(Read more on the industrial market.)

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SAN FRANCISCO-The third quarter for AMB Property Corp. sawstable occupancy, rising rents and extraordinary developmentprofits. The locally based distribution real estate company saidTuesday evening its third quarter funds from operations (FFO) hit$0.99 per share, $0.17 higher than analysts' average estimate,according to Thomson Financial, and $0.21 above the high end ofAMB's previous guidance.

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Net income more than doubled in the quarter to $69.2 million, or$0.69 cents per share, from $30 million, or $0.33 cents per share,in the third quarter of 2006. Revenue fell 8% to $166.3 millionfrom $180.3 million in the third quarter of 2006. Analysts expectedrevenue of $176.9 million.

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AMB attributed the higher FFO and net income tobetter-than-expected profitability on development projectscontributed to the company's private capital funds and strong coreoperating performance. The lower revenue is due to lower rentalrevenue and higher general and administrative expenses, accordingto the company's financial statement.

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AMB owns or has investments in properties totaling 140.8 millionsf in 44 markets in 13 countries. Its operating portfolio was 95.5%occupied at the end of September 2007, down from 96.1% at the endof June and 95.9% at the end of September 2006. Average occupancyduring the third quarter, however, was up 50 basis points to 95.4%from 94.9% at the end of September 2006.

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As a result of the increased average occupancy and rising rentsin many markets, the company's same store net operating incomeincreased 5.3% in the third quarter over the same 2006 period.Rents on lease renewals and rollovers increased 8.9% in the thirdquarter of 2007. In the same period one year earlier, rents onlease renewals and rollovers increased by 9.9%.

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In its conference call Wednesday afternoon, the company said itsaverage year-to-date rental rate increases were held down by rentroll downs in the San Francisco Bay Area from rental agreementsentered into at the top of the market. The company owns 10.1million sf in the Bay Area that was 96.5% leased at an average baserent of $6.36 per sf per year. Average remaining lease term in theBay Area is 2.5 years and tenant retention has been in the low 60%range. Year-to-date, rents in the Bay Area have dropped 5.6% butwere up 5.6% in the third quarter and will be a driver in thefuture, the company said.

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AMB's new development starts in the quarter globally totaledapproximately 2.8 million sf in 11 projects in North America andEurope, with an estimated total investment of $233 million. Atquarter end, its industrial development pipeline totaledapproximately 16.8 million sf in 47 projects globally, and fourvalue-added conversion projects in North America.

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During the third quarter, AMB contributed four developmentprojects totaling 1.3 million sf to its private capital funds andsold three projects, generating gross proceeds of $245 million. Thecompany acquired 1.5 million sf in nine properties for $116million, $98 million of which was acquired for three of its privatecapital funds: AMB Institutional Alliance Fund III, AMB Japan FundI and AMB Europe Fund I.

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