According to Germain's and McElroy's report, the solid resultsunderscore the company's quality portfolio concentrations inhigh-growth and supply-constrained logistics markets. Theresearchers believe AMB should continue to benefit from healthyglobal industrial fundamentals driven by the reconfiguration of thesupply chain and product obsolescence. In general, BofA Securitiesmarket-weights the industrial sector based on an "overweight" toglobal industrial REITs and "underweight" to US industrial. "Webelieve global trade trends will lead to better-than-expecteddemand in markets that are directly linked to the globaldistribution network," Germain and McElroy state in the report.

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Germain and McElroy further say the REIT's solid portfolioconcentrations moderate any risk of slowing demand. They contendAMB's portfolio is less susceptible to slowing industrialfundamentals because the company derives over 70% of its rents fromkey port and airport markets. In addition, AMB's growing globalplatform, with about 70% of new development starts and acquisitionsprojected to be outside the US, should mitigate some of the effectsof a potential US slowdown. The company expects to grow itsdevelopment platform to $1.6 billion by 2010, with about 70% of newdevelopment outside the US. AMB's private capital platform, whichcurrently manages over $7.6 billion , is expected to raise capitalfor a Canada and non-Japan Asia fund over the next 12 months.

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For '08, AMB projects total capital deployment of more than $2.1billion, comprising $850 million of acquisitions and $1.3 billionof development starts. The analysts emphasize that the REIT hasadequate capital to fund this plan, with limited near-term debtmaturities, $600 million available on its credit facility, $300million of cash on hand and a co-investment platform with over $2.5billion of capacity available. It also continues to enjoy a healthyinterest rate for secured debt from life companies. Additionally,AMB expects to see a positive earnings contribution from itsvalue-add conversion platform; which readies land entitled forindustrial development to higher use.

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According to the two analystst, AMB's valuation remains"compelling," with shares trading at a discount of 11% to forwardnet asset value (FW NAV) and 9% to discount cash flow (DCF).Furthermore, AMB is currently trading at 17 times adjusted fundsfrom operations (AFFO) for '08, which represents a modest 7%premium relative to its industrial peers, versus a historicalpremium of about 20%. Despite the buy recommendation, Germain andMcElroy tweaked earlier estimates of profitability due to AMBmanagement's more cautious outlook on US industrial fundamentalsand the tempering of rent and occupancy assumptions. As a result,they reduced their '08 estimate of funds from operations per shareby $0.02 to $3.99.

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