OF BUILDINGS/CENTERS)
<TABLE>
<CAPTION>
INITIAL COST TO COMPANY COSTS
----------------------- CAPITALIZED
NO. OF ENCUMBRANCES BUILDING & SUBSEQUENT TO
PROPERTY BLDGS./ CTRS. LOCATION TYPE (1) LAND IMPROVEMENTS ACQUISITION
-------- ------------- -------- ---- ------------ -------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Mendota Heights.................... 1 MN IND 668 1,367 4,565 1,799
Metric Center...................... 6 TX IND -- 10,968 32,944 479
Miami Airport Business Center...... 6 FL IND -- 6,400 19,634 105
Minnetonka......................... 10 MN IND 12,334 6,794 20,380 1,241
Milmont Page....................... 3 CA IND -- 3,201 9,642 304
Minneapolis Distribution
Portfolio......................... 5 MN IND -- 6,227 18,692 992
Minneapolis Industrial Portfolio
IV................................ 4 MN IND 7,955 4,938 14,854 742
Minneapolis Industrial V........... 7 MN IND 6,512 4,426 13,317 647
Mittel Drive....................... 2 IL IND -- 646 1,938 83
Moffett Park R&D Portfolio......... 14 CA IND -- 14,807 44,462 3,527
Murray Hill........................ 2 NJ IND -- 1,670 2,568 2,632
NDP -- Los Angeles................. 6 CA IND 10,550 5,948 17,844 504
NDP -- Seattle..................... 4 WA IND -- 3,888 11,663 272
Norcross/Brookhollow Portfolio..... 4 GA IND -- 3,721 11,180 396
North GSW Industrial Park.......... 1 TX IND -- -- 1,388 --
Northpointe Commerce............... 2 CA IND -- 1,773 5,358 85
Northwest Distribution Center...... 3 WA IND -- 3,533 10,751 565
O'Hare Industrial Portfolio........ 15 IL IND -- 7,357 22,112 1,075
Oakland Ridge Industrial Center.... 12 MD IND 7,407 5,571 16,933 1,077
Orlando Central Park............... n/a FL IND -- -- 1,218 --
Pacific Business Center............ 2 CA IND 9,521 5,417 16,291 281
Pacific Service Center............. 1 GA IND -- 504 1,511 322
Pardee Drive....................... 1 CA IND -- 619 1,924 1
Parkway Business Center............ 1 MN IND -- 475 1,425 377
Patuxent........................... 2 MD IND -- 1,696 5,127 118
Peachtree North East Business
Center............................ 3 GA IND -- 2,197 6,592 922
Peninsula Business Center III...... 1 VA IND -- 992 2,976 65
Penn James Office Warehouse........ 2 MN IND -- 1,991 6,013 605
Pennsy Drive....................... 1 MD IND -- 657 2,011 12,600
Pioneer Alburtis................... 5 CA IND -- 2,355 7,163 --
Porete Avenue Warehouse............ 1 NJ IND 9,567 4,067 12,202 1,523

<CAPTION>
GROSS AMOUNT CARRIED AT 12/31/99
------------------------------------- YEAR OF
BUILDING & TOTAL COSTS ACCUMULATED CONSTRUCTION/ DEPRECIABLE
PROPERTY LAND IMPROVEMENTS (2)(3) DEPRECIATION ACQUISITION LIFE (YEARS)
-------- -------- ------------ ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Mendota Heights.................... 1,367 6,364 7,731 261 1998 5-40
Metric Center...................... 10,968 33,422 44,390 1,500 1997 5-40
Miami Airport Business Center...... 6,400 19,739 26,139 883 1999 5-40
Minnetonka......................... 6,794 21,622 28,415 960 1998 5-40
Milmont Page....................... 3,201 9,946 13,147 444 1997 5-40
Minneapolis Distribution
Portfolio......................... 6,227 19,684 25,911 876 1997 5-40
Minneapolis Industrial Portfolio
IV................................ 4,938 15,595 20,533 694 1997 5-40
Minneapolis Industrial V........... 4,426 13,964 18,389 621 1997 5-40
Mittel Drive....................... 646 2,021 2,667 90 1998 5-40
Moffett Park R&D Portfolio......... 14,805 47,992 62,796 2,122 1997 5-40
Murray Hill........................ 1,670 5,199 6,869 232 1999 5-40
NDP -- Los Angeles................. 5,948 18,348 24,296 821 1998 5-40
NDP -- Seattle..................... 3,888 11,935 15,822 535 1998 5-40
Norcross/Brookhollow Portfolio..... 3,721 11,576 15,297 517 1997 5-40
North GSW Industrial Park.......... -- 1,388 1,388 47 1999 5-40
Northpointe Commerce............... 1,773 5,443 7,216 244 1997 5-40
Northwest Distribution Center...... 3,533 11,316 14,849 502 1997 5-40
O'Hare Industrial Portfolio........ 7,357 23,187 30,545 1,032 1997 5-40
Oakland Ridge Industrial Center.... 5,571 18,009 23,581 797 1999 5-40
Orlando Central Park............... -- 1,218 1,218 41 1999 5-40
Pacific Business Center............ 5,417 16,572 21,990 743 1997 5-40
Pacific Service Center............. 504 1,833 2,337 79 1998 5-40
Pardee Drive....................... 619 1,925 2,544 86 1999 5-40
Parkway Business Center............ 475 1,802 2,277 77 1998 5-40
Patuxent........................... 1,696 5,246 6,941 235 1997 5-40
Peachtree North East Business
Center............................ 2,197 7,513 9,711 328 1998 5-40
Peninsula Business Center III...... 992 3,041 4,033 136 1998 5-40
Penn James Office Warehouse........ 1,991 6,617 8,608 291 1997 5-40
Pennsy Drive....................... 2,857 12,411 15,268 516 1997 5-40
Pioneer Alburtis................... 2,355 7,163 9,518 322 1999 5-40
Porete Avenue Warehouse............ 4,067 13,725 17,793 601 1998 5-40
</TABLE>

S-4
<PAGE> 78

AMB PROPERTY, L.P.

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
AS OF DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT NUMBER OF BUILDINGS/CENTERS)
<TABLE>
<CAPTION>
INITIAL COST TO COMPANY COSTS
----------------------- CAPITALIZED
NO. OF ENCUMBRANCES BUILDING & SUBSEQUENT TO
PROPERTY BLDGS./ CTRS. LOCATION TYPE (1) LAND IMPROVEMENTS ACQUISITION
-------- ------------- -------- ---- ------------ -------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Presidents Drive Distribution
Center............................. 6 -- 3,687 11,307 1,019
Preston Court...................... 1 MD IND -- 2,313 7,192 288
Production Drive................... 1 KY IND -- 425 1,286 273
Rivers Corporate Center............ 4 MD IND -- 2,838 8,648 294
Round Lake Business Center......... 1 MN IND -- 875 2,625 330
Sabal III.......................... 1 FL IND -- 1,211 3,634 69
Sand Lake Service Center........... 6 FL IND -- -- -- 744
Santa Barbara Court................ 1 MD IND -- 1,617 5,029 398
Scripps Sorrento................... 1 CA IND -- 1,110 3,330 32
Shawnee Industrial................. 1 GA IND -- 2,481 7,531 2,019
Silicon Valley R&D Portfolio....... 5 CA IND -- 8,024 24,205 (260)
South Bay Industrial............... 8 CA IND 18,970 14,992 45,016 981
South Point Business Park.......... 7 NC IND 10,725 5,371 16,113 303
South River Park................... 1 NJ IND -- 1,122 12,404 0
Southfield/KDRC Industrial
Portfolio......................... 13 GA IND -- 11,827 35,730 1,039
Stadium Business Park.............. 9 CA IND 4,680 3,768 11,345 330
Stapleton Square................... 2 CO IND -- 526 1,577 157
Sunrise Industrial................. 4 FL IND 17,240 6,266 18,798 278
Suwannee Creek..................... n/a GA IND -- -- 1,660 0
Sylvan............................. 1 GA IND -- 1,946 5,905 0
Systematics........................ 1 CA IND -- 911 2,773 40
Technology I....................... 2 MD IND -- 1,657 5,049 46
Technology II...................... 9 MD IND 13,433 10,206 3,761 27,025
Texas Industrial Portfolio......... 23 TX IND -- 10,806 32,499 2,234
The Rotunda........................ 2 MD IND 13,184 4,400 17,736 665
Torrance Commerce Center........... 6 CA IND -- 2,046 6,136 218
Twin Cities........................ 2 MN IND -- 4,873 14,638 1,042
Two South Middlesex................ 1 NJ IND -- 2,247 6,781 47
Valwood............................ 2 TX IND 3,882 1,983 5,989 609
Viscount........................... 1 FL IND -- 984 3,016 143
Weigman Road....................... 1 CA IND -- 1,563 4,688 166

<CAPTION>
GROSS AMOUNT CARRIED AT 12/31/99
------------------------------------- YEAR OF
BUILDING & TOTAL COSTS ACCUMULATED CONSTRUCTION/ DEPRECIABLE
PROPERTY LAND IMPROVEMENTS (2)(3) DEPRECIATION ACQUISITION LIFE (YEARS)
-------- -------- ------------ ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Presidents Drive Distribution
Center............................. 3,687 12,326 16,013 541 1997 5-40
Preston Court...................... 2,313 7,480 9,793 331 1997 5-40
Production Drive................... 425 1,559 1,984 67 1997 5-40
Rivers Corporate Center............ 2,838 8,941 11,779 398 1999 5-40
Round Lake Business Center......... 875 2,955 3,830 129 1998 5-40
Sabal III.......................... 1,211 3,703 4,914 166 1998 5-40
Sand Lake Service Center........... -- 744 744 25 1998 5-40
Santa Barbara Court................ 1,617 5,427 7,044 238 1997 5-40
Scripps Sorrento................... 1,110 3,363 4,473 151 1998 5-40
Shawnee Industrial................. 2,481 9,551 12,032 407 1999 5-40
Silicon Valley R&D Portfolio....... 8,024 23,945 31,970 1,080 1997 5-40
South Bay Industrial............... 14,992 45,998 60,990 2,061 1997 5-40
South Point Business Park.......... 5,371 16,415 21,786 736 1998 5-40
South River Park................... 1,122 12,404 13,526 457 1999 5-40
Southfield/KDRC Industrial
Portfolio......................... 11,827 36,768 48,595 1,642 1999 5-40
Stadium Business Park.............. 3,768 11,675 15,443 522 1997 5-40
Stapleton Square................... 526 1,734 2,260 76 1998 5-40
Sunrise Industrial................. 6,266 19,075 25,341 856 1998 5-40
Suwannee Creek..................... -- 1,660 1,660 56 1999 5-40
Sylvan............................. 1,946 5,905 7,851 265 1999 5-40
Systematics........................ 911 2,813 3,724 126 1997 5-40
Technology I....................... 1,657 5,095 6,752 228 1999 5-40
Technology II...................... 10,206 30,786 40,993 1,385 1999 5-40
Texas Industrial Portfolio......... 10,806 34,733 45,539 1,539 1997 5-40
The Rotunda........................ 4,400 18,401 22,802 771 1999 5-40
Torrance Commerce Center........... 2,046 6,354 8,400 284 1998 5-40
Twin Cities........................ 4,873 15,680 20,553 695 1997 5-40
Two South Middlesex................ 2,247 6,828 9,075 307 1997 5-40
Valwood............................ 1,983 6,598 8,581 290 1997 5-40
Viscount........................... 984 3,159 4,143 140 1997 5-40
Weigman Road....................... 1,563 4,855 6,417 217 1997 5-40
</TABLE>

S-5
<PAGE> 79

AMB PROPERTY, L.P.

SCHEDULE III

S-6
<PAGE> 80

AMB PROPERTY, L.P.

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
(IN THOUSANDS)

- ---------------
(1) As of December 31, 1999, properties with a net book value of $140,792,
served as collateral for outstanding indebtedness under a secured debt
facility of $73,000.

(2) Reconciliation of total cost to Consolidated Balance Sheet caption at
December 31, 1999:

<TABLE>
<S> <C>
Total per Schedule III(4)................................... $3,064,137
Construction in process(5).................................. 185,315
----------
Total investments in properties................... $3,249,452
==========
</TABLE>

(3) As of December 31, 1999, the aggregate cost for federal income tax purposes
of investments in real estate was approximately $2,877,017.

(4) A summary of activity for real estate and accumulated depreciation for the
year ended December 31, 1999, is as follows:

<TABLE>
<S> <C>
Investment in Real Estate:
Balance at beginning of year.............................. $3,185,783
Acquisition of properties(6).............................. 471,905
Improvements.............................................. 216,766
Acquisition of properties under
development/redevelopment.............................. 190,612
Divestiture of properties................................. (814,825)
Adjustment for properties held for divestiture............ (186,104)
----------
Balance at end of year.................................... $3,064,137
==========
Accumulated Depreciation:
Balance at beginning of year.............................. $ 58,404
Depreciation expense...................................... 66,457
Adjustment for properties divested........................ (20,264)
Adjustment for properties held for divestiture............ (1,039)
----------
Balance at end of year.................................... $ 103,558
==========
</TABLE>

(5) Includes $164,500 of fundings for projects under development and $8,676 of
leasing and other costs related to leases starting subsequent to December
31, 1999.

(6) Excludes $7,789 investment in unconsolidated joint venture.

S-7
<PAGE> 81

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.7 Agreement for Purchase and Exchange entered into as of March
9, 1999 by and among AMB Property, L.P., AMB Property II,
L.P., Long Gate, L.L.C. and BPP Retail, LLC, regarding the
transaction which closed on June 15, 1999 (incorporated by
reference to Exhibit 10.1 of the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999).
10.8 Agreement for Purchase and Exchange entered into as of March
9, 1999 by and among AMB Property, L.P., AMB Property II,
L.P., Long Gate, L.L.C. and BPP Retail, LLC, regarding the
transaction which closed on August 4, 1999 (incorporated by
reference to Exhibit 10.2 of the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999).
10.9 Agreement for Purchase and Exchange entered into as of March
9, 1999 by and among AMB Property, L.P., AMB Property II,
L.P., Long Gate, L.L.C. and BPP Retail, LLC, regarding the
transaction which closed on December 1, 1999 (incorporated
by reference to Exhibit 10.3 of the Registrant's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999).
10.10 Second Amended and Restated 1997 Stock Option and Incentive
Plan (incorporated by reference to Exhibit 10.5 of the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999).
10.11 Fifth Amended and Restated Agreement of Limited Partnership
of AMB Property II, L.P., dated August 31, 1999
(incorporated by reference to Exhibit 10.1 of the
Registrant's Current Report on Form 8-K filed on September
14, 1999).
10.12 Credit Agreement, dated as of September 27, 1999, by and
among AMB Institutional Alliance Fund I, L.P., AMB
Institutional Alliance REIT I, Inc., the Lenders and Issuing
Bank party thereto, BT Realty Resources, Inc. and The Chase
Manhattan Bank. (incorporated by reference to Exhibit 10.2
of the Registrant's Quarterly Report on Report Form 10-Q for
the quarter ended September 30, 1999).
10.13 Third Amendment to Second Amended and Restated Revolving
Credit Agreement made as of March 22, 1999.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP.
24.1 Powers of Attorney (included in Part IV of this Form 10-K).
27.1 Financial Data Schedule -- AMB Property, L.P.
</TABLE>

<PAGE> 1
EXHIBIT 10.13

THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT

THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT (this "Amendment") is made as of March 22, 1999, by and among AMB
PROPERTY, L.P., a Delaware limited partnership (the "Borrower"), the BANKS and
CO-AGENTS party hereto, and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent.

WITNESSETH:

WHEREAS, the Borrower, the Agent, the Co-Agents and the Banks have
entered into the Second Amended and Restated Revolving Credit Agreement, dated
as of November 26, 1997, as amended by the Amendment to Second Amended and
Restated Revolving Credit Agreement, dated as of May 29, 1998, and by the Second
Amendment to Second Amended and Restated Revolving Credit Agreement, dated as of
September 30, 1998 (as so amended, the "Credit Agreement"); and

WHEREAS, the parties desire to modify the Credit Agreement upon the
terms and conditions set forth herein.

NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties do hereby agree as
follows:

1. DEFINITIONS. All capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Credit Agreement.

2. MODIFICATIONS TO DEFINITIONS. The definition of "Non-Recourse
Debt" is hereby amended by adding the following:

Notwithstanding the foregoing, however, Non-Recourse Debt
shall include Recourse Debt of a Subsidiary incurred to
fund the costs of a Development Project if the sole asset
of such Subsidiary shall be such Development Project and
the right of recovery of the obligee of such Debt is
limited to the assets of such Subsidiary, together with a
guaranty of completion by Borrower.

<PAGE> 2
3. FIXED RATE INDEBTEDNESS. Section 5.9(d) of the Credit Agreement is
hereby deleted and the following substituted therefore:

(d) Fixed Rate Indebtedness. All Non-Recourse Debt of the
Borrower, the General Partner and any Subsidiaries shall
be Fixed Rate Indebtedness; provided, however, the
Subsidiaries may incur Non-Recourse Debt that is Floating
Rate Indebtedness in connection with the funding of
construction costs at Development Projects, which such
Floating Rate Indebtedness shall not exceed $150,000,000
outstanding at any time.

4. EFFECTIVE DATE. This Amendment shall become effective as of the
date hereof upon receipt by the Agent of counterparts hereof signed by the
Borrower and the Required Banks (the date of such receipt being deemed the
"Effective Date").

5. ENTIRE AGREEMENT. This Amendment constitutes the entire and final
agreement among the parties hereto with respect to the subject matter hereof and
there are no other agreements, understandings, undertakings, representations or
warranties among the parties hereto with respect to the subject matter hereof
except as set forth herein.

6. GOVERNING LAW. This Amendment shall be governed by, and construed
in accordance with, the law of the State of New York.

7. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
agreement, and any of the parties hereto may execute this Amendment by signing
any such counterpart.

8. HEADINGS, ETC. Section or other headings contained in this
Amendment are for reference purposes only and shall not in any way affect the
meaning of interpretation or this Amendment.

<PAGE> 3
9. NO FURTHER MODIFICATIONS. Except as modified herein, all of the
terms and conditions of the Credit Agreement, as modified hereby shall remain in
full force and effect and, as modified hereby, the Borrower confirms and
ratifies all of the terms, covenants and conditions of the Credit Agreement in
all respect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers as of the day and year
first above written.

Borrower: AMB Property, L.P., a
Delaware limited partnership

By: AMB Property Corporation, a Maryland
corporation and its
sole general partner

By: /s/ John T. Roberts, Jr.
------------------------------------
Name: John T. Roberts, Jr.
Title: Senior Vice President

FOR PURPOSES OF CONFIRMING AND RATIFYING THE CONTINUED EFFECTIVENESS OF
THE UNCONDITIONAL GUARANTY AGREEMENT, DATED AS OF NOVEMBER 26, 1997, BY AMB
PROPERTY CORPORATION:

Confirmed and Ratified:

AMB Property Corporation

By: /s/ John T. Roberts, Jr.
----------------------------
Name: John T. Roberts, Jr.
Title: Senior Vice President

<PAGE> 4
Signature Page to AMB Property, L.P. Third Amendment to
Second Amended and Restated Revolving Credit Agreement

Agent and Bank: Morgan Guaranty Trust Company of
New York, as a Bank and as Agent

By: /s/ Gery Sampere
--------------------------------------
Name: Gery Sempere
Title: Vice President

Co-Agent and Bank: Commerzbank Aktiengesellschaft
Los Angeles Branch

By: /s/ David M. Schwarz
--------------------------------------
Name: David M. Schwarz
Title: Vice President

By: /s/ Lisa C. Miller
--------------------------------------
Name: Lisa C. Miller
Title: Assistant Vice President

Fleet National Bank

By: /s/ Allison M. Gauthier
--------------------------------------
Name: Allison M. Gauthier
Title: Vice President

PNC Bank, National Association

By: /s/ David Martens
--------------------------------------
Name: David Martens
Title: Vice President

Bank of America, National Trust and
Savings Association

By: /s/ Donald H. Moses
--------------------------------------
Name: Donald H. Moses
Title: Senior Vice President

<PAGE> 5
Bank: Societe Generale, Southwest Agency

By: /s/ Scott Gosslee
--------------------------------------
Name: Scott Gosslee
Title: Vice President

Dresdner Bank AG, New York and
Grand Cayman Branches

By: /s/ John W. Sweeney
--------------------------------------
Name: John W. Sweeney
Title: Assistant Vice President

By: /s/ Brigitte Sacin
--------------------------------------
Name: Brigitte Sacin
Title: Assistant Treasurer

Bankers Trust Company

By: /s/ Steven P. Lapham
--------------------------------------
Name: Steven P. Lapham
Title: Principal

First Union Bank, N.A.
(successor to Corestates Bank, N.A.)

By: /s/ Daniel J. Sullivan
--------------------------------------
Name: Daniel J. Sullivan
Title: Director

The Bank of Novia Scotia,
Acting through its San Francisco Agency

By: /s/ Kate Pigott
--------------------------------------
Name: Kate Pigott
Title: Relationship Manager

<PAGE> 6
Bank: The Industrial Bank of Japan,
Limited, Los Angeles Agency

By: /s/ Yoshiaki Ohashi
--------------------------------------
Name: Yoshiaki Ohashi
Title: Senior Deputy General Manager

Union Bank of California, N.A.

By: /s/ Diana Giacomini
--------------------------------------
Name: Diana Giacomini
Title: Vice President

<PAGE> 1

EXHIBIT 21.1

SUBSIDIARIES OF REGISTRANT

<TABLE>
<CAPTION>
Jurisdiction of Organization
Name of Subsidiary and Type of Entity
- ------------------ ----------------------------
<S> <C>
AMB Property II, L.P. Delaware limited partnership
Long Gate, L.L.C. Delaware limited liability
company
</TABLE>

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10-K, into AMB Property, L.P.'s previously filed
Registration Statement File No. 333-68283.

ARTHUR ANDERSEN LLP

San Francisco, California
March 28, 2000

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMB
PROPERTY, L.P.'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER
31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> $137,019
<SECURITIES> 0
<RECEIVABLES> $91,079
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> $228,098
<PP&E> $3,249,452
<DEPRECIATION> $103,558
<TOTAL-ASSETS> $3,621,550
<CURRENT-LIABILITIES> $89,371
<BONDS> $1,270,037
0
0
<COMMON> $1,983,549
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> $3,621,550
<SALES> 0
<TOTAL-REVENUES> $448,183
<CGS> 0
<TOTAL-COSTS> $289,332
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> $88,681
<INCOME-PRETAX> $158,851
<INCOME-TAX> 0
<INCOME-CONTINUING> $139,237
<DISCONTINUED> 0
<EXTRAORDINARY> ($2,490)
<CHANGES> 0
<NET-INCOME> $190,500
<EPS-BASIC> 1.94
<EPS-DILUTED> 1.94

</TABLE>