How did AMB's core earnings and cash flow trend in 2000?

Funds from operations, a key REIT performance measure, rose 9.2% to $208.7 million, and operating cash flow increased to $261.2 million from $190.4 million. Reported net income to common stockholders declined to $113.3 million from $167.6 million mainly because 1999 included large one-time divestiture gains, so FFO is the better indicator of recurring performance.

Is the dividend secure, and how has it changed?

The company paid $1.48 per common share in 2000, up from $1.40 in 1999, and paid $0.37 per quarter throughout the year. It has stated an intention to distribute 100% of taxable income, but the filing notes that distributions alone will not cover all debt maturities, so the company expects to rely on refinancing and asset sales.

What are the main balance sheet and refinancing risks?

Total consolidated debt was $1.84 billion, including $930.4 million of secured debt at a 7.9% weighted average rate, $680 million of unsecured senior notes, and $216 million drawn on the $500 million credit line that matures in May 2003. Debt maturities are concentrated in 2003 through 2008, and the company acknowledges that refinancing could occur at higher rates.

What is the company's exposure to California and other concentrated risks?

About 24.2% of rentable square footage and 29.6% of annualized base rent are in California, exposing results to the state's economy, electricity supply problems, and seismic risk. The company carries replacement-cost earthquake insurance on properties in historically seismic areas, but it notes that losses could exceed coverage.

What is management's strategy going forward?

Management plans to focus on High Throughput Distribution properties in in-fill submarkets of major metros, sell roughly 33 non-core industrial buildings and one retail center, and redeploy proceeds into strategic assets. It also intends to grow co-investment ventures with institutional capital, including the Alliance Fund I, and to keep debt-to-total market capitalization at about 45% or less.

PLD/PLDGP 10-K FY2000 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed March 28, 2001. Cited figures are marked; the original filing is the authoritative source.

This 10-K for fiscal year 2000 is from AMB Property Corporation (NYSE: AMB), a self-administered, self-managed REIT focused on High Throughput Distribution (HTD) industrial properties near airports, highways, and ports in major U.S. metros.

At December 31, 2000, the company owned 862 industrial buildings and eight retail centers totaling about 77.0 million rentable square feet, 96.3% leased. Total revenues rose 6.6% to $477.7 million^a, but net income available to common stockholders fell sharply to $113.3 million ($1.35 per diluted share) from $167.6 million ($1.94) in 1999, which benefited from $53.8 million of divestiture gains. Funds from operations rose 9.2% to $208.7 million, and the dividend was raised to $1.48 per share from $1.40.

Same-store cash NOI grew 8.4%, and rent increases on renewals and rollovers averaged 26.5%. The company invested $730.0 million^b in 145 operating industrial buildings during 2000 and disposed of $175.7 million of non-strategic assets, with 33 industrial buildings and one retail center still held for divestiture. Leverage is moderate and managed to a policy of debt at or below about 45% of total market capitalization; the company reported a debt-to-total market capitalization ratio of 37.9% on its share of debt.

Total debt rose to $1.84 billion^c, including $680 million of unsecured senior notes, a $216 million drawn balance on a $500 million credit facility, and $930 million of secured debt. Liquidity appears adequate, with $20.4 million of cash and $284 million of available credit. Key risks for investors include California concentration (about 29.6% of annualized base rent), refinancing and interest-rate exposure, reliance on joint ventures and co-investment capital, the need to reinvest divestiture proceeds effectively, and the REIT distribution requirements.

Insiders and three large holders together control a meaningful stake, with the three largest stockholders owning about 18.3%^d. Note that the filing's cover and body refer to the company as AMB Property Corporation, and the filing date is March 28, 2001 as requested.

02—Key points

Key Highlights

Revenue grew 6.6% to $477.7 million, while diluted EPS fell to $1.35 from $1.94 because 1999 included a $53.8 million divestiture gain.
Funds from operations increased 9.2% to $208.7 million, and the common dividend rose to $1.48 per share from $1.40.
Industrial portfolio was 96.4% leased, with same-store cash NOI growth of 8.4% and renewal/rollover rent increases of 26.5%.
Invested $730.0 million in 145 industrial buildings (10.5 million sq ft) in 2000, while disposing of $175.7 million of non-core assets.
Total debt of $1.84 billion at a 37.9% debt-to-total market capitalization ratio, within the stated ~45% policy ceiling.
Heavy California exposure (29.6% of annualized base rent) and significant energy-cost and earthquake risk in that market.
Development pipeline of 19 industrial and three retail projects totaling $305.9 million and $76.3 million, with $155.7 million left to fund.

03—Questions

Frequently Asked Questions

How did AMB's core earnings and cash flow trend in 2000?
Funds from operations, a key REIT performance measure, rose 9.2% to $208.7 million, and operating cash flow increased to $261.2 million from $190.4 million. Reported net income to common stockholders declined to $113.3 million from $167.6 million mainly because 1999 included large one-time divestiture gains, so FFO is the better indicator of recurring performance.
Is the dividend secure, and how has it changed?
The company paid $1.48 per common share in 2000, up from $1.40 in 1999, and paid $0.37 per quarter throughout the year. It has stated an intention to distribute 100% of taxable income, but the filing notes that distributions alone will not cover all debt maturities, so the company expects to rely on refinancing and asset sales.
What are the main balance sheet and refinancing risks?
Total consolidated debt was $1.84 billion, including $930.4 million of secured debt at a 7.9% weighted average rate, $680 million of unsecured senior notes, and $216 million drawn on the $500 million credit line that matures in May 2003. Debt maturities are concentrated in 2003 through 2008, and the company acknowledges that refinancing could occur at higher rates.
What is the company's exposure to California and other concentrated risks?
About 24.2% of rentable square footage and 29.6% of annualized base rent are in California, exposing results to the state's economy, electricity supply problems, and seismic risk. The company carries replacement-cost earthquake insurance on properties in historically seismic areas, but it notes that losses could exceed coverage.
What is management's strategy going forward?
Management plans to focus on High Throughput Distribution properties in in-fill submarkets of major metros, sell roughly 33 non-core industrial buildings and one retail center, and redeploy proceeds into strategic assets. It also intends to grow co-investment ventures with institutional capital, including the Alliance Fund I, and to keep debt-to-total market capitalization at about 45% or less.

04—Continue

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