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SAN FRANCISCO-AMB Property Corp. said Monday morning that it will further curtail its development activities, only moving forward with fully committed or previously negotiated build-to-suit agreements until financial markets stabilize. Coming on the heels of a similar development slowdown by fellow industrial REIT ProLogis, AMB also suspended its fourth quarter dividend and has lowered its 2009 dividend in order to improve its cash position going forward.

The company’s development pipeline, approximately $1.6 billion, was 76% funded as of Oct. 31, 2008. The development pipeline includes approximately $1 billion of assets that are shell complete and in the process of lease-up, and approximately $636 million that is under construction, consists of more than $1 billion of assets that are shell complete and in the process of lease-up. It’s share of the remaining funding to complete the projects is expected to be $338 million.

“Our analysis indicates that we have sufficient capacity to complete the build-out of our development pipeline without the reliance on proceeds from property dispositions,” the company said. “We also currently have the capacity to hold all of our development assets upon completion as well as our development and operating properties held for sale or contribution, and to maintain compliance with our various financial covenants.”

Last week, Denver-based ProLogis, one of AMB’s main competitors, lost its chief executive, halted all new development and began slashing overhead by as much as 25%. The actions of the two industrial REITs are said to be another sign that manufacturers’ and retailers’ economic outlook is becoming increasingly pessimistic.

AMB says it suspended the fourth quarter dividend in part because it projects the company has already met its 2008 dividend distribution requirement. With regard to its 2009 dividend, the company said it will be aligned with the projected taxable income from recurring operations alone, which is expected to be $1.12 per share. As a result of the moves, the company says it will retain $53 million of cash in the fourth quarter and an additional $98 million over the course of 2009.

“Together, these actions are expected to improve our cash position on a go-forward basis,” the company said. “We intend to make special distributions going forward, as necessary, related to taxable income associated with any asset dispositions and gain activity.”

As of last month, the company had $238 million of consolidated cash and cash equivalents and $689 million of availability on its lines of credit. In addition, it has approximately $850 million of its share of properties held for sale or contribution to its co-investment joint ventures in Japan, Europe, Canada, Mexico and the US.

The company’s total debt maturities through the end of 2008 were estimated at approximately $106 million and its total consolidated debt maturities for 2009 were expected to be $660 million. The company has since exercised an option to extend $93 million of its 2008 maturities, subject to fulfilling certain conditions, to December 2009, and says its 2009 maturities will be reduced to $342 million, of which $213 million is scheduled to be paid off at maturity or upon contribution and the remainder to be either refinanced or retired upon sale or contribution.

Looking forward to 2010, the company says it has the option to extend, subject to certain conditions, its $230-million secured-term facility and two of its three revolving credit facilities, which as of last month carried a balance of $584 million against a capacity of $1.1 billion.

ProLogis’ troubles have hurt the share price of AMB. AMB’s share price, which two weeks ago was flirting with $26 per share, had slipped to approximately $19 when ProLogis revealed its restructuring, sending it down another 30% to close at $13.25. On Monday’s AMB news, as well as a research note by Deutsche Bank analyst Lou Taylor saying AMB has more funding capacity relative to its needs than ProLogis, the company’s shares were trading at $15.32, up $0.52 on the day.

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