AMB Amb Property Corp.

AMB Property Corp. (AMB), a leading global provider of distribution facilities, reported first quarter 2011 recurring fund from operations (FFO) of 33 cents per share compared with 31 cents in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and other non-cash expenses to net income. The first quarter 2011 recurring FFO marginally beat the Zacks Consensus Estimate by a penny.

Total revenues during the reported quarter were $165.8 million compared to $154.1 million in the year-ago quarter – an increase of about 7.6%. Total revenues for first quarter 2011 well exceeded the Zacks Consensus Estimate of $161 million.

During the quarter, AMB commenced leases spanning approximately 8.9 million square feet in its global operating portfolio – a record first quarter lease in its 27-year history. Operating portfolio occupancy was 92.8% at quarter-end, while average occupancy was 92.4% during the quarter.  

Same-store net operating income (cash basis), without the effect of lease termination fees, increased 0.2% during the quarter compared with the year-ago period. Average rent change on lease renewals and rollovers in the operating portfolio of the company decreased 12.6% on trailing four-quarter basis.

During the quarter, the company raised a record $1.1 billion in new third-party equity, including $566 million raised for AMB Europe Logistics Joint Venture and $500 million for AMB China Logistics Venture I. Subsequent to the quarter-end, the company raised an additional $87.6 million of third-party equity in AMB U.S. Logistics Fund.

AMB made approximately $323 million of capital investments during the quarter, which included $300 million of new development starts in Japan, Brazil, China, and Germany; and $23 million in acquisitions at a stabilized capitalization rate of 6.2%. The company also sold assets worth approximately $78 million during the quarter. Subsequent to the quarter-end, the company deployed $168 million of assets to its China Logistics Venture I Fund comprising approximately 2.6 million square feet of operating and under development properties.

By the end of first quarter 2011, the company had approximately $1.4 billion of liquidity (including $1.2 billion available under its credit facility and $204 million of cash and cash equivalents). As of March 31, 2011, the company's share of total debt (including joint venture debt) to total assets was 43%. For full year 2011, AMB reiterated its earlier recurring FFO guidance in the range of $1.30 to $1.40 per share.

We currently have a ‘Neutral’ recommendation on AMB, which presently has a Zacks #3 Rank that translates into a short-term ‘Hold’ rating and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1-3 months. We also have a ‘Neutral’ recommendation and a Zacks #4 Rank (short-term ‘Sell’) for Duke Realty Corp. (DRE), a competitor of AMB.

 
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