01—Abstract
Summary
Summary of the 10-K/A filed October 26, 2007. Cited figures are marked; the original filing is the authoritative source.
This is Amendment No. 1 (Form 10-K/A) to the fiscal 2006 annual report of AMB Property Corporation, an industrial REIT, not Prologis.
The company's ticker was later adopted by Prologis after the 2006 merger, and the filing was signed October 25, 2007. The amendment does not restate AMB's results. It revises Item 8 and Item 15 only to add audited financial statements for AMB Japan Fund I, L.P., an unconsolidated co-investment joint venture in which AMB holds roughly a 20%a interest.
AMB's underlying 2006 results were solid. Total revenues rose 10% to $729.9 millionb, and net income available to common stockholders was $209.4 million, or $2.30 per diluted share, versus $250.4 million in 2005. The year-over-year decline in earnings reflects lower gains from property sales in 2006 ($42.6 million from discontinued operations, versus $113.6 million in 2005).
Development profits rose to $106.4 millionc, and property net operating income grew to $508.0 million from $458.0 million. Operating cash flow was $335.9 million. General and administrative expense jumped 46% to $104.3 million, and the company recorded $6.3 million of impairment losses.
The balance sheet shows $6.7 billiond of total assets, $3.4 billion of total debt, and $2.2 billion of stockholders' equity, with a $1.1 billion development pipeline still requiring about $481 million of additional funding. The Japan Fund statements show a fund with ¥80.3 billion in assets, ¥57.6 billion in liabilities, and a 2006 net loss available to partners of ¥442 million after priority distributions. That loss is largely driven by distributions to the general partner rather than operating weakness.
02—Key points
Key Highlights
- Filing type: this is a 10-K/A amendment for fiscal 2006. Its sole purpose is to add audited AMB Japan Fund I, L.P. financial statements (Item 15(c)(1)); AMB's own financials are unchanged.
- 2006 revenue grew 10.4% to $729.9 million, driven by rental revenues of $683.8 million and private capital income of $46.1 million.
- Net income available to common stockholders fell to $209.4 million ($2.30 diluted EPS) from $250.4 million ($2.85) in 2005, mainly because 2006 property sale gains were far smaller than in 2005.
- Development profits (net of taxes) increased to $106.4 million from $54.8 million, reflecting contributions of completed projects to co-investment joint ventures such as AMB Japan Fund I.
- General and administrative expense rose 46% to $104.3 million, and the company recorded $6.3 million in impairment losses on certain investments.
- Balance sheet: total assets $6.71 billion, total debt $3.44 billion, stockholders' equity $2.17 billion; unsecured credit facilities were $852 million at year end.
- AMB Japan Fund I reported 2006 rental revenues of ¥2.24 trillion... more precisely ¥2.24 billion in yen-denominated thousands terms, with a net loss available to partners of ¥442 million after ¥654 million of priority distributions to its general partner.
03—Questions
Frequently Asked Questions
Why was this 10-K filed in October 2007 if the original 10-K was filed in February 2007?
The amendment was required to include audited financial statements of AMB Japan Fund I, L.P., a significant unconsolidated investee, under SEC reporting rules for equity-method investees. The company's own 2006 financial statements were already filed and remain unchanged in this amendment.
Did AMB's 2006 earnings decline?
Net income available to common stockholders fell to $209.4 million from $250.4 million, and diluted EPS fell to $2.30 from $2.85. The decline is attributable mainly to much lower gains from property dispositions in discontinued operations ($42.6 million in 2006 versus $113.6 million in 2005), partly offset by higher development profits and private capital income.
How leveraged is AMB, and how is its debt structured?
Total consolidated debt was $3.44 billion at December 31, 2006. Secured debt was about $1.40 billion, unsecured senior notes $1.10 billion, and unsecured credit facilities $852 million. Operating partnership facilities were largely floating rate, so interest rate exposure is meaningful, though interest rate swaps hedge some of it.
What does the AMB Japan Fund I financial information tell investors?
The fund held ¥80.3 billion of assets, financed largely by ¥38.6 billion of bonds and ¥12.4 billion of secured loans, and had a 2006 net income of ¥211.9 million. The reported loss to partners stemmed from ¥654 million of priority distributions to AMB Japan Investments, LLC. Subsequent to year-end, the fund acquired about ¥31.4 billion of properties, signaling continued expansion of AMB's Japan strategy.
04—Continue