AMB Property Corporation Announces Third Quarter Results; FFO Per Diluted Share Increases 14.3% to $0.48 in the Third Quarter on Continued Strong Internal Growth.SAN FRANCISCO--(BUSINESS WIRE)--Oct. 27, 1998--AMB Property Corporation (NYSE NYSE See: New York Stock Exchange :AMB AMB Ambient AMB Ambassador AMB Amber AMB Ambulance AMB Associação Médica Brasileira (Brazil) AMB Ambulatory AMB Advanced Memory Buffer (FBDIMM control unit on DRAM) ) today reported results for the third quarter ended September September: see month. 30, 1998. The following is a summary of third quarter results, including the Company's investment activity: -0-
-- Generated funds from operations ("FFO") of $0.48 per diluted
share, an increase of 14.3% from pro forma third quarter 1997, in
line with consensus estimates.
-- Generated strong internal growth, with same-store cash basis NOI
growth of 6.9%.
-- Occupancy increased from 95.1% at prior quarter-end to 95.8%.
-- Investment activity for the quarter totaled $282.2 million,
including $258.9 million in acquisitions of operating properties
and $23.3 million of development starts; 69% of total investment
activity was sourced through AMB's Strategic Alliance
Programs(TM).
-0- Increase in FFO FFO See: Funds from operations and Net Income FFO for the quarter totaled $43.4 million, or $0.48 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, on revenues of $94.1 million, as compared to pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma FFO for the AMB predecessors for the same period in 1997 of $37.4 million or $0.42 per diluted share, on revenues of $70.8 million. Third quarter 1998 FFO per diluted share increased 14.3% from pro forma 1997. Net income totaled $28.9 million for the third quarter 1998, as compared to $25.5 million for the same period in 1997. Strong Internal Growth During the quarter, same-store cash basis net operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. increased 6.9% as compared to the third quarter of 1997. On a year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. basis, same-store cash basis NOI NOI Net Operating Income NOI Notice of Intent NOI Nation of Islam NOI Notice of Inquiry NOI Neuro Orthopaedic Institute NOI New Organizing Institute NOI Notice of Interest NOI No Offense Intended NOI National Olympiad in Informatics has increased by 7.4% over 1997. Year-to-date, AMB has successfully retained 75.3% of tenants with expiring ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. space and increased average base rent by 18.4% on renewed and re-tenanted space. During the quarter, average base rent increased 15.4% on space that was either renewed or re-tenanted. Occupancy was 95.8% as of September 30, 1998, up from 95.1% at June June: see month. 30, 1998. Investment Activity During the third quarter, AMB committed to invest $282.2 million in existing properties and new development starts, $195.9 million of which was sourced through AMB's Strategic Alliance Programs(TM), including approximately $100.4 million through AMB's UPREIT Alliance Program(TM). Investments during the quarter in operating properties totaled $258.9 million, totaling 83 industrial buildings and 5.1 million square feet. In addition, AMB initiated two new developments during the quarter, with a total estimated cost of $23.3 million in projects aggregating approximately 507,000 square feet, both of which are being developed through the Company's Development Alliance Program(TM). Capital Markets Activity During the quarter AMB completed its debut public offering of 4.0 million shares of 8.50% Series A Preferred Stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. with gross proceeds of $100 million, which was used to repay borrowings on the Company's credit facility. At quarter-end, AMB's debt-to-total market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. ratio was 35.1% and its ratio of EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become to interest expense for the quarter was 3.4 times. Hamid Moghadam, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , commented, "The strong operating results of the third quarter reflect the quality of our portfolio and the success of our in-fill strategy. We believe that our operating platform of forming strategic alliances with local partners and outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. property management to third parties allows us to maintain flexibility in the face of changing markets. Furthermore, our investment activity during the quarter demonstrates that, through our Strategic Alliance Programs(TM), we have been able to continue to make attractive investments in our target markets." AMB Property Corporation, one of the largest public REITs in the country, is a national real estate operating company operating company A business that engages in transactions with outsiders. focusing on industrial properties and community shopping centers shopping center, a concentration of retail, service, and entertainment enterprises designed to serve the surrounding region. The modern shopping center differs from its antecedents—bazaars and marketplaces—in that the shops are usually amalgamated into . As of September 30, 1998, AMB owned and operated 547 industrial buildings and 37 retail centers totaling approximately 60.0 million square feet located in 30 markets nationwide, including: Atlanta Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. , Boston, Chicago, Dallas/Fort Worth, Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. , Miami, Minneapolis, Northern New Jersey, San Francisco Bay Area “Bay Area” redirects here. For other uses, see Bay Area (disambiguation). The San Francisco Bay Area, colloquially known as the Bay Area or The Bay , and Seattle. As of September 30, 1998, the Company operated a total of 64.5 million square feet, including 4.5 million square feet on behalf of investment management clients. The Company completed an initial public offering on November 21, 1997, and at quarter end had 90.3 million shares of common stock and units outstanding. This press release contains forward looking statements about the Company, which are made pursuant to the safe-harbor provisions of Section 21E of the Securities Exchange Act of 1934. Such statements relate to, among other things, events, conditions and financial trends that may affect the Company's future plans of operations, business strategy, growth of operations and financial position. A number of factors could cause the Company's actual results to differ materially from those anticipated, including changes in the general economic climate, the supply of and demand for industrial and retail properties in the Company's markets, potential environmental liabilities, interest rate levels, the availability of financing, slippage Slippage The difference between estimated transaction costs and the amount actually paid. Notes: Slippage is usually attributed to a change in the spread. See also: Spread, Transaction Costs Slippage in development or lease-up schedules, tenant credit risks and higher than expected costs. For further information on these and other factors that could impact the Company and the statements contained herein, reference should be made to the Company's filings with the Securities and Exchange Commission, including the Company's report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December 31, 1997. -0-
CONSOLIDATED BALANCE SHEET
(dollars in thousands)
As of
September 30, 1998 December 31, 1997
ASSETS
Investments in
real estate, net $ 3,247,217 $ 2,438,846
Cash and cash equivalents 33,206 39,968
Other assets 46,850 27,441
Total assets $ 3,327,273 $ 2,506,255
LIABILITIES AND STOCKHOLDERS' EQUITY
Unsecured credit facility $ 205,000 $ 150,000
Senior debt securities 400,000 --
Secured debt 701,602 535,652
Other liabilities 109,606 87,421
Total liabilities 1,416,208 773,073
Minority interests 144,389 65,152
Stockholders' equity 1,766,676 1,668,030
Total liabilities
and stockholders' equity $ 3,327,273 $ 2,506,255
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except share data)
For the Quarter Ended For the Nine Months Ended
September 30, September 30,
1998 1997(1) 1998 1997(1)
REVENUES $ 94,061 $ 70,816 $ 254,860 $ 210,048
OPERATING EXPENSES
Property operating 25,133 20,170 67,637 59,780
Interest, including
amortization 19,544 11,084 47,105 33,780
Depreciation and
amortization 14,750 12,060 40,052 35,298
General,
administrative
and other 2,832 1,772 8,694 5,651
Total expenses 62,259 45,086 163,488 134,509
Income from
operations 31,802 25,730 91,372 75,539
Minority interests (2,930) (267) (6,615) (2,967)
Net income $ 28,872 $ 25,463 $ 84,757 $ 75,572
Net income per share:
Basic $ 0.34 $ 0.30 $ 0.99 $ 0.88
Diluted $ 0.33 $ 0.30 $ 0.98 $ 0.88
Weighted average
shares:
Basic 85,874,513 85,874,513 85,874,513 85,874,513
Diluted (2) 86,251,857 85,874,513 86,252,923 85,874,513
(1) Pro forma to reflect the formation transactions, IPO, and 1997
acquisitions.
(2) Includes the dilutive effect of stock options.
CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS
(dollars in thousands, except share data)
For the Quarter Ended For the Nine Months Ended
September 30, September 30,
1998 1997(1) 1998 1997(1)
Income from
operations $ 31,802 $ 25,730 $ 91,372 $ 75,539
Real estate related
depreciation and
amortization:
Total depreciation
and amortization 14,750 12,060 40,052 35,298
FF&E depreciation (104) (21) (319) (107)
FFO attributable to
minority interests(2) (2,035) (375) (4,123) (1,326)
Adjustments to derive
FFO in
unconsolidated JV:
Company's share
of net income (833) -- (833) --
Company's share
of FFO 1,327 -- 1,327 --
Series A Preferred
Stock dividends (1,514) -- (1,514) --
Funds from
operations $ 43,393 $ 37,394 $ 125,962 $ 109,404
FFO per share:
Basic $ 0.48 $ 0.42 $ 1.41 $ 1.24
Diluted $ 0.48 $ 0.42 $ 1.41 $ 1.24
Weighted average shares
and units:
Basic 89,675,763 88,416,676 89,214,581 88,416,676
Diluted (3) 90,053,107 88,416,676 89,537,512 88,416,676
(1) Pro forma to reflect the formation transactions, IPO, and 1997
acquisitions.
(2) Represents FFO allocated to minority interests in consolidated
joint ventures whose interests are not exchangeable into common
stock.
(3) Includes the dilutive effect of stock options.
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