AMB Property Doubles Profit in Third Quarter

AMB Property Corporation boosted third quarter net income 120 percent to $76.5 million compared with third quarter a year ago, strengthening the balance sheet by reducing costs.

Cash basis same store net operating income fell 7 percent to $82.1 million. But the sale of some properties earned high margins, helping the industrial real estate firm overcome losses earlier in the year. Full-year earnings guidance is a loss of 29 cents to 30 cents per share.

Increased development gains and lower general and administrative expenses in the third quarter drove an increase in funds from operations, the company said.

AMB's operating portfolio was 91 percent occupied at Sept. 30, up 50 basis points from June 30. Average occupancy during the quarter was 90.4 percent, compared to 95.3 percent for the same period in 2008.

During the third quarter, the company commenced leases of approximately 9.9 million square feet worldwide. In its development pipeline, the company leased more than 935,000 square feet.

As of Sept. 30, the company completed property dispositions and contributions of $670 million, with a stabilized capitalization rate of 6.7 percent.

During the third quarter, the company completed dispositions totaling $209 million, with gains of approximately $60 million and a 6.2 percent capitalization rate, consisting of the following:
The sale of three development and value-added conversion properties in the Americas for an aggregate price of $145 million and an average margin of 46.9 percent;
The sale of four properties from its U.S. operating portfolio for an aggregate sales price of $32 million;
The transfer of two assets to AMB Alliance Fund III in exchange for additional units equal to the fair value of the assets, for an aggregate price of $33 million, increasing its ownership interest in the fund to 22.7 percent from 19.3 percent.

"We have addressed two of the company's main priorities: strengthening our balance sheet and reducing our cost structure. The improvements and progress we have made in our business, over the last nine months, have allowed us to successfully navigate the downturn," said Hamid R. Moghadam, chairman and CEO. "We are now working on a number of initiatives to take advantage of opportunities as the global economy rebounds."

Contact Thomas L. Gallagher at tgallagher@joc.com.