Prologis - 10-K annual report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K


(Mark One)
þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the fiscal year ended December 31, 2002

or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-13545

AMB PROPERTY CORPORATION

(Exact name of Registrant as specified in its charter)


Maryland		94-3281941
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

Pier 1, Bay 1, San Francisco, California (Address of Principal Executive Offices)		94111 (Zip Code)

(415) 394-9000

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Common Stock, $.01 par value 8 1/2 Series A Cumulative Redeemable Preferred Stock (Title of Class)		New York Stock Exchange (Name of Exchange on Which Registered)

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes þ No o

The aggregate market value of common shares held by non-affiliates of the registrant (based upon the closing sale price on the New York Stock Exchange) on June 30, 2002, was $2,595,016,448.

As of March 10, 2003, there were 80,935,750 shares of the Registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates by reference the Registrant’s Proxy Statement for its Annual Meeting of Stockholders which the Registrant anticipates will be filed no later than 120 days after the end of its fiscal year pursuant to Regulation 14A.

PART I

Item 1. Business

General

AMB Property Corporation, a Maryland corporation, acquires, develops and operates industrial property in key distribution markets throughout North America, in Europe and in Asia. We commenced operations as a fully integrated real estate company effective with the completion of our initial public offering on November 26, 1997. Increasingly, our properties are designed for customers who value the efficient movement of goods in the world’s busiest distribution markets: large, supply-constrained locations with close proximity to airports, seaports and major freeway systems. We currently serve 2,550 customers in a portfolio (owned, managed or under development) totaling 992 buildings, encompassing approximately 94.6 million square feet (8.8 million square meters), in 30 global markets.

Through our subsidiary, AMB Property, L.P., a Delaware limited partnership, we are engaged in the acquisition, ownership, operation, management, renovation, expansion and development of primarily industrial properties in target markets in North America, in Europe and in Asia. We refer to AMB Property, L.P. as the “operating partnership.” As of December 31, 2002, we owned an approximate 94.5% general partnership interest in the operating partnership, excluding preferred units. As the sole general partner of the operating partnership, we have the full, exclusive and complete responsibility and discretion in the day-to-day management and control of the operating partnership. Unless the context otherwise requires, the terms “we,” “us” and “our” refer to AMB Property Corporation, the operating partnership and their other controlled subsidiaries, and the references to AMB Property Corporation include the operating partnership and their other controlled subsidiaries.

Our investment strategy targets customers whose businesses are growing at a faster rate than world gross domestic product (GDP) — specifically, participants in global trade. To serve the facilities needs of these customers, we invest in major markets: transportation hubs and gateways in the U.S., and targeted distribution and airport markets internationally. Our target markets are characterized by large population densities and typically offer substantial consumer bases, proximity to large clusters of distribution-facility users and significant labor pools. When measured by annual base rents, approximately 70% of these assets are concentrated in eight U.S. hub and gateway distribution markets: Atlanta, Chicago, Dallas/Fort Worth, Los Angeles, Northern New Jersey/ New York City, San Francisco Bay Area, Miami and Seattle.

By focusing on an investment strategy that benefits from high customer demand and limited competition from new supply, we believe that over time net operating income will grow and our property values will increase. We work to implement this strategy by investing in locations that have geographic or regulatory supply constraints, high barriers to entry and close proximity to large population centers, and in buildings with customer-preferred characteristics.

Our portfolio is comprised of strategically located industrial buildings in in-fill submarkets; in-fill locations are characterized by supply constraints on the availability of land for competing projects as well as physical, political or economic barriers to new development. A substantial majority of our owned or managed buildings function as High Throughput Distribution®, or HTD® facilities; buildings designed to quickly distribute our customers’ products, rather than store them. Our investment focus on HTD assets is based on the secular change toward lower inventory levels and expedited supply chains.

HTD facilities have a variety of characteristics that allow the rapid transport of goods from point-to-point; examples include numerous dock doors, shallower building depths, fewer columns, large truck courts and more space for trailer parking. These facilities function best when located in convenient proximity to transportation infrastructure such as major airports and seaports. We believe that these building characteristics represent an important success factor for time-sensitive tenants such as air express, logistics and freight forwarding companies.

As of December 31, 2002, we owned and operated (exclusive of properties that we managed for third parties) 904 industrial buildings and nine retail and other properties, totaling approximately 85.2 million

rentable square feet, located in 28 markets throughout North America and in France. As of December 31, 2002, our industrial and retail properties were 94.6% and 88.6% leased, respectively. As of December 31, 2002, through our subsidiary, AMB Capital Partners, LLC, we also managed, but did not have an ownership interest in, industrial buildings and retail centers, totaling approximately 1.7 million rentable square feet, on behalf of various clients. In addition, as of December 31, 2002, we had investments in 43 industrial buildings, totaling approximately 5.5 million rentable square feet, through unconsolidated joint ventures.

As of December 31, 2002, we had two retail centers, four industrial properties and two development properties that we are holding for divestiture. Over the next few years, we intend to dispose of non-strategic assets and redeploy the resulting capital into industrial properties in supply-constrained markets in the U.S. and internationally that better fit our current investment focus.

We are self-administered and self-managed and expect that we have qualified and will continue to qualify as a real estate investment trust for federal income tax purposes beginning with the year ending December 31, 1997. As a self-administered and self-managed real estate investment trust, our own employees perform our administrative and management functions, rather than our relying on an outside manager for these services. Our principal executive office is located at Pier 1, Bay 1, San Francisco, California 94111; our telephone number is (415) 394-9000. We also maintain regional offices in Boston, Massachusetts and Amsterdam, the Netherlands. As of December 31, 2002, we employed 184 individuals, 141 at our San Francisco headquarters, 42 in our Boston office and one in our Amsterdam office. Our website address is www.amb.com. Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available on our website free of charge as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission.

The following marks are our registered trademarks: AMB®; Broker Alliance Partners®; Broker Alliance Program®; Customer Alliance Partners®; Customer Alliance Program®; Development Alliance Partners®; Development Alliance Program®; HTD®; High Throughput Distribution®; Institutional Alliance Partners®; Institutional Alliance Program®; Management Alliance Partners®; Management Alliance Program®; Strategic Alliance Partners®; UPREIT Alliance Partners®; and UPREIT Alliance Program®. The following mark is our unregistered trademark: Strategic Alliance Programs™.

Co-investment Joint Ventures

Through the operating partnership, we enter into co-investment joint ventures with institutional investors. These co-investment joint ventures provide us with an additional source of capital to fund certain acquisitions, development projects and renovation projects, as well as private capital income, which enhances our returns. As of December 31, 2002, we had investments in five co-investment joint ventures with a gross book value of $1.6 billion, which are consolidated for financial reporting purposes.

Acquisition, Development and Disposition Activity

During 2002, we invested $403.3 million in operating properties, consisting of 43 industrial buildings, aggregating approximately 5.4 million square feet, and a parking lot adjacent to Los Angeles International Airport. Our acquisitions included the investment of $166.5 million in 31 buildings, aggregating approximately 3.1 million square feet, through two of our co-investment joint ventures.

During 2002, we completed industrial developments valued at $135.4 million, aggregating approximately 3.1 million square feet. We also initiated eight new industrial development projects valued at $90.6 million, aggregating approximately 1.8 million square feet, including new international industrial development projects valued at $50.3 million, aggregating approximately 1.1 million square feet.

As of December 31, 2002, we had in our development pipeline ten industrial projects, which will total approximately 1.7 million square feet and have an aggregate estimated investment of $106.8 million upon completion and three development projects available for sale, which will total approximately 0.6 million square feet and have an aggregate estimated investment of $49.1 million upon completion. As of December 31, 2002,

we and our partners had funded an aggregate of $92.8 million and needed to fund an estimated additional $63.1 million in order to complete current and planned projects.

During 2002, we disposed of 58 industrial buildings, two retail buildings, and an undeveloped retail land parcel, aggregating approximately 5.7 million rentable square feet, for an aggregate price of $244.0 million. During 2002, we also sold $76.9 million in operating properties, consisting of 15 industrial buildings aggregating approximately 1.9 million square feet, to one of our co-investment joint ventures. During 2002, we also completed and sold six buildings developed as part of our development-for-sale program for a net gain of $1.0 million.

Operating Strategy

We base our operating strategy on extensive operational and service offerings, including in-house acquisitions, development, redevelopment, asset management, leasing, finance, accounting and market research. We leverage our expertise across a large customer base and have long-standing relationships with entrepreneurial real estate management and development firms in our target markets, our Strategic Alliance Partners®.

We believe that real estate is fundamentally a local business and best operated by forging alliances with service providers in each target market. We believe that this strategy results in a mutually beneficial relationship as these alliance partners provide us with high-quality, local market expertise and intelligence. We, in turn, contribute value to the alliance relationship through national and global customer relationship development, industry knowledge, perspective and financial strength.

While our alliance relationships give us local market benefits, we retain flexibility to focus on our core competencies: developing and executing our strategic approach to real estate investment and management and raising private capital to finance growth and enhance returns to stockholders.

Growth Strategies

Growth Through Operations

We seek to generate internal growth through rent increases on existing space and renewals on rollover space. We do this by seeking to maintain a high occupancy rate at our properties and by seeking to control expenses by capitalizing on the economies of owning, operating and growing a large global portfolio. As of December 31, 2002, our industrial properties and retail centers were 94.6% leased and 88.6% leased, respectively. During 2002, average industrial base rental rates (on a cash basis) decreased by 1.0% from the expiring rent for that space, on leases entered into or renewed during the period. This amount excludes expense reimbursements, rental abatements and percentage rents. During 2002, we increased cash-basis same-store net operating income by 3.5% on our industrial properties. Since our initial public offering in November 1997, we have experienced average annual increases in industrial base rental rates (on a cash basis) of 14.5%; and we have experienced average quarterly increases in industrial same-store net operating income (on a cash basis) of 6.5%. While we believe that it is important to view real estate as a long-term investment, past results are not necessarily an indication of future performance.

While occupancy levels in our industrial portfolio were similar in 2002 and 2001, rents on lease renewals and rollovers were lower in 2002 as the general contraction in business activity nationwide caused a reduction in demand for industrial warehouse facilities. This reduction in demand was evidenced by two significant factors: decreases in national industrial occupancy levels and negative net absorption of industrial facility space. Specifically, according to Torto Wheaton Research, at December 31, 2001, national industrial occupancy was 90.2%; by December 31, 2002, national occupancy fell to 88.8%. As reported by Torto Wheaton Research, national net absorption of industrial space (the change in the amount of square footage leased in existing and newly constructed industrial properties) was positive from 1989 through 2000. By contrast, Torto Wheaton Research reported that net absorption was negative by 152 million square feet in 2001 and 34 million square feet in 2002. In 2002, these factors combined to reduce market rents for industrial properties by approximately 15% to 20% nationally from peak levels at the beginning of 2001. While the level

of rental rate reduction varied by market, we strove to maintain high occupancy by pricing lease renewals and new leases with sensitivity to local market conditions.

Growth Through Acquisitions and Capital Redeployment

We believe that our significant acquisition experience, our alliance-based operating strategy and our extensive network of property acquisition sources will continue to provide opportunities for external growth. We have forged relationships with third-party local property management firms through our Management Alliance Program®. We believe that these alliances will create acquisition opportunities, as such managers market properties on behalf of sellers. Our operating structure also enables us to acquire properties through our UPREIT Alliance Program® in exchange for limited partnership units in the operating partnership, thereby enhancing our attractiveness to owners and developers seeking to transfer properties on a tax-deferred basis. In addition to acquisitions, we seek to redeploy capital from non-strategic assets into properties that better fit our current investment focus.

We are generally in various stages of negotiations for a number of acquisitions and dispositions that may include acquisitions and dispositions of individual properties, acquisitions of large multi-property portfolios and acquisitions of other real estate companies. There can be no assurance that we will consummate any of these transactions. Such transactions, if we consummate them, may be material individually or in the aggregate. Sources of capital for acquisitions may include undistributed cash flow from operations, borrowings under our unsecured credit facility, other forms of secured or unsecured debt financing, issuances of debt or equity securities by us or the operating partnership (including issuances of units in the operating partnership or its subsidiaries), proceeds from divestitures of properties, assumption of debt related to the acquired properties and private capital from our co-investment partners.

Growth Through Development

We believe that renovation and expansion of properties and development of well-located, high-quality industrial properties should continue to provide us with attractive opportunities for increased cash flow and a higher rate of return than we may obtain from the purchase of fully-leased, renovated properties. Value-added properties are typically characterized as properties with available space or near-term leasing exposure, undeveloped land acquired in connection with another property that provides an opportunity for development, or properties that are well located but require redevelopment or renovation. Value-added properties require significant management attention or capital investment to maximize their return. We believe that we have developed the in-house expertise to create value through acquiring and managing value-added properties and believe that our global market presence and expertise will enable us to continue to generate and capitalize on these opportunities. Through our Development Alliance Program®, we have established strategic alliances with global and regional developers to enhance our development capabilities.

The multidisciplinary backgrounds of our employees should provide us with the skills and experience to capitalize on strategic renovation, expansion and development opportunities. Several of our officers have extensive experience in real estate development, both with us and with national development firms. We generally pursue development projects in joint ventures with our Development Alliance Partners. This way, we leverage the development skill, access to opportunities and capital of such developers, and we eliminate the need and expense of an extensive in-house development staff. Under a typical joint venture agreement with a Development Alliance Partner, we would fund 95% of the construction costs and our partner would fund 5%; however, in certain cases we may own as little as 50% or as much as 98% of the joint venture. Upon completion, we generally would purchase our partner’s interest in the joint venture. We may also structure developments where we would own 100% of the asset with an incentive development fee to be paid upon completion to our development partner.

Growth Through Co-Investments

We co-invest with third-party partners (some of whom may be clients of AMB Capital Partners, LLC, to the extent such partners commit new investment capital) through partnerships, limited liability companies or

joint ventures. We currently use a co-investment formula with each third party whereby we will own at least a 20% interest in all ventures. In general, we control all significant operating and investment decisions of our co-investment entities. We believe that our co-investment program will continue to serve as a source of capital for acquisitions and developments and private capital income; however, there can be no assurance that it will continue to do so. During 2002, we sold $76.9 million in operating properties, consisting of 15 industrial buildings, aggregating approximately 1.9 million square feet, to one of our co-investment joint ventures, AMB-SGP, L.P. We recognized a gain of $3.3 million related to this sale, representing the portion of the sold properties acquired by the third-party co-investor. We also sold 30% of our interest in AMB Partners II, L.P., our co-investment joint venture with the City and County of San Francisco Employees’ Retirement System, to our co-investment joint venture partner; we now own 20% of AMB Partners II, L.P. We recognized a gain of $6.3 million related to this sale.

Growth Through Developments for Sale

The operating partnership, through its taxable REIT subsidiaries, conducts a variety of businesses that include incremental income programs, such as our development projects available for sale to third parties. Such development properties include value-added conversion projects and build-to-sell projects. During 2002, we completed and sold six value-added conversion buildings for a net gain of $1.0 million. As of December 31, 2002, we were developing three projects for sale to third parties. During 2001, we completed and sold two value-added conversion projects for a net gain of $13.2 million.

Growth Through Global Expansion

Over the next three to five years, we expect to have from 10% to 15% of our assets invested in international markets. Our Mexican target markets currently include Mexico City, Guadalajara and Monterrey. Our European target markets currently include Paris, Amsterdam, London, Frankfurt and Madrid. Our Asian target markets currently include Singapore, Hong Kong and Tokyo. In 2002, our first year of international operation, we earned $0.7 million in rental revenues from our Mexico City, Guadalajara and Paris properties. There are many factors that could cause our entry into target markets and future capital allocation to differ from our current expectations, which are discussed under the subheading “Our International Growth is Subject to Special Political and Monetary Risks” and elsewhere under the heading “Business Risks” in this report.

We believe that expansion into target international markets represents a natural extension of our well-established strategy to invest in industrial markets with high population densities, close proximity to large customer clusters and available labor pools, and major distribution centers serving the global supply chain. Our expansion strategy mirrors our domestic focus on in-fill locations, which are supply-constrained submarkets with political, economic or physical constraints to new development; and, land, as a high percentage of total asset value, becoming more valuable for higher and better use over time. Our international investments will extend our offering of High Throughput Distribution facilities for customers who value speed-to-market over storage. Specifically, we are focused on customers whose business is derived from world air-cargo flows, a sector expected to grow significantly faster than world GDP growth. In addition, our investments target major consumer distribution markets and customers.

We believe that our established customer relationships, our contacts in the air cargo and logistics industries, diligent underwriting of markets and investment considerations and our strategic alliance partnerships with knowledgeable, local-market property brokers, developers and managers will assist us in competing internationally.

BUSINESS RISKS

See: “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Business Risks” for a complete discussion of the various risks that could adversely affect us.

Item 2. Properties

INDUSTRIAL PROPERTIES

As of December 31, 2002, we owned 904 industrial buildings aggregating approximately 84.2 million rentable square feet, located in 28 markets throughout North America and France. Our industrial properties accounted for $501.2 million, or 97.7%, of our total annualized base rent as of December 31, 2002. Our industrial properties were 94.6% leased to over 2,300 customers, the largest of which accounted for no more than 2.6% of our annualized base rent from our industrial properties. See “Item 14. Note 17 of Notes to Consolidated Financial Statements” for segment information related to our operations.

Property Characteristics.Our industrial properties, which consist primarily of warehouse distribution facilities suitable for single or multiple customers, are typically comprised of multiple buildings. The following table identifies type and characteristics of our industrial buildings and each type’s percentage of our total portfolio based on square footage at December 31:


Building Type	Description	2002		2001

Warehouse	15,000-75,000 SF, single or multi-customer		40.2%		40.3%
Bulk Warehouse	Over 75,000 SF, single or multi-customer		39.6%		37.8%
Flex Industrial	Includes assembly or R&D, single or multi-customer		7.5%		9.6%
Light Industrial	Smaller customers, 15,000 SF or less, higher office finish		6.5%		7.3%
Trans-Shipment	Unique configurations for truck terminals and cross-docking		2.3%		1.8%
Air Cargo	On-tarmac or airport land for transfer of air cargo goods		2.6%		1.6%
Office	Single or multi-customer, used strictly for office		1.3%		1.5%

Lease Terms. Our industrial properties are typically subject to lease on a “triple net basis,” in which customers pay their proportionate share of real estate taxes, insurance and operating costs, or are subject to leases on a “modified gross basis,” in which customers pay expenses over certain threshold levels. In addition, most of our leases include fixed rental increases or CPI rental increases. Lease terms typically range from three to ten years, with an average of six years, excluding renewal options. However, the majority of our industrial leases do not include renewal options.

Overview of Major Target Markets.Our industrial properties are located near key passenger and air cargo airports, key interstate highways, and seaports in major domestic metropolitan areas, such as Atlanta, Chicago, Dallas/ Fort Worth, Los Angeles, Northern New Jersey/New York City, the San Francisco Bay Area, Miami and Seattle. Our international industrial facilities are located in major distributions markets including Mexico City, Guadalajara and Paris. We believe our industrial properties’ strategic location, transportation network and infrastructure, and large consumer and manufacturing bases support strong demand for industrial space.

Within these metropolitan areas, our industrial properties are concentrated in locations with limited new construction opportunities within established, relatively large submarkets, which we believe should provide a higher rate of occupancy and rent growth than properties located elsewhere. These in-fill locations are typically near major passenger and air cargo facilities, seaports or convenient to major highways and rail lines, and are proximate to a diverse labor pool. There is typically broad demand for industrial space in these centrally located submarkets due to a diverse mix of industries and types of industrial uses, including warehouse distribution, light assembly and manufacturing. We generally avoid locations at the periphery of metropolitan areas where there are fewer constraints to the supply of additional industrial properties.

Industrial Market Operating Statistics

As of December 31, 2002, we operated in eight domestic hub and gateway markets, in addition to 20 other markets throughout North America and France. The following table represents properties in which we own a fee simple interest or a controlling interest (consolidated), and excludes properties in which we only own a non-controlling interest (unconsolidated) and properties under development.


										No.		San						Total		Total
						Dallas/		Los		New Jersey/		Francisco						Hub		Other
		Atlanta		Chicago(1)		Ft. Worth		Angeles		New York		Bay Area		Miami		Seattle		Markets		Markets		Total

Square feet owned(1)			7,235,434		7,821,563		3,728,532		12,205,784		7,487,729		11,296,618		4,432,361		4,857,434		58,975,455		25,227,567		84,203,022
Our pro rata share of square feet			4,699,741		6,049,044		2,740,714		8,544,968		5,121,955		8,801,807		4,008,449		3,008,807		42,885,515		22,413,294		65,298,809
Occupancy Percentage			90.8%		94.5%		96.3%		97.7%		97.1%		94.7%		95.7%		97.2%		95.5%		92.5%		94.6%
Annualized base rent (000’s)			$27,187		$34,879		$14,761		$71,391		$46,997		$94,458		$30,357		$22,718		$342,748		$158,461		$501,209
Annualized base rent per square foot			$4.14		$4.72		$4.11		$5.99		$6.46		$8.83		$7.31		$4.81		$6.09		$6.79		$6.29
Lease expirations as a percentage of ABR:
	2003.		11.9%		19.7%		16.3%		17.7%		16.7%		14.6%		12.6%		22.3%		16.1%		13.7%		15.4%
	2004.		13.1%		21.9%		18.8%		15.8%		28.4%		15.1%		22.4%		18.1%		18.5%		10.4%		16.0%
	2005.		20.7%		16.3%		22.5%		14.7%		9.3%		16.8%		20.6%		11.4%		15.9%		15.8%		16.0%
	2006.		17.8%		22.1%		13.8%		16.0%		8.2%		10.4%		14.3%		11.1%		13.5%		11.0%		12.8%
	2007.		6.4%		7.8%		8.0%		11.0%		15.4%		12.1%		15.5%		19.6%		12.1%		16.6%		13.4%
Weighted average lease terms Original			6.0 years		6.3 years		5.4 years		5.9 years		5.5 years		5.8 years		5.9 years		6.0 years		5.9 years		7.0 years		6.2 years
	Remaining		3.9 years		2.3 years		1.9 years		3.1 years		2.9 years		3.0 years		3.0 years		3.0 years		3.0 years		4.0 years		3.3 years
Tenant Retention (Year-to-date)			64.7%		88.1%		55.6%		83.4%		96.3%		60.7%		57.3%		65.2%		74.0%		74.7%		74.2%
Rent increases on renewals and rollovers			-8.3%		-5.6%		3.4%		10.8%		11.7%		-8.0%		-15.1%		-12.2%		-1.8%		1.0%		-1.0%
Same space leased			1,121,943		1,220,090		387,071		2,092,507		1,566,866		2,083,734		706,839		1,124,633		10,303,683		4,396,916		14,700,599
Same store cash basis NOI growth			-2.8%		5.7%		2.1%		2.1%		-5.3%		15.1%		4.0%		-4.9%		5.2%		-0.4%		3.5%
Square feet owned in same store pool(2)			5,160,923		6,492,649		3,413,679		9,319,905		5,280,207		8,775,561		4,342,361		3,520,291		46,305,576		21,693,009		67,998,585
Total market square footage(3)			7,587,220		11,992,828		4,328,659		15,080,058		7,914,243		12,298,081		4,968,046		4,984,898		69,154,033		25,432,716		94,586,749


(1)	Includes all industrial consolidated operating properties and excludes industrial developments and renovation projects.

(2)	Same store pool excludes properties purchased or developments stabilized after December 31, 2000.

(3)	Total market square footage includes industrial and retail operating properties, development properties, unconsolidated properties, properties managed for third parties and reallocation of on-tarmac properties.

Industrial Operating Portfolio Overview

As of December 31, 2002, our 904 industrial buildings were diversified across 28 markets throughout North America and France. The average age of our industrial properties is 19 years (since the property was built or substantially renovated). The following table represents properties in which we own a fee simple interest or a controlling interest (consolidated), and excludes properties in which we only own a non-controlling interest (unconsolidated).


						Total		Percentage								Percentage					Annualized
						Rentable		of Total						Annualized		of Total					Base Rent
				Number of		Square		Rentable			Percentage			Base Rent		Annualized			Number		per Leased
Industrial Properties				Buildings		Feet (1)		Square Feet			Leased			(000’s)		Base Rent			of Leases		Square Foot

Hub and Gateway Markets:
	Atlanta				61		7,235,434		8.6	%		90.8	%	$	27,187		5.4	%		183	$	4.14
	Chicago (2)				92		7,821,563		9.3			94.5			34,879		7.0			184		4.72
	Dallas/ Ft. Worth				41		3,728,532		4.4			96.3			14,761		2.9			105		4.11
	Los Angeles (3)				144		12,205,784		14.5			97.7			71,391		14.2			364		5.99
	N. New Jersey/ New York City				79		7,487,729		8.9			97.1			46,997		9.4			254		6.46
	San Francisco Bay Area				143		11,296,618		13.4			94.7			94,458		18.8			400		8.83
	Miami				42		4,342,361		5.2			95.7			30,557		6.1			225		7.31
	Seattle				47		4,857,434		5.8			97.2			22,718		4.5			168		4.81

		Subtotal/ Weighted Average			649		58,975,455		70.0			95.5			342,748		68.4			1,883		6.09
Other Markets:
	Austin				9		1,365,873		1.6			94.1			9,559		1.9			27		7.44
	Baltimore/ Washington D.C				63		4,105,921		4.9			96.9			30,749		6.1			287		7.73
	Boston				38		4,401,018		5.2			95.1			22,933		4.6			57		5.48
	Charlotte				10		729,836		0.9			55.9			1,900		0.4			24		4.66
	Cincinnati				6		812,053		1.0			95.1			2,512		0.5			13		3.25
	Columbus				2		465,433		0.6			48.4			683		0.1			1		3.03
	Guadalajara, Mexico				5		687,088		0.8			88.3			3,691		0.7			13		6.08
	Memphis				17		1,883,845		2.2			97.4			9,014		1.8			46		4.91
	Mexico City				1		786,979		0.9			100.0			4,246		0.8			1		5.40
	Minneapolis				42		4,456,905		5.3			95.9			18,382		3.7			203		4.30
	New Orleans				5		411,689		0.5			94.5			1,959		0.4			47		5.04
	Newport News				1		60,215		0.1			78.8			584		0.1			3		12.31
	Orlando				19		1,845,494		2.2			81.9			6,608		1.3			80		4.37
	Paris, France				1		67,415		0.1			100.0			677		0.1			1		10.04
	Portland				5		676,104		0.8			100.0			2,940		0.6			11		4.35
	San Diego				5		276,167		0.3			100.0			2,545		0.5			21		9.22
	On-Tarmac (4)				26		2,195,532		2.6			91.0			39,479		7.9			167		19.76

		Subtotal/ Weighted Average			255		25,227,567		30.0			92.5			158,461		31.6			1,002		6.79

			Total/ Weighted Average		9 04		84,203,022		100.0	%		94.6	%	$	501,209		100.0	%		2,885	$	6.29


(1)	In addition to owned square feet, we manage, through our subsidiary, AMB Capital Partners, LLC, 1.7 million additional square feet of industrial, retail and other properties.

(2)	We also have an ownership interest in 36 industrial buildings totaling 4.0 million square feet in the Chicago market through our investment in an unconsolidated joint venture.

(3)	We also have an ownership interest in 7 industrial buildings totaling 1.4 million square feet in the Los Angeles market through our investment in an unconsolidated joint venture.

(4)	Includes on-tarmac airport air cargo facilities at 11 airports.

Industrial Lease Expirations

The following table summarizes the lease expirations for our industrial properties for leases in place as of December 31, 2002, without giving effect to the exercise of renewal options or termination rights, if any, at or prior to the scheduled expirations.


				Annualized		Percentage of
		Rentable		Base Rent		Annualized
Year of Lease Expiration (1)		Square Feet		(000s) (2)		Base Rent

2003 (3)			14,068,516	$	82,252		15.4	%
2004.			13,476,638		85,679		16.0
2005.			13,542,987		84,741		16.0
2006.			9,916,313		68,271		12.8
2007.			9,572,812		71,905		13.4
2008.			6,265,707		38,605		7.2
2009.			3,697,563		21,802		4.1
2010.			2,589,890		26,418		4.9
2011.			1,898,797		21,040		3.9
2012.			2,593,493		19,794		3.7
2013 and beyond			1,508,054		14,131		2.6

	Total		79,130,770	$	534,638		100.0	%


(1)	Schedule includes in-place leases and leases with future commencement dates.

(2)	Calculated as monthly rent at expiration multiplied by 12.

(3)	Includes month-to-month leases totaling 0.5 million square feet.

Customer Information

Largest Property Customers.Our 25 largest industrial property customers by annualized base rent are set forth in the table below.


											Percentage of
						Percentage of					Aggregate
		Number		Aggregate		Aggregate					Annualized
		of		Rentable		Leased Square			Annualized		Base Rent
Industrial Customer Name (1)		Leases		Square Feet		Feet (2)			Base Rent		(3)

United States Government(4)(5)			30		642,264		0.8	%	$	13,150		2.6	%
FedEx Corporation (4)			30		727,965		0.9			9,608		1.9
Harmonic Inc.			3		241,980		0.3			4,776		0.9
Proctor & Gamble Manufactura			2		797,168		1.0			4,308		0.8
International Paper Company			7		541,379		0.7			4,069		0.8
Abgenix, Inc.			2		97,887		0.1			3,607		0.7
County of Los Angeles (6)			12		248,078		0.3			3,551		0.7
Waitex International Co. Ltd.			5		504,940		0.6			3,212		0.6
Ford Motor Company			1		610,878		0.8			3,034		0.6
Ahold NV			7		680,565		0.8			2,879		0.6
TJX Companies, Inc.			4		699,157		0.9			2,824		0.6
FMI International			3		439,390		0.5			2,533		0.5
Wells Fargo and Company			5		213,432		0.3			2,510		0.5
Danzas AEI International			7		352,476		0.4			2,472		0.5
United Airlines Inc. (4)			4		121,381		0.2			2,437		0.5
Home Depot USA Inc.			3		577,813		0.7			2,392		0.5
BAX Global Inc. (4)			4		151,452		0.2			2,332		0.5
Forward Air Corporation			7		344,765		0.4			2,249		0.4
CNF Inc.			9		545,495		0.4			2,242		0.4
Boeing Company			5		457,565		0.6			2,237		0.4
Johnson & Johnson			4		129,449		0.2			2,196		0.4
Applied Materials, Inc.			1		290,557		0.4			2,152		0.4
Cirrus Logic			1		48,384		0.1			2,113		0.4
United Liquors, Ltd.			1		440,000		0.5			2,057		0.4
DJ Air Services, Inc.			1		51,920		0.1			2,054		0.4

	Total				9,756,340		12.1	%	$	86,994		17.0	%


(1)	Customer(s) may be a subsidiary of or an entity affiliated with the named customer. We also hold a lease at Park One with an annualized base rent of $6.5 million, which is not included because it is not an industrial operating property.

(2)	Computed as aggregate leased square feet divided by the aggregate leased square feet of the industrial and retail properties.

(3)	Computed as aggregate annualized base rent divided by the aggregate annualized base rent of the industrial and retail and other properties.

(4)	Apron rental amount (but not square footage) are included.

(5)	United States Government includes the United States Postal Service (USPS), U.S. Customs and the United Stated Department of Agriculture (USDA).

(6)	County of Los Angeles includes Children’s Services, the Fire Department, the District Attorney’s Office, the Sheriff and the Unified School District.

OPERATING AND LEASING STATISTICS

Industrial Operating and Leasing Statistics

The following table summarizes key operating and leasing statistics for all of our industrial properties as of and for the years ended December 31, 2002, 2001 and 2000:


			2002			2001			2000

Square feet owned at December 31(1)(2)				84,203,022			81,550,880			77,795,989
Occupancy percentage at December 31.				94.6	%		94.5	%		96.4	%
Weighted average lease term:
	Original			6.2 years			6.3 years			6.4 years
	Remaining			3.3 years			3.3 years			3.5 years
Tenant retention				74.2	%		66.8	%		59.0	%
Same Space Leasing Activity:(3)
Rent increases on renewals and rollovers				(1.0	)%		20.4	%		25.6	%
	Same space square footage commencing (millions)			14.7			11.9			11.9
2nd generation leasing activity:(4)
	Renewals		$	1.30		$	0.99		$	1.22
	Re-tenanted			2.45			3.25			2.27

		Weighted average	$	1.90		$	2.05		$	1.86

	Same space square footage commencing (millions)			19.0			13.9			n/a


(1)	Includes all consolidated operating properties and excludes industrial development and renovation projects.

(2)	In addition to owned square feet as of December 31, 2002, we manage, through our subsidiary, AMB Capital Partners, 1.7 million additional square feet of industrial, retail and other properties. We also have investments in 5.5 million square feet of industrial properties through our investments in unconsolidated joint ventures.

(3)	Consists of second-generation leases renewing or re-tenanting with current and prior lease terms greater than one year.

(4)	Second generation leasing activity includes total tenant improvements, lease commissions and other leasing costs incurred during the leasing of second generation space. Costs incurred prior to leasing available space are not included until such space is leased. Second generation space excludes newly developed space or space vacant at acquisition.

Industrial Same Store Operating Statistics

The following table summarizes key operating and leasing statistics for our same store properties as of and for the years ended December 31, 2002, 2001 and 2000. The same store pool excludes properties purchased and developments stabilized after December 31, 2000. For an explanation of our same store

properties, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations.”


		2002			2001			2000

Square feet in same store pool at December 31.			67,998,585			60,165,437			52,145,350
	% of total industrial square feet		80.8	%		73.8	%		68.8	%
Occupancy percentage at period end			94.6	%		94.6	%		96.8	%
Tenant retention			73.3	%		64.5	%		59.2	%
Rent increases on renewals and rollovers			(1.4	)%		23.5	%		27.0	%
	Same space square footage commencing (millions)		13.8			10.0			9.9
Cash basis net operating income growth % increase
	Revenues		3.9	%		6.4	%		7.3	%
	Expenses		5.1	%		6.9	%		3.5	%
	NOI		3.5	%		6.3	%		8.5	%

RETAIL PROPERTIES

Retail and Other Property Summary

The following table sets forth the rentable square footage of our retail centers and other properties as of December 31, 2002, and represents properties in which we own a fee simple interest or a controlling interest (consolidated).


		Total					Annualized
		Rentable		Percentage			Base Rent
Retail Properties		Square Feet		Leased			(000’s)(1)

Around Lenox(3)			120,946		67.1	%	$	2,185
Beacon Center			63,240		61.9			754
Charles & Chase			48,000		100.0			300
Howard & Western(4)			88,544		94.3			1,196
Mazzeo Drive			88,420		100.0			717
Novato Fair Shopping Center(3)			126,193		90.1			1,002
Palm Aire			131,233		96.9			1,648
Springs Gate land(3)			n/a		n/a			n/a
The Plaza at Delray(3)(4)			332,908		91.5			4,161

	Total/ Weighted Average		999,484		88.6	%	$	11,963


(1)	Annualized base rent means the monthly contractual amount under existing leases at December 31, 2002, multiplied by 12. This amount excludes expense reimbursements, rental abatements, and percentage rents.

(2)	Calculated as total Annualized Base Rent divided by total rentable square feet actually leased as of December 31, 2002.

(3)	We hold an interest in this property through a joint venture interest in a limited partnership.

(4)	This property is held for divestiture as of December 31, 2002.

Our retail properties have an average age of 12 years since they were built, expanded or renovated. During 2002, we sold two retail properties totaling approximately 0.3 million rentable square feet and an undeveloped retail land parcel. As of December 31, 2002, we had two retail centers, aggregating approximately 0.4 million rentable square feet, held for divestiture.

Development Pipeline

The following table sets forth the properties owned by us as of December 31, 2002, which were undergoing renovation, expansion or new development. No assurance can be given that any of such projects will be completed on schedule or within budgeted amounts.

Industrial Development and Renovation Deliveries


					Estimated		Estimated			Estimated			Our
			Development Alliance		Stabilization		Square Feet at			Total			Ownership
Project		Location	Partner®		Date		Completion			Investment(1)			Percentage


		(Dollars in thousands)
2003 Deliveries
	1. Van Nuys Buildings 3 & 4	Van Nuys, CA		Trammell Crow Company		January		161,000		$	12,600			95	%
	2. Dulles Airport Park Building 300	Dulles, VA		Seefried Properties		April		77,000			5,600			21	%
	3. Airport South Building 700	College Park, GA		Seefried Properties		July		64,000			4,100			20	%
	4. Sunset Distribution Center(3)	Brea, CA		None		July		348,000			18,100			20	%
	5. Suwanee Creek Phase V	Atlanta, GA		Seefried Properties		July		167,000			6,000			100	%
	6. Des Plaines Distribution Center(4)	Des Plaines, IL		Seefried Properties		August		36,000			6,900			18	%
	7. Paris Nord Distribution II	Paris, France		None		September		101,000			8,300			100	%
	8. Carson Town Center, SE	Carson, CA		Mar Ventures		September		349,000			23,200			95	%
	9. Houston Air Cargo	Houston, TX		Trammell Crow Company		October		156,000			10,800			20	%

Total 2003 Deliveries								1,459,000			95,600			60	%
% Pre-leased/funded-to-date (2)								33	%	$	57,700	(2)
Weighted Average Estimated Yield											9.9%/ 9.4%
GAAP/ Cash(5)
2004 Deliveries
10. Airport Logistics Park of Singapore Phase I		Changi, Singapore		Boustead Projects		September		234,000			11,200			50	%

% Pre-leased/funded-to-date(2)								0	%	$	100
Weighted Average Estimated Yield										11.9%/ 11.9%
GAAP/ Cash(5)
Total Scheduled Deliveries(1)								1,693,000		$	106,800			59	%

% Pre-leased/funded-to-date (2)								28	%	$	57,800	(2)
Weighted Average Estimated Yield GAAP/ Cash(5)										10.1%/ 9.7%


(1)	Represents total estimated cost or renovation, expansion or development, including initial acquisition costs, Development Alliance Partner® earnouts and associated equity carry costs. The estimates are based on our current estimates and forecasts and are subject to change. Excludes 178 acres of land held for future development and other acquisition-related costs totaling $27.1 million.

(2)	As of December 31, 2002, our share of amounts funded to date for 2003 deliveries was $36.8 million.

(3)	Represents a renovation project.

(4)	This is a 79-door truck terminal.

(5)	The yield on international projects is on an after-tax basis.

DEVELOPMENT PROJECTS AVAILABLE FOR SALE(1)

Estimated

Our

Development

Stabilization

Square Feet at

Total

Ownership

Project

Market

Alliance Partner®

Date(2)

Completion

Investment(3)

Percentage

(Dollars in thousands)

Value-Added Conversion

None

Build-to-Sell(4)

1. Carson Town Center SW

Southern California

Mar Ventures

Completed

247,000

18,900

95%

2. Novato Fair Shopping Center

SF Bay Area

AIG

November 2003

134,000

18,300

50%

3. Wilsonville Phase II

Southern California

Trammell Crow

March 2004

250,000

11,900

100%

Total Build-to-Sell Properties

631,000

49,100

79%

Funded-to-date

35,000

(5)


(1)	Excludes 47 acres of land and other acquisition-related costs totaling $11.2 million.

(2)	We intend to sell these properties within two years of completion.

(3)	Represents total estimated cost of renovation, expansion or development, including initial acquisition costs, debt and equity carry and partner earnouts. The estimates are based on our current estimates and forecasts and are subject to change.

(4)	Represents build-to-suit and speculative development or redevelopment.

(5)	As of December 31, 2002, our share of amounts funded to date was $27.0 million.

Properties Held Through Joint Ventures, Limited Liability Companies, and Partnerships

Consolidated

As of December 31, 2002, we held interests in joint ventures, limited liability companies and partnerships with third parties, which are consolidated in our consolidated financial statements. Such investments are consolidated because we own a majority interest or exercise significant control over major operating decisions such as approval of budgets, selection of property managers and changes in financing. Under the agreements governing the joint ventures, we and the other party to the joint venture may be required to make additional capital contributions and, subject to certain limitations, the joint ventures may incur additional debt. Such agreements also impose certain restrictions on the transfer of joint venture interests by us or the other party to the joint venture and provide certain rights to us or the other party to the joint venture to sell its interest to the joint venture or to the other joint venture partner on terms specified in the agreement. See “Item 14. Note 10 of the Notes to Consolidated Financial Statements.”

INDUSTRIAL CONSOLIDATED JOINT VENTURES


				Our											JV Partners’
				Ownership			Number of		Square		Gross Book				Share of
Joint Ventures				Percentage			Buildings		Feet(1)		Value(2)		Debt		Debt


				(Dollars in thousands)
Operating Joint Ventures:
Co-investment joint ventures with AMB:
	AMB/ Erie(3)				50	%		32		2,837,459	$	166,184	$	58,248	$	29,124
	AMB Institutional Alliance Fund I(4)				21	%		103		5,902,060		393,827		171,813		136,413
	AMB Partners II(5)				20	%		56		4,416,908		237,173		120,874		91,428
	AMB-SGP(6)				50	%		73		8,594,016		379,207		252,475		126,238
	AMB Institutional Alliance Fund II(4)				20	%		56		5,725,598		337,865		227,955		182,216

		Total co-investment joint ventures			31	%		320		27,476,041		1,514,256		831,365		565,419
Other Joint Ventures					92	%		41		4,094,640		320,721		80,250		4,944

		Total Operating Joint Ventures			42	%		361		31,570,681		1,834,977		911,615		570,363

Development Alliance Joint Ventures:
	AMB/ Erie(3)				50	%		—		—		13,985		—		—
	AMB Institutional Alliance Fund I(4)				21	%		2		233,000		9,933		9,748		7,701
	AMB Partners II(5)				20	%		1		64,000		3,006		—		—
	AMB Institutional Alliance Fund II(4)				20	%		3		384,000		17,805		—		—
	Other Development Alliance Joint Ventures				93	%		8		757,000		52,674		—		—

		Total Development Joint Ventures			64	%		14		1,438,000		97,403		9,748		7,701

			Total Industrial Consolidated Joint Ventures		43	%		375		33,008,681	$	1,932,380	$	921,363	$	578,064


(1)	For development properties, this represents estimated square feet at completion of development for committed phases of development and renovation projects.

(2)	Represents the book value of the property (before accumulated depreciation) owned by the joint venture entity and excludes net other assets.

(3)	AMB Erie is a co-investment partnership formed in 1998 with the Erie Insurance Company and certain related entities.

(4)	AMB Institutional Alliance Fund I (closed in 2000) and II (closed in 2001) are co-investment partnerships with institutional investors, which invest through private REITs.

(5)	AMB Partners II is a co-investment partnership formed in 2001 with the City and County of San Francisco Employees’ Retirement System. In November 2002, CCSF increased its ownership in AMB Partners II from 50% to 80% by acquiring an additional 30% partnership interest in AMB Partners II from us.

(6)	AMB-SGP is a co-investment partnership formed in 2001 with Industrial JV Pte Ltd, a subsidiary of GIC Real Estate Pte Ltd., the real estate investment subsidiary of the government of Singapore Investment Corporation.

RETAIL AND OTHER CONSOLIDATED JOINT VENTURES


				Our								JV Partners’
				Ownership		Square		Gross Book				Share of
Properties			Market	Percentage		Feet		Value(1)		Debt		Debt


			(Dollars in thousands)
Operating Joint Ventures
	1. Around Lenox		Atlanta		90%		120,946	$	21,408	$	9,424	$	942
	2. Palm Aire		Miami		100%		131,233		18,787		—		—
	3. Plaza at Delray(2)		Miami		76%		332,908		41,306		—		—

		Total Operating Joint Ventures			85%		585,087		81,501		9,424		942

Development Alliance Joint Venture
	4. Springs Gate land(3)		Miami		100%		—		6,717		—		—
	5. Novato Fair Shopping Center		SF Bay Area		50%		134,000		14,522		7,806		3,903

		Total Development Joint Ventures			66%		134,000		21,239		7,806		3,903

		Total Retail Consolidated Joint Ventures			81%		719,087	$	102,740	$	17,230	$	4,845


(1)	Represents the book value of the property (before accumulated depreciation) owned by the joint-venture entity and excludes net other assets.

(2)	Included as properties held for divestiture.

(3)	Represents 26 acres of land for future development. We sold 13 acres of our 39 acres in December 2002.

Unconsolidated Joint Ventures, Mortgage Investments and Other Investments:

As of December 31, 2002, we held interests in four equity investment joint ventures that are unconsolidated in our financial statements. The management and control over significant aspects of these investments are with the third party joint venture partner. In addition, as of December 31, 2002, we held one mortgage investment from which we receive interest income.

UNCONSOLIDATED JOINT VENTURES,

MORTGAGE AND OTHER INVESTMENTS


						Our Net		Our		Our
				Total		Equity		Ownership		Share
Joint Ventures	Market	Alliance Partner		Square Feet		Investment		Percentage		of Debt


	(Dollars in thousands)
1. Elk Grove Du Page	Chicago		Hamilton Partners		4,046,721	$	58,966		56%	$	13,438
2. Pico Rivera	Southern California		Majestic Realty		855,600		2,444		50%		16,826
3. Monte Vista Spectrum	Southern California		Majestic Realty		576,700		2,983		50%		9,024
4. Airport Logistics Park of Singapore Phase I(1)	Singapore		Boustead Projects		234,000		35		50%		—

Total Unconsolidated Joint Ventures					5,713,021	$	64,428		56%	$	39,288

Mortgage

Mortgage Investment

Market

Maturity

Receivable(2)

Rate

(Dollars in thousands)

1. Pier 1(3)

SF Bay Area

May 2026

13,133

13.0%

Our

Ownership

Other Investments

Market

Property Type

Investment

Percentage

(Dollars in thousands)

1. Park One(4)

Southern California

Parking Lot

75,500

100%


(1)	Square feet for development alliance joint ventures represents estimated square feet at completion of development project.

(2)	We also hold inter-company loans that we eliminate in consolidation.

(3)	We also have a 0.1% unconsolidated equity interest (with a 33% economic interest) in this property and have an option to purchase the remaining equity interest beginning January 1, 2007, and expiring December 31, 2009.

(4)	Park One is a 19.9 acre parking lot with 2,720 parking spaces and 12 billboard signs in the Los Angeles market, immediately adjacent to Los Angeles International Airport.

Secured Debt

As of December 31, 2002, we had $1.3 billion of indebtedness, net of unamortized premiums, secured by deeds of trust on 104 properties. As of December 31, 2002, the total gross investment value of those properties secured by debt was $2.6 billion. Of the $1.3 billion of secured indebtedness, $893.1 million was joint venture debt secured by properties with a gross investment value of $1.6 billion. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” and “Item 14. Note 7 of Notes to Consolidated Financial Statements” included in this report. We believe that as of December 31, 2002, the value of the properties securing the respective obligations in each case exceeded the principal amount of the outstanding obligations.

Item 3. Legal Proceedings

As of December 31, 2002, there were no pending legal proceedings to which we were a party or of which any of our properties was the subject, the adverse determination of which we anticipate would have a material adverse effect upon our financial condition, results of operations and cash flows.

Item 4. Submission of Matters to a Vote of Security Holders

None.

PART II

Item 5. Market For Registrant’s Common Equity and Related Shareholder Matters

Our common stock began trading on the New York Stock Exchange on November 21, 1997, under the symbol “AMB.” As of March 10, 2003, there were approximately 352 holders of record of our common stock (excluding shares held through The Depository Trust Company, as nominee). Set forth below are the high and low sales prices per share of our common stock, as reported on the NYSE composite tape, and the distribution per share paid or payable by us during the period from January 1, 2000, through December 31, 2002.


Year		High		Low		Dividend

2002
	1st Quarter	$	27.60	$	25.26	$	0.410
	2nd Quarter		31.00		27.46		0.410
	3rd Quarter		30.83		26.35		0.410
	4th Quarter		28.92		24.99		0.410
2001
	1st Quarter		25.56		23.71		0.395
	2nd Quarter		25.76		22.90		0.395
	3rd Quarter		26.64		23.35		0.395
	4th Quarter		26.21		23.30		0.395
2000
	1st Quarter		21.50		19.25		0.370
	2nd Quarter		23.63		21.25		0.370
	3rd Quarter		24.94		23.00		0.370
	4th Quarter		26.06		23.25		0.370

Item 6. Selected Financial and Other Data

SELECTED COMPANY FINANCIAL AND OTHER DATA (1)

The following table sets forth selected consolidated historical financial and other data for AMB Property Corporation on an historical basis as of and for the years ended December 31:


			2002			2001			2000			1999			1998


			(Dollars in thousands, except per share mounts)
Operating Data
	Total revenues		$	615,843		$	562,777		$	447,098		$	420,023		$	338,521
	Income before minority interests			148,505			148,742			151,639			144,209			113,671
	Income from continuing operations			94,371			121,653			107,847			163,975			102,526
	Net income available to common stockholders			116,153			125,053			113,282			167,603			108,954
	Net income from continuing operations per common share:
		Basic (2)		1.03			1.29			1.18			1.80			1.15
		Diluted (2)		1.02			1.28			1.18			1.80			1.15
	Net income per common share:
		Basic (2)		1.39			1.49			1.35			1.94			1.27
		Diluted (2)		1.37			1.47			1.35			1.94			1.26
	Dividends declared per common share			1.64			1.58			1.48			1.40			1.37
Other Data
	Funds from operations (3)			217,628			212,907			208,651			191,147			170,407
	Cash flows provided by (used in):
		Operating activities		288,801			288,562			261,175			190,391			177,180
		Investing activities		(318,471	)		(363,152	)		(726,499	)		63,732			(793,366	)
		Financing activities		45,931			127,303			452,370			(240,721	)		604,202
Balance Sheet Data
	Investments in real estate at cost		$	4,925,982		$	4,530,711		$	4,026,597		$	3,249,452		$	3,369,060
	Total assets			4,992,494			4,768,943			4,433,207			3,631,175			3,571,327
	Total consolidated debt			2,235,361			2,143,714			1,843,857			1,279,662			1,376,638
	Our share of total debt			1,691,737			1,655,386			1,681,161			1,168,218			1,348,107
	Contractual obligations (4)			2,609,935			2,329,152			2,002,884			1,279,662			1,376,638
	Stockholders’ equity			1,684,150			1,752,342			1,767,930			1,829,259			1,765,360


(1)	Certain items in the consolidated financial statements for prior periods have been reclassified to conform with current classifications with no effect on net income or stockholders’ equity.

(2)	Basic and diluted net income per weighted average share equals the net income available to common stockholders divided by 83,310,885 and 84,795,987 shares, respectively, for 2002; 84,174,644 and 85,214,066 shares, respectively, for 2001; 83,697,170 and 84,155,306 shares, respectively, for 2000; 86,271,862 and 86,347,487 shares, respectively, for 1999; and 85,876,383 and 86,235,176 shares, respectively, for 1998.

(3)	Funds from Operations, or FFO, is defined as income from operations before minority interest plus real estate depreciation, discontinued operations’ FFO and adjustments to derive our pro rata share of the FFO of unconsolidated joint ventures, less minority interests’ pro rata share of the FFO of consolidated joint ventures and preferred stock dividends. In accordance with the National Association of Real Estate Investment Trust White Paper on funds from operations, we include the effects of straight-line rents in funds from operations. We believe that FFO is an appropriate measure of performance for a real estate investment trust because it is widely used by investors and analysts. While FFO is a relevant and widely used measure of operating performance of real estate investment trusts, it does not represent cash flow from operations or net income as defined by accounting principles generally accepted in the United States of America, or GAAP, and it should not be considered as an alternative to these indicators in evaluating liquidity or operating performance. Further, FFO as disclosed by other real estate investment trusts may not be comparable. For a presentation of and a quantitative reconciliation of FFO with the most directly comparable financial measure to FFO calculated in accordance with GAAP, please see the supplemental earnings table in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(4)	Contractual obligations include short-term and long-term debt payments and lease obligations. Amounts due within one year were $160.3 million, $103.5 million, $54.1 million, $128.1 million and $14.1 million as of December 31, 2002, 2001, 2000, 1999 and 1998, respectively.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our consolidated financial condition and results of operations in conjunction with the notes to consolidated financial statements. Statements contained in this discussion that are not historical facts may be forward-looking statements. Such statements relate to our future performance and plans, results of operations, capital expenditures, acquisitions, and operating improvements and costs. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or “anticipates,” or the negative of these words and phrases, or similar words or phrases. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements involve numerous risks and uncertainties and you should not rely upon them as predictions of future events. There is no assurance that the events or circumstances reflected in forward-looking statements will occur or be achieved. Forward-looking statements are necessarily dependent on assumptions, data or methods that may be incorrect or imprecise and we may not be able to realize them.

The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:


	•	defaults or non-renewal of leases by customers;

	•	increased interest rates and operating costs;

	•	our failure to obtain necessary outside financing;

	•	difficulties in identifying properties to acquire and in effecting acquisitions;

	•	our failure to successfully integrate acquired properties and operations;

	•	our failure to divest of properties that we have contracted to sell or to timely reinvest proceeds from any such divestitures;

	•	risks and uncertainties affecting property development and construction (including construction delays, cost overruns, our inability to obtain necessary permits and public opposition to these activities);

	•	our failure to qualify and maintain our status as a real estate investment trust under the Internal Revenue Code of 1986;

	•	environmental uncertainties;

	•	risks related to natural disasters;

	•	financial market fluctuations;

	•	changes in real estate and zoning laws;

	•	increases in real property tax rates; and

	•	risks of doing business internationally, including currency risks.

Our success also depends upon economic trends generally, including interest rates, income tax laws, governmental regulation, legislation, population changes and those other risk factors discussed in the section entitled “Business Risks” in this report. We caution you not to place undue reliance on forward-looking statements, which reflect our analysis only and speak as of the date of this report or as of the dates indicated in the statements.

GENERAL

We commenced operations as a fully integrated real estate company in connection with the completion of our initial public offering on November 26, 1997, and elected to be taxed as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code of 1986 with our initial tax return for the year

ended December 31, 1997. AMB Property Corporation and the operating partnership were formed shortly before the consummation of our initial public offering.

We generate revenue primarily from rent received from customers under long-term operating leases at our properties, including reimbursements from customers for certain operating costs and our private capital business. In addition, our growth is, in part, dependent on our ability to increase occupancy rates or increase rental rates at our properties and our ability to continue the acquisition and development of additional properties. Although the weak economy has decreased customer demand for new space and has limited or in some cases lowered rent growth, many types of investors are acquiring industrial real estate. In 2002, we capitalized on this opportunity by accelerating our portfolio repositioning program through the disposition of properties. Our income would be adversely affected if a significant number of customers were unable to pay rent or if we were unable to rent our industrial space on favorable terms. Certain significant expenditures associated with an investment in real estate (such as mortgage payments, real estate taxes and maintenance costs) generally do not decline when circumstances cause a reduction in income from the property. Moreover, as the general partner of the operating partnership, we generally will be liable for all of the operating partnership’s unsatisfied obligations other than non-recourse obligations, including the operating partnership’s obligations as the general partner of the co-investment joint ventures. Any such liabilities could adversely affect our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our stock.

Critical Accounting Policies

Our discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and contingencies as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We evaluate our assumptions and estimates on an on-going basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Rental Revenues. We record rental revenue from operating leases on a straight-line basis over the term of the leases and maintain an allowance for estimated losses that may result from the inability of our customers to make required payments. If customers fail to make contractual lease payments that are greater than our bad-debt reserves, security deposits and letters of credit, then we may have to recognize additional bad debt charges in future periods. Each period we review our outstanding accounts receivable, including straight-line rents, for doubtful accounts and provide allowances as needed. Historically, our bad debt expense has been between 50 and 150 basis points of total revenues.

Consolidated Joint Ventures.Minority interests represent the limited partnership interests in the operating partnership and interests held by certain third parties in several real estate joint ventures, aggregating approximately 33.8 million square feet, which are consolidated for financial reporting purposes. Such investments are consolidated because we own a majority interest or we exercise significant control over major operating decisions such as approval of budgets, selection of property managers, investment activity and changes in financing.

Investments in Unconsolidated Joint Ventures.We have non-controlling limited partnership interests in four separate unconsolidated joint ventures. These investments are not consolidated because we do not exercise significant control over major operating decisions such as approval of budgets, selection of property managers, investment activity and changes in financing. We account for the joint ventures using the equity method of accounting.

Stock-based Compensation Expense.In 2002, we adopted the expense recognition provisions of Statement of Financial Accounting Standard (“SFAS”) No. 123, Accounting for Stock-Based Compensation. We value stock options issued using the Black-Scholes option-pricing model and recognize this value as an expense over the period in which the options vest. Under this standard, recognition of expense for stock options is retroactively applied to all options granted after the beginning of the year of adoption. Prior to 2002, we followed the intrinsic method set forth in APB Opinion 25, Accounting for Stock Issued to Employees. During 2002, we awarded 2.0 million stock options to employees. In accordance with SFAS No. 123, we will recognize the associated expense over the three to five-year vesting periods. The expense is included in general and administrative expenses in the accompanying consolidated statements of operations.

REIT Compliance. We elected to be taxed as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code commencing with our taxable year ended December 31, 1997. In order to qualify as a real estate investment trust, we must derive at least 95% of our gross income in any year from qualifying sources. In addition, we must pay dividends to stockholders aggregating annually at least 90% of our real estate investment trust taxable income (determined without regard to the dividends paid deduction and by excluding capital gains) and must satisfy specified asset tests on a quarterly basis. It is our current intention to adhere to these requirements and maintain our REIT status. As a REIT, we generally will not be subject to corporate level federal income tax on net income that we distribute currently to our stockholders. As such, no provision for federal income taxes has been included in the accompanying consolidated financial statements. As a REIT, we still may be subject to certain state, local and foreign taxes on our income and property and to federal income and excise taxes on our undistributed taxable income. In addition, we will be required to pay federal and state income tax on the net taxable income, if any, from the activities conducted through our taxable REIT subsidiaries.

RESULTS OF OPERATIONS

The analysis below includes changes attributable to acquisitions, development activity, divestitures and the changes resulting from properties that we owned during both the current and prior year reporting periods, excluding development properties prior to being stabilized (generally defined as 90% leased or 12 months after we receive a certificate of occupancy for the building). We refer to these properties as the same store properties. For the comparison between the years ended December 31, 2002 and 2001, the same store industrial properties consisted of properties aggregating approximately 68.0 million square feet. The properties acquired during 2002 consisted of 43 buildings, aggregating approximately 5.4 million square feet. The properties acquired during 2001 consisted of 65 buildings, aggregating approximately 6.8 million square feet. In 2002, property divestitures consisted of 58 industrial buildings and two retail centers, aggregating approximately 5.7 million square feet. In 2001, property divestitures consisted of 24 industrial and two retail buildings, aggregating approximately 3.2 million square feet. Our future financial condition and results of operations, including rental revenues, may be impacted by the acquisition of additional properties and dispositions. Our future revenues and expenses may vary materially from historical rates.

in demand for industrial warehouse facilities. This reduction in demand was evidenced by two significant factors: decreases in national industrial occupancy levels and negative net absorption of industrial facility space. Specifically, according to Torto Wheaton Research, at December 31, 2001, national industrial occupancy was 90.2%; by December 31, 2002, national occupancy fell to 88.8%. As reported by Torto Wheaton Research, national net absorption of industrial space (the change in the amount of square footage leased in existing and newly constructed industrial properties) was positive from 1989 through 2000. By contrast, Torto Wheaton Research reported that net absorption was negative by 152.0 million square feet in 2001 and 34.0 million square feet in 2002. These factors combined to reduce market rents for industrial properties by approximately 15% to 20% nationally from peak levels at the beginning of 2001. While the level of rental rate reduction varied by market, we strove to maintain high occupancy by pricing lease renewals and new leases with sensitivity to local market conditions.

For the Years Ended December 31, 2002 and 2001


Rental Revenues			2002			2001			$ Change			% Change


			(Dollars in millions)
Industrial:
	Same store		$	490.9		$	472.4		$	18.5			3.9	%
	2001 acquisitions			46.7			20.3			26.4			130.0	%
	2002 acquisitions			21.2			—			21.2			—
	Developments			20.2			9.6			10.6			110.4	%
	Divestitures			21.9			31.3			(9.4	)		(30.0	)%
Retail				16.9			24.3			(7.4	)		(30.5	)%
Discontinued operations				(40.3	)		(38.0	)		2.3			—
Straight-line rents				11.0			10.1			0.9			8.9	%

		Total	$	588.5		$	530.0		$	58.5			11.0	%

The growth in rental revenues in same store properties resulted primarily from increased lease termination fees, fixed rent increases on existing leases and reimbursement of expenses, partially offset by lower average occupancies. Industrial same store occupancy was 94.6% at December 31, 2002, and 95.0% at December 31, 2001. Year-to-date, the same store rent decrease on industrial renewals and rollovers (cash basis) was (1.4%) on 13.8 million square feet leased. The increase in straight-line rents was partially offset by write-offs associated with lease terminations. In 2002, lease termination fees increased $9.5 million, net of straight-line rent adjustments and lease cost and tenant improvement write-downs, over 2001.


Private Capital and Other Income		2002		2001		$ Change			% Change

Equity in earnings of unconsolidated joint ventures		$	5.7	$	5.5	$	0.2			3.6	%
Private capital income			11.2		11.0		0.2			1.8	%
Interest and other income			10.4		16.3		(5.9	)		(36.2	)%

	Total	$	27.3	$	32.8	$	(5.5	)		(16.8	)%

The decrease in interest and other income was primarily due to the repayment of the $74.0 million mortgage note in July 2002. We carried a 9.5% mortgage note secured by the retail center that we sold in September 2000 in the principal amount of $74.0 million.


Property Operating Expenses and Real Estate Taxes
(Exclusive of depreciation and amortization)			2002			2001			$ Change			% Change

Rental expenses			$	77.5		$	64.5		$	13.0			20.2	%
Real estate taxes				68.4			63.3			5.1			8.1	%

	Property operating expenses		$	145.9		$	127.8		$	18.1			14.2	%

Industrial:
	Same store		$	118.3		$	112.6		$	5.7			5.1	%
	2001 acquisitions			11.0			3.9			7.1			182.1	%
	2002 acquisitions			6.8			—			6.8			—
	Developments			7.2			3.1			4.1			132.3	%
	Divestitures			6.7			10.0			(3.3	)		(33.0	)%
Retail				6.3			8.6			(2.3	)		(26.7	)%
Discontinued operations				(10.4	)		(10.4	)		0.0			—

		Total	$	145.9		$	127.8		$	18.1			14.2	%

The $5.7 million increase in same store properties’ operating expenses primarily relates to increases in real estate taxes of $1.2 million and insurance expenses of $3.7 million due to premium increases.


Other Expenses		2002		2001		$ Change		% Change

Interest, including amortization		$	147.1	$	124.9	$	22.2		17.8	%
Depreciation and amortization			127.2		104.8		22.4		21.4	%
General and administrative			47.2		35.8		11.4		31.8	%

	Total	$	321.5	$	265.5	$	56.0		21.1	%

The increase in interest expense was primarily due to the issuance of additional unsecured senior debt securities and an increase in secured debt balances, partially offset by decreased borrowings on our unsecured credit facility. The secured debt issuances were primarily for our co-investment joint ventures’ properties. The increase in depreciation expense was due to the increase in our net investment in real estate. The increase in general and administrative expenses was primarily due to the consolidation of AMB Investment Management, Inc. (predecessor-in-interest to AMB Capital Partners, LLC) and Headlands Realty Corporation on May 31, 2001. Prior to May 31, 2001, general and administrative expenses did not include expenses incurred by two unconsolidated preferred stock subsidiaries, Headlands Realty Corporation and AMB Investment Management, Inc. General and administrative expenses would have been $39.4 million had the subsidiaries been consolidated beginning January 1, 2001. The increase in general and administrative expenses was also due to increased stock-based compensation expense, additional staffing and expenses for new initiatives, including our international expansion and income taxes for our taxable REIT subsidiaries.

In 2001, we recognized $20.8 million of losses on investments in other companies, including our investment in Webvan Group, Inc. and other technology-related companies. The loss reflects a 100% write-down of the investments. No gains or losses were recognized in 2002.

For the Years Ended December 31, 2001 and 2000


Rental Revenues		2001			2000			$ Change			% Change


		(Dollars in millions)
Same store		$	400.2		$	376.7		$	23.5			6.2	%
2000 acquisitions			97.1			25.6			71.5			279.3	%
2001 acquisitions			22.8			—			22.8			—
Developments			26.9			14.6			12.3			84.0	%
Divestitures			10.9			37.1			(26.2	)		(70.6	)%
Discontinued operations			(38.0	)		(33.1	)		(4.9	)		14.8	%
Straight-line rents			10.1			10.2			(0.1	)		(1.0	)%

	Total	$	530.0		$	431.1		$	98.9			22.9	%

The growth in rental revenues in same store properties resulted primarily from the incremental effect of cash rental rate increases on renewals and rollovers, fixed rent increases on existing leases, and reimbursement of expenses, partially offset by lower average occupancies. During 2001, the same store rent increases on industrial renewals and rollovers (cash basis) was 23.5% on 10.0 million square feet leased.


Private Capital and Other Income		2001		2000		$ Change		% Change

Equity in earnings of unconsolidated joint ventures		$	5.5	$	5.2	$	0.3		5.8	%
Private capital income			11.0		4.3		6.7		155.8	%
Interest and other income			16.3		6.5		9.8		150.8	%

	Total	$	32.8	$	16.0	$	16.8		105.0	%

The $6.7 million increase in private capital income was due primarily to increased asset management and acquisition fees and priority distributions from our co-investment joint ventures. The $9.8 million increase in interest and other income was primarily due to interest income from our mortgage note on the retail center that we sold in 2000 and from interest income resulting from higher average cash balances.


Property Operating Expenses and Real Estate Taxes
(Exclusive of depreciation and amortization)			2001			2000			$ Change			% Change

Rental expenses			$	64.5		$	46.4		$	18.1			39.0	%
Real estate taxes				63.3			52.0			11.3			21.7	%

	Property operating expenses		$	127.8		$	98.4		$	29.4			29.9	%

Same store			$	93.2		$	87.2		$	6.0			6.9	%
2000 acquisitions				27.9			7.1			20.8			293.0	%
2001 acquisitions				4.4			—			4.4			—
Developments				9.6			4.3			5.3			123.3	%
Divestitures				3.1			9.2			(6.1	)		(66.3	)%
Discontinued operations				(10.4	)		(9.4	)		(1.0	)		10.6	%

		Total	$	127.8		$	98.4		$	29.4			29.9	%

The increase in same store properties’ operating expenses primarily relates to increases in common area maintenance expenses of $2.3 million, real estate taxes of $2.5 million and insurance expense of $0.8 million.


Other Expenses		2001		2000		$ Change		% Change

Interest, including amortization		$	124.9	$	85.8	$	39.1		45.6	%
Depreciation and amortization			104.8		85.0		19.8		23.3	%
General and administrative			35.8		23.7		12.1		51.1	%

	Total	$	265.5	$	194.5	$	71.0		36.5	%

During 2001, we recognized $20.8 million of losses on investments in other companies, related to our investment in Webvan Group, Inc. and other technology-related companies. The loss reflects a 100% write-down of the book value of the investments.

LIQUIDITY AND CAPITAL RESOURCES

We currently expect that our principal sources of working capital and funding for acquisitions, development, expansion and renovation of properties will include:


	•	cash flow from operations;

	•	borrowings under our unsecured credit facility;

	•	other forms of secured or unsecured financing;

	•	proceeds from equity or debt offerings by us or the operating partnership (including issuances of limited partnership units in the operating partnership or its subsidiaries);

	•	net proceeds from divestitures of properties; and

	•	private capital from co-investment partners.

We believe that our sources of working capital, specifically our cash flow from operations, borrowings available under our unsecured credit facility and our ability to access private and public debt and equity capital, are adequate for us to meet our liquidity requirements for the foreseeable future.

Capital Resources

Property Divestitures.During 2002, we divested ourselves of 58 industrial buildings, two retail centers and an undeveloped retail land parcel for an aggregate price of $244.0 million, with a resulting net gain of $9.6 million. During 2002, we also completed and sold six buildings developed as part of our development-for-sale program for a net gain of $1.0 million.

Properties Held for Divestiture.We have decided to divest ourselves of two retail centers, four industrial properties and two development properties, which are not in our core markets or which do not meet our current strategic objectives. The divestitures of the properties are subject to negotiation of acceptable terms and other customary conditions. As of December 31, 2002, the net carrying value of the properties held for divestiture was $107.9 million.

Co-investment Joint Ventures.We consolidate the financial position, results of operations and cash flows of our five co-investment joint ventures. Our five co-investment joint ventures are engaged in the acquisition, ownership, operation, management and, in some cases, the renovation, expansion and development of industrial buildings in target markets nationwide. We consolidate these joint ventures for financial reporting purposes because we are the sole managing general partner and, as a result, control all major operating decisions. Third-party equity interests in the joint ventures are reflected as minority interests in the consolidated financial statements. As of December 31, 2002, we owned approximately 28.2 million square feet of our properties through these five co-investment joint ventures and 5.6 million square feet of our properties through our other consolidated joint ventures. We may make additional investments through these joint ventures or new joint ventures in the future and presently plan to do so.

During 2002, we sold $76.9 million in operating properties, consisting of 15 industrial buildings, aggregating approximately 1.9 million square feet, to one of our co-investment joint ventures, AMB-SGP, L.P. We recognized a gain of $3.3 million related to this sale, representing the portion of the sold properties acquired by the third-party co-investor. We also sold 30% of our interest in AMB Partners II, L.P. to our co-investment joint venture partner, we now own 20% of AMB Partners II, L.P. We recognized a gain of $6.3 million related to this sale.

Our co-investment joint ventures at December 31, 2002 (dollars in thousands):


		Company’s
		Approximate
		Ownership			Total Planned
Co-investment Joint Venture	Joint Venture Partner	Percentage			Capitalization(1)

AMB/ Erie, L.P.	Erie Insurance Company and affiliates		50%		$	200,000
AMB Institutional Alliance Fund I, L.P.	AMB Institutional Alliance REIT I, Inc.(2)		21%		$	420,000
AMB Partners II, L.P.	City and County of San Francisco Employees’ Retirement System		20%	(5)	$	500,000
AMB-SGP, L.P.	Industrial JV Pte Ltd. GIC Real Estate Pte Ltd.(3)		50%		$	425,000
AMB Institutional Alliance Fund II, L.P.	Employees’ Retirement System AMB Institutional Alliance REIT II, Inc.(4)		20%		$	489,000


(1)	Planned capitalization includes anticipated debt and both partners’ expected equity contributions.

(2)	Included 15 institutional investors as stockholders as of December 31, 2002.

(3)	A subsidiary of the real estate investment subsidiary of the Government of Singapore Investment Corporation.

(4)	Included 14 institutional investors as stockholders as of December 31, 2002.

(5)	In November 2002, our partner increased its ownership in AMB Partners II, L.P. from 50% to 80% by acquiring 30% of our partnership interest. We recognized a gain of $6.3 million.

Equity. We have authorized for issuance 100,000,000 shares of preferred stock, of which the following series were designated as of December 31, 2002: 4,600,000 shares of Series A preferred; 1,300,000 shares of Series B preferred; 1,595,337 shares of Series D preferred; 220,440 shares of Series E preferred; 267,439 shares of Series F preferred; 840,000 shares of Series H preferred; 510,000 shares of Series I preferred; 800,000 shares of Series J preferred; and 800,000 shares of Series K preferred. On July 31, 2002, AMB Property II, L.P., one of our subsidiaries, repurchased 130,000 7.95% Series F Cumulative Redeemable Preferred Limited Partnership Units and all 20,000 of its outstanding 7.95% Series G Cumulative Redeemable Preferred Limited Partnership Units from a single institutional investor. We redeemed the units for an aggregate cost of $7.1 million, including accrued and unpaid dividends and a redemption discount of $0.4 million.

On April 17, 2002, the operating partnership issued and sold 800,000 7.95% Series K Cumulative Redeemable Preferred Limited Partnership Units at a price of $50.00 per unit in a private placement. Distributions are cumulative from the date of issuance and payable quarterly in arrears. The Series K Preferred Units are redeemable by the operating partnership on or after April 17, 2007, subject to certain conditions, for cash at a redemption price equal to $50.00 per unit, plus accumulated and unpaid distributions thereon, if any, to the redemption date. The Series K Preferred Units are exchangeable at specified times and subject to certain conditions, on a one-for-one basis, for shares of our Series K Preferred Stock. The operating partnership used the net proceeds of $39.0 million for general corporate purposes, which included the partial repayment of indebtedness and the acquisition and development of additional properties.

During 2002, we redeemed 122,640 common limited partnership units of the operating partnership for shares of our common stock.

In December 2001, our board of directors approved a new stock repurchase program for the repurchase of up to $100.0 million worth of our common and preferred stock. In December 2002, our board of directors increased the repurchase program to $200.0 million. The current stock repurchase program expires in December 2003 and as of December 31, 2002, $130.6 million of repurchase capacity remained under our current stock repurchase program. During 2002, we repurchased 2,651,600 shares of our common stock for $69.4 million, including commissions. In July 2002, we also repurchased 4,200 shares of our Series A Preferred Stock for an aggregate cost of $0.1 million, including accrued and unpaid dividends.

Debt. In order to maintain financial flexibility and facilitate the deployment of capital through market cycles, we presently intend to operate with a debt-to-total market capitalization ratio (our share) of approximately 45% or less. As of December 31, 2002, our share of total debt-to-total market capitalization ratio was 37.7%. Additionally, we currently intend to manage our capitalization in order to maintain an investment grade rating on our senior unsecured debt. In spite of these policies, our organizational documents do not contain any limitation on the amount of indebtedness that we may incur. Accordingly, our board of directors could alter or eliminate these policies or circumstances could arise that could render us unable to comply with these policies.

As of December 31, 2002, the aggregate principal amount of our secured debt was $1.3 billion, excluding unamortized debt premiums of $9.8 million. Of the $1.3 billion of secured debt, $0.9 billion is secured by properties in our joint ventures. The secured debt is generally non-recourse and bears interest at rates varying from 3.0% to 10.4% per annum (with a weighted average rate of 7.3%) and final maturity dates ranging from January 2003 to June 2023. All of the secured debt bears interest at fixed rates, except for seven loans with an aggregate principal amount of $65.6 million as of December 31, 2002, which bear interest at variable rates (with a weighted average interest rate of 3.5% as of December 31, 2002). Over time, we intend to repay the secured debt on our 100%-owned assets and may prepay if market conditions warrant.

In May 2002, the operating partnership commenced a medium-term note program for the issuance of up to $400.0 million in principal amount of medium-term notes, which will be guaranteed by us. As of December 31, 2002, the operating partnership had issued no medium-term notes under this program.

In August 2000, the operating partnership commenced a medium-term note program for the issuance of up to $400.0 million in principal amount of medium-term notes, which are guaranteed by us. On January 14, 2002, the operating partnership completed the program when it issued and sold the remaining $20.0 million of the notes to Lehman Brothers, Inc., as principal. We have guaranteed the notes, which mature on January 17, 2007, and bear interest at 5.90% per annum. The operating partnership used the net proceeds of $19.9 million for general corporate purposes, to partially repay indebtedness and to acquire and develop additional properties.

We guarantee the operating partnership’s obligations with respect to its senior debt securities. If we are unable to refinance or extend principal payments due at maturity or pay them with proceeds from other capital transactions, then our cash flow may be insufficient to pay dividends to our stockholders in all years and to repay debt upon maturity. Furthermore, if prevailing interest rates or other factors at the time of refinancing (such as the reluctance of lenders to make commercial real estate loans) result in higher interest rates upon refinancing, then the interest expense relating to that refinanced indebtedness would increase. This increased interest expense would adversely affect our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our stock.

Credit Facilities.In December 2002, the operating partnership renewed its $500.0 million unsecured revolving line of credit. We guarantee the operating partnership’s obligations under the credit facility. The credit facility matures in December 2005, has a one-year extension option and is currently subject to a 20 basis point annual facility fee. Borrowings under our credit facility currently bear interest at LIBOR plus 60 basis points. Both the facility fee and the interest rate are based on our credit rating, which is currently investment grade. However, if our credit rating falls below investment grade, then our facility fee and interest rate may increase. The credit facility includes a multi-currency component under which up to $150.0 million may be drawn in either British pounds sterling, euros or yen, provided that such currency is readily available and freely transferable and convertible to U.S. dollars. The Reuters Monitor Money Rates Service reports LIBOR for such currency in interest periods of 1, 2, 3 or 6 months. The operating partnership has the ability to increase available borrowings to $700.0 million by adding additional banks to the facility or obtaining the agreement of existing banks to increase their commitments. We use our unsecured credit facility principally for acquisitions and for general working capital requirements. Monthly debt service payments on our credit facility are interest only. The total amount available under our credit facility fluctuates based upon the borrowing base, as defined in the agreement governing the credit facility, generally the value of our unencumbered properties. As of December 31, 2002, the outstanding balance on our unsecured credit facility was $95.0 million and the

remaining amount available was $379.0 million, net of outstanding letters of credit (excluding the $200.0 million of potential additional capacity).

In July 2001, AMB Institutional Alliance Fund II, L.P. obtained a $150.0 million credit facility secured by the unfunded capital commitments of the investors in AMB Institutional Alliance REIT II, Inc. and AMB Institutional Alliance Fund II, L.P. Borrowings currently bear interest at LIBOR plus 87.5 basis points. As of December 31, 2002, the outstanding balance was $45.5 million and the remaining amount available was $31.2 million, net of outstanding letters of credit and capital contributions from third-party investors.

Mortgage Receivables.In September 2000, we sold a retail center located in Southern California. We carried a 9.5% mortgage note secured by the retail center in the principal amount of $74.0 million, due September 30, 2002. On July 3, 2002, we received a full repayment of the mortgage. Through a wholly-owned subsidiary, we also hold a mortgage loan receivable on AMB Pier One, LLC, an unconsolidated joint venture. The note bears interest at 13.0% and matures in May 2026. As of December 31, 2002, the outstanding balance on the note was $13.1 million.

The tables below summarize our debt maturities and capitalization as of December 31, 2002 (dollars in thousands):

DEBT


				Company			Joint			Unsecured
				Secured			Venture			Senior Debt			Unsecured			Credit
				Debt			Debt			Securities			Debt			Facilities			Total Debt

2003				$	74,631		$	19,678		$	—		$	558		$	45,500		$	140,367
2004					63,465			64,928			—			601			—			128,994
2005					45,511			59,326			250,000			647			95,000			450,484
2006					85,023			65,676			25,000			698			—			176,397
2007					24,073			43,163			75,000			752			—			142,988
2008					32,669			154,684			175,000			810			—			363,163
2009					4,147			76,826			—			873			—			81,846
2010					50,948			105,854			75,000			941			—			232,743
2011					409			179,295			75,000			1,014			—			255,718
2012					407			101,399			—			1,092			—			102,898
Thereafter					481			22,264			125,000			2,200			—			149,945

	Subtotal				381,764			893,093			800,000			10,186			140,500			2,225,543
	Unamortized premiums				7,835			1,983			—			—			—			9,818

			Total consolidated debt		389,599			895,076			800,000			10,186			140,500			2,235,361
	Our share of unconsolidated joint venture debt(1)				—			39,288			—			—			—			39,288

			Total debt		389,599			934,364			800,000			10,186			140,500			2,274,649
	Joint venture partners’ share of consolidated joint venture debt				—			(546,509	)		—			—			(36,400	)		(582,909	)

		Our share of total debt		$	389,599		$	387,855		$	800,000		$	10,186		$	104,100		$	1,691,740

	Weighed average interest rate				8.1	%		7.0	%		7.2	%		7.5	%		2.1	%		7.0	%
	Weighed average maturity (in years)				3.7			7.1			6.5			11.8			2.2			6.0


(1)	The weighted average interest and maturity for the unconsolidated joint venture debt were 6.4% and 6.6 years, respectively.

MARKET EQUITY


		Shares/Units
Security		Outstanding		Market Price		Market Value

Common stock			82,029,449	$	27.36	$	2,244,326
Common limited partnership units			4,846,387		27.36		132,597

	Total		86,875,836			$	2,376,923

PREFERRED STOCK AND UNITS


		Dividend			Liquidation		Redemption
Security		Rate			Preference		Provisions

Series A preferred stock			8.50	%	$	99,895		July 2003
Series B preferred units			8.63	%		65,000		November 2003
Series D preferred units			7.75	%		79,767		May 2004
Series E preferred units			7.75	%		11,022		August 2004
Series F preferred units			7.95	%		13,372		March 2005
Series H preferred units			8.13	%		42,000		September 2005
Series I preferred units			8.00	%		25,500		March 2006
Series J preferred units			7.95	%		40,000		September 2006
Series K preferred units			7.95	%		40,000		April 2007

	Weighted average/total		8.17	%	$	416,556

CAPITALIZATION RATIOS


Total debt-to-total market capitalization	44.9	%
Our share of total debt-to-total market capitalization	37.7	%
Total debt plus preferred-to-total market capitalization	53.1	%
Our share of total debt plus preferred-to-total market capitalization	47.0	%
Our share of total debt-to-total book capitalization	45.9	%

Liquidity

As of December 31, 2002, we had $117.2 million in cash, restricted cash and cash equivalents, and $379.0 million of additional available borrowings under our credit facility. We also had $31.2 million of additional available borrowings under our AMB Institutional Alliance Fund II, L.P. credit facility. To fund acquisitions, development activities and capital expenditures, and to provide for general working capital requirements, we intend to use:


	•	cash flow from operations;

	•	borrowings under our unsecured credit facility;

	•	other forms of secured and unsecured financing;

	•	proceeds from any future debt or equity offerings by us or the operating partnership (including issuances of limited partnership units in the operating partnership or its subsidiaries);

	•	net proceeds from divestitures of properties; and

	•	private capital from our co-investment partners.

The unavailability of capital would adversely affect our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our stock.

Our board of directors declared a regular cash dividend for the quarter ending December 31, 2002, of $0.41 per share of common stock and the operating partnership declared a regular cash distribution for the quarter ending December 31, 2002, of $0.41 per common unit. The dividends and distributions were payable on January 6, 2003, to stockholders and unitholders of record on December 20, 2002. The Series A, B, E, F, J and K preferred stock and unit dividends and distributions were payable on January 15, 2003, to stockholders and unitholders of record on January 3, 2003. The Series D, H and I preferred unit distributions were payable on December 26, 2002. The following table sets forth the dividends and distributions paid or payable per share or unit for the years ended December 31, 2002, 2001 and 2000:


Paying Entity	Security		2002		2001		2000

AMB Property Corporation		Common stock	$	1.64	$	1.58	$	1.48
AMB Property Corporation		Series A preferred stock	$	2.13	$	2.13	$	2.13
Operating Partnership		Common limited partnership units	$	1.64	$	1.58	$	1.48
Operating Partnership		Series A preferred units	$	2.13	$	2.13	$	2.13
Operating Partnership		Series B preferred units	$	4.31	$	4.31	$	4.31
Operating Partnership		Series J preferred units	$	3.98	$	1.24		n/a
Operating Partnership		Series K preferred units	$	2.96		n/a		n/a
AMB Property II, L.P.		Series C preferred units		n/a	$	3.88	$	4.38
AMB Property II, L.P.		Series D preferred units	$	3.88	$	3.88	$	3.88
AMB Property II, L.P.		Series E preferred units	$	3.88	$	3.88	$	3.88
AMB Property II, L.P.		Series F preferred units(1)	$	3.34	$	3.98	$	3.09
AMB Property II, L.P.		Series G preferred units(1)	$	2.14	$	3.98	$	1.35
AMB Property II, L.P.		Series H preferred units	$	4.06	$	4.06	$	1.30
AMB Property II, L.P.		Series I preferred units	$	4.00	$	3.04		n/a

(1)

On July 31, 2002, AMB Property II, L.P., one of our subsidiaries, repurchased 130,000 of its 7.95% Series F Cumulative Redeemable Preferred Limited Partnership Units and all 20,000 of its outstanding 7.95% Series G Cumulative Redeemable Preferred Limited Partnership Units from a single institutional investor. On July, 31, 2002, AMB Property II, L.P. paid a distribution, which accrued during the period from July 15, 2002 to July 31, 2002, of $0.155 per unit on the 130,000 Series F preferred units that were redeemed.

The anticipated size of our distributions, using only cash from operations, will not allow us to retire all of our debt as it comes due. Therefore, we intend to also repay maturing debt with net proceeds from future debt or equity financings, as well as property divestitures. However, we may not be able to obtain future financings on favorable terms or at all. Our inability to obtain future financings on favorable terms or at all would adversely affect our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our stock.

Capital Commitments

Developments. In addition to recurring capital expenditures, which consist of building improvements and leasing costs incurred to renew or re-tenant space, as of December 31, 2002, we are developing ten projects representing a total estimated investment of $106.8 million upon completion and three development projects available for sale representing a total estimated investment of $49.1 million upon completion. Of this total, $92.8 million had been funded as of December 31, 2002, and an estimated $63.1 million is required to complete current and planned projects. We expect to fund these expenditures with cash from operations, borrowings under our credit facility, debt or equity issuances and net proceeds from property divestitures, which could have an adverse effect on our cash flow.

Acquisitions. During 2002, we invested $403.3 million in 43 operating industrial buildings, aggregating approximately 5.4 million rentable square feet, and a parking lot adjacent to Los Angeles International

Airport. We funded these acquisitions and initiated development and renovation projects through private capital contributions, borrowings under our credit facility, cash, debt issuances and net proceeds from property divestitures.

Lease Commitments.We have entered into operating ground leases on certain land parcels, primarily on-tarmac facilities, and office space with remaining lease terms from one to 38 years. Future minimum rental payments required under non-cancelable operating leases in effect as of December 31, 2002, were as follows (dollars in thousands):


2003		$	19,921
2004			19,753
2005			19,819
2006			20,553
2007			20,772
Thereafter			283,574

	Total lease commitments	$	384,392

These operating lease payments are being amortized ratably over the terms of the related leases.

Captive Insurance Company.We have responded to recent trends towards increasing costs and decreasing coverage availability in the insurance markets by obtaining higher-deductible property insurance from third-party insurers and by forming a wholly-owned captive insurance company, Arcata National Insurance Ltd., in December 2001. Arcata National Insurance Ltd. provides insurance coverage for all or a portion of losses below the increased deductible under the third-party policies. We capitalized Arcata National Insurance Ltd. in accordance with regulatory requirements. Arcata National Insurance Ltd. established annual premiums based on projections derived from the past loss experience of our properties. Annually, we engage an independent third party to perform an actuarial estimate of future projected claims and projected expenses necessary to fund associated risk management programs. Premiums paid to Arcata National Insurance Ltd. may be adjusted based on this estimate. Premiums paid to Arcata National Insurance Ltd. have a retrospective component, so that if expenses, including losses, are less than premiums collected, the excess will be returned to the property owners (and, in turn, as appropriate, to the customers) and conversely, subject to certain limitations, if expenses, including losses, are greater than premiums collected, an additional premium will be charged. As with all recoverable expenses, differences between estimated and actual insurance premiums will be recognized in the subsequent year. Through this structure, we believe that we have been able to obtain insurance for our portfolio with more comprehensive coverage at a projected overall lower cost than would otherwise be available in the market.

Potential Unknown Liabilities.Unknown liabilities may include the following:


	•	liabilities for clean-up or remediation of undisclosed environmental conditions;

	•	claims of customers, vendors or other persons dealing with our predecessors prior to our formation transactions that had not been asserted prior to our formation transactions;

	•	accrued but unpaid liabilities incurred in the ordinary course of business;

	•	tax liabilities; and

	•	claims for indemnification by the officers and directors of our predecessors and others indemnified by these entities.

Overview of Contractual Obligations

The following tables summarizes our debt and lease commitments as of December 31, 2002 (dollars in thousands):


		Less than						More than 5
Contractual Obligations		1 Year		1–3 Years		3–5 Years		Years		Total

Debt		$	140,367	$	579,478	$	319,385	$	1,186,313	$	2,225,543
Lease commitments			19,921		39,572		41,325		283,574		384,392

	Total contractual obligations	$	160,288	$	619,050	$	360,710	$	1,469,887	$	2,609,935

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet transactions, arrangements, obligations, guarantees or other relationships with unconsolidated entities or other persons that have, or are reasonably likely to have, a material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Supplemental Earning Measure

We believe that net income, as defined by GAAP , is the most appropriate earnings measure. However, the real estate industry has adopted a supplemental earnings measure, funds from operations, or FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), that is widely used by investors and analysts. While FFO is a relevant and widely used measure of operating performance of real estate investment trusts, it does not represent cash flow from operations or net income as defined by GAAP and it should not be considered as an alternative to those indicators in evaluating liquidity or operating performance. Further, FFO as disclosed by other real estate investment trusts may not be comparable.

FFO is defined as income from operations before minority interest plus real estate depreciation, discontinued operations’ FFO and adjustments to derive our pro rata share of FFO of unconsolidated joint ventures, less minority interests’ pro rata share of FFO of consolidated joint ventures and perpetual preferred stock dividends. In accordance with the NAREIT White Paper on FFO, we include the effects of straight-line rents in FFO. Further, we do not adjust FFO to eliminate the effects of non-recurring charges.

The following table reflects the calculation of FFO for the years ended December 31, (dollars in thousands):


			2002			2001			2000			1999			1998

Net income			$	116,153		$	125,053		$	113,282		$	167,603		$	108,954
Minority interests				37,806			34,835			20,323			14,486			9,350
Gains from dispositions of real estate, net of minority interests				(7,789	)		(23,259	)		(1,144	)		(51,263	)		—
Gains from dispositions of real estate, discontinued operations				(11,372	)		—			—			—			—
Preferred unit redemption discount/(premium)				(412	)		4,400			—			—			—
Real estate related depreciation and amortization:
	Total depreciation and amortization			127,160			104,838			84,960			63,747			55,210
	Discontinued operations’ depreciation			7,529			6,600			5,398			3,758			2,254
	Furniture, fixtures and equipment depreciation and ground lease amortization(1)			(2,450	)		(1,963	)		(1,114	)		(1,002	)		(463	)
FFO attributable to minority interests				(52,051	)		(40,144	)		(15,030	)		(8,158	)		(5,887	)
Adjustments to derive FFO in unconsolidated joint ventures:
	Our share of net income			(5,674	)		(5,467	)		(5,212	)		(4,701	)		(1,750	)
	Our share of FFO			8,728			8,014			7,188			6,677			2,739

		Funds from operations	$	217,628		$	212,907		$	208,651		$	191,147		$	170,407


(1)	Ground lease amortization represents the amortization of our investments in ground lease properties, for which we do not have a purchase option.

The following table reflects supplemental cash flow information and recurring capital expenditures for the years ended December 31, (dollars in thousands):


			2002			2001			2000

Straight-line rents			$	11,013		$	10,093		$	10,203
Our share of unconsolidated joint venture partners’ net operating income			$	11,055		$	10,181		$	8,338
Joint venture partners’ share of cash basis net operating income			$	86,482		$	65,010		$	24,979
Discontinued operations’ net operating income			$	29,949		$	27,642		$	23,727
Stock-based compensation amortization			$	5,265		$	2,725		$	1,022
Capitalized interest			$	6,919		$	13,650		$	15,461
Recurring capital expenditures:
	Tenant improvements		$	18,977		$	8,168		$	11,624
	Lease commissions and other lease costs			17,684			19,822			17,679
	Building improvements			18,270			19,852			11,270

		Subtotal		54,931			47,842			40,573
	Joint venture partners’ share of capital expenditures			(9,547	)		(5,824	)		(2,659	)

		Our share of recurring capital expenditures	$	45,384		$	42,108		$	37,914

BUSINESS RISKS

Our operations involve various risks that could have adverse consequences to us. These risks include, among others:

General Real Estate Risks

There are Factors Outside of Our Control that Affect the Performance and Value of Our Properties.

Real property investments are subject to varying degrees of risk. The yields available from equity investments in real estate depend on the amount of income earned and capital appreciation generated by the related properties as well as the expenses incurred in connection with the properties. If our properties do not generate income sufficient to meet operating expenses, including debt service and capital expenditures, then our ability to pay dividends to our stockholders could be adversely affected. Income from, and the value of, our properties may be adversely affected by the general economic climate, local conditions, such as oversupply of industrial space or a reduction in demand for industrial space, the attractiveness of our properties to potential customers, competition from other properties, our ability to provide adequate maintenance and insurance and an increase in operating costs. Periods of economic slowdown or recession in the United States and in other countries, rising interest rates or declining demand for real estate, or public perception that any of these events may occur, would result in a general decrease in rents or an increased occurrence of defaults under existing leases, which would adversely affect our financial condition and results of operations.

Our properties are currently concentrated predominantly in the industrial real estate sector. Our concentration in a certain property type exposes us to the risk of economic downturns in this sector to a greater extent than if our portfolio also included other property types. As a result of such concentration, economic downturns in the industrial real estate sector could adversely affect our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our stock. In addition, revenues from properties and real estate values are also affected by factors such as the cost of compliance with regulations, the potential for liability under applicable laws (including changes in tax laws), interest rate levels and the availability of financing. Our income would be adversely affected if a significant number of customers were unable to pay rent or if we were unable to rent our industrial space on favorable terms. Certain significant expenditures associated with an investment in real estate (such as mortgage payments, real estate taxes, and maintenance costs) generally do not decline when circumstances cause a reduction in income from the property. Future terrorist attacks in the United States may result in declining economic activity, which could harm the demand for and the value of our properties. To the extent that our customers are impacted by future attacks, their businesses similarly could be adversely affected, including their ability to continue to honor their existing leases.

We May Be Unable to Renew Leases or Relet Space as Leases Expire.

We are subject to the risks that leases may not be renewed, space may not be relet, or the terms of renewal or reletting (including the cost of required renovations) may be less favorable than current lease terms. Leases on a total of 15.4% of our industrial properties (based on annualized base rent) as of December 31, 2002, will expire on or prior to December 31, 2003. In addition, numerous properties compete with our properties in attracting customers to lease space, particularly with respect to retail centers. The number of competitive commercial properties in a particular area could have a material adverse effect on our ability to lease space in our properties and on the rents that we are able to charge. Our financial condition, results of operations, cash flow and our ability to pay dividends on, and the market price of, our stock could be adversely affected if we are unable to promptly relet or renew the leases for all or a substantial portion of expiring leases, if the rental rates upon renewal or reletting is significantly lower than expected, or if our reserves for these purposes prove inadequate.

Real Estate Investments are Illiquid.

Because real estate investments are relatively illiquid, our ability to vary our portfolio promptly in response to economic or other conditions is limited. The limitations in the Internal Revenue Code and related

regulations on a real estate investment trust holding property for sale may affect our ability to sell properties without adversely affecting dividends to our stockholders. The relative illiquidity of our holdings and Internal Revenue Code prohibitions and related regulations could impede our ability to respond to adverse changes in the performance of our investments and could adversely affect our financial condition, results of operations, cash flow and our ability to pay dividends on, and the market price of, our stock.

A Significant Number of Our Properties are Located in California.

Our industrial properties located in California as of December 31, 2002, represented 28.4% of the aggregate square footage of our industrial operating properties as of December 31, 2002, and 33.9% of our industrial annualized base rent. Annualized base rent means the monthly contractual amount under existing leases as of December 31, 2002, multiplied by 12. This amount excludes expense reimbursements and rental abatements. Our revenue from, and the value of, our properties located in California may be affected by a number of factors, including local real estate conditions (such as oversupply of or reduced demand for industrial properties) and the local economic climate. Business layoffs, downsizing, industry slowdowns, changing demographics, and other factors may adversely impact the local economic climate. A downturn in California’s economy, fiscal situation or real estate conditions could adversely affect our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our stock. Certain of our properties are also subject to possible loss from seismic activity. See “Some Potential Losses are not Covered by Insurance.”

Some Potential Losses are not Covered by Insurance.

We carry commercial liability, property and rental loss insurance covering all properties owned and managed by us, with policy specifications and insured limits that we believe are adequate and appropriate under the circumstances given relative risks, the cost of such coverage and industry practice. Certain losses such as losses due to terrorism, windstorms, floods or seismic activity may be insured subject to certain limitations, including large deductibles or co-payments and policy limits. Although we have obtained coverage for certain acts of terrorism, with policy specifications and insured limits that we believe are commercially reasonable, it is not certain that we will be able to renew coverage or collect under such policies. From time to time, we evaluate the amount of earthquake coverage that we carry for all properties owned and managed by us, to assess whether, in our good faith discretion, the coverage is adequate. We may incur material losses in excess of insurance proceeds and we may not be able to continue to obtain insurance at commercially reasonable rates. In addition, there are certain losses that are not generally insured because it is not economically feasible to insure against them, including losses due to riots or acts of war. If an uninsured loss or a loss in excess of insured limits occurs with respect to one or more of our properties, then we could lose the capital we invested in the properties, as well as the anticipated future revenue from the properties and, in the case of debt, which is with recourse to us, we would remain obligated for any mortgage debt or other financial obligations related to the properties. Moreover, as the general partner of the operating partnership, we generally will be liable for all of the operating partnership’s unsatisfied obligations other than non-recourse obligations, including any obligations incurred by the operating partnership as the general partner of the co-investment joint ventures. Any such liabilities could adversely affect our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our stock.

A number of our properties are located in areas that are known to be subject to earthquake activity, including California where, as of December 31, 2002, 295 industrial buildings, aggregating approximately 23.9 million square feet (representing 28.4% of our industrial operating properties based on aggregate square footage and 33.9% based on industrial annualized base rent), are located. We carry replacement-cost earthquake insurance on all of our properties located in areas historically subject to seismic activity, subject to coverage limitations and deductibles that we believe are commercially reasonable. This insurance coverage also applies to the properties managed by AMB Capital Partners, LLC, with a single aggregate policy limit and deductible applicable to those properties and our properties. Through an annual analysis prepared by outside consultants, we evaluate our earthquake insurance coverage in light of current industry practice and determine the appropriate amount of earthquake insurance to carry, which we believe is commercially

reasonable. We may incur material losses in excess of insurance proceeds and we may not be able to continue to obtain insurance at commercially reasonable rates.

We are Subject to Risks and Liabilities In Connection With Properties Owned Through Joint Ventures, Limited Liability Companies and Partnerships.

As of December 31, 2002, we had ownership interests in several joint ventures, limited liability companies or partnerships with third parties, as well as interests in three unconsolidated entities. As of December 31, 2002, we owned approximately 33.7 million square feet (excluding three unconsolidated joint ventures) of our properties through these entities. We may make additional investments through these ventures in the future and presently plan to do so. Such partners may share certain approval rights over major decisions. Partnership, limited liability company or joint venture investments may involve risks such as the following:


	•	our partners, co-members or joint venturers might become bankrupt (in which event we and any other remaining general partners, members, or joint venturers would generally remain liable for the liabilities of the partnership, limited liability company, or joint venture);

	•	our partners, co-members or joint venturers might at any time have economic or other business interests or goals that are inconsistent with our business interests or goals;

	•	our partners, co-members or joint venturers may be in a position to take action contrary to our instructions, requests, policies, or objectives, including our current policy with respect to maintaining our qualification as a real estate investment trust; and

	•	agreements governing joint ventures, limited liability companies and partnerships often contain restrictions on the transfer of a joint venturer’s, member’s or partner’s interest or “buy-sell” or other provisions that may result in a purchase or sale of the interest at a disadvantageous time or on disadvantageous terms.

We will, however, generally seek to maintain sufficient control of our partnerships, limited liability companies, and joint ventures to permit us to achieve our business objectives. Our organizational documents do not limit the amount of available funds that we may invest in partnerships, limited liability companies or joint ventures. The occurrence of one or more of the events described above could adversely affect our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our stock.

We May be Unable to Consummate Acquisitions on Advantageous Terms or Acquisitions May Not Perform As We Expect.

We intend to continue to acquire primarily industrial properties. The acquisition of and investment in properties entails various risks. In addition to the general investment risks associated with any real estate investment, our investments may not perform in accordance with our expectations or our cost estimates for bringing an acquired property up to market standards may prove inaccurate. Further, we may not be able to acquire additional properties on acceptable terms. We anticipate significant competition for attractive investment opportunities from other major real estate investors with significant capital including both publicly-traded real estate investment trusts and private institutional investment funds. In addition, we expect to finance future acquisitions through a combination of borrowings under our unsecured credit facility, proceeds from equity or debt offerings by us or the operating partnership (including issuances of limited partnership units by the operating partnership or its subsidiaries) and proceeds from property divestitures, which could have an adverse effect on our cash flow. Our inability to finance future acquisitions on favorable terms, the failure of acquisitions to conform with our expectations or investment criteria, or our failure to timely reinvest the proceeds from property divestitures could adversely affect our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our stock.

We May be Unable to Complete Divestitures on Advantageous Terms.

We have decided to divest ourselves of retail centers and industrial properties that are not in our core markets or which do not meet our strategic objectives. The divestitures of the properties are subject to negotiation of acceptable terms and other customary conditions. Our ability to dispose of properties on advantageous terms is dependent upon factors beyond our control, including competition from other owners (including other real estate investment trusts) that are attempting to dispose of industrial and retail properties and the availability of attractive financing for potential buyers of our properties. Our inability to dispose of properties on favorable terms or redeploy the proceeds of property divestitures in accordance with our investment strategy could adversely affect our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our stock.

We May be Unable to Complete Renovation and Development Projects on Advantageous Terms.

The real estate development business, including the renovation and rehabilitation of existing properties, involves significant risks that include the following:


	•	we may not be able to obtain financing on favorable terms for development projects and we may not complete construction on schedule or within budget, resulting in increased debt service expense and construction costs and delays in leasing such properties and generating cash flow;

	•	we may not be able to obtain, or we may experience delays in obtaining, all necessary zoning, land-use, building, occupancy and other governmental permits and authorizations;

	•	new or renovated properties may perform below anticipated levels, producing cash flow below budgeted amounts;

	•	substantial renovation as well as new development activities, regardless of their ultimate success, typically require a substantial portion of management’s time and attention, diverting our attention from our day-to-day operations; and

	•	upon completion of construction, we may not be able to obtain permanent financing, or obtain permanent financing on advantageous terms, for activities that we have financed through construction loans.

These risks could adversely affect our financial condition, results of operations, cash flow, and ability to pay dividends on, and the market price of, our stock.

Debt Financing

We Could Incur More Debt.

It is our policy to incur debt, either directly or through our subsidiaries, only if it will not cause our share of debt-to-total market capitalization ratio to exceed approximately 45%. The aggregate amount of indebtedness that we may incur under our policy varies directly with the valuation of our capital stock and the number of shares of capital stock outstanding. Accordingly, we would be able to incur additional indebtedness under our policy as a result of increases in the market price per share of our common stock or other outstanding classes of capital stock, and future issuance of shares of our capital stock. However, our organizational documents do not contain any limitation on the amount of indebtedness that we may incur. Accordingly, our board of directors could alter or eliminate this policy. If we change this policy, then we could become more highly leveraged, resulting in an increase in debt service that could adversely affect our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our stock.

Scheduled Debt Payments Could Adversely Affect Our Financial Condition.

We are subject to risks normally associated with debt financing, including that cash flow will be insufficient to pay dividends to our stockholders, that we will be unable to refinance existing indebtedness on our properties (which in all cases will not have been fully amortized at maturity), and that the terms of

refinancing will not be as favorable as the terms of existing indebtedness. As of December 31, 2002, we had total debt outstanding of $2.2 billion.

In addition, we guarantee the operating partnership’s obligations with respect to the senior debt securities referenced in our financial statements. If we are unable to refinance or extend principal payments due at maturity or pay them with proceeds of other capital transactions, then we expect that our cash flow will not be sufficient in all years to pay dividends to our stockholders and to repay all such maturing debt. Furthermore, if prevailing interest rates or other factors at the time of refinancing (such as the reluctance of lenders to make commercial real estate loans) result in higher interest rates upon refinancing, then the interest expense relating to that refinanced indebtedness would increase. This increased interest expense would adversely affect our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our stock. In addition, if we mortgage one or more of our properties to secure payment of indebtedness and we are unable to meet mortgage payments, then the property could be foreclosed upon or transferred to the mortgagee with a consequent loss of income and asset value. A foreclosure on one or more of our properties could adversely affect our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our stock.

Rising Interest Rates Could Adversely Affect Our Cash Flow.

As of December 31, 2002, we had $45.5 million outstanding under our Alliance Fund II secured credit facility, $95.0 million outstanding on our unsecured credit facility, and we had seven secured loans with an aggregate principal amount of $65.6 million that bear interest at variable rates (with weighted average interest rate of 3.5% as of December 31, 2002). In addition, we may incur other variable rate indebtedness in the future. Increases in interest rates on this indebtedness could increase our interest expense, which would adversely affect our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our stock. Accordingly, in the future, we may engage in transactions to limit our exposure to rising interest rates.

We Are Dependent on External Sources of Capital.

In order to qualify as a real estate investment trust under the Internal Revenue Code, we are required each year to distribute to our stockholders at least 90% of our real estate investment trust taxable income (determined without regard to the dividends-paid deduction and by excluding any net capital gain) and we are subject to tax on our income to the extent it is not distributed. Because of this distribution requirement, we may not be able to fund all future capital needs, including capital needs in connection with acquisitions, from cash retained from operations. As a result, to fund capital needs we rely on third-party sources of capital, which we may not be able to obtain on favorable terms or at all. Our access to third-party sources of capital depends upon a number of factors, including:


	•	general market conditions;

	•	the market’s perception of our growth potential;

	•	our current and potential future earnings and cash distributions; and

	•	the market price of our capital stock. Additional debt financing may substantially increase our debt-to-total capitalization ratio.

We Could Default on Cross-Collateralized and Cross-Defaulted Debt.

As of December 31, 2002, we had 26 non-recourse secured loans that are cross-collateralized by 60 properties, totaling $711.7 million (not including unamortized debt premium). If we default on any of these loans, then we could be required to repay the aggregate of all indebtedness, together with applicable prepayment charges, to avoid foreclosure on all the cross-collateralized properties within the applicable pool. Foreclosure on our properties, or our inability to refinance our loans on favorable terms, could adversely impact our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our stock. In addition, our credit facilities and senior debt securities contain certain cross-default

provisions, which are triggered in the event that our other material indebtedness is in default. These cross-default provisions may require us to repay or restructure the credit facilities and the senior debt securities in addition to any mortgage or other debt that is in default, which could adversely affect our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our stock.

Contingent or Unknown Liabilities Could Adversely Affect Our Financial Condition.

Our predecessors have been in existence for varying lengths of time up to 19 years. At the time of our formation we acquired the assets of these entities subject to all of their potential existing liabilities. There may be current liabilities or future liabilities arising from prior activities that we are not aware of and therefore have not disclosed in this report. We assumed these liabilities as the surviving entity in the various merger and contribution transactions that occurred at the time of our formation. Existing liabilities for indebtedness generally were taken into account in connection with the allocation of the operating partnership’s limited partnership units or shares of our common stock in the formation transactions, but no other liabilities were taken into account for these purposes. We do not have recourse against our predecessors or any of their respective stockholders or partners or against any individual account investors with respect to any unknown liabilities. Unknown liabilities might include the following:


	•	liabilities for clean-up or remediation of undisclosed environmental conditions;

	•	claims of customers, vendors, or other persons dealing with our predecessors prior to the formation transactions that had not been asserted prior to the formation transactions;

	•	accrued but unpaid liabilities incurred in the ordinary course of business;

	•	tax liabilities; and

	•	claims for indemnification by the officers and directors of our predecessors and others indemnified by these entities.

Certain customers may claim that the formation transactions gave rise to a right to purchase the premises that they occupy. We do not believe any such claims would be material and, to date, no such claims have been filed. See “— Government Regulations — We Could Encounter Costly Environmental Problems” below regarding the possibility of undisclosed environmental conditions potentially affecting the value of our properties. Undisclosed material liabilities in connection with the acquisition of properties, entities and interests in properties, or entities could adversely affect our financial condition, results of operations, cash flow, and ability to pay dividends on, and the market price of, our stock.

Conflicts of Interest

Some of Our Directors and Executive Officers are Involved in Other Real Estate Activities and Investments.

Some of our executive officers own interests in real estate-related businesses and investments. These interests include minority ownership interests in Institutional Housing Partners, L.P., a residential housing finance company (Messrs. Burke and Moghadam) and Aspire Development, Inc. and Aspire Development, L.P., developers of properties not within our investment criteria (Messrs. Belmonte, Burke and Moghadam). The continued involvement in other real estate-related activities by some of our executive officers and directors could divert management’s attention from our day-to-day operations. Our executive officers have entered into non-competition agreements with us pursuant to which they have agreed not to engage in any activities, directly or indirectly, in respect of commercial real estate, and not to make any investment in respect of any industrial or retail real estate, other than through ownership of not more than 5% of the outstanding shares of a public company engaged in such activities or through the existing investments referred to in this report. State law may limit our ability to enforce these agreements.

Certain of Our Executive Officers and Directors May Have Conflicts of Interest with Us in Connection with Other Properties that They Own or Control.

As of December 31, 2002, Aspire Development, L.P. owned interests in several retail development projects in the U.S., which are individually less than 10,000 feet. In addition, Messrs. Moghadam and Burke, each a founder and director, own less than 1% interests in two partnerships that own office buildings in various markets; these interests have negligible value. Luis A. Belmonte, an executive officer, owns less than a 10% interest, representing an estimated value of $150,000, in a limited partnership, which owns an office building located in Oakland, California.

In addition, several of our executive officers individually own:


	•	less than 1% interests in the stocks of certain publicly-traded real estate investment trusts;

	•	certain interests in and rights to developed and undeveloped real property located outside the United States; and

	•	certain other de minimus holdings in equity securities of real estate companies.

Thomas W. Tusher, a member of our board of directors and chair of the board’s compensation committee, is a limited partner in a venture in which Messrs. Moghadam and Burke are two of three members in the controlling general partner. The venture owns an office building. Mr. Tusher owns a 20% interest in the venture and Messrs. Moghadam and Burke each have a 26.7% interest in the venture. These interests in the venture have negligible value. The venture was formed in 1985, prior to the time of our initial public offering, and we continue to act as property and asset manager of the office building, for which services the venture pays us a fee. In our capacity as property and asset manager, we oversee the management and operation of the property, including the obtaining of financing and negotiating with third party lenders in connection therewith. The largest tenant, which occupies 68% of the building, filed for bankruptcy in January 2003.

We believe that the properties and activities set forth above generally do not directly compete with any of our properties. However, it is possible that a property in which an executive officer or director, or an affiliate of an executive officer or director, has an interest may compete with us in the future if we were to invest in a property similar in type and in close proximity to that property. In addition, the continued involvement by our executive officers and directors in these properties could divert management’s attention from our day-to-day operations. Our policy prohibits us from acquiring any properties from our executive officers or their affiliates without the approval of the disinterested members of our board of directors with respect to that transaction.

Our Role as General Partner of the Operating Partnership May Conflict with the Interests of Stockholders.

As the general partner of the operating partnership, we have fiduciary obligations to the operating partnership’s limited partners, the discharge of which may conflict with the interests of our stockholders. In addition, those persons holding limited partnership units will have the right to vote as a class on certain amendments to the partnership agreement of the operating partnership and individually to approve certain amendments that would adversely affect their rights. The limited partners may exercise these voting rights in a manner that conflicts with the interests of our stockholders. In addition, under the terms of the operating partnership’s partnership agreement, holders of limited partnership units will have certain approval rights with respect to certain transactions that affect all stockholders but which they may not exercise in a manner that reflects the interests of all stockholders.

Our Directors, Executive Officers, and Significant Stockholders Could Act in a Manner that is Not in the Best Interest of All Stockholders.

As of December 31, 2002, our two largest stockholders, Morgan Stanley Investment Management, Inc. (with respect to various client accounts for which Morgan Stanley Investment Management, Inc. serves as investment advisor) and ABP Investments U.S. (with respect to various client accounts for which ABP Investments U.S. serves as investment advisor) together beneficially owned 10.8% of our outstanding common stock. In addition, our executive officers and directors beneficially owned 4.3% of our outstanding common stock as of December 31, 2002, and will have influence on our management and operation and, as

stockholders, will have influence on the outcome of any matters submitted to a vote of our stockholders. This influence might be exercised in a manner that is inconsistent with the interests of other stockholders. Although there is no understanding or arrangement for these directors, officers, and stockholders and their affiliates to act in concert, these parties would be in a position to exercise significant influence over our affairs if they choose to do so.

Government Regulations

Many laws and governmental regulations are applicable to our properties and changes in these laws and regulations, or their interpretation by agencies and the courts, occur frequently.

We May Incur Costs to Comply with Americans with Disabilities Act.

Under the Americans with Disabilities Act, places of public accommodation must meet certain federal requirements related to access and use by disabled persons. Compliance with the Americans with Disabilities Act might require us to remove structural barriers to handicapped access in certain public areas where such removal is “readily achievable.” If we fail to comply with the Americans with Disabilities Act, then we might be required to pay fines to the government or damages to private litigants. The impact of application of the Americans with Disabilities Act to our properties, including the extent and timing of required renovations, is uncertain. If we are required to make unanticipated expenditures to comply with the Americans with Disabilities Act, then our cash flow and the amounts available for dividends to our stockholders may be adversely affected.

We Could Encounter Environmental Problems.

Federal, state and local laws and regulations relating to the protection of the environment impose liability on a current or previous owner or operator of real estate for contamination resulting from the presence or discharge of hazardous or toxic substances or petroleum products at the property. A current or previous owner may be required to investigate and clean up contamination at or migrating from a site. These laws typically impose liability and clean-up responsibility without regard to whether the owner or operator knew of or caused the presence of the contaminants. Even if more than one person may have been responsible for the contamination, each person covered by the environmental laws may be held responsible for all of the clean-up costs incurred. In addition, third parties may sue the owner or operator of a site for damages based on personal injury, property damage, or other costs, including investigation and clean-up costs, resulting from environmental contamination present at or emanating from that site.

Environmental laws also govern the presence, maintenance and removal of asbestos. These laws require that owners or operators of buildings containing asbestos properly manage and maintain the asbestos, that they adequately inform or train those who may come into contact with asbestos and that they undertake special precautions, including removal or other abatement in the event that asbestos is disturbed during renovation or demolition of a building. These laws may impose fines and penalties on building owners or operators for failing to comply with these requirements and may allow third parties to seek recovery from owners or operators for personal injury associated with exposure to asbestos fibers. Some of our properties may contain asbestos-containing building materials.

Some of our properties are leased or have been leased, in part, to owners and operators of businesses that use, store, or otherwise handle petroleum products or other hazardous or toxic substances. These operations create a potential for the release of petroleum products or other hazardous or toxic substances. Some of our properties are adjacent to or near other properties that have contained or currently contain petroleum products or other hazardous or toxic substances. In addition, certain of our properties are on, are adjacent to, or are near other properties upon which others, including former owners or customers of the properties, have engaged or may in the future engage in activities that may release petroleum products or other hazardous or toxic substances. From time to time, we may acquire properties, or interests in properties, with known adverse environmental conditions where we believe that the environmental liabilities associated with these conditions are quantifiable and the acquisition will yield a superior risk-adjusted return. Environmental issues for each

property are evaluated and quantified prior to acquisition. The costs of environmental investigation, clean-up and monitoring are underwritten into the cost of the acquisition and appropriate environmental insurance is obtained for the property. In connection with certain divested properties, we have agreed to remain responsible for, and to bear the cost of, remediating or monitoring certain environmental conditions on the properties.

All of our properties were subject to a Phase I or similar environmental assessments by independent environmental consultants at the time of acquisition. Phase I assessments are intended to discover and evaluate information regarding the environmental condition of the surveyed property and surrounding properties and include an historical review, a public records review, an investigation of the surveyed site and surrounding properties, and preparation and issuance of a written report. We may perform additional Phase II testing if recommended by the independent environmental consultant. Phase II testing may include the collection and laboratory analysis of soil and groundwater samples, completion of surveys for asbestos-containing building materials, and any other testing that the consultant considers prudent in order to test for the presence of hazardous materials.

None of the environmental assessments of our properties has revealed any environmental liability that we believe would have a material adverse effect on our financial condition or results of operations taken as a whole. Furthermore, we are not aware of any such material environmental liability. Nonetheless, it is possible that the assessments do not reveal all environmental liabilities and that there are material environmental liabilities of which we are unaware or that known environmental conditions may give rise to liabilities that are materially greater than anticipated. Moreover, the current environmental condition of our properties may be affected by customers, the condition of land, operations in the vicinity of the properties (such as releases from underground storage tanks), or by third-parties unrelated to us. If the costs of compliance with existing or future environmental laws and regulations exceed our budgets for these items, then our financial condition, results of operations, cash flow, and ability to pay dividends on, and the market price of, our stock could be adversely affected.

Our Financial Condition Could be Adversely Affected if We Fail to Comply with Other Regulations.

Our properties are also subject to various federal, state and local regulatory requirements such as state and local fire and life-safety requirements. If we fail to comply with these requirements, then we might incur fines by governmental authorities or be required to pay awards of damages to private litigants. We believe that our properties are currently in substantial compliance with all such regulatory requirements. However, these requirements may change or new requirements may be imposed that could require significant unanticipated expenditures by us. Any such unanticipated expenditure could adversely affect our financial condition, results of operations, cash flow, and ability to pay dividends on, and the market price of, our stock.

Federal Income Tax Risks

Our Failure to Qualify as a Real Estate Investment Trust Would Have Serious Adverse Consequences to Our Stockholders.

We elected to be taxed as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code commencing with our taxable year ended December 31, 1997. We currently intend to operate so as to qualify as a real estate investment trust under the Internal Revenue Code and believe that our current organization and method of operation comply with the rules and regulations promulgated under the Internal Revenue Code to enable us to continue to qualify as a real estate investment trust. However, it is possible that we have been organized or have operated in a manner that would not allow us to qualify as a real estate investment trust, or that our future operations could cause us to fail to qualify. Qualification as a real estate investment trust requires us to satisfy numerous requirements (some on an annual and others on a quarterly basis) established under highly technical and complex Internal Revenue Code provisions for which there are only limited judicial and administrative interpretations, and involves the determination of various factual matters and circumstances not entirely within our control. For example, in order to qualify as a real estate investment trust, we must derive at least 95% of our gross income in any year from qualifying sources. In addition, we must pay dividends to stockholders aggregating annually at least 90% of our real estate investment

trust taxable income (determined without regard to the dividends paid deduction and by excluding capital gains) and must satisfy specified asset tests on a quarterly basis. These provisions and the applicable treasury regulations are more complicated in our case because we hold our assets through the operating partnership. Legislation, new regulations, administrative interpretations or court decisions could significantly change the tax laws with respect to qualification as a real estate investment trust or the federal income tax consequences of such qualification. However, we are not aware of any pending tax legislation that would adversely affect our ability to operate as a real estate investment trust.

If we fail to qualify as a real estate investment trust in any taxable year, then we will be required to pay federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates. Unless we are entitled to relief under certain statutory provisions, we would be disqualified from treatment as a real estate investment trust for the four taxable years following the year in which we lost qualification. If we lose our real estate investment trust status, then our net earnings available for investment or distribution to stockholders would be significantly reduced for each of the years involved. In addition, we would no longer be required to make distributions to our stockholders.

We Pay Some Taxes.

Even if we qualify as a real estate investment trust, we will be required to pay certain state, local and foreign taxes on our income and property. In addition, we will be required to pay federal and state income tax on the net taxable income, if any, from the activities conducted through our taxable REIT subsidiaries, IMD Holding Corporation and Headlands Realty Corporation, thereby reducing their cash available for distribution to us.

Certain Property Transfers May Generate Prohibited Transaction Income.

From time to time, we may transfer or otherwise dispose of some of our properties. Under the Internal Revenue Code, any gain resulting from transfers of properties that we hold as inventory or primarily for sale to customers in the ordinary course of business would be treated as income from a prohibited transaction. We would be required to pay a 100% penalty tax on that income. Since we acquire properties for investment purposes, we believe that any transfer or disposal of property by us would not be deemed by the Internal Revenue Service to be a prohibited transaction with any resulting gain allocable to us being subject to a 100% penalty tax. However, whether property is held for investment purposes is a question of fact that depends on all the facts and circumstances surrounding the particular transaction. The Internal Revenue Service may contend that certain transfers or disposals of properties by us are prohibited transactions. While we believe that the Internal Revenue Service would not prevail in any such dispute, if the IRS were to argue successfully that a transfer or disposition of property constituted a prohibited transaction, then we would be required to pay a 100% penalty tax on any gain allocable to us from the prohibited transaction. In addition, any income from a prohibited transaction may adversely affect our ability to satisfy the income tests for qualification as a real estate investment trust for federal income tax purposes.

We May Be Unable to Manage Our Growth.

Our business has grown rapidly and continues to grow through property acquisitions and developments. If we fail to effectively manage our growth, then our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our stock could be adversely affected.

Our International Growth is Subject to Special Political and Monetary Risks.

We have and expect to continue to acquire or develop additional properties in foreign countries. Local markets affect our operations and, therefore, we would be subject to economic fluctuations in foreign locations. Our international operations also would be subject to the usual risks of doing business abroad such as the revaluation of currencies, revisions in tax treaties or other laws governing the taxation of revenues, restrictions on the transfer of funds, and, in certain parts of the world, property rights uncertainty and political instability. We cannot predict the likelihood that any such developments may occur. Further, we may enter into

agreements with non-U.S. entities that are governed by the laws of, and are subject to dispute resolution in, the courts of another country or region. We cannot accurately predict whether such a forum would provide us with an effective and efficient means of resolving disputes that may arise. Even if we are able to obtain a satisfactory decision through arbitration or a court proceeding, we could have difficulty enforcing any award or judgment on a timely basis. Our business has grown rapidly and continues to grow through property acquisitions and developments. If we fail to effectively manage our international growth, then our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our stock could be adversely affected.

We Are Dependent On Our Key Personnel.

We depend on the efforts of our executive officers. While we believe that we could find suitable replacements for these key personnel, the loss of their services or the limitation of their availability could adversely affect our financial condition, results of operations, cash flow and ability to pay dividends on, and the market price of, our stock. We do not have employment agreements with any of our executive officers.

Ownership of Our Stock

Limitations in Our Charter and Bylaws Could Prevent a Change in Control.

Certain provisions of our charter and bylaws may delay, defer, or prevent a change in control or other transaction that could provide the holders of our common stock with the opportunity to realize a premium over the then-prevailing market price for the common stock. To maintain our qualification as a real estate investment trust for federal income tax purposes, not more than 50% in value of our outstanding stock may be owned, actually or constructively, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities) during the last half of a taxable year after the first taxable year for which a real estate investment trust election is made. Furthermore, our common stock must be held by a minimum of 100 persons for at least 335 days of a 12-month taxable year (or a proportionate part of a short tax year). In addition, if we, or an owner of 10% or more of our stock, actually or constructively owns 10% or more of one of our customers (or a tenant of any partnership in which we are a partner), then the rent received by us (either directly or through any such partnership) from that tenant will not be qualifying income for purposes of the real estate investment trust gross income tests of the Internal Revenue Code. To facilitate maintenance of our qualification as a real estate investment trust for federal income tax purposes, we prohibit the ownership, actually or by virtue of the constructive ownership provisions of the Internal Revenue Code, by any single person of more than 9.8% (by value or number of shares, whichever is more restrictive) of the issued and outstanding shares of our common stock and more than 9.8% (by value or number of shares, whichever is more restrictive) of the issued and outstanding shares of our Series A preferred stock, and we also prohibit the ownership, actually or constructively, of any shares of our other preferred stock by any single person so that no such person, taking into account all of our stock so owned by such person, may own in excess of 9.8% of our issued and outstanding capital stock. We refer to this limitation as the “ownership limit.” Shares acquired or held in violation of the ownership limit will be transferred to a trust for the benefit of a designated charitable beneficiary. Any person who acquires shares in violation of the ownership limit will not be entitled to any dividends on the shares or be entitled to vote the shares or receive any proceeds from the subsequent sale of the shares in excess of the lesser of the price paid for the shares or the amount realized from the sale. A transfer of shares in violation of the above limits may be void under certain circumstances. The ownership limit may have the effect of delaying, deferring, or preventing a change in control and, therefore, could adversely affect our stockholders’ ability to realize a premium over the then-prevailing market price for the shares of our common stock in connection with such transaction.

Our charter authorizes us to issue additional shares of common and preferred stock and to establish the preferences, rights and other terms of any series or class of preferred stock that we issue. Although our board of directors has no intention to do so at the present time, it could establish a series or class of preferred stock that could delay, defer, or prevent a transaction or a change in control that might involve a premium price for the common stock or otherwise be in the best interests of our stockholders.

Our charter and bylaws and Maryland law also contain other provisions that may delay, defer, or prevent a transaction, including a change in control, that might involve payment of a premium price for the common stock or otherwise be in the best interests of our stockholders. Those provisions include the following:


	•	directors may be removed only for cause and only upon a two-thirds vote of stockholders, together with bylaw provisions authorizing the board of directors to fill vacant directorships;

	•	a two-thirds vote of stockholders for any amendment of the charter is required;

	•	the request of the holders of 50% or more of our common stock is necessary for stockholders to call a special meeting;

	•	stockholders may only take action by written consent with the unanimous approval of all stockholders entitled to vote on the matter in question; and

	•	advance notice by stockholders for the nomination of directors or proposal of business to be considered at a meeting of stockholders is required.

These provisions may impede various actions by stockholders without approval of our board of directors, which in turn may delay, defer or prevent a transaction involving a change of control.

Various Market Conditions Affect the Price of Our Stock.

As with other publicly-traded equity securities, the market price of our stock will depend upon various market conditions that may change from time to time. Among the market conditions that may affect the market price of our stock are the following:


	•	the extent of investor interest in us;

	•	the general reputation of real estate investment trusts and the attractiveness of their equity securities in comparison to other equity securities (including securities issued by other real estate-based companies);

	•	our financial performance;

	•	general stock and bond market conditions, including changes in interest rates on fixed income securities, that may lead prospective purchasers of our stock to demand a higher annual yield from future dividends; and

	•	terrorist activity may adversely affect the markets in which our securities trade, possibly increasing market volatility and causing the further erosion of business and consumer confidence and spending.

Other factors such as governmental regulatory action and changes in tax laws could also have a significant impact on the future market price of our stock.

Earnings and Cash Dividends, Asset Value and Market Interest Rates Affect the Price of Our Stock.

The market value of the equity securities of a real estate investment trust generally is based primarily upon the market’s perception of the real estate investment trust’s growth potential and its current and potential future earnings and cash dividends. It is based secondarily upon the real estate market value of the underlying assets. For that reason, shares of our stock may trade at prices that are higher or lower than the net asset value per share. To the extent that we retain operating cash flow for investment purposes, working capital reserves, or other purposes, these retained funds, while increasing the value of our underlying assets, may not correspondingly increase the market price of our stock. Our failure to meet the market’s expectations with regard to future earnings and cash dividends likely would adversely affect the market price of our stock. Another factor that may influence the price of our stock will be the distribution yield on the stock (as a percentage of the price of the stock) relative to market interest rates. An increase in market interest rates might lead prospective purchasers of our stock to expect a higher distribution yield, which would adversely affect the market price of the stock. If the market price of our stock declines significantly, then we might

breach certain covenants with respect to debt obligations, which might adversely affect our liquidity and ability to make future acquisitions and our ability to pay dividends to our stockholders.

If We Issue Additional Securities, then the Investment of Existing Stockholders Will Be Diluted.

We have authority to issue shares of common stock or other equity or debt securities in exchange for property or otherwise. Similarly, we may cause the operating partnership to issue additional limited partnership units in exchange for property or otherwise. Existing stockholders will have no preemptive right to acquire any additional securities issued by us or the operating partnership and any issuance of additional equity securities could result in dilution of an existing stockholder’s investment.

We Could Change Our Investment and Financing Policies without a Vote of Stockholders.

Subject to our current investment policy to maintain our qualification as a real estate investment trust (unless a change is approved by our board of directors under certain circumstances), our board of directors will determine our investment and financing policies, our growth strategy and our debt, capitalization, distribution and operating policies. Although the board of directors has no present intention to revise or amend these strategies and policies, they may do so at any time without a vote of stockholders. Accordingly, stockholders will have no control over changes in our strategies and policies (other than through the election of directors), and any such changes may not serve the interests of all stockholders and could adversely affect our financial condition or results of operations, including our ability to pay dividends to our stockholders.

Shares Available for Future Sale Could Adversely Affect the Market Price of Our Common Stock.

We cannot predict the effect, if any, that future sales of shares of our common stock, or the availability of shares of our common stock for future sale, will have on its market price. Sales of a substantial number of shares of our common stock in the public market (or upon exchange of limited partnership units in the operating partnership) or the perception that such sales (or exchanges) might occur could adversely affect the market price of our common stock.

All shares of common stock issuable upon the redemption of limited partnership units in the operating partnership will be deemed to be “restricted securities” within the meaning of Rule 144 under the Securities Act and may not be transferred unless registered under the Securities Act or an exemption from registration is available, including any exemption from registration provided under Rule 144. In general, upon satisfaction of certain conditions, Rule 144 permits the holder to sell certain amounts of restricted securities one year following the date of acquisition of the restricted securities from us and, after two years, permits unlimited sales by persons unaffiliated with us. Commencing generally on the first anniversary of the date of acquisition of common limited partnership units (or such other date agreed to by the operating partnership and the holders of the units), the operating partnership may redeem common limited partnership units at the request of the holders for cash (based on the fair market value of an equivalent number of shares of common stock at the time of redemption) or, at the option of the operating partnership, exchange the common limited partnership units for an equal number of shares of our common stock, subject to certain antidilution adjustments. The operating partnership had issued and outstanding 4,846,387 common limited partnership units as of December 31, 2002. As of December 31, 2002, we had reserved 17,336,237 shares of common stock for issuance under our Stock Option and Incentive Plans (not including shares that we have already issued) and, as of December 31, 2002, we had granted to certain directors, officers and employees options to purchase 8,764,912 shares of common stock (excluding forfeitures and 896,152 shares that we have issued pursuant to the exercise of options). As of December 31, 2002, we had granted 717,611 restricted shares of common stock, excluding 36,200 shares that have been forfeited. In addition, we may issue additional shares of common stock and the operating partnership may issue additional limited partnership units in connection with the acquisition of properties. In connection with the issuance of common limited partnership units to other transferors of properties, and in connection with the issuance of the performance units, we have agreed to file registration statements covering the issuance of shares of common stock upon the exchange of the common limited partnership units. We have also filed registration statements with respect to the shares of common stock issuable under our stock option and incentive plans. These registration statements and registration rights

generally allow shares of common stock covered thereby, including shares of common stock issuable upon exchange of limited partnership units, including performance units, or the exercise of options or restricted shares of common stock, to be transferred or resold without restriction under the Securities Act. We may also agree to provide registration rights to any other person who may become an owner of the operating partnership’s limited partnership units.

Future sales of the shares of common stock described above could adversely affect the market price of our common stock. The existence of the operating partnership’s limited partnership units, options, and shares of common stock reserved for issuance upon exchange of limited partnership units, and the exercise of options and registration rights referred to above, also may adversely affect the terms upon which we are able to obtain additional capital through the sale of equity securities.

Item 7a. Qualitative Disclosures about Market Risk

Market risk is the risk of loss from adverse changes in market prices and interest rates. Our future earnings and cash flows are dependent upon prevailing market rates. Accordingly, we manage our market risk by matching projected cash inflows from operating, investing and financing activities with projected cash outflows for debt service, acquisitions, capital expenditures, distributions to stockholders and unitholders, and other cash requirements. The majority of our outstanding debt has fixed interest rates, which minimizes the risk of fluctuating interest rates. Our exposure to market risk includes: (1) interest rate fluctuations in connection with our credit facilities and other variable rate borrowings; and (2) our ability to incur more debt without stockholder approval, thereby increasing our debt service obligations, which could adversely affect our cash flows. As of December 31, 2002, we had no interest rate caps or swaps. See “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Capital Resources — Market Capitalization.”

The table below summarizes the market risks associated with our fixed and variable rated debt outstanding before unamortized debt premiums of $9.8 million as of December 31, 2002:


					Expected		Maturity
	2003		2004		2005		2006		Date 2007		Thereafter		Total Debt

Fixed rate debt (1)	$	93,088	$	98,490	$	351,996	$	167,804	$	136,120	$	1,171,945	$	2,019,443
Average interest rate		7.8%		8.0%		7.3%		7.4%		7.4%		7.3%		7.4%
Variable rate debt (2)	$	47,279	$	30.504	$	98,488	$	8,593	$	6,868	$	14,368	$	206,100
Average interest rate		2.8%		3.3%		2.1%		3.1%		3.1%		4.4%		2.7%


(1)	Represents 93.9% of all outstanding debt.

(2)	Represents 6.1% of all outstanding debt.

If market rates of interest on our variable rate debt increased by 10% (or approximately 27 basis points), then the increase in interest expense on the variable rate debt would be $0.6 million annually. As of December 31, 2002, the estimated fair value of our fixed rate debt was $2,152.6 million based on our estimate of current market interest rates.

Item 8. Financial Statements and Supplementary Data

See “Item 14. Exhibits, Financial Statement Schedules, and Reports of Form 8-K.”

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

PART III

Items 10, 11, 12 and 13.

Directors and Executive Officers of AMB Property Corporation, Executive Compensation, Security Ownership of Certain Beneficial Owners and Management, and Certain Relationships and Related Transactions

The information required by Item 10, Item 11, Item 12 and Item 13 will be contained in a definitive proxy statement for our Annual Meeting of Stockholders which we anticipate will be filed no later than 120 days after the end of our fiscal year pursuant to Regulation 14A and accordingly these items have been omitted in accordance with General Instruction G(3) to Form 10-K.

Item 14. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer, president and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Also, we have investments in certain unconsolidated entities, which are accounted for using the equity method of accounting. As we do not control or manage these entities, our disclosure controls and procedures with respect to such entities are necessarily substantially more limited than those we maintain with respect to our consolidated subsidiaries.

Within 90 days prior to the date of this report, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer, president and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our chief executive officer, president and chief financial officer each concluded that our disclosure controls and procedures were effective.

There have been no significant changes in our internal controls or in other factors that could significantly affect the internal controls subsequent to the date we completed our evaluation.

PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)(1) and (2) Financial Statements and Schedules:


	The following consolidated financial information is included as a separate section of this report on Form 10-K.


	Page

Report of Independent Accountants		64
Consolidated Balance Sheets as of December 31, 2002 and 2001		65
Consolidated Statements of Operations for the years ended December 31, 2002, 2001 and 2000		66
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2002, 2001 and 2000		67
Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000		68
Notes to Consolidated Financial Statements		69
Schedule III — Real Estate and Accumulated Depreciation		S-1


	All other schedules are omitted since the required information is not present in amounts sufficient to require submission of the schedule or because the information required is included in the financial statements and notes thereto.

(a)(3) Exhibits:


Exhibit
Number		Description

	3.1	Articles of Incorporation of AMB Property Corporation (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-35915)).
	3.2	Certificate of Correction of AMB Property Corporation’s Articles Supplementary establishing and fixing the rights and preferences of the 8 1/2% Series A Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.2 of AMB Property Corporation’s Annual Report on Form 10-K for the year ended December 31, 1998).
	3.3	Articles Supplementary establishing and fixing the rights and preferences of the 8 5/8% Series B Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Current Report on Form 8-K filed on January 7, 1999).
	3.4	Articles Supplementary establishing and fixing the rights and preferences of the 8.75% Series C Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.2 of AMB Property Corporation’s Current Report on Form 8-K filed on January 7, 1999).
	3.5	Articles Supplementary establishing and fixing the rights and preferences of the 7.75% Series D Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1999).
	3.6	Articles Supplementary establishing and fixing the rights and preferences of the 7.75% Series E Cumulative Preferred Stock (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Current Report on Form 8-K filed on September 14, 1999).
	3.7	Articles Supplementary establishing and fixing the rights and preferences of the 7.95% Series F Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Current Report on Form 8-K filed on April 14, 2000).
	3.8	Articles Supplementary establishing and fixing the rights and preferences of the 7.95% Series G Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Current Report on Form 8-K filed on September 29, 2000).
	3.9	Articles Supplementary establishing and fixing the rights and preferences of the 8.125% Series H Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.3 of AMB Property Corporation’s Current Report on Form 8-K filed on September 29, 2000).
	3.10	Articles Supplementary establishing and fixing the rights and preferences of the 8.00% Series I Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Current Report on Form 8-K filed on March 23, 2001).
	3.11	Articles Supplementary establishing and fixing the rights and preferences of the 7.95% Series J Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Current Report on Form 8-K filed on October 3, 2001).


Exhibit
Number		Description

	3.12	Articles Supplementary redesignating and reclassifying all 2,200,000 Shares of the 8.75% Series C Cumulative Redeemable Preferred Stock as Preferred Stock (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Current Report on Form 8-K filed on December 7, 2001).
	3.13	Articles Supplementary establishing and fixing the rights and preferences of the 7.95% Series K Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Current Report on Form 8-K filed on April 23, 2002).
	3.14	Articles Supplementary Redesignating and Reclassifying 130,000 Shares of 7.95% Series F Cumulative Redeemable Preferred Stock as Preferred Stock (incorporated by reference to Exhibit 3.2 of AMB Property Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).
	3.15	Articles Supplementary Redesignating and Reclassifying all 20,000 Shares of 7.95% Series G Cumulative Redeemable Preferred Stock as Preferred Stock (incorporated by reference to Exhibit 3.3 of AMB Property Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).
	3.16	Second Amended and Restated Bylaws of AMB Property Corporation (incorporated by reference to Exhibit 3.11 of AMB Property Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000).
	4.1	Form of Certificate for Common Stock of AMB Property Corporation (incorporated by reference to Exhibit 3.3 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-35915)).
	4.2	Form of Certificate for 8.5% Series A Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.5(2) of Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998).
	4.3	$30,000,000 7.925% Fixed Rate Note No. 1 dated August 18, 2000, attaching the Parent Guarantee dated August 18, 2000 (incorporated by reference to Exhibit 4.5 of AMB Property Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000).
	4.4	$25,000,000,000 7.925% Fixed Rate Note No. 2 dated September 12, 2000, attaching the Parent Guarantee dated September 12, 2000 (incorporated by reference to Exhibit 4.6 of AMB Property Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000).
	4.5	$50,000,000 8.00% Fixed Rate Note No. 3 dated October 26, 2000, attaching the Parent Guarantee dated October 26, 2000 (incorporated by reference to Exhibit 4.7 of AMB Property Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000).
	4.6	$25,000,000 8.000% Fixed Rate Note No. 4 dated October 26, 2000, attaching the Parent Guarantee dated October 26, 2000 (incorporated by reference to Exhibit 4.8 of AMB Property Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000).
	4.7	$50,000,000 7.20% Fixed Rate Note No. 5 dated December 19, 2000, attaching the Parent Guarantee dated December 19, 2000 (incorporated herein by reference to Exhibit 4.1 of AMB Property Corporation’s Current Report on Form 8-K filed on January 8, 2001).
	4.8	$50,000,000 7.20% Fixed Rate Note No. 6 dated December 19, 2000, attaching the Parent Guarantee dated December 19, 2000 (incorporated herein by reference to Exhibit 4.2 of AMB Property Corporation’s Current Report on Form 8-K filed on January 8, 2001).
	4.9	$50,000,000 7.20% Fixed Rate Note No. 7 dated December 19, 2000, attaching the Parent Guarantee dated December 19, 2000 (incorporated herein by reference to Exhibit 4.3 of AMB Property Corporation’s Current Report on Form 8-K filed on January 8, 2001).
	4.10	Indenture dated as of June 30, 1998, by and among AMB Property, L.P., AMB Property Corporation and State Street Bank and Trust Company of California, N.A., as trustee (incorporated by reference to Exhibit 4.1 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-49163)).


Exhibit
Number		Description

	4.11	First Supplemental Indenture dated as of June 30, 1998 by and among AMB Property, L.P., AMB Property Corporation and State Street Bank and Trust Company of California, N.A., as trustee (incorporated by reference to Exhibit 4.2 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-49163)).
	4.12	Second Supplemental Indenture dated as of June 30, 1998, by and among AMB Property, L.P., AMB Property Corporation and State Street Bank and Trust Company of California, N.A., as trustee (incorporated by reference to Exhibit 4.3 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-49163)).
	4.13	Third Supplemental Indenture dated as of June 30, 1998, by and among AMB Property, L.P., AMB Property Corporation and State Street Bank and Trust Company of California, N.A., as trustee (incorporated by reference to Exhibit 4.4 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-49163)).
	4.14	Fourth Supplemental Indenture, by and among AMB Property, L.P., AMB Property Corporation and State Street Bank and Trust Company of California, N.A., as trustee (incorporated herein by reference as Exhibit 4.1 of AMB Property Corporation’s Current Report on Form 8-K/ A filed on November 9, 2000).
	4.15	Fifth Supplemental Indenture dated as of May 7, 2002, by and among AMB Property, L.P., AMB Property Corporation and State Street Bank and Trust Company of California, N.A., as trustee.
	4.16	Specimen of 7.10% Notes due 2008 (included in the First Supplemental Indenture incorporated by reference as Exhibit 4.2 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-49163)).
	4.17	Specimen of 7.50% Notes due 2018 (included in the Second Supplemental Indenture incorporated by reference as Exhibit 4.3 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-49163)).
	4.18	Specimen of 6.90% Reset Put Securities due 2015 (included in the Third Supplemental Indenture incorporated by reference as Exhibit 4.4 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-49163)).
	4.19	$25,000,000 6.90% Fixed Rate Note No. 8 dated January 9, 2001, attaching the Parent Guarantee dated January 9, 2001 (incorporated by reference to Exhibit 4.1 of AMB Property Corporation’s Current Report on Form 8-K filed on January 31, 2001).
	4.20	$50,000,000 7.00% Fixed Rate Note No. 9 dated March 7, 2001, attaching the Parent Guarantee dated March 7, 2001 (incorporated by reference to Exhibit 4.1 of AMB Property Corporation’s Current Report on Form 8-K filed on March 16, 2001).
	4.21	$25,000,000 6.75% Fixed Rate Note No. 10 dated September 6, 2001, attaching the Parent Guarantee dated September 6, 2001 (incorporated by reference to Exhibit 4.1 of AMB Property Corporation’s Current Report on Form 8-K filed on September 18, 2001).
	4.22	$20,000,000 5.90% Fixed Rate Note No. 11 dated January 17, 2002, attaching the Parent Guarantee dated January 17, 2002 (incorporated by reference to Exhibit 4.1 of AMB Property Corporation’s Current Report on Form 8-K filed on January 23, 2002).
	10.1	Distribution Agreement dated August 15, 2000 by and among AMB Property Corporation, AMB Property, L.P., Morgan Stanley & Co., Incorporated, Banc of America Securities LLC, Banc One Capital Markets, Inc., Chase Securities, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., and Salomon Smith Barney Inc. (incorporated herein by reference to Exhibit 1.1 of Registrant’s Current Report on Form 8-K/ A filed on November 9, 2000).
	10.2	Terms Agreement dated as of December 14, 2000, by and between Morgan Stanley & Co., Incorporated and J.P. Morgan Securities Inc. and AMB Property, L.P. (incorporated herein by reference to Exhibit 1.1 of AMB Property Corporation’s Current Report on Form 8-K filed on January 8, 2001).


Exhibit
Number		Description

	10.3	Terms Agreement dated as of January 4, 2001, by and between A.G. Edwards & Sons, Inc. and AMB Property, L.P. (incorporated herein by reference to Exhibit 1.1 of AMB Property Corporation’s Current Report on Form 8-K filed on January 31, 2001).
	10.4	Terms Agreement dated as of March 2, 2001, by and among First Union Securities, Inc., AMB Property, L.P. and AMB Property Corporation (incorporated by reference to Exhibit 1.1 of Registrants’ current report on Form 8-K filed on March 16, 2001).
	10.5	Sixth Amended and Restated Partnership Agreement of Limited Partnership of AMB Property, L.P. dated April 17, 2002 (incorporated by reference to Exhibit 10.1 of AMB Property Corporation’s Current Report on Form 8-K filed on April 23, 2002).
	10.6	First Amendment to the Sixth Amended and Restated Agreement of Limited Partnership of AMB Property, L.P. dated October 30, 2002 (incorporated by reference to Exhibit 10.1 of AMB Property Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002).
	10.7	Form of Registration Rights Agreement among AMB Property Corporation and the persons named therein (incorporated by reference to Exhibit 10.2 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-35915)).
	10.8	Form of Change in Control and Noncompetition Agreement between AMB Property Corporation and Executive Officers (incorporated by reference to AMB Property Corporation’s Annual Report on Form 10-K for the year ended December 31, 1998).
	10.9	Dividend Reinvestment and Direct Purchase Plan, dated July 9, 1999 (incorporated by reference to Exhibit 10.4 of AMB Property Corporation’s Quarterly Report on Report Form 10-Q for the quarter ended June 30, 1999).
	10.10	Eleventh Amended and Restated Agreement of Limited Partnership of AMB Property II, L.P., dated July 31, 2002 (incorporated by reference to Exhibit 10.2 of AMB Property Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).
	10.11	Revolving Credit Agreement dated as of August 23, 2001, among AMB Institutional Alliance Fund II, L.P., AMB Institutional Alliance REIT II, Inc., the banks and financial institutions listed therein, Bank of America, N.A. as Administrative Agent, Dresdner Bank AG, as Syndication Agent, and Bank One, NA, as Documentation Agent (incorporated by reference to Exhibit 10.4 of AMB Property Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001).
	10.12	Amended and Restated Revolving Credit Agreement, dated as of December 11, 2002, by and among AMB Property, L.P., the banks listed therein, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Europe Limited, as administrative agent for alternate currencies, Bank of America, N.A., as syndication agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint lead arrangers and joint bookrunners, Bank One, NA, Commerzbank Aktiengesellschaft, New York and Grand Cayman Branches and Wachovia Bank, N.A., as documentation agents, PNC Bank, National Association, The Bank of Nova Scotia, acting through its San Francisco Agency, and Wells Fargo Bank, N.A., as managing agents, and KeyBank National Association, as co-agent (incorporated by reference to Exhibit 10.1 of AMB Property Corporation’s Current Report on Form 8-K filed on December 18, 2002).
	10.13	Guaranty of Payment, dated as of December 11, 2002, by AMB Property Corporation for the benefit of JPMorgan Chase Bank, as administrative agent, and J.P. Morgan Europe Limited, as administrative agent for alternate currencies, for the banks listed on the signature page to the Revolving Credit Agreement (incorporated by reference to Exhibit 10.2 of AMB Property Corporation’s Current Report on Form 8-K filed on December 18, 2002).
	10.14	Qualified Borrower Guaranty, dated as of December 11, 2002, by AMB Property, L.P. for the benefit of JPMorgan Chase Bank and J.P. Morgan Europe Limited, as administrative agents for the banks listed on the signature page to the Revolving Credit Agreement (incorporated by reference to Exhibit 10.3 of AMB Property Corporation’s Current Report on Form 8-K filed on December 18, 2002).


Exhibit
Number		Description

	10.15	Terms Agreement dated as of August 30, 2001, by and among Lehman Brothers Inc., AMB Property, L.P., and AMB Property Corporation (incorporated by reference to Exhibit 1.1 of AMB Property Corporation’s Current Report on Form 8-K filed on September 18, 2001).
	10.16	Terms Agreement dated as of January 14, 2002, by and among Lehman Brothers Inc., AMB Property, L.P., and AMB Property Corporation (incorporated by reference to Exhibit 1.1 of AMB Property Corporation’s Current Report on Form 8-K filed on January 23, 2002).
	10.17	Third Amended and Restated 1997 Stock Option and Incentive Plan of AMB Property Corporation and AMB Property, L.P. (incorporated by reference to Exhibit 10.22 of AMB Property Corporation’s Annual Report on Form 10-K for the year ended December 31, 2001).
	10.18	Amendment No. 1 to the Third Amended and Restated 1997 Stock Option and Incentive Plan of AMB Property Corporation and AMB Property, L.P. (incorporated by reference to Exhibit 10.23 of AMB Property Corporation’s Annual Report on Form 10-K for the year ended December 31, 2001).
	10.19	2002 Stock Option and Incentive Plan of AMB Property Corporation and AMB Property, L.P. (incorporated by reference to Exhibit 4.15 of AMB Property Corporation’s Registration Statement on Form S-8 (No. 333-90042)).
	10.20	Amended and Restated AMB Nonqualified Deferred Compensation Plan (incorporated by reference to Exhibit 4.17 of AMB Property Corporation’s Registration Statement on Form S-8 (No. 333-100214)).
	21.1	Subsidiaries of AMB Property Corporation.
	23.1	Consent of PricewaterhouseCoopers LLP.
	24.1	Powers of Attorney (included in Part IV of this Form 10-K)
	99.1	Audit Committee Charter

(b) Reports on Form 8-K:


	•	AMB Property Corporation filed a Current Report on Form 8-K on October 8, 2002, in connection with its third quarter 2002 earnings release.

	•	AMB Property Corporation filed a Current Report on Form 8-K on December 18, 2002, in connection with its entrance into an amended and restated $500 million unsecured revolving credit agreement that replaced its then existing $500 million credit facility that was to mature in May 2003.

	•	AMB Property Corporation filed a Current Report on Form 8-K on January 16, 2003, in connection with its fourth quarter 2002 earnings release.

See Item 15(a)(3) above.

(d) Financial Statement Schedules:

See Item 15(a)(1) and (2) above.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, AMB Property Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 17, 2003.


	AMB PROPERTY CORPORATION


	By:	/s/ HAMID R. MOGHADAM



	Hamid R. Moghadam
	Chairman of the Board and
	Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and directors of AMB Property Corporation, hereby severally constitute Hamid R. Moghadam, W. Blake Baird, David S. Fries and Michael A. Coke, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, the Form 10-K filed herewith and any and all amendments to said Form 10-K, and generally to do all such things in our names and in our capacities as officers and directors to enable AMB Property Corporation to comply with the provisions of the Securities Exchange Act of 1934, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said Form 10-K and any and all amendments thereto.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of AMB Property Corporation and in the capacities and on the dates indicated.



Name	Title	Date


/s/ HAMID R. MOGHADAM Hamid R. Moghadam	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)	March 17, 2003

/s/ W. BLAKE BAIRD W. Blake Baird	President and Director	March 17, 2003

/s/ T. ROBERT BURKE T. Robert Burke	Director	March 17, 2003

/s/ DAVID A. COLE David A. Cole	Director	March 17, 2003

/s/ J. MICHAEL LOSH J. Michael Losh	Director	March 17, 2003

/s/ LYNN M. SEDWAY Lynn M. Sedway	Director	March 17, 2003



Name	Title	Date


/s/ JEFFREY L. SKELTON, PH.D. Jeffrey L. Skelton, Ph.D.	Director	March 17, 2003

/s/ THOMAS W. TUSHER Thomas W. Tusher	Director	March 17, 2003

/s/ CARYL B. WELBORN, ESQ. Caryl B. Welborn, Esq	Director	March 17, 2003

/s/ MICHAEL A. COKE Michael A. Coke	Chief Financial Officer and Executive Vice President (Duly Authorized Officer and Principal Financial and Accounting Officer)	March 17, 2003

CERTIFICATIONS

I, Hamid R. Moghadam, certify that:


	(1) I have reviewed this annual report on Form 10-K of AMB Property Corporation;

	(2) Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

	(3) Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this annual report;

	(4) The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


	a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

	b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

	c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;


	(5) The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):


	a) all significant deficiencies in the design or operation of internal controls that could adversely affect the registrant’s ability to record, process, summarize, and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and


	(6) The registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 17, 2003


	By:	/s/ HAMID R. MOGHADAM



	Hamid R. Moghadam
	Chairman of the Board and
	Chief Executive Officer

I, W. Blake Baird, certify that:


	(1) I have reviewed this annual report on Form 10-K of AMB Property Corporation;

	(2) Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

	(3) Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this annual report;

	(4) The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


	d) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

	e) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

	f) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;


	(5) The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):


	c) all significant deficiencies in the design or operation of internal controls that could adversely affect the registrant’s ability to record, process, summarize, and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	d) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and


	(6) The registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 17, 2003


	By:	/s/ W. BLAKE BAIRD



	W. Blake Baird
	President and Director

I, Michael A. Coke, certify that:


	(1) I have reviewed this annual report on Form 10-K of AMB Property Corporation;

	(2) Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

	(3) Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this annual report;

	(4) The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


	g) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

	h) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

	i) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;


	(5) The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):


	e) all significant deficiencies in the design or operation of internal controls that could adversely affect the registrant’s ability to record, process, summarize, and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	f) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and


	(6) The registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 17, 2003


	By:	/s/ MICHAEL A. COKE



	Michael A. Coke
	Chief Financial Officer and
	Executive Vice President

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders

of AMB Property Corporation:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of stockholders’ equity and of cash flows present fairly, in all material respects, the financial position of AMB Property Corporation and its subsidiaries as of December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 2 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 144,Accounting for the Impairment or Disposal of Long Lived Assets, and the expense recognition provisions of SFAS No. 123, Accounting for Stock-based Compensation, in 2002.

PRICEWATERHOUSECOOPERS LLP

San Francisco, California

January 14, 2003

F-1

AMB PROPERTY CORPORATION

CONSOLIDATED BALANCE SHEETS

As of December 31, 2002 and 2001


			December 31,			December 31,
			2002			2001


			(Dollars in thousands, except
			share amounts)
ASSETS
Investments in real estate:
	Land		$	1,236,406		$	1,064,422
	Buildings and improvements			3,557,086			3,285,110
	Construction in progress			132,490			181,179

		Total investments in properties		4,925,982			4,530,711
	Accumulated depreciation and amortization			(362,540	)		(265,653	)

		Net investments in properties		4,563,442			4,265,058
Investments in unconsolidated joint ventures				64,428			71,097
Properties held for divestiture, net				107,871			157,174

		Net investments in real estate		4,735,741			4,493,329
Cash and cash equivalents				89,332			73,071
Restricted cash				27,882			8,661
Mortgages receivable				13,133			87,214
Accounts receivable net of allowance for doubtful accounts of $6,720 and $7,677, respectively				74,207			70,794
Other assets				52,199			35,874

		Total assets	$	4,992,494		$	4,768,943

LIABILITIES AND STOCKHOLDERS’ EQUITY
Debt:
	Secured debt		$	1,284,675		$	1,228,214
	Unsecured senior debt securities			800,000			780,000
	Alliance Fund II credit facility			45,500			123,500
	Unsecured debt			10,186			—
	Unsecured credit facility			95,000			12,000

		Total debt		2,235,361			2,143,714
Dividends payable				41,213			4,960
Accounts payable and other liabilities				140,503			133,641

		Total liabilities		2,417,077			2,282,315

Commitments and contingencies (Note 12)

Minority interests				891,267			734,286

Stockholders’ equity:
	Series A preferred stock, cumulative, redeemable, $.01 par value, 4,600,000 shares authorized, 4,000,000 issued, and 3,995,800 and 4,000,000 outstanding, $99,895 liquidation preference			95,994			96,100
	Common stock $.01 par value, 500,000,000 shares authorized, 82,029,449 and 83,821,829 issued and outstanding			820			838
	Additional paid-in capital			1,580,733			1,627,764
	Retained earnings			6,572			27,640
	Accumulated other comprehensive income			31			—

		Total stockholders’ equity		1,684,150			1,752,342

		Total liabilities and stockholders’ equity	$	4,992,494		$	4,768,943

The accompanying notes are an integral part of these consolidated financial statements.

F-2

AMB PROPERTY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2002, 2001 and 2000


					2002			2001			2000


					(Dollars in thousands, except share and
					per share amounts)
REVENUES AND OTHER INCOME
	Rental revenues				$	588,522		$	530,041		$	431,122
	Equity in earnings of unconsolidated joint ventures					5,674			5,467			5,212
	Private capital income					11,193			10,972			4,282
	Interest and other income					10,454			16,297			6,482

			Total revenues and other income			615,843			562,777			447,098
EXPENSES
	Property operating expenses					77,481			64,452			46,419
	Real estate taxes					68,389			63,301			51,996
	Interest, including amortization					147,101			124,866			85,834
	Depreciation and amortization					127,160			104,838			84,960
	General and administrative					47,207			35,820			23,750
	Loss on investments in other companies					—			20,758			2,500

			Total expenses			467,338			414,035			295,459

			Income before minority interests			148,505			148,742			151,639
	Minority interests’ share of income:
		Preferred units				(25,149	)		(28,682	)		(24,613	)
		Minority interests				(37,806	)		(34,835	)		(20,323	)

			Total minority interests’ share of income			(62,955	)		(63,517	)		(44,936	)

				Income from continuing operations, before gains on developments and dispositions		85,550			85,225			106,703
	Gains on developments and dispositions:
		Gains on developments held for sale				1,032			13,169			—
		Gains from dispositions of real estate, net of minority interests				7,789			23,259			1,144

			Total gains on developments and dispositions			8,821			36,428			1,144

				Income from continuing operations		94,371			121,653			107,847
	Discontinued operations:
		Income attributable to discontinued operations				18,494			16,300			13,935
		Gains from dispositions of real estate, discontinued operations, net of minority interests				11,372			—			—

			Total discontinued operations			29,866			16,300			13,935

				Net income		124,237			137,953			121,782
		Series A preferred stock dividends				(8,496	)		(8,500	)		(8,500	)
		Preferred unit redemption discount/(premium)				412			(4,400	)		—

				Net income available to common stockholders	$	116,153		$	125,053		$	113,282

BASIC INCOME PER COMMON SHARE
	Income from continuing operations available to common stockholders				$	1.03		$	1.29		$	1.18
	Discontinued operations					0.36			0.20			0.17

				Net income available to common stockholders	$	1.39		$	1.49		$	1.35

DILUTED INCOME PER COMMON SHARE
	Income from continuing operations available to common stockholders				$	1.02		$	1.28		$	1.18
	Discontinued operations					0.35			0.19			0.17

				Net income available to common stockholders	$	1.37		$	1.47		$	1.35

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
	Basic					83,310,885			84,174,644			83,697,170

	Diluted					84,795,987			85,214,066			84,155,306

The accompanying notes are an integral part of these consolidated financial statements.

F-3

AMB PROPERTY CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Years Ended December 31, 2002, 2001 and 2000



						Common Stock												Accumulated
			Series A									Additional						Other
			Preferred			Number						Paid-in			Retained			Comprehensive
			Stock			of Shares			Amount			Capital			Earnings			Income			Total


			(Dollars in thousands, except share amounts)
AMB Property Corporation
Balance as of December 31, 1999			$	96,100			85,133,041		$	851		$	1,656,226		$	47,089		$	28,993		$	1,829,259
Comprehensive income:
	Net income			8,500			—			—			—			113,282			—
	Unrealized loss on securities			—			—			—			—			—			(32,725	)
		Total comprehensive income		—			—			—			—			—			—			89,057
	Issuance of restricted stock, net			—			161,996			2			3,268			—			—			3,270
	Retirement of common stock			—			(1,465,926	)		(15	)		(29,303	)		—			—			(29,318	)
	Exercise of stock options			—			103,217			1			2,179			—			—			2,180
	Conversion of Operating Partnership units			—			206,423			2			4,911			—			—			4,913
	Stock-based deferred compensation			—			—			—			(3,270	)		—			—			(3,270	)
	Deferred compensation amortization			—			—			—			1,022			—			—			1,022
	Reallocation of limited partners’ interests in Operating Partnership			—			—			—			3,622			—			—			3,622
	Dividends			(8,500	)		—			—			—			(124,305	)		—			(132,805	)

Balance as of December 31, 2000				96,100			84,138,751			841			1,638,655			36,066			(3,732	)		1,767,930
Comprehensive income:
	Net income			8,500			—			—			—			129,453			—
	Reversal of unrealized loss on securities			—			—			—			—			—			3,732
		Total comprehensive income		—			—			—			—			—			—			141,685
	Preferred unit redemption premium			—			—			—			—			(4,400	)		—			(4,400	)
	Issuance of restricted stock, net			—			237,920			2			5,851			—			—			5,853
	Exercise of stock options			—			201,960			2			4,272			—			—			4,274
	Conversion of Operating Partnership units			—			635,798			7			15,248			—			—			15,255
	Retirement of common stock			—			(1,392,600	)		(14	)		(32,878	)		—			—			(32,892	)
	Stock-based deferred compensation			—			—			—			(5,853	)		—			—			(5,853	)
	Deferred compensation amortization			—			—			—			2,725			—			—			2,725
	Reallocation of limited partners’ interest in Operating Partnership and other			—			—			—			(256	)		—			—			(256	)
	Dividends			(8,500	)		—			—			—			(133,479	)		—			(141,979	)

Balance as of December 31, 2001				96,100			83,821,829			838			1,627,764			27,640			—			1,752,342
Comprehensive income:
	Net income			8,496			—			—			—			115,741			—
	Foreign currency translation adjustments			—			—			—			—			—			31
		Total comprehensive income		—			—			—			—			—			—			124,268
	Preferred unit redemption discount			—			—			—			—			412			—			412
	Issuance of restricted stock, net			—			170,604			2			4,706			—			—			4,708
	Issuance of stock options, net			—			—			—			2,770			—			—			2,770
	Exercise of stock options			—			565,976			6			14,824			—			—			14,830
	Conversion of Operating Partnership units			—			122,640			1			2,308			—			—			2,309
	Retirement of common and preferred stock			(106	)		(2,651,600	)		(27	)		(69,372	)		—			—			(69,505	)
	Stock-based deferred compensation			—			—			—			(7,478	)		—			—			(7,478	)
	Amortization of stock-based compensation			—			—			—			5,265			—			—			5,265
	Reallocation of limited partners’ interest in Operating Partnership and other			—			—			—			(54	)		—			—			(54	)
	Dividends			(8,496	)		—			—			—			(137,221	)		—			(145,717	)

Balance as of December 31, 2002			$	95,994			82,029,449		$	820		$	1,580,733		$	6,572		$	31		$	1,684,150

The accompanying notes are an integral part of these consolidated financial statements.

F-4

AMB PROPERTY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2002, 2001 and 2000


					2002			2001			2000


					(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income					$	124,237		$	137,953		$	121,782
Adjustments to reconcile net income to net cash provided by operating activities:
	Equity in loss of AMB Investment Management, L.P.					—			43			3,159
	Equity in earnings of unconsolidated joint ventures					(5,674	)		(5,467	)		(5,212	)
	Straight-line rents					(11,013	)		(10,093	)		(10,203	)
	Debt premiums, discounts and finance cost amortization, net					(58	)		(3,562	)		(6,055	)
	Depreciation and amortization, including discontinued operations					134,663			111,414			90,358
	Stock-based compensation amortization					5,265			2,725			1,022
	Loss on investments in other companies					—			20,758			2,500
	Minority interests, including discontinued operations					62,981			63,541			44,961
	Gains on developments held for sale					(1,032	)		(13,169	)		—
	Gains from dispositions of real estate, net of minority interests					(19,161	)		(23,259	)		(1,144	)
	Changes in assets and liabilities:
		Accounts receivable and other assets				(8,269	)		14,303			(37,664	)
		Accounts payable and other liabilities				6,862			(6,625	)		57,671

			Net cash provided by operating activities			288,801			288,562			261,175
CASH FLOWS FROM INVESTING ACTIVITIES
Change in restricted cash						(19,221	)		13,703			(4,002	)
Cash paid for property acquisitions						(355,964	)		(402,208	)		(604,872	)
Additions to buildings, development costs and other first generation improvements						(152,196	)		(174,651	)		(153,534	)
Additions to second generation building improvements and lease costs						(54,931	)		(47,842	)		(40,573	)
Additions to interests in unconsolidated joint ventures						35			—			(13,158	)
Distributions received from unconsolidated joint ventures						6,423			5,341			4,295
Net proceeds from divestiture of real estate						257,383			242,505			85,345

			Net cash used in investing activities			(318,471	)		(363,152	)		(726,499	)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock						14,830			4,274			2,180
Retirement of common and preferred stock						(69,505	)		(32,892	)		—
Borrowings on secured debt						167,960			362,052			156,797
Payments on secured debt						(146,118	)		(88,866	)		(71,822	)
Borrowings on unsecured credit facility						230,000			210,000			510,000
Payments on unsecured credit facility						(147,000	)		(414,000	)		(377,000	)
Payments on Alliance Fund I credit facility						—			—			(80,000	)
Borrowings on Alliance Fund II credit facility						67,250			125,000			—
Payments on Alliance Fund II credit facility						(145,250	)		(1,500	)		—
Payment of financing fees						(6,837	)		(7,296	)		(6,364	)
Repayment of mortgage receivable						74,081			—			—
Net proceeds from issuances of senior debt securities						19,883			99,406			278,183
Net proceeds from issuances of preferred units						38,932			63,727			61,413
Repurchase of preferred units						(7,927	)		(114,400	)		—
Contributions from co-investment partners						146,572			134,770			153,872
Dividends paid to common and preferred stockholders						(112,085	)		(141,979	)		(130,680	)
Distributions to minority interests, including preferred units						(78,855	)		(70,993	)		(44,209	)

			Net cash provided by financing activities			45,931			127,303			452,370

				Net increase (decrease) in cash and cash equivalents		16,261			52,713			(12,954	)
				Cash and cash equivalents at beginning of period		73,071			20,358			33,312

				Cash and cash equivalents at end of period	$	89,332		$	73,071		$	20,358
Supplemental Disclosures of Cash Flow Information
Cash paid for interest, net of capitalized interest					$	165,154		$	147,637		$	90,138
Non-cash transactions:
			Acquisition of properties		$	403,318		$	428,254		$	729,972
			Assumption of debt			(39,687	)		(9,724	)		(125,100	)
			Acquisition capital			(7,667	)		(16,322	)		—

				Net cash paid	$	355,964		$	402,208		$	604,872

The accompanying notes are an integral part of these consolidated financial statements.

F-5

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002 and 2001

1. Organization and Formation of the Company

AMB Property Corporation, a Maryland corporation (the “Company”), commenced operations as a fully integrated real estate company effective with the completion of its initial public offering on November 26, 1997. The Company elected to be taxed as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986 (the “Code”), commencing with its taxable year ended December 31, 1997, and believes its current organization and method of operation will enable it to maintain its status as a real estate investment trust. The Company, through its controlling interest in its subsidiary, AMB Property, L.P., a Delaware limited partnership (the “Operating Partnership”), is engaged in the acquisition, ownership, operation, management, renovation, expansion and development of industrial buildings primarily within key distribution markets worldwide. Unless the context otherwise requires, the “Company” means AMB Property Corporation, the Operating Partnership and their other controlled subsidiaries.

As of December 31, 2002, the Company owned an approximate 94.5% general partner interest in the Operating Partnership, excluding preferred units. The remaining 5.5% limited partner interest is owned by non-affiliated investors and certain current and former directors and officers of the Company. For local law purposes, certain properties are owned through limited partnerships and limited liability companies. The ownership of such properties through such entities does not materially affect the Company’s overall ownership interests in the properties. As the sole general partner of the Operating Partnership, the Company has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Operating Partnership. Net operating results of the Operating Partnership are allocated after preferred unit distributions based on the respective partners’ ownership interests.

Through the Operating Partnership, the Company enters into co-investment joint ventures with institutional investors. These co-investment joint ventures provide the Company with an additional source of capital and income. As of December 31, 2002, the Company had investments in five co-investment joint ventures, which are consolidated for financial reporting purposes.

AMB Capital Partners, LLC, a Delaware limited liability company (“AMB Capital Partners”), the successor-in-interest to AMB Investment Management, Inc. (“AMB Investment Management”), provides real estate investment services to clients on a fee basis. Headlands Realty Corporation, a Maryland corporation, conducts a variety of businesses that include incremental income programs, such as the Company’s CustomerAssist Program, and development projects available for sale to third parties. IMD Holding Corporation, a Delaware corporation, also conducts a variety of businesses that include development projects available for sale to third parties. On December 31, 2001, AMB Investment Management was reorganized through a series of related transactions into AMB Capital Partners. The Operating Partnership is the managing member of AMB Capital Partners. On May 31, 2001, the Operating Partnership acquired 100% of the common stock of AMB Investment Management and Headlands Realty Corporation from current and former executive officers of the Company, a former executive officer of AMB Investment Management, and a director of Headlands Realty Corporation, thereby acquiring 100% of both entities’ capital stock. The Operating Partnership began consolidating its investments in AMB Investment Management and Headlands Realty Corporation on May 31, 2001. Prior to May 31, 2001, the Operating Partnership reflected its investment using the equity method. The net impact of consolidating AMB Investment Management and Headlands Realty Corporation was not material.

Any references to the number of buildings, square footage, customers and occupancy data in the financial statement footnotes are unaudited.

As of December 31, 2002, the Company owned 904 industrial buildings and seven retail centers, located in 28 markets throughout North America and France. The Company’s strategy is to become a leading provider of distribution properties in supply-constrained, infill submarkets located near key international passenger and

F-6

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

cargo airports, highway systems and seaports in major metropolitan areas. As of December 31, 2002, the industrial buildings, principally warehouse distribution buildings, encompassed approximately 84.2 million rentable square feet and were 94.6% leased to over 2,300 customers. As of December 31, 2002, the retail centers, principally grocer-anchored community shopping centers, encompassed approximately 1.0 million rentable square feet and were 88.6% leased to 122 customers.

As of December 31, 2002, through AMB Capital Partners, the Company also managed, but did not have an ownership interest in, industrial, retail and other properties, totaling approximately 1.7 million rentable square feet on behalf of various clients. In addition, the Company has investments in industrial buildings, totaling approximately 5.5 million rentable square feet, through unconsolidated joint ventures.

2. Summary of Significant Accounting Policies

Basis of Presentation.These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying consolidated financial statements include the financial position, results of operations and cash flows of the Company, its wholly-owned qualified REIT and taxable REIT subsidiaries, the Operating Partnership and joint ventures, in which the Company has a controlling interest. Third-party equity interests in the Operating Partnership and joint ventures are reflected as minority interests in the consolidated financial statements. The Company also has four non-controlling limited partnership interests in four separate unconsolidated real estate joint ventures, which are accounted for under the equity method. All significant intercompany amounts have been eliminated.

Use of Estimates.The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Investments in Real Estate.Investments in real estate are stated at cost unless circumstances indicate that cost cannot be recovered, in which case, the carrying value of the property is reduced to estimated fair value. Carrying values for financial reporting purposes are reviewed for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of a property may not be recoverable. Impairment is recognized when estimated expected future cash flows (undiscounted and without interest charges) are less than the carrying value of the property. The estimation of expected future net cash flows is inherently uncertain and relies on assumptions regarding current and future economics and market conditions and the availability of capital. If impairment analysis assumptions change, then an adjustment to the carrying value of the Company’s long-lived assets could occur in the future period in which the assumptions change. To the extent that a property is impaired, the excess of the carrying amount of the property over its estimated fair value is charged to income and is included with gains from disposition of real estate, net on the consolidated statements of operations. The Company evaluated its properties held for divestiture and operating properties for impairment and reduced their carrying value by $1.2 million, $18.6 million and $5.9 million in 2002, 2001 and 2000, respectively. The management of the Company believes that there are no additional impairments of the carrying values of its investments in real estate as of December 31, 2002.

F-7

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the real estate investments. The estimated lives and components of depreciation and amortization expense for the years ended December 31, are as follows (dollars in thousands):


Depreciation and Amortization Expenses			Estimated Lives	2002			2001			2000

Building costs			40	$	80,663		$	73,462		$	62,097
Buildings and improvements:
	Roof/ HVAC/parking lots		10		5,471			3,836			2,404
	Plumbing/signage		7		1,170			805			484
	Painting and other		5		13,370			7,664			6,345
Tenant improvements			Various		14,386			12,305			9,165
Lease commissions			Various		17,076			11,311			8,641

		Total real estate depreciation			132,136			109,383			89,136
Other depreciation and amortization			Various		2,527			2,031			1,222
Discontinued operations’ depreciation			Various		(7,503	)		(6,576	)		(5,398	)

		Total depreciation and amortization		$	127,160		$	104,838		$	84,960

The cost of buildings and improvements includes the purchase price of the property or interest in property, including legal fees and acquisition costs. Project costs directly associated with the development and construction of a real estate project, which include interest and property taxes, are capitalized as construction in progress. Capitalized interest related to construction projects for the years ended December 31, 2002, 2001 and 2000, was $6.9 million, $13.7 million and $15.5 million, respectively.

Expenditures for maintenance and repairs are charged to operations as incurred. Maintenance expenditures include painting and repair costs. The Company expenses costs as incurred and does not accrue in advance of planned major maintenance activities. Significant renovations or betterments that extend the economic useful life of assets are capitalized and include parking lot, HVAC and roof replacement costs.

Business Combinations.In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (“SFAS”) No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 and No. 142 require the Company to record at acquisition an intangible asset or liability for the value attributable to above or below-market leases. The requirements are applicable to all acquisitions subsequent to July 1, 2001. The adoption of SFAS No. 141 and No. 142 did not have a material impact on the Company’s financial position or results of operations.

Investments in Unconsolidated Joint Ventures.The Company has non-controlling limited partnership interests in four separate unconsolidated joint ventures. These investments are not consolidated because the Company does not exercise significant control over major operating decisions such as approval of budgets, selection of property managers, investment activity and changes in financing. The Company accounts for the joint ventures using the equity method of accounting.

Section 1031 Reverse Exchanges.Reverse exchanges represent loan agreements with third parties, whereby the Company loans substantially all funds to the third party to acquire a real estate investment that we intend to acquire in a Section 1031 exchange. The loan is secured by the real estate investment and title is held by the third party. Upon acquisition of the property by the third party, the Company records the asset as an investment in real estate and records the rental income and expenses associated with the property as the Company retains the risk of loss and the benefits of the asset. As of December 31, 2002, the Company had one property in a reverse exchange valued at $13.5 million.

F-8

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Concentration of Credit Risk.Other real estate companies compete with the Company in its real estate markets. This results in competition for customers to occupy space. The existence of competing properties could have a material impact on the Company’s ability to lease space and on the amount of rent received. As of December 31, 2002, the Company did not have any single tenant that accounted for greater than 2.6% of rental revenues.

Cash and Cash Equivalents.Cash and cash equivalents include cash held in financial institutions and other highly liquid short-term investments with original maturities of three months or less.

Restricted Cash.Restricted cash includes cash held in escrow in connection with property purchases, Section 1031 exchange accounts and debt and real estate tax payments.

Accounts Receivable.Accounts receivable includes all current accounts receivable, net of allowances, other accruals and deferred rent receivable of $46.3 million and $37.9 million as of December 31, 2002 and 2001, respectively. The Company regularly reviews the credit worthiness of its tenants and adjusts its allowance for doubtful accounts, straight-line rent receivable balance and tenant improvement and leasing costs amortization accordingly.

Mortgage Receivable.Through a wholly-owned subsidiary, the Company holds a mortgage loan receivable on AMB Pier One, LLC, an unconsolidated joint venture. Based on borrowing rates available at December 31, 2002, the estimated fair value of the mortgage receivable was $15.5 million.

Deferred Financing Costs.Costs incurred in connection with financings are capitalized and amortized to interest expense using the effective-interest method over the term of the related loan. As of December 31, 2002 and 2001, deferred financing costs were $19.6 million and $17.5 million, respectively, net of accumulated amortization. Such amounts are included in other assets on the accompanying consolidated balance sheets.

Investments in Other Companies.Investments in other companies were accounted for on a cost basis and realized gains and losses were included in current earnings. For its investments in private companies, the Company periodically reviewed its investments and management determined if the value of such investments had been permanently impaired. During 2001, the Company recognized losses on its investments in other companies totaling $20.8 million, including its investment in Webvan Group, Inc. The Company had previously recognized gains and losses on its investment in Webvan Group, Inc. as a component of other comprehensive income. As of December 31, 2001, the Company had realized losses on 100% of its investments in such other companies. The Company recognized no gains or losses in 2002.

Debt. The Company’s debt includes both fixed and variable rate secured debt, unsecured fixed rate debt and unsecured variable rate credit facilities. Based on borrowing rates available to the Company at December 31, 2002, the book value and the estimated fair value of the fixed rate secured and unsecured debt were $2,019.4 million and $2,152.6 million, respectively. The carrying value of the variable rate debt approximates fair value.

Debt Premiums. Debt premiums represent the excess of the fair value of debt over the principal value of debt assumed in connection with the Company’s initial public offering and subsequent property acquisitions. The debt premiums are being amortized into interest expense over the term of the related debt instrument using the effective interest method. As of December 31, 2002 and 2001, the net unamortized debt premium was $9.8 million and $14.9 million, respectively, and are included as a component of secured debt on the accompanying consolidated balance sheets.

Rental Revenues. The Company, as a lessor, retains substantially all of the benefits and risks of ownership of the properties and accounts for its leases as operating leases. Rental income is recognized on a straight-line basis over the term of the leases. Reimbursements from customers for real estate taxes and other recoverable operating expenses are recognized as revenue in the period the applicable expenses are incurred. In addition, the Company nets its bad debt expense against rental income for financial reporting purposes.

F-9

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Such amounts totaled $1.8 million, $5.2 million and $1.8 million for the years ended December 31, 2002, 2001 and 2000, respectively.

Private Capital Income.Private capital income consists primarily of asset management fees and acquisition and disposition fees earned by AMB Capital Partners from joint ventures and clients. Private capital income also includes priority distributions from the Operating Partnership’s co-investment joint ventures.

Interest and Other Income.Interest and other income consists primarily of interest income from mortgages receivable and on cash and cash equivalents.

Stock-based Compensation Expense.In 2002, the Company adopted the expense recognition provisions of SFAS No. 123,Accounting for Stock-Based Compensation. The Company values stock options issued using the Black-Scholes option-pricing model and recognizes this value as an expense over the period in which the options vest. Under this standard, recognition of expense for stock options is applied to all options granted after the beginning of the year of adoption. Prior to 2002, the Company followed the intrinsic method set forth in APB Opinion 25, Accounting for Stock Issued to Employees. During 2002, the Company awarded 2.0 million stock options to employees. In accordance with SFAS No. 123, the Company will recognize the associated expense over the three to five-year vesting periods. Related stock-based compensation expense was $0.9 million for the year ended December 31, 2002. The expense is included in general and administrative expenses in the accompanying consolidated statements of operations. The adoption of SFAS No. 123 is prospective and the 2002 expense relates only to stock options granted in 2002. Had compensation cost for the Company’s stock-based compensation plans been determined based on the fair value at the grant dates for awards prior to 2002 consistent with the method of SFAS No. 123, the Company’s pro forma net income available to common stockholders would have been reduced by $2.4 million, $3.9 million and $2.7 million and pro forma basic and diluted earnings per share would have been reduced to $1.37 and $1.34; $1.44 and $1.42; and $1.32 and $1.31, respectively, for the years ended December 31, 2002, 2001 and 2000.

Discontinued Operations.In August 2001, the Financial Accounting Standards Board issued SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 retains SFAS No. 121’s,Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, fundamental provisions for the: (1) recognition and measurement of impairment of long-lived assets to be held and used; and (2) measurement of long-lived assets to be disposed of by sale. Beginning in 2002, the Company reported operating results attributable to discontinued operations and the applicable gain on disposition of real estate separately as prescribed under the provisions of SFAS No. 144. The consolidated statements of operations for the years ended December 31, 2001 and 2000 were also revised to conform with this change.

Financial Instruments.For its lease denominated in Mexican pesos, the Company used derivative financial instruments to manage foreign currency exchange rate risk. The Company adopted SFAS No. 133, Accounting for Derivative Instruments and for Hedging Activities, as amended, on January 1, 2001. SFAS No. 133 provides comprehensive guidelines for the recognition and measurement of derivatives and hedging activities and, specifically, requires all derivatives to be recorded on the balance sheet at fair value as an asset or liability, with an offset to accumulated other comprehensive income or income. The Company’s only derivative financial instruments in effect at December 31, 2002, were a combination of foreign currency option contracts. These derivative instruments were marked to market through accumulated other comprehensive income because they qualified for hedge accounting treatment. In assessing the fair value of its financial instruments, the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each balance sheet date. The Company uses quoted market prices or quotes from brokers or dealers for the same or similar instruments. These values represent a general approximation of possible value and may never actually be realized.

F-10

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Comprehensive Income.Comprehensive income consists of net income, unrealized gains and losses on certain investments in equity securities and foreign currency translation adjustments and is presented in the consolidated statements of stockholders’ equity.

Reclassifications.Certain items in the consolidated financial statements for prior periods have been reclassified to conform with current classifications with no effect on net income or stockholders’ equity.

3. Transactions with Affiliates

AMB Capital Partners provides real estate investment services to clients on a fee basis. Headlands Realty Corporation, a Maryland corporation, conducts a variety of businesses that include incremental income programs, such as the Company’s CustomerAssist Program, and development projects available for sale to third parties. IMD Holding Corporation, a Delaware corporation, also conducts a variety of businesses that include development projects available for sale to third parties. On December 31, 2001, AMB Investment Management was reorganized through a series of related transactions into AMB Capital Partners. The Operating Partnership is the managing member of AMB Capital Partners. On May 31, 2001, the Operating Partnership acquired 100% of the common stock of AMB Investment Management and Headlands Realty Corporation from current and former executive officers of the Company, a former executive officer of AMB Investment Management, and a director of Headlands Realty Corporation, thereby acquiring 100% of both entities’ capital stock. The Operating Partnership began consolidating its investments in AMB Investment Management (predecessor-in-interest to AMB Capital Partners) and Headlands Realty Corporation on May 31, 2001. Prior to May 31, 2001, the Operating Partnership reflected its investment using the equity method and did not include expenses incurred by these two unconsolidated preferred stock subsidiaries in general and administrative expenses, they were netted with private capital income. The net impact of consolidating AMB Investment Management and Headlands Realty Corporation was not material. General and administrative expenses for the twelve months ended December 31, 2001, would have been $39.4 million had the subsidiaries been consolidated beginning January 1, 2001.

4. Real Estate Acquisition and Development Activity

During 2002, the Company invested $403.3 million in operating properties, consisting of 43 industrial buildings, aggregating approximately 5.4 million square feet, and a parking lot adjacent to Los Angeles International Airport. The Company’s acquisitions included the investment of $166.5 million in 31 industrial buildings, aggregating approximately 3.1 million square feet through three of the Company’s co-investment joint ventures.

During 2002, the Company completed industrial developments valued at $135.4 million, aggregating approximately 3.1 million square feet. The Company also initiated new industrial development projects in North America, France and Singapore valued at $90.6 million, aggregating approximately 1.8 million square feet.

As of December 31, 2002, the Company had in its development pipeline: (1) 10 industrial projects, which will total approximately 1.7 million square feet and have an aggregate estimated investment of $106.8 million upon completion; and (2) three development projects available for sale, which will total approximately 0.6 million square feet and have an aggregate estimated investment of $49.1 million upon completion. As of December 31, 2002, the Company and its Development Alliance Partners® have funded an aggregate of $92.8 million and will need to fund an estimated additional $63.1 million in order to complete current and planned projects during 2003 and 2004.

During 2001, the Company invested $428.3 million in operating properties, consisting of 65 industrial buildings, aggregating approximately 6.8 million square feet, which included the investment of $219.5 million

F-11

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

in 36 industrial buildings, aggregating approximately 3.8 million square feet through three of the Company’s co-investment joint ventures.

During 2001, the Company completed industrial and retail developments valued at $148.0 million and $73.9 million, respectively, aggregating approximately 2.3 million and 0.4 million square feet, respectively. The Company also initiated new industrial development projects valued at $9.7 million, aggregating approximately 0.2 million square feet.

5. Property Divestitures and Properties Held for Divestiture

Property Divestitures.During 2002, the Company divested itself of 58 industrial buildings, two retail properties and one undeveloped retail land parcel, aggregating approximately 5.7 million square feet, for an aggregate price of $244.0 million, with a resulting net gain of $9.6 million, which is net of minority interests’ share. During 2002, we also completed and sold six buildings developed as part of our development-for-sale program for a net gain of $1.0 million. As of December 31, 2002, we were developing three projects for sale to third parties.

In June 2002, the Company also sold operating properties valued at $76.9 million, consisting of 15 industrial buildings, aggregating approximately 1.9 million square feet, to one of its co-investment joint ventures. The properties sold to the co-investment joint venture were reflected at the Company’s historical cost because the Company controls these joint ventures and, therefore, they were under common control. The Company recognized a gain of $3.3 million related to these sales representing the portion of the properties acquired by the third-party co-investors. In November 2002, the Company’s joint venture partner in AMB Partners II, L.P. (“Partners II”) increased its ownership in Partners II from 50% to 80% by acquiring 30% of the Operating Partnership’s partnership interest. The Company recognized a gain of $6.3 million on the sale of its interest.

During 2001, the Company divested itself of 24 industrial and two retail buildings, aggregating approximately 3.2 million square feet, for an aggregate price of $193.4 million, with a resulting net gain of $24.1 million, which is net of minority interests’ share. The resulting net gain is before impairment charges of $18.6 million and the gain on the Company’s contributed properties of $17.8 million.

During 2001, the Company also contributed operating properties valued at $539.2 million, consisting of 111 industrial buildings, aggregating approximately 10.8 million square feet, to three of its co-investment joint ventures. The properties contributed to the co-investment joint ventures were reflected at the Company’s historical cost because the Company controls these joint ventures and, therefore, they were under common control. The Company recognized a gain of $17.8 million related to these contributions representing the portion of the contributed properties acquired by the third-party co-investors.

During 2000, the Company divested itself of 25 industrial buildings and one retail center, aggregating approximately 2.5 million square feet, for an aggregate price of $175.7 million, with a resulting net gain of $7.0 million. The resulting net gain is before impairment charges of $5.9 million.

Properties Held for Divestiture.As of December 31, 2002, the Company had decided to divest itself of four industrial properties, one development property and two retail properties with a net book value of $107.9 million. The properties are not in the Company’s core markets and do not meet its current strategic objectives. The divestitures of the properties are subject to negotiation of acceptable terms and other customary conditions. Properties held for divestiture are stated at the lower of cost or estimated fair value less

F-12

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

costs to sell. The following summarizes the condensed results of operations of the properties held for divestiture and sold under SFAS No. 144 for the years ended December 31, (dollars in thousands):


		2002			2001			2000

Rental revenues		$	38,809		$	37,952		$	31,951
Straight-line rents			1,522			73			1,091
Interest and other income			6			43			67
Property operating expenses			(4,876	)		(4,564	)		(4,147	)
Real estate taxes			(5,512	)		(5,879	)		(5,168	)
Interest, including amortization			(3,926	)		(4,725	)		(4,436	)
Depreciation and amortization			(7,503	)		(6,576	)		(5,398	)
Minority interests’ share			(26	)		(24	)		(25	)

	Income attributable to discontinued operations	$	18,494		$	16,300		$	13,935

As of December 31, 2002 and 2001, assets and liabilities of properties held for divestiture consisted of the following (dollars in thousands):


	2002		2001

Accounts receivable, net	$	3,986	$	3,065
Other assets	$	82	$	174
Secured debt	$	9,544	$	32,024
Accounts payable and other liabilities	$	1,912	$	2,257

6. Mortgages Receivable

In September 2000, the Company sold a retail center located in Southern California. The Company carried a 9.5% mortgage note secured by the retail center in the principal amount of $74.0 million, due September 30, 2002. The Company received full repayment of this mortgage on July 3, 2002.

Through a wholly-owned subsidiary, the Company holds a mortgage loan receivable on AMB Pier One, LLC, an unconsolidated joint venture. The note bears interest at 13.0% and matures in May 2026. As of December 30, 2002, the outstanding balance on the note was $13.1 million.

F-13

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

7. Debt

As of December 31, 2002 and 2001, debt consisted of the following (dollars in thousands):


			December 31,		December 31,
			2002		2001

Company secured debt, varying interest rates from 4.0% to 10.4%, due January 2003 to January 2014 (weighted average interest rate of 8.1% at December 31, 2002 and 2001)			$	381,764	$	453,954
Joint venture secured debt, varying interest rates from 3.0% to 12.0%, due April 2004 to April 2023 (weighted average interest rate of 7.0% and 7.1% at December 31, 2002 and 2001, respectively)				893,093		759,374
Unsecured senior debt securities, varying interest rates from 5.9% to 8.0%, (weighted average interest rate of 7.2% and 7.3% at December 31, 2002 and 2001, respectively) due June 2005 to June 2018.				800,000		780,000
Unsecured debt, interest rate of 7.5%, due June 2013 and November 2015.				10,186		—
Unsecured credit facility, variable interest at LIBOR plus 60 basis points (interest rate of 2.0% and 2.8% at December 31, 2002 and 2001, respectively), due December 2005.				95,000		12,000
Alliance Fund II credit facility, variable interest at LIBOR plus 87.5 basis points (interest rate of 2.3% at December 31, 2002), due August 2003.				45,500		123,500

	Total before premiums			2,225,543		2,128,828
	Unamortized premiums			9,818		14,886

		Total consolidated debt	$	2,235,361	$	2,143,714

Secured debt generally requires monthly principal and interest payments. The secured debt is secured by deeds of trust on certain properties and is generally non-recourse. As of December 31, 2002 and 2001, the total gross investment book value of those properties securing the debt was $2.6 billion and $2.3 billion, respectively, including $1.6 billion and $1.2 billion, respectively, in consolidated joint ventures. All of the secured debt bears interest at fixed rates, except for seven loans with an aggregate principal amount of $65.6 million as of December 31, 2002, which bear interest at variable rates (weighted average interest rate of 3.5% as of December 31, 2002). The secured debt has various covenants. Management believes that the Company and the Operating Partnership were in compliance with their financial covenants as of December 31, 2002. As of December 31, 2002, the Company had 26 non-recourse secured loans, which are cross-collateralized by 60 properties, totaling $711.7 million (not including unamortized debt premiums).

Interest on the unsecured senior debt securities is payable semi-annually. The 2015 notes are putable and callable in September 2005. The senior debt securities are subject to various covenants. Management believes that the Company and the Operating Partnership were in compliance with their financial covenants as of December 31, 2002.

In May 2002, the Operating Partnership commenced a medium-term note program for the issuance of up to $400.0 million in principal amount of medium-term notes (unsecured senior debt securities), which will be guaranteed by the Company. As of December 31, 2002, the Operating Partnership had issued no medium-term notes under this program.

In August 2000, the Operating Partnership commenced a medium-term note program for the issuance of up to $400.0 million in principal amount of medium-term notes, which are guaranteed by the Company. On

F-14

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

January 14, 2002, the Operating Partnership completed this program when it issued and sold the remaining $20.0 million of the notes to Lehman Brothers, Inc., as principal. The Company has guaranteed the notes, which mature on January 17, 2007, and bear interest at 5.90% per annum. The Operating Partnership used the net proceeds of $19.9 million for general corporate purposes, to partially repay indebtedness and to acquire and develop additional properties.

In December 2002, the Operating Partnership renewed its $500.0 million unsecured revolving line of credit. The Company guarantees the Operating Partnership’s obligations under the credit facility. The credit facility matures in December 2005, has a one-year extension option and is subject to a 20 basis point annual facility fee. Borrowings under the credit facility currently bear interest at LIBOR plus 60 basis points. Both the facility fee and the interest rate are based on the Operating Partnership’s credit rating, which is currently investment grade. The credit facility includes a multi-currency component under which up to $150.0 million may be drawn in either British pounds sterling, euros or yen, provided that such currency is readily available and freely transferable and convertible to U.S. dollars. The Reuters Monitor Money Rates Service reports LIBOR for such currency in interest periods of 1, 2, 3 or 6 months. The Operating Partnership has the ability to increase available borrowings to $700.0 million by adding additional banks to the facility or obtaining the agreement of existing banks to increase their commitments. The Company uses its unsecured credit facility principally for acquisitions and for general working capital requirements. Monthly debt service payments on the credit facility are interest only. The total amount available under the credit facility fluctuates based upon the borrowing base, as defined in the agreement governing the credit facility, generally the value of the Company’s unencumbered properties. As of December 31, 2002, the outstanding balance on the credit facility was $95.0 million and the remaining amount available was $379.0 million, net of outstanding letters of credit (excluding the additional $200.0 million of potential additional capacity). The credit facility has various covenants. Management believes that the Company and the Operating Partnership were in compliance with their financial covenants at December 31, 2002.

In July 2001, AMB Institutional Alliance Fund II, L.P. (“Alliance Fund II”) obtained a $150.0 million credit facility secured by the unfunded capital commitments of the investors in AMB Institutional Alliance REIT II, Inc. (“Alliance REIT II”) and the Alliance Fund II. Borrowings currently bear interest at LIBOR plus 87.5 basis points. As of December 31, 2002, the outstanding balance was $45.5 million and the remaining amount available was $31.2 million, net of outstanding letters of credit and capital contributions from third-party investors. The credit facility has various covenants. Management believes that the Alliance Fund II and the Alliance REIT II were in compliance with their financial covenants as of December 31, 2002.

F-15

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2002, the scheduled maturities of the Company’s total debt, excluding unamortized debt premiums, were as follows (dollars in thousands):


			Consolidated		Unsecured
	Company		Joint		Senior
	Secured		Venture		Debt		Unsecured		Credit
	Debt		Debt		Securities		Debt		Facilities		Total

2003	$	74,631	$	19,678	$	—	$	558	$	45,500	$	140,367
2004		63,465		64,928		—		601		—		128,994
2005		45,511		59,326		250,000		647		95,000		450,484
2006		85,023		65,676		25,000		698		—		176,397
2007		24,073		43,163		75,000		752		—		142,988
2008		32,669		154,684		175,000		810		—		363,163
2009		4,147		76,826		—		873		—		81,846
2010		50,948		105,854		75,000		941		—		232,743
2011		409		179,295		75,000		1,014		—		255,718
2012		407		101,399		—		1,092		—		102,898
Thereafter		481		22,264		125,000		2,200		—		149,945

	$	381,764	$	893,093	$	800,000	$	10,186	$	140,500	$	2,225,543

8. Leasing Activity

Future minimum base rental income due under non-cancelable leases with customers in effect as of December 31, 2002, was as follows (dollars in thousands):


2003		$	546,267
2004			454,176
2005			356,236
2006			274,783
2007			203,883
Thereafter			506,035

	Total	$	2,341,380

The schedule does not reflect future rental revenues from the renewal or replacement of existing leases and excludes property operating expense reimbursements.

In addition to minimum rental payments, certain customers pay reimbursements for their pro rata share of specified operating expenses, which amounted to $127.6 million, $116.7 million and $77.9 million for the years ended December 31, 2002, 2001 and 2000, respectively. These amounts are included as rental income and operating expenses in the accompanying consolidated statements of operations. Some leases contain options to renew.

9. Income Taxes

The Company elected to be taxed as a REIT under the Code, commencing with its taxable year ended December 31, 1997. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its taxable income to its stockholders. It is management’s current intention to adhere to these requirements and maintain the Company’s REIT status. As a REIT, the Company generally will not be subject to corporate level federal

F-16

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

income tax on net income it distributes currently to its stockholders. As such, no provision for federal income taxes has been included in the accompanying consolidated financial statements. If the Company fails to qualify as a REIT in any taxable year, then it will be subject to federal income taxes at regular corporate rates (including any applicable alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable years. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state, local and foreign taxes on its income and property and to federal income and excise taxes on its undistributed taxable income. In addition, the Company is required to pay federal and state income tax on its net taxable income, if any, from the activities conducted through the Company’s taxable REIT subsidiaries, IMD Holding Corporation and Headlands Realty Corporation.

The following reconciles net income available to common stockholders to taxable income available to common stockholders for the years ended December 31, (dollars in thousands):


		2002			2001			2000

Net income available to common stockholders		$	116,153		$	125,053		$	113,282
Book depreciation and amortization			127,160			104,838			84,960
Book depreciation discontinued operations			7,503			6,576			5,398
Tax depreciation and amortization			(125,888	)		(117,400	)		(87,338	)
Book/tax difference on gain on divestiture of real estate			26,328			(7,563	)		24,688
Other book/tax differences, net(1)			(39,621	)		15,943			(5,723	)

	Taxable income available to common stockholders	$	111,635		$	127,447		$	135,267


(1)	Primarily due to straight-line rent, prepaid rent, joint venture accounting and debt premium amortization timing differences.

For income tax purposes, distributions paid to common stockholders consist of ordinary income, capital gains or a combination thereof. For the years ended December 31, 2002, 2001 and 2000, the Company elected to distribute all of its taxable capital gain. Dividends paid or payable per common share for the years ended December 31, were taxable as follows:



		2002			2001			2000


Ordinary income		$	1.05	64.0%	$	1.29	81.9%	$	1.21	82.0%
Capital gains			—	—		0.24	14.9%		0.20	13.2%
Unrecaptured Section 1250 gain			0.18	11.0%		0.05	3.2%		0.07	4.8%
Dividends taxed in subsequent year			0.41	25.0%		—	—		—	—

	Dividends paid or payable	$	1.64	100.0%	$	1.58	100.0%	$	1.48	100.0%

10. Minority Interests in Consolidated Joint Ventures and Preferred Units

Minority interests in the Company represent the limited partnership interests in the Operating Partnership and interests held by certain third parties in several real estate joint ventures, aggregating approximately 33.8 million square feet, which are consolidated for financial reporting purposes. Such investments are consolidated because the Company owns a majority interest or exercises significant control over major operating decisions such as approval of budgets, selection of property managers, investment activity and changes in financing.

Through the Operating Partnership, the Company enters into co-investment joint ventures with institutional investors. As of December 31, 2002, the Company had investments in five co-investment joint ventures with a gross book value of $1.6 billion, which are consolidated for financial reporting purposes and

F-17

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

which are discussed below. The Company’s five co-investment joint ventures are engaged in the acquisition, ownership, operation, management and, in some cases, the renovation, expansion and development of industrial buildings in target markets nationwide.

Our co-investment joint ventures at December 31, 2002 (dollars in thousands):


		Company’s
		Ownership			Total
Co-investment Joint Venture	Joint Venture Partner	Percentage			Capitalization

AMB/Erie, L.P.	Erie Insurance Company and affiliates		50%		$	170,084
AMB Institutional Alliance Fund I, L.P.	AMB Institutional Alliance REIT I, Inc.(1)		21%		$	393,007
AMB Partners II, L.P.	City and County of San Francisco Employees’ Retirement System		20%	(4)	$	248,306
AMB-SGP, L.P.	Industrial JV Pte Ltd. GIC Real Estate Pte Ltd.(2)		50%		$	367,082
AMB Institutional Alliance Fund II, L.P.	AMB Institutional Alliance REIT II, Inc.(3)		20%		$	350,416


(1)	Included 15 institutional investors as stockholders as of December 31, 2002.

(2)	A subsidiary of the real estate investment subsidiary of the Government of Singapore Investment Corporation.

(3)	Included 14 institutional investors as stockholders as of December 31, 2002.

(4)	In November 2002, the City and County of San Francisco Employees’ Retirement System increased its ownership in Partners II from 50% to 80% by acquiring 30% of the Operating Partnership’s partnership interest. The Company recognized a gain of $6.3 million.

On July 31, 2002, AMB Property II, L.P., one of the Company’s subsidiaries, repurchased 130,000 of its 7.95% Series F Cumulative Redeemable Preferred Limited Partnership Units and all 20,000 of its outstanding 7.95% Series G Cumulative Redeemable Preferred Limited Partnership Units from a single institutional investor. AMB Property II, L.P. redeemed the units for an aggregate cost of $7.1 million, including accrued and unpaid dividends and a redemption discount of $0.4 million.

On April 17, 2002, the Operating Partnership issued and sold 800,000 7.95% Series K Cumulative Redeemable Preferred Limited Partnership Units at a price of $50.00 per unit in a private placement. Distributions are cumulative from the date of issuance and payable quarterly in arrears. The Series K preferred units are redeemable by the Operating Partnership on or after April 17, 2007, subject to certain conditions, for cash at a redemption price equal to $50.00 per unit, plus accumulated and unpaid distributions thereon, if any, to the redemption date. The Series K preferred units are exchangeable, at specified times and subject to certain conditions, on a one-for-one basis, for shares of the Company’s Series K preferred stock. The Operating Partnership used the net proceeds of $39.0 million for general corporate purposes, which included the partial repayment of indebtedness and the acquisition and development of additional properties.

F-18

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table distinguishes the minority interest liability as of December 31, 2002 and 2001 (dollars in thousands):


			December 31,		December 31,
			2002		2001

Joint venture partners			$	488,524	$	359,514
Limited Partners in the Operating Partnership				94,374		98,785
Series B preferred units (liquidation preference of $65,000)				63,288		62,319
Series J preferred units (liquidation preference of $40,000)				38,883		38,906
Series K preferred units (liquidation preference of $40,000)				38,932		—
Held through AMB Property II, L.P.:
	Series D preferred units (liquidation preference of $79,767)			77,684		77,687
	Series E preferred units (liquidation preference of $11,022)			10,788		10,788
	Series F preferred units (liquidation preference of $13,372)			13,082		19,597
	Series G preferred units (repurchased in July 2002)			—		954
	Series H preferred units (liquidation preference of $42,000)			40,912		40,915
	Series I preferred units (liquidation preference of $25,500)			24,800		24,821

		Total minority interests	$	891,267	$	734,286

The following table distinguishes the minority interests’ share of net income for the years ended December 31, (dollars in thousands):


			2002		2001		2000

Joint venture partners			$	30,963	$	27,132	$	12,281
Limited partners in the Operating Partnership				6,843		7,703		8,042
Series B preferred units (liquidation preference of $65,000)				5,606		5,608		5,608
Series J preferred units (liquidation preference of $40,000)				3,303		873		—
Series K preferred units (liquidation preference of $40,000)				2,367		—		—
Held through AMB Property II, L.P.:
	Series C preferred units (repurchased in December 2001)			—		8,540		9,624
	Series D preferred units (liquidation preference of $79,767)			6,182		6,180		6,180
	Series E preferred units (liquidation preference of $11,022)			854		856		856
	Series F preferred units (liquidation preference of $13,372)			1,342		1,580		1,228
	Series G preferred units (repurchased in July 2002)			43		80		27
	Series H preferred units (liquidation preference of $42,000)			3,412		3,412		1,090
	Series I preferred units (liquidation preference of $25,500)			2,040		1,553		—

		Total minority interests’ share of net income	$	62,955	$	63,517	$	44,936

11. Investments in Unconsolidated Joint Ventures

The Company has a 56.1% interest in a joint venture, which owns an aggregate of 36 industrial buildings totaling approximately 4.0 million square feet. The Company has a 50% interest in two other operating joint ventures, which own an aggregate of 7 industrial buildings totaling approximately 1.4 million square feet. The Company also has a 50% interest in a development alliance joint venture. The Company’s net equity investment in these joint ventures is shown as investments in unconsolidated joint ventures on the accompanying consolidated balance sheets.

F-19

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Under the agreements governing the joint ventures, the Company and the other parties to the joint venture may be required to make additional capital contributions and, subject to certain limitations, the joint ventures may incur additional debt. As of December 31, 2002, the Company’s share of unconsolidated joint venture debt was $39.3 million.

The Company also has a 0.1% unconsolidated equity interest (with an approximate 33% economic interest) in AMB Pier One, LLC, a joint venture to redevelop the Company’s office space in San Francisco. The investment is not consolidated because the Company does not own a majority interest and does not exercise significant control over major operating decisions such as approval of budgets, selection of property managers, investment activity and changes in financing. The Company has an option to purchase the remaining equity interest beginning January 1, 2007, and expiring December 31, 2009, based on the fair market value as stipulated in the operating agreement.

12. Stockholders’ Equity

During 2002, the Company redeemed 122,640 common limited partnership units of the Operating Partnership for shares of its common stock. Holders of common limited partnership units of the Operating Partnership have the right, commencing generally on or after the first anniversary of the holder becoming a limited partner of the Operating Partnership (or such other date agreed to by the Operating Partnership and the applicable unit holders), to require the Operating Partnership to redeem part or all of their common units for cash (based upon the fair market value of an equivalent number of shares of common stock at the time of redemption) or the Operating Partnership may, in its sole and absolute discretion (subject to the limits on ownership and transfer of common stock set forth in the Company’s charter), elect to have the Company exchange those common units for shares of the Company’s common stock on a one-for-one basis, subject to adjustment in the event of stock splits, stock dividends, issuance of certain rights, certain extraordinary distributions and similar events. The Company presently anticipates that the Operating Partnership will generally elect to have it issue shares of its common stock in exchange for common units in connection with a redemption request; however, the Operating Partnership has paid cash, and may in the future pay cash, for a redemption of common units. With each redemption or exchange, the Company’s percentage ownership in the Operating Partnership will increase. Common limited partners may exercise this redemption right from time to time, in whole or in part, subject to the limitations that limited partners may not exercise this right if such exercise would result in any person actually or constructively owning shares of common stock in excess of the ownership limit or any other amount specified by the board of directors, assuming common stock was issued in the exchange.

In December 2001, the Company’s board of directors approved a new stock repurchase program for the repurchase of up to $100.0 million worth of common and preferred stock. In December 2002, the Company’s board of directors increased the repurchase program to $200.0 million. The new stock repurchase program expires in December 2003. During 2002, the Company repurchased 2,651,600 shares of its common stock for $69.4 million, including commissions.

The Company has authorized 100,000,000 shares of preferred stock for issuance, of which the following series were designated as of December 31, 2002: 4,600,000 shares of Series A preferred; 1,300,000 shares of Series B preferred; 1,595,337 shares of Series D preferred; 220,440 shares of Series E preferred; 267,439 shares of Series F preferred; 840,000 shares of Series H preferred; 510,000 shares of Series I preferred; 800,000 shares of Series J preferred; and 800,000 shares of Series K preferred.

In July 2002, the Company repurchased 4,200 shares of its Series A Preferred Stock for an aggregate cost of $0.1 million, including accrued and unpaid dividends.

F-20

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the dividends and distributions paid or payable per share or unit for the years ended December 31:


Paying Entity	Security		2002		2001		2000

Company		Common stock	$	1.64	$	1.58	$	1.48
Company		Series A preferred stock	$	2.13	$	2.13	$	2.13
Operating Partnership		Common limited partnership units	$	1.64	$	1.58	$	1.48
Operating Partnership		Series A preferred units	$	2.13	$	2.13	$	2.13
Operating Partnership		Series B preferred units	$	4.31	$	4.31	$	4.31
Operating Partnership		Series J preferred units	$	3.98	$	1.24		n/a
Operating Partnership		Series K preferred units	$	2.96		n/a		n/a
AMB Property II, L.P.		Series C preferred units		n/a	$	3.88	$	4.38
AMB Property II, L.P.		Series D preferred units	$	3.88	$	3.88	$	3.88
AMB Property II, L.P.		Series E preferred units	$	3.88	$	3.88	$	3.88
AMB Property II, L.P.		Series F preferred units(1)	$	3.38	$	3.98	$	3.09
AMB Property II, L.P.		Series G preferred units(1)	$	2.14	$	3.98	$	1.35
AMB Property II, L.P.		Series H preferred units	$	4.06	$	4.06	$	1.30
AMB Property II, L.P.		Series I preferred units	$	4.00	$	3.04		n/a

(1)

On July 31, 2002, AMB Property II, L.P., one of the Company’s subsidiaries, repurchased 130,000 of its 7.95% Series F Cumulative Redeemable Preferred Limited Partnership Units and all 20,000 of its outstanding 7.95% Series G Cumulative Redeemable Preferred Limited Partnership Units from a single institutional investor. On July, 31, 2002, AMB Property II, L.P. paid a distribution, which accrued during the period from July 15, 2002, to July 31, 2002, of $0.155 per unit on the 130,000 Series F preferred units that were redeemed.

13. Stock Incentive Plan, 401(k) Plan and Deferred Compensation Plan

Stock Incentive Plan.The Company has Stock Option and Incentive Plans (“Stock Incentive Plans”) for the purpose of attracting and retaining eligible officers, directors and employees. The Company has reserved for issuance 18,950,000 shares of common stock under its Stock Incentive Plans. As of December 31, 2002, the Company had 8,764,912 non-qualified options outstanding granted to certain directors, officers and employees. Each option is exchangeable for one share of the Company’s common stock. The options have a weighted average exercise price of $23.16 and the exercise prices range from $18.94 to $30.83. Each option’s exercise price is equal to the Company’s market price on the date of grant. The options had an original ten-year term and generally vest pro rata in annual installments over a three- to five-year period from the date of grant.

In 2002, the Company adopted the expense recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation. The Company values stock options issued using the Black-Scholes option-pricing model and recognizes this value as an expense over the period in which the options vest. Under this standard, recognition of expense for stock options is applied to all options granted after the beginning of the year of adoption. Prior to 2002, the Company followed the intrinsic method set forth in APB Opinion 25,Accounting for Stock Issued to Employees. In accordance with SFAS No. 123, the Company will recognize the associated expense over the three to five-year vesting periods. Related stock-based compensation expense was $0.9 million for the twelve month period ended December 31, 2002. The expense is included in general and administrative expenses in the accompanying consolidated statements of operations. The adoption of SFAS No. 123 is prospective and the 2002 expense relates only to stock options granted in 2002. Prior to January 1,

F-21

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2002, the Company applied APB Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations in accounting for its Stock Incentive Plan. Opinion 25 measures compensation cost using the intrinsic value based method of accounting. Under this method, compensation cost is the excess, if any, of the quoted market price of the stock at the date of grant over the amount an employee must pay to acquire the stock. Accordingly, no compensation cost had been recognized for the Company’s Stock Incentive Plan as of December 31, 2001.

As permitted by SFAS No. 148, Accounting for Stock-based Compensation — Transition and Disclosure — an amendment of FASB Statement No. 123, the Company has changed its method of accounting for stock options beginning January 1, 2002. The Company has not retroactively changed its method of accounting for stock options but has provided additional required disclosures. Had compensation cost for the Company’s stock-based compensation plans been determined based on the fair value at the grant dates for awards prior to 2002 consistent with the method of SFAS No. 123, the Company’s pro forma net income available to common stockholders would have been reduced by $2.4 million, $3.9 million and $2.7 million and pro forma basic and diluted earnings per share would have been reduced to $1.37 and $1.34; $1.44 and $1.42; and $1.32 and $1.31, respectively, for the years ended December 31, 2002, 2001 and 2000.

The fair value of each option grant was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions used for grants in 2002, 2001 and 2000, respectively: dividend yields of 5.9%, 6.4% and 6.5%; expected volatility of 13.3%, 14.9% and 13.3%; risk-free interest rates of 4.0%, 5.2% and 6.1%; and expected lives of 10 years for each year.

Following is a summary of the option activity for the years ended December 31 (options in thousands):


						Options
				Weighted		Exercisable
	Shares Under			Average		at Year
	Option			Exercise Price		End

Outstanding as of December 31, 1999		4,510		$	21.44		1,832

Granted		1,565			20.86
Exercised		(103	)		21.11
Forfeited		(205	)		21.21

Outstanding as of December 31, 2000		5,767			20.83		3,326

Granted		1,924			24.61
Exercised		(202	)		21.15
Forfeited		(52	)		22.45

Outstanding as of December 31, 2001		7,437			22.16		4,623

Granted		1,990			26.48
Exercised		(566	)		21.41
Forfeited		(96	)		24.48

Outstanding as of December 31, 2002		8,765		$	23.16		5,526

Remaining average contractual life		7.1 years

Fair value of options granted during the year	$	1.56

In 2002, 2001 and 2000, the Company issued 204,072, 238,790 and 162,229 restricted shares, respectively, to certain officers of the Company as part of the performance pay program and in connection with employment with the Company. As of December 31, 2002, 36,200 shares of restricted stock have been

F-22

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

forfeited. The 717,611 outstanding restricted shares are subject to repurchase rights, which generally lapse over a period from three to five years.

401(k) Plan. In November 1997, the Company established a Section 401(k) Savings/ Retirement Plan (“401(k) Plan”), which is a continuation of the 401(k) Plan of the predecessor, to cover eligible employees of the Company and any designated affiliates. During 2002 and 2001, the 401(k) Plan permitted eligible employees of the Company to defer up to 20% of their annual compensation, subject to certain limitations imposed by the Code. The employees’ elective deferrals are immediately vested and non-forfeitable upon contribution to the 401(k) Plan. During 2002 and 2001, the Company matched the employee contributions to the 401(k) Plan in an amount equal to 50% of the first 5.5% of annual compensation deferred by each employee. The Company may also make discretionary contributions to the 401(k) Plan. In 2002 and 2001, the Company paid $0.4 million and $0.3 million, respectively, for its 401(k) match.

Deferred Compensation Plan.Effective September 1, 1999, the Company established a non-qualified deferred compensation plan for officers of the Company and certain of its affiliates. As of January 1, 2002, the plan enables participants to defer income up to 100% of annual base pay and up to 100% of annual bonuses on a pre-tax basis. The Company may make discretionary matching contributions to participant accounts at any time. The Company made no such discretionary matching contributions in 2002, 2001 or 2000. The participant’s elective deferrals and any matching contributions are immediately 100% vested. As of December 31, 2002 and 2001, the total amount of compensation deferred was $2.9 million and $1.7 million, respectively.

14. Income Per Share

The Company’s only dilutive securities outstanding for the years ended December 31, 2002, 2001 and 2000 were stock options and restricted stock granted under the Stock Incentive Plans. The effect on income per share was to increase weighted average shares outstanding. Such dilution was computed using the treasury stock method.


			2002		2001		2000

Weighted Average Common Shares
	Basic			83,310,885		84,174,644		83,697,170
	Stock options and restricted stock			1,485,102		1,039,422		458,136

		Diluted weighted average common shares		84,795,987		85,214,066		84,155,306

15. Commitments and Contingencies

Commitments

Lease Commitments.The Company has entered into operating ground leases on certain land parcels, primarily on-tarmac facilities, and office space with remaining lease terms from one to 38 years. Future

F-23

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

minimum rental payments required under non-cancelable operating leases in effect as of December 31, 2002, were as follows (dollars in thousands):


2003		$	19,921
2004			19,753
2005			19,819
2006			20,553
2007			20,772
Thereafter			283,574

	Total lease commitments	$	384,392

These operating lease payments are being amortized ratably over the terms of the related leases.

Contingencies

Litigation. In the normal course of business, from time to time, the Company may be involved in legal actions relating to the ownership and operations of its properties. Management does not expect that the liabilities, if any, that may ultimately result from such legal actions will have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company.

Environmental Matters.The Company monitors its properties for the presence of hazardous or toxic substances. The Company is not aware of any environmental liability with respect to the properties that would have a material adverse effect on the Company’s business, assets or results of operations. However, there can be no assurance that such a material environmental liability does not exist. The existence of any such material environmental liability would have an adverse effect on the Company’s results of operations and cash flow.

General Uninsured Losses.The Company carries property and rental loss, liability, flood, environmental and terrorism insurance. The Company believes that the policy terms and conditions, limits and deductibles are adequate and appropriate under the circumstances, given the relative risk of loss, the cost of such coverage and industry practice. In addition, certain of the Company’s properties are located in areas that are subject to earthquake activity; therefore, the Company has obtained limited earthquake insurance on those properties. There are, however, certain types of extraordinary losses, such as those due to acts of war that may be either uninsurable or not economically insurable. Although we have obtained coverage for certain acts of terrorism, with policy specifications and insured limits that we believe are commercially reasonable, it is not certain that we will be able to collect under such policies. Should an uninsured loss occur, the Company could lose its investment in, and anticipated profits and cash flows from, a property.

Captive Insurance Company.The Company has responded to recent trends towards increasing costs and decreasing coverage availability in the insurance markets by obtaining higher-deductible property insurance from third party insurers and by forming a wholly-owned captive insurance company, Arcata National Insurance Ltd. (“Arcata”) in December 2001. Arcata provides insurance coverage for all or a portion of losses below the increased deductible under the third party policies. The Company capitalized Arcata in accordance with regulatory requirements. Arcata established annual premiums based on projections derived from the past loss experience at the Company’s properties. Annually, the Company engages an independent third party to perform an actuarial estimate of future projected claims and projected expenses necessary to fund associated risk management programs. Premiums paid to Arcata may be adjusted based on this estimate. Premiums paid to Arcata have a retrospective component, so that if expenses, including losses, are less than premiums collected, the excess will be returned to the property owners (and, in turn, as appropriate, to the customers) and conversely, subject to certain limitations, if expenses, including losses, are greater than premiums collected, an additional premium will be charged. As with all recoverable expenses,

F-24

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

differences between estimated and actual insurance premiums will be recognized in the subsequent year. Through this structure, the Company believes that it will be able to obtain insurance for its portfolio with more comprehensive coverage at a projected overall lower cost than would otherwise be available in the market.

16. Quarterly Financial Data (Unaudited)

Selected quarterly financial results for 2002 and 2001 were as follows (dollars in thousands):



			Quarter(1)

			March 31			June 30			September 30			December 31			Year


			(unaudited)
2002
Total revenues and other income			$	149,807		$	148,933		$	155,346		$	161,757		$	615,843
Income before minority interests and gains				41,212			36,883			35,545			34,865			148,505
Total minority interests’ share of income				(15,619	)		(15,367	)		(17,266	)		(14,703	)		(62,955	)
Total gains on developments and dispositions, net of minority interests				(288	)		2,768			618			5,723			8,821
Income from continuing operations				25,305			24,284			18,897			25,885			94,371
Discontinued operations				4,998			4,566			8,177			12,125			29,866

	Net income			30,303			28,850			27,074			38,010			124,237
Series A preferred stock dividends				(2,125	)		(2,125	)		(2,123	)		(2,123	)		(8,496	)
Preferred unit redemption discount				—			—			412			—			412

		Net income available to common stockholders	$	28,178		$	26,725		$	25,363		$	35,887		$	116,153

INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE(2)
	Basic		$	0.28		$	0.26		$	0.20		$	0.29		$	1.03

	Diluted		$	0.27		$	0.26		$	0.20		$	0.28		$	1.02

NET INCOME PER COMMON SHARE(2)
	Basic		$	0.34		$	0.32		$	0.30		$	0.44		$	1.39

	Diluted		$	0.33		$	0.31		$	0.30		$	0.43		$	1.37

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
	Basic			83,319,047			83,710,208			83,723,897			82,289,995			83,310,885

	Diluted			84,781,872			85,529,416			85,527,829			83,648,772			84,795,987

F-25

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



			Quarter (1)

			March 31			June 30			September 30			December 31			Year


			(unaudited)
2001
Total revenues and other income			$	137,343		$	136,084		$	144,891		$	144,459		$	562,777
Income before minority interests and gains				38,303			24,426			44,307			41,706			148,742
Total minority interests’ share of income				(12,992	)		(16,968	)		(17,975	)		(15,582	)		(63,517	)
Total gains from developments and dispositions, net of minority interests				16,767			17,792			114			1,755			36,428
Income from continuing operations				42,078			25,250			26,446			27,879			121,653
Discontinued operations				2,362			4,683			5,131			4,124			16,300

	Net income			44,440			29,933			31,577			32,003			137,953
Series A preferred stock dividends				(2,125	)		(2,125	)		(2,125	)		(2,125	)		(8,500	)
Preferred unit redemption premium				—			—			—			(4,400	)		(4,400	)

		Net income available to common stockholders	$	42,315		$	27,808		$	29,452		$	25,478		$	125,053

INCOME FROM CONTINUING OPERATIONS PER COMMON SHARE(2)
	Basic		$	0.48		$	0.27		$	0.29		$	0.26		$	1.29

	Diluted		$	0.47		$	0.27		$	0.28		$	0.25		$	1.28

NET INCOME PER COMMON SHARE(2)
	Basic		$	0.50		$	0.33		$	0.35		$	0.31		$	1.49

	Diluted		$	0.50		$	0.33		$	0.34		$	0.30		$	1.47

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
	Basic			83,895,993			84,461,544			84,395,107			83,264,975			84,174,644

	Diluted			84,720,917			85,378,727			85,644,840			84,338,812			85,214,066


(1)	Certain reclassifications have been made to the quarterly data to conform with the annual presentation with no net effect to net income or per share amounts.

(2)	The sum of quarterly financial data may vary from the annual data due to rounding.

17. Segment Information

The Company operates industrial and retail properties in North America and France and manages its business both by property type and by market. Industrial properties represent more than 98% of the Company’s portfolio by rentable square feet and consist primarily of warehouse distribution facilities suitable for single or multiple customers and are typically comprised of multiple buildings that are leased to customers engaged in various types of businesses. As of December 31, 2002, the Company operated industrial properties in eight hub and gateway markets in addition to 20 other markets throughout North America and France. The Company’s geographic markets for industrial properties are managed separately because each market requires different operating, pricing and leasing strategies. As of December 31, 2002, the Company operated retail properties in Southeast Florida, Atlanta, Chicago, the San Francisco Bay Area, Boston and Baltimore. The Company does not separately manage its retail operations by market. Retail properties are generally leased to

F-26

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

one or more anchor customers, such as grocery and drug stores and various retail businesses. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance based upon property net operating income of the combined properties in each segment.

Within the hub and gateway market categorization, the Company operates in eight major U.S. markets. The other industrial markets category captures all of the Company’s other smaller markets. Summary information for the reportable segments is as follows (dollars in thousands):



			Rental Revenues									Property NOI (1)

Segments			2002			2001			2000			2002			2001			2000

Industrial hub and gateway markets:
	Atlanta		$	30,444		$	28,264		$	23,458		$	23,970		$	22,722		$	19,368
	Chicago			45,109			40,990			38,228			31,441			28,197			26,447
	Dallas/ Fort Worth			26,693			25,180			24,081			18,911			17,610			16,984
	Los Angeles			77,751			61,628			37,187			61,301			49,103			30,366
	Northern New Jersey/ New York			47,393			44,897			34,618			31,817			31,622			26,444
	San Francisco Bay Area			129,858			106,202			79,155			109,000			88,898			64,972
	Miami			35,069			33,176			22,853			25,421			24,366			16,775
	Seattle			25,656			23,215			22,081			20,394			18,620			18,048

		Total hub and gateway markets		417,973			363,552			281,661			322,255			281,138			219,404
Total other industrial markets				182,971			170,100			145,516			128,730			122,962			107,568
Straight-line rents				11,013			10,093			10,203			11,013			10,093			10,203
Total retail markets				16,896			24,321			26,784			10,597			15,677			19,259
Discontinued operations				(40,331	)		(38,025	)		(33,042	)		(29,943	)		(27,582	)		(23,727	)

		Total properties	$	588,522		$	530,041		$	431,122		$	442,652		$	402,288		$	332,707


(1)	Property net operating income (NOI) is defined as rental revenue, including reimbursements, less property operating expenses, which excludes depreciation, amortization, general and administrative expenses and interest expense.

F-27

AMB PROPERTY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)



			Total Gross Investment(1)
			As of December 31,

			2002			2001

Industrial hub and gateway markets:
	Atlanta		$	289,398		$	271,663
	Chicago			370,139			345,446
	Dallas/ Fort Worth			140,616			179,157
	Los Angeles			760,640			694,602
	Northern New Jersey/ New York			486,644			406,077
	San Francisco Bay Area			828,975			806,528
	Miami			305,399			288,046
	Seattle			249,500			193,154

		Total industrial hub and gateway markets		3,431,311			3,184,673
Total other industrial markets				1,489,431			1,321,959
Properties held for divestiture				(115,175	)		(164,831	)
Total retail markets				120,415			188,910

		Total properties	$	4,925,982		$	4,530,711


(1)	Includes construction in progress of $132.5 million and $181.2 million as of December 31, 2002 and 2001, respectively.

F-28

REPORT OF INDEPENDENT ACCOUNTANTS

ON FINANCIAL STATEMENT SCHEDULES

To the Board of Directors and Stockholders

of AMB Property Corporation:

Our audits of the consolidated financial statements referred to in our report dated January 14, 2003, appearing on page F-1 in this Annual Report on Form 10-K of AMB Property Corporation, also included an audit of the financial statement schedules listed in Item 14(a)(2) of this Form 10-K. In our opinion, these financial statement schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

PRICEWATERHOUSECOOPERSLLP

San Francisco, California

January 14, 2003

F-29

AMB PROPERTY CORPORATION

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION

As of December 31, 2002



									Initial Cost to Company

	No. of										Building &
Property	Bldgs./ Ctrs.		Location		Type		Encumbrances		Land		Improvements


	(In thousands, except number of buildings/centers)
Acer Distribution Center		1		CA		IND	$	—	$	3,146	$	9,479
Activity Distribution Center		4		CA		IND		—		3,736		11,248
Addison Business Center		1		IL		IND		—		1,060		3,228
Airport South Business Park		7		GA		IND		17,362		10,019		16,528
Albrae Business Center		1		CA		IND		7,780		6,299		6,227
Alsip Industrial		1		IL		IND		—		1,200		3,744
Alvarado Business Center		5		CA		IND		24,195		4,915		26,671
AMB Meadowlands Park		9		NJ		IND		—		5,838		17,923
AMB O’Hare Rosemont		14		IL		IND		8,000		3,131		8,995
AMB Port O’Hare		2		IL		IND		6,150		4,913		5,761
Amwiler-Gwinnett Industial Portfolio		9		GA		IND		7,247		6,641		19,964
Anaheim Industrial		1		CA		IND		—		1,457		4,341
Artesia Industrial Portfolio		25		CA		IND		50,001		22,758		68,254
Around Lenox		1		GA		RET		9,424		3,462		13,848
Arthur Distribution Center		1		IL		IND		4,950		2,726		5,216
Atlanta South Business Park		9		GA		IND		—		8,047		24,180

[Additional columns below]

[Continued from above table, first column(s) repeated]



			Gross Amount Carried at 12/31/02
	Costs
	Capitalized						Total				Year of		Depreciable
	Subsequent to				Building &		Costs(1)		Accumulated		Construction/		Life
Property	Acquisition		Land		Improvements		(2)		Depreciation		Acquisition		(Years)


	(In thousands, except number of buildings/centers)
Acer Distribution Center	$	1,397	$	3,146	$	10,876	$	14,023	$	2,037		1997		5-40
Activity Distribution Center		1,460		3,736		12,708		16,444		3,976		1997		5-40
Addison Business Center		79		1,060		3,307		4,366		187		2000		5-40
Airport South Business Park		5,892		10,255		22,183		32,439		800		2001		5-40
Albrae Business Center		89		6,299		6,317		12,615		227		2001		5-40
Alsip Industrial		259		1,200		4,003		5,203		501		1998		5-40
Alvarado Business Center		728		4,915		27,399		32,314		1,266		1997		5-40
AMB Meadowlands Park		1,641		5,838		19,564		25,402		1,425		2000		5-40
AMB O’Hare Rosemont		979		3,131		9,975		13,106		622		1999		5-40
AMB Port O’Hare		252		4,913		6,013		10,926		151		2001		5-40
Amwiler-Gwinnett Industial Portfolio		2,541		6,641		22,504		29,146		3,813		1997		5-40
Anaheim Industrial		334		1,457		4,675		6,131		771		1997		5-40
Artesia Industrial Portfolio		7,008		22,758		75,262		98,020		11,751		1997		5-40
Around Lenox		4,098		3,462		17,946		21,408		2,164		1998		5-40
Arthur Distribution Center		171		2,726		5,387		8,113		258		2001		5-40
Atlanta South Business Park		1,692		8,047		25,872		33,919		3,997		1997		5-40

F-30

AMB PROPERTY CORPORATION

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION — (Continued)



									Initial Cost to Company

	No. of										Building &
Property	Bldgs./ Ctrs.		Location		Type		Encumbrances		Land		Improvements


	(In thousands, except number of buildings/centers)
Atlantic Business Center (Formerly Peachtree North East)		3		GA		IND		—		2,197		6,592
Atlantic Distribution Center		1		GA		IND		3,886		1,519		4,679
Beacon Centre — OP		18		FL		IND		68,703		31,704		96,681
Beacon Centre — AF I		4		FL		IND		17,355		7,229		22,238
Beacon Centre — Headlands		1		FL		RET		—		2,523		7,669
Beacon Industrial Park		8		FL		IND		16,712		10,466		31,437
Bedford Warehouse		1		IL		IND		2,827		1,354		3,225
Belden Avenue		3		IL		IND		10,173		5,822		13,655
Bell Ranch Distribution		5		CA		IND		—		6,904		12,915
Beltway Distribution		1		VA		IND		—		4,800		15,159
Bennington Corporate Center		2		MD		IND		5,958		2,671		8,181
Bensenville Industrial Park		13		IL		IND		37,731		20,799		62,438
Black River		1		WA		IND		—		1,845		3,559
Blue Lagoon Business Park		2		FL		IND		10,748		4,945		14,875
Boston Industrial Portfolio		20		MA		IND		11,009		16,707		52,013
Braemar Business Center		2		MA		IND		—		1,566		4,613
Brennan Distribution		1		CA		IND		4,600		3,683		3,022

[Additional columns below]

[Continued from above table, first column(s) repeated]



			Gross Amount Carried at 12/31/02
	Costs
	Capitalized						Total				Year of		Depreciable
	Subsequent to				Building &		Costs(1)		Accumulated		Construction/		Life
Property	Acquisition		Land		Improvements		(2)		Depreciation		Acquisition		(Years)


	(In thousands, except number of buildings/centers)
Atlantic Business Center (Formerly Peachtree North East)		1,823		2,197		8,415		10,612		1,566		1998		5-40
Atlantic Distribution Center		155		1,519		4,834		6,353		282		2000		5-40
Beacon Centre — OP		11,271		31,704		107,952		139,656		7,600		2000		5-40
Beacon Centre — AF I		755		7,229		22,993		30,222		1,414		2000		5-40
Beacon Centre — Headlands		236		2,523		7,905		10,428		449		2000		5-40
Beacon Industrial Park		4,960		10,466		36,398		46,864		5,262		1997		5-40
Bedford Warehouse		7		1,354		3,232		4,586		95		2001		5-40
Belden Avenue		1,526		5,822		15,181		21,002		935		1997		5-40
Bell Ranch Distribution		158		6,904		13,073		19,976		529		2001		5-40
Beltway Distribution		5,496		4,800		20,655		25,455		1,933		1999		5-40
Bennington Corporate Center		962		2,671		9,144		11,815		844		2000		5-40
Bensenville Industrial Park		8,806		20,799		71,244		92,043		11,464		1997		5-40
Black River		159		1,845		3,718		5,563		205		2001		5-40
Blue Lagoon Business Park		1,174		4,945		16,048		20,993		2,263		1997		5-40
Boston Industrial Portfolio		15,084		16,707		67,098		83,805		9,046		1998		5-40
Braemar Business Center		934		1,566		5,546		7,113		858		1998		5-40
Brennan Distribution		1,557		3,683		4,578		8,261		138		2001		5-40

F-31

AMB PROPERTY CORPORATION

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION — (Continued)



									Initial Cost to Company

	No. of										Building &
Property	Bldgs./ Ctrs.		Location		Type		Encumbrances		Land		Improvements


	(In thousands, except number of buildings/centers)
Bridgeview Industrial (Formerly Lake Michigan Industrial)		1		IL		IND		—		1,332		3,996
Burnsville Business Center		1		MN		IND		—		932		2,796
BWI Air Cargo Centre		1		MD		IND		2,899		—		6,367
B.W.I.P		2		MD		IND		3,521		2,258		5,149
Cabrillo Distribution Center		1		CA		IND		—		7,563		11,177
Cabot Business Park		13		MA		IND		—		15,283		46,433
Cabot Business Park (KYKJ)		3		MA		IND		—		1,474		14,353
Cabot Business Park SGP		3		MA		IND		16,682		5,499		16,969
Carson Industrial		12		CA		IND		—		4,231		10,418
Cascade Business Center		4		OR		IND		—		2,825		7,860
Central Bay		2		CA		IND		7,400		3,896		7,400
Chancellor		1		FL		IND		2,634		1,587		4,802
Chancellor Square		3		FL		IND		15,346		2,009		6,106
Charles and Chase		1		MD		RET		—		751		2,287
Chancellory Warehouse		1		IL		IND		—		1,566		2,006
Chartwell Distribution Center		1		CA		IND		—		2,711		8,191
Chemway Industrial Portfolio		5		NC		IND		—		2,875		8,625
Chicago Industrial Portfolio		1		IL		IND		1,593		762		2,285

[Additional columns below]

[Continued from above table, first column(s) repeated]



			Gross Amount Carried at 12/31/02
	Costs
	Capitalized						Total				Year of		Depreciable
	Subsequent to				Building &		Costs(1)		Accumulated		Construction/		Life
Property	Acquisition		Land		Improvements		(2)		Depreciation		Acquisition		(Years)


	(In thousands, except number of buildings/centers)
Bridgeview Industrial (Formerly Lake Michigan Industrial)		81		1,332		4,077		5,409		516		1997		5-40
Burnsville Business Center		1,048		932		3,844		4,776		695		1998		5-40
BWI Air Cargo Centre		87		—		6,454		6,454		370		2000		5-40
B.W.I.P		79		2,258		5,228		7,486		119		2002		5-40
Cabrillo Distribution Center		—		7,563		11,177		18,740		—		2002		5-40
Cabot Business Park		4,542		15,283		50,975		66,258		7,758		1998		5-40
Cabot Business Park (KYKJ)		17,851		2,920		30,759		33,679		2,486		1998		5-40
Cabot Business Park SGP		57		5,499		17,027		22,526		212		2002		5-40
Carson Industrial		3,734		4,231		14,153		18,384		1,293		1999		5-40
Cascade Business Center		2,062		2,825		9,922		12,748		1,480		1998		5-40
Central Bay		801		3,896		8,202		12,097		444		2001		5-40
Chancellor		270		1,587		5,072		6,660		693		1997		5-40
Chancellor Square		2,691		2,009		8,797		10,807		1,832		1998		5-40
Charles and Chase		7		751		2,294		3,044		228		1998		5-40
Chancellory Warehouse		676		1,566		2,681		4,248		57		2002		5-40
Chartwell Distribution Center		70		2,711		8,261		10,972		552		2000		5-40
Chemway Industrial Portfolio		949		2,875		9,574		12,449		1,370		1998		5-40
Chicago Industrial Portfolio		242		762		2,527		3,289		337		1997		5-40

F-32

AMB PROPERTY CORPORATION

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION — (Continued)



									Initial Cost to Company

	No. of										Building &
Property	Bldgs./ Ctrs.		Location		Type		Encumbrances		Land		Improvements


	(In thousands, except number of buildings/centers)
Chicago Ridge Freight Terminal		1		IL		IND		—		3,705		3,576
Chicago/ O’Hare Industrial Portfolio		5		IL		IND		9,090		4,816		9,603
Circle Freeway		1		OH		IND		—		530		1,591
Columbia Business Center		9		MD		IND		3,988		3,856		11,736
Component Drive Ind Port		3		CA		IND		—		12,688		6,974
Concord Industrial Portfolio		10		CA		IND		9,615		3,872		11,647
Corporate Park/ Hickory Hill		7		TN		IND		15,937		6,789		20,366
Corporate Square Industrial		6		MN		IND		—		4,024		12,113
Corridor Industrial		1		MD		IND		2,403		996		3,019
Crysen Industrial		1		DC		IND		2,623		1,425		4,275
D/ FW Int’l Air Cargo — AF I		1		TX		IND		4,700		—		19,683
D/ FW Air Cargo 2		1		TX		IND		—		—		4,286
Dado Distribution		1		CA		IND		—		7,221		3,739
Dallas Industrial (Formerly Taxas Industrial Fortfolio)		8		TX		IND		—		3,715		11,143
Dayton Air Cargo Centre		5		OH		IND		6,720		—		7,163
Del Amo Industrial Center		1		CA		IND		—		2,529		7,651
Dellamor		8		NJ		IND		14,500		12,061		11,577
DFW Air Cargo Centre		3		TX		IND		6,142		—		20,632

[Additional columns below]

[Continued from above table, first column(s) repeated]



			Gross Amount Carried at 12/31/02
	Costs
	Capitalized						Total				Year of		Depreciable
	Subsequent to				Building &		Costs(1)		Accumulated		Construction/		Life
Property	Acquisition		Land		Improvements		(2)		Depreciation		Acquisition		(Years)


	(In thousands, except number of buildings/centers)
Chicago Ridge Freight Terminal		12		3,705		3,588		7,294		120		2001		5-40
Chicago/ O’Hare Industrial Portfolio		468		4,816		10,071		14,887		402		2001		5-40
Circle Freeway		613		530		2,204		2,735		540		1998		5-40
Columbia Business Center		1,886		3,856		13,622		17,478		1,753		1999		5-40
Component Drive Ind Port		550		12,688		7,524		20,212		372		2001		5-40
Concord Industrial Portfolio		2,206		3,872		13,853		17,724		1,791		1999		5-40
Corporate Park/ Hickory Hill		1,075		6,789		21,441		28,230		2,852		1998		5-40
Corporate Square Industrial		1,854		4,024		13,967		17,992		2,244		1997		5-40
Corridor Industrial		270		996		3,289		4,285		329		1999		5-40
Crysen Industrial		931		1,425		5,206		6,631		780		1998		5-40
D/ FW Int’l Air Cargo — AF I		3,060		—		22,743		22,743		1,935		1999		5-40
D/ FW Air Cargo 2		13,900		—		18,186		18,186		1,375		1999		5-40
Dado Distribution		56		7,221		3,795		11,016		120		2001		5-40
Dallas Industrial (Formerly Taxas Industrial Fortfolio)		2,486		3,715		13,629		17,344		2,496		1997		5-40
Dayton Air Cargo Centre		346		—		7,509		7,509		510		2000		5-40
Del Amo Industrial Center		31		2,529		7,682		10,211		433		2000		5-40
Dellamor		65		12,061		11,642		23,703		196		2002		5-40
DFW Air Cargo Centre		165		—		20,797		20,797		1,221		2000		5-40

F-33

AMB PROPERTY CORPORATION

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION — (Continued)



									Initial Cost to Company

	No. of										Building &
Property	Bldgs./ Ctrs.		Location		Type		Encumbrances		Land		Improvements


	(In thousands, except number of buildings/centers)
DFW Airfreight Portfolio		6		TX		IND		6,800		950		8,492
Diablo Industrial Park		13		CA		IND		9,134		3,496		10,852
Dixie Highway		2		KY		IND		—		1,700		5,149
Dock’s Corner		1		NJ		IND		36,328		5,125		22,516
Dock’s Corner II		1		NJ		IND		—		2,272		6,917
Doolittle Distribution Center		1		CA		IND		—		2,644		8,014
Dowe Industrial Center		2		CA		IND		—		2,665		8,034
Dublin Industrial Portfolio		1		CA		IND		—		2,980		9,042
Dulles Airport — Alliance		3		VA		IND		9,748		2,301		6,884
Earlington Business Park		1		WA		IND		—		2,766		3,234
East Bay Doolittle		1		CA		IND		—		7,128		11,023
East Bay Whipple		1		CA		IND		7,000		5,333		8,126
East Valley Warehouse		1		WA		IND		—		6,813		20,511
Eaves Distribution Center		3		CA		IND		15,220		11,893		12,708
Edenvale Business Center		1		MN		IND		—		775		2,412
Edgewater Industrial Center		1		CA		IND		—		4,038		15,113
Elk Grove Village Industrial		10		IL		IND		17,103		6,589		21,739
Elmwood Business Park		5		LA		IND		—		4,163		12,488

[Additional columns below]

[Continued from above table, first column(s) repeated]



			Gross Amount Carried at 12/31/02
	Costs
	Capitalized						Total				Year of		Depreciable
	Subsequent to				Building &		Costs(1)		Accumulated		Construction/		Life
Property	Acquisition		Land		Improvements		(2)		Depreciation		Acquisition		(Years)


	(In thousands, except number of buildings/centers)
DFW Airfreight Portfolio		762		950		9,254		10,204		767		2000		5-40
Diablo Industrial Park		513		3,496		11,365		14,861		1,097		1999		5-40
Dixie Highway		210		1,700		5,358		7,059		746		1997		5-40
Dock’s Corner		29,628		13,672		43,597		57,269		2,057		1997		5-40
Dock’s Corner II		349		2,272		7,267		9,539		1,513		1997		5-40
Doolittle Distribution Center		333		2,644		8,347		10,991		638		2000		5-40
Dowe Industrial Center		1,294		2,665		9,328		11,993		1,417		1997		5-40
Dublin Industrial Portfolio		432		2,980		9,473		12,453		520		2000		5-40
Dulles Airport — Alliance		7,680		2,301		14,563		16,864		221		2000		5-40
Earlington Business Park		148		2,766		3,382		6,149		58		2002		5-40
East Bay Doolittle		1,264		7,128		12,288		19,416		544		2001		5-40
East Bay Whipple		701		5,333		8,827		14,160		322		2001		5-40
East Valley Warehouse		5,655		6,813		26,166		32,978		2,492		1999		5-40
Eaves Distribution Center		1,390		11,893		14,097		25,991		406		2001		5-40
Edenvale Business Center		721		775		3,132		3,907		593		1998		5-40
Edgewater Industrial Center		3,375		4,038		18,487		22,525		1,210		2000		5-40
Elk Grove Village Industrial		2,054		6,589		23,793		30,383		1,234		1997		5-40
Elmwood Business Park		1,567		4,163		14,054		18,217		1,865		1998		5-40

F-34

AMB PROPERTY CORPORATION

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION — (Continued)



									Initial Cost to Company

	No. of										Building &
Property	Bldgs./ Ctrs.		Location		Type		Encumbrances		Land		Improvements


	(In thousands, except number of buildings/centers)
Empire Drive		1		KY		IND		—		1,590		4,815
Executive Drive		1		IL		IND		—		1,399		4,236
Fairway Drive Industrial		4		CA		IND		12,383		3,228		13,949
Ford Distribution Cntr		8		CA		IND		—		25,443		23,529
Fordyce Distribution Center		1		CA		IND		7,600		4,340		8,335
Gateway 58		3		MD		IND		—		3,256		9,940
Gateway Commerce Center		5		MD		IND		—		4,083		12,336
Gateway Corporate Center		9		WA		IND		27,000		10,643		32,908
Gateway North		6		WA		IND		14,000		5,270		16,296
Greater Dallas Industrial Portfolio		5		TX		IND		—		5,633		18,414
Greenwood Industrial		3		MD		IND		—		4,729		14,188
Hamilton Parkway (Formerly Lake Michigan Industrial)		1		IL		IND		—		1,554		4,703
Harris Business Center — AF I		10		CA		IND		27,254		19,194		26,368
Harris Business Center — AF II		10		CA		IND		33,500		21,414		33,182
Harvest Business Park		3		WA		IND		—		2,371		7,153
Hawthorne LAX Cargo Center		1		CA		IND		6,550		2,775		8,377
Hayward Industrial — Hathaway		2		CA		IND		—		4,473		13,546

[Additional columns below]

[Continued from above table, first column(s) repeated]



			Gross Amount Carried at 12/31/02
	Costs
	Capitalized						Total				Year of		Depreciable
	Subsequent to				Building &		Costs(1)		Accumulated		Construction/		Life
Property	Acquisition		Land		Improvements		(2)		Depreciation		Acquisition		(Years)


	(In thousands, except number of buildings/centers)
Empire Drive		277		1,590		5,091		6,682		786		1997		5-40
Executive Drive		806		1,399		5,042		6,441		821		1997		5-40
Fairway Drive Industrial		669		3,228		14,618		17,846		651		1997		5-40
Ford Distribution Cntr		1,811		25,443		25,340		50,782		797		2001		5-40
Fordyce Distribution Center		232		4,340		8,568		12,908		454		2001		5-40
Gateway 58		110		3,256		10,050		13,306		648		2000		5-40
Gateway Commerce Center		1,180		4,083		13,516		17,600		1,669		1999		5-40
Gateway Corporate Center		2,747		10,643		35,655		46,298		3,407		1999		5-40
Gateway North		1,048		5,270		17,344		22,614		1,478		1999		5-40
Greater Dallas Industrial Portfolio		1,231		5,633		19,645		25,277		3,369		1997		5-40
Greenwood Industrial		1,511		4,729		15,698		20,427		2,166		1998		5-40
Hamilton Parkway (Formerly Lake Michigan Industrial)		134		1,554		4,837		6,391		669		1997		5-40
Harris Business Center — AF I		1,129		19,194		27,496		46,690		1,725		2000		5-40
Harris Business Center — AF II		2,791		21,414		35,973		57,386		2,343		2000		5-40
Harvest Business Park		1,040		2,371		8,193		10,564		1,307		1997		5-40
Hawthorne LAX Cargo Center		263		2,775		8,640		11,415		436		2000		5-40
Hayward Industrial — Hathaway		177		4,473		13,723		18,196		713		2000		5-40

F-35

AMB PROPERTY CORPORATION

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION — (Continued)



									Initial Cost to Company

	No. of										Building &
Property	Bldgs./ Ctrs.		Location		Type		Encumbrances		Land		Improvements


	(In thousands, except number of buildings/centers)
Hayward Industrial — Wiegman		1		CA		IND		6,525		2,773		8,393
Highway 17		2		NJ		IND		—		8,185		6,516
Hintz Building		1		TX		IND		—		420		1,259
Holton Drive		1		KY		IND		—		2,633		7,899
IAD Cargo Building 5		1		VA		IND		14,205		—		39,050
International Multifoods		1		CA		IND		—		1,613		4,879
Interstate Crossdock		1		NJ		IND		—		12,712		19,295
Itasca Industrial Portfolio		6		IL		IND		—		6,416		19,289
Jacksonville Air Cargo Centre		1		FL		IND		3,100		—		3,028
Jamesburg		3		NJ		IND		22,571		11,700		35,101
Janitrol		1		OH		IND		—		1,797		5,390
JFK Air Cargo — OP		15		NY		IND		—		15,434		45,660
JFK Air Cargo — AF I		15		NY		IND		19,120		10,260		30,128
JFK Airport Park		1		NY		IND		—		2,350		7,251
JFK International Cargo 75&77		2		NJ		IND		—		—		30,965
Junction Industrial Park		4		CA		IND		—		7,875		23,975
Kent Centre Corporate Park		4		WA		IND		—		3,042		9,165
Kingsport Industrial Park		7		WA		IND		16,232		7,919		23,798

[Additional columns below]

[Continued from above table, first column(s) repeated]



			Gross Amount Carried at 12/31/02
	Costs
	Capitalized						Total				Year of		Depreciable
	Subsequent to				Building &		Costs(1)		Accumulated		Construction/		Life
Property	Acquisition		Land		Improvements		(2)		Depreciation		Acquisition		(Years)


	(In thousands, except number of buildings/centers)
Hayward Industrial — Wiegman		406		2,773		8,799		11,571		453		2000		5-40
Highway 17		—		8,185		6,516		14,701		35		2002		5-40
Hintz Building		271		420		1,530		1,950		205		1998		5-40
Holton Drive		368		2,633		8,267		10,900		1,435		1997		5-40
IAD Cargo Building 5		14		—		39,064		39,064		489		2002		5-40
International Multifoods		1,059		1,613		5,938		7,551		783		1997		5-40
Interstate Crossdock		67		12,712		19,362		32,074		201		2002		5-40
Itasca Industrial Portfolio		2,744		6,416		22,033		28,449		3,651		1997		5-40
Jacksonville Air Cargo Centre		—		—		3,028		3,028		169		2000		5-40
Jamesburg		1,561		11,700		36,662		48,363		4,948		1998		5-40
Janitrol		313		1,797		5,703		7,499		775		1997		5-40
JFK Air Cargo — OP		3,097		15,434		48,757		64,190		3,696		2000		5-40
JFK Air Cargo — AF I		2,827		10,260		32,955		43,215		2,713		2000		5-40
JFK Airport Park		507		2,350		7,757		10,107		582		2000		5-40
JFK International Cargo 75&77		1,052		—		32,017		32,017		384		2002		5-40
Junction Industrial Park		1,457		7,875		25,432		33,307		2,795		1999		5-40
Kent Centre Corporate Park		954		3,042		10,120		13,161		1,660		1997		5-40
Kingsport Industrial Park		2,658		7,919		26,457		34,376		3,964		1997		5-40

F-36

AMB PROPERTY CORPORATION

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION — (Continued)



									Initial Cost to Company

	No. of										Building &
Property	Bldgs./ Ctrs.		Location		Type		Encumbrances		Land		Improvements


	(In thousands, except number of buildings/centers)
L.A. County Industrial Portfolio		6		CA		IND		23,161		8,226		29,242
LA Media Tech Center		7		CA		IND		—		12,810		12,531
Laurelwood Drive		2		CA		IND		—		2,750		8,538
Lawrence SSF		1		CA		IND		—		2,870		5,521
LAX Air Cargo Centre		3		CA		IND		7,590		—		13,445
Lincoln Industrial Center		1		TX		IND		—		671		2,052
Linden Industrial		1		NJ		IND		—		900		2,753
Locke Drive		1		MA		IND		—		1,074		3,227
Lonestar		7		TX		IND		16,665		6,878		21,154
Los Nietos		4		CA		IND		8,109		2,459		7,751
MCI I Air Cargo Centre		1		MO		IND		5,255		—		5,793
MCI II Air Cargo Centre		1		MO		IND		9,350		—		8,134
Mahwah Corporate Center		5		NJ		IND		—		9,003		27,573
Marietta Industrial		3		GA		IND		—		1,830		5,489
Marina Business Park		2		CA		IND		4,387		3,280		4,316
Martin/ Scott Ind Port		2		CA		IND		—		9,052		5,309
Mazzeo		1		MA		RET		3,372		1,477		4,432
Meadow Lane 495		1		NJ		IND		—		838		2,594
Meadowlands AF II		4		NJ		IND		12,400		6,755		13,093
Meadowlands Cross Dock		1		NJ		IND		—		1,110		3,485
Meadowridge		3		MD		IND		—		3,716		11,147

[Additional columns below]

[Continued from above table, first column(s) repeated]



			Gross Amount Carried at 12/31/02
	Costs
	Capitalized						Total				Year of		Depreciable
	Subsequent to				Building &		Costs(1)		Accumulated		Construction/		Life
Property	Acquisition		Land		Improvements		(2)		Depreciation		Acquisition		(Years)


	(In thousands, except number of buildings/centers)
L.A. County Industrial Portfolio		685		8,226		29,927		38,153		1,420		1997		5-40
LA Media Tech Center		27,341		12,810		39,872		52,682		2,216		1998		5-40
Laurelwood Drive		123		2,750		8,661		11,411		1,174		1997		5-40
Lawrence SSF		1,124		2,870		6,644		9,514		391		2001		5-40
LAX Air Cargo Centre		123		—		13,568		13,568		766		2000		5-40
Lincoln Industrial Center		211		671		2,262		2,933		399		1997		5-40
Linden Industrial		449		900		3,201		4,101		264		1999		5-40
Locke Drive		113		1,074		3,339		4,413		399		1998		5-40
Lonestar		503		6,878		21,657		28,536		289		1997		5-40
Los Nietos		134		2,459		7,884		10,344		382		1999		5-40
MCI I Air Cargo Centre		88		—		5,882		5,882		368		2000		5-40
MCI II Air Cargo Centre		—		—		8,134		8,134		441		2000		5-40
Mahwah Corporate Center		485		9,003		28,058		37,061		3,010		1998		5-40
Marietta Industrial		1,493		1,830		6,983		8,812		1,278		1998		5-40
Marina Business Park		—		3,280		4,316		7,596		36		2002		5-40
Martin/ Scott Ind Port		296		9,052		5,605		14,657		216		2001		5-40
Mazzeo		218		1,477		4,650		6,127		539		1998		5-40
Meadow Lane 495		279		838		2,874		3,711		265		1999		5-40
Meadowlands AF II		990		6,755		14,082		20,837		644		2001		5-40
Meadowlands Cross Dock		935		1,110		4,420		5,530		443		2000		5-40
Meadowridge		339		3,716		11,487		15,202		1,429		1998		5-40

F-37

AMB PROPERTY CORPORATION

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION — (Continued)



									Initial Cost to Company

	No. of										Building &
Property	Bldgs./ Ctrs.		Location		Type		Encumbrances		Land		Improvements


	(In thousands, except number of buildings/centers)
Melrose Park		1		IL		IND		—		2,936		9,190
Mendota Heights		1		MN		IND		—		1,367		4,565
Metric Center		5		TX		IND		—		10,968		32,944
Miami Airport Business Center		6		FL		IND		—		6,400		19,634
Milmont Page Business Center		3		CA		IND		11,561		1,836		10,600
Minneapolis Distribution Portfolio		4		MN		IND		—		6,227		18,692
Minneapolis Industrial Portfolio IV		4		MN		IND		7,420		4,938		14,854
Minneapolis Industrial V		7		MN		IND		4,885		4,426		13,317
Minnetonka		10		MN		IND		11,259		6,690		20,380
Moffett Business Center (MBC Industrial)		4		CA		IND		11,605		5,892		17,716
Moffett Distribution		7		CA		IND		21,130		26,916		11,277
Moffett Park R&D Portfolio		14		CA		IND		—		14,805		44,462
Moonachie Industrial		2		NJ		IND		4,825		2,731		5,228
Murray Hill Parkway		2		NJ		IND		—		1,670		2,568
NDP — Chicago (Formerly Glen Ellyn Rd. & Mitel Drive)		3		IL		IND		—		1,496		4,487
NDP — Los Angeles		6		CA		IND		9,313		5,948		17,844
NDP — Seattle		4		WA		IND		12,041		3,758		11,773
Newark Airport I& II		2		NJ		IND		3,694		1,755		5,400

[Additional columns below]

[Continued from above table, first column(s) repeated]



			Gross Amount Carried at 12/31/02
	Costs
	Capitalized						Total				Year of		Depreciable
	Subsequent to				Building &		Costs(1)		Accumulated		Construction/		Life
Property	Acquisition		Land		Improvements		(2)		Depreciation		Acquisition		(Years)


	(In thousands, except number of buildings/centers)
Melrose Park		1,737		2,936		10,927		13,863		1,654		1997		5-40
Mendota Heights		2,051		1,367		6,616		7,983		2,379		1998		5-40
Metric Center		979		10,968		33,923		44,891		4,573		1997		5-40
Miami Airport Business Center		1,781		6,400		21,415		27,815		2,269		1999		5-40
Milmont Page Business Center		317		1,836		10,917		12,752		498		1997		5-40
Minneapolis Distribution Portfolio		4,083		6,227		22,775		29,001		3,238		1997		5-40
Minneapolis Industrial Portfolio IV		1,979		4,938		16,833		21,771		2,750		1997		5-40
Minneapolis Industrial V		2,319		4,426		15,635		20,061		2,585		1997		5-40
Minnetonka		2,896		6,690		23,277		29,967		3,323		1998		5-40
Moffett Business Center (MBC Industrial)		3,211		5,892		20,927		26,820		2,948		1997		5-40
Moffett Distribution		933		26,916		12,211		39,127		355		2001		5-40
Moffett Park R&D Portfolio		9,081		14,805		53,543		68,348		10,072		1997		5-40
Moonachie Industrial		258		2,731		5,486		8,217		274		2001		5-40
Murray Hill Parkway		5,195		1,670		7,763		9,433		1,053		1999		5-40
NDP — Chicago (Formerly Glen Ellyn Rd. & Mitel Drive)		694		1,496		5,181		6,677		783		1998		5-40
NDP — Los Angeles		1,226		5,948		19,069		25,017		2,442		1998		5-40
NDP — Seattle		97		3,758		11,870		15,629		151		1998		5-40
Newark Airport I& II		395		1,755		5,794		7,549		465		2000		5-40

F-38

AMB PROPERTY CORPORATION

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION — (Continued)



									Initial Cost to Company

	No. of										Building &
Property	Bldgs./ Ctrs.		Location		Type		Encumbrances		Land		Improvements


	(In thousands, except number of buildings/centers)
Nicholas Warehouse		1		IL		IND		—		2,599		1,883
Norcross/ Brookhollow Portfolio		4		GA		IND		—		3,721		11,180
Northfield Distribution Center		4		TX		IND		12,401		3,944		16,033
Normandie Industrial		1		CA		IND		—		2,398		7,491
Northbrook Distribution Center		1		GA		IND		—		1,039		3,481
Northpointe Commerce		2		CA		IND		—		1,773		5,358
Northwest Distribution Center		3		WA		IND		—		3,533		10,751
Novato Fair Shopping Center		1		CA		RET		7,806		4,393		8,424
Oakland Ridge Industrial Center		12		MD		IND		4,293		5,571		16,933
O’Hare Industrial Portfolio		15		IL		IND		—		7,357		22,112
Orlando Central Park		2		FL		IND		—		1,779		979
Orchard Hill		1		NJ		IND		—		1,212		1,411
Pacific Business Center		2		CA		IND		8,890		5,417		16,291
Pacific Service Center		1		GA		IND		—		504		1,511
Palm Aire		1		FL		RET		—		2,279		9,720
Pardee Drive		1		CA		IND		1,559		619		1,880
Park One at LAX, LLC		0		CA		IND		—		75,000		431
Parkway Business Center		1		MN		IND		—		475		1,425

[Additional columns below]

[Continued from above table, first column(s) repeated]



			Gross Amount Carried at 12/31/02
	Costs
	Capitalized						Total				Year of		Depreciable
	Subsequent to				Building &		Costs(1)		Accumulated		Construction/		Life
Property	Acquisition		Land		Improvements		(2)		Depreciation		Acquisition		(Years)


	(In thousands, except number of buildings/centers)
Nicholas Warehouse		199		2,599		2,081		4,681		92		2001		5-40
Norcross/ Brookhollow Portfolio		1,094		3,721		12,274		15,995		1,896		1997		5-40
Northfield Distribution Center		24		3,944		16,056		20,001		403		2002		5-40
Normandie Industrial		1,018		2,398		8,508		10,906		613		2000		5-40
Northbrook Distribution Center		964		1,039		4,445		5,484		804		2000		5-40
Northpointe Commerce		332		1,773		5,691		7,464		880		1997		5-40
Northwest Distribution Center		997		3,533		11,748		15,281		1,897		1997		5-40
Novato Fair Shopping Center		2,505		4,393		10,929		15,322		550		2001		5-40
Oakland Ridge Industrial Center		6,116		5,571		23,049		28,620		3,127		1999		5-40
O’Hare Industrial Portfolio		2,551		7,357		24,663		32,020		3,930		1997		5-40
Orlando Central Park		9,914		1,779		10,892		12,671		1,453		1998		5-40
Orchard Hill		—		1,212		1,411		2,622		12		2002		5-40
Pacific Business Center		962		5,417		17,253		22,670		2,553		1997		5-40
Pacific Service Center		659		504		2,170		2,674		708		1998		5-40
Palm Aire		6,789		2,452		16,335		18,787		1,649		1996		5-40
Pardee Drive		64		619		1,944		2,563		92		1999		5-40
Park One at LAX, LLC		—		75,000		431		75,431		—		2002		5-40
Parkway Business Center		528		475		1,953		2,428		341		1998		5-40

F-39

AMB PROPERTY CORPORATION

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION — (Continued)



									Initial Cost to Company

	No. of										Building &
Property	Bldgs./ Ctrs.		Location		Type		Encumbrances		Land		Improvements


	(In thousands, except number of buildings/centers)
Patuxent Range Road		2		MD		IND		—		1,696		5,127
Patuxent Alliance 8280		1		MD		IND		—		887		1,706
Peninsula Business Center III		1		VA		IND		—		992		2,976
Penn James Office Warehouse		2		MN		IND		—		1,991		6,013
Pioneer Alburtis		5		CA		IND		7,150		2,433		7,166
Poplar Gateway Truck Terminal		1		IL		IND		—		4,551		3,152
Porete Avenue Warehouse		1		NJ		IND		—		4,067		12,202
Portland Air Cargo Center		2		OR		IND		—		—		26
Presidents Drive		6		FL		IND		—		5,770		17,655
Preston Court		1		MD		IND		—		2,313		7,192
Production Drive		1		KY		IND		—		425		1,286
Puget Sound Airfreight		1		WA		IND		—		1,329		1,830
Renton Northwest Corp. Park		6		WA		IND		24,400		25,959		14,792
Richardson Tech Center		2		TX		IND		5,183		1,320		5,887
The Rotunda		2		MD		IND		12,669		4,400		17,736
Round Lake Business Center		1		MN		IND		—		875		2,625
Sand Lake Service Center		6		FL		IND		—		3,483		10,585
Santa Barbara Court		1		MD		IND		—		1,617		5,029
Scripps Sorrento		1		CA		IND		—		1,110		3,330

[Additional columns below]

[Continued from above table, first column(s) repeated]



			Gross Amount Carried at 12/31/02
	Costs
	Capitalized						Total				Year of		Depreciable
	Subsequent to				Building &		Costs(1)		Accumulated		Construction/		Life
Property	Acquisition		Land		Improvements		(2)		Depreciation		Acquisition		(Years)


	(In thousands, except number of buildings/centers)
Patuxent Range Road		431		1,696		5,558		7,254		879		1997		5-40
Patuxent Alliance 8280		43		887		1,749		2,636		79		2001		5-40
Peninsula Business Center III		195		992		3,171		4,162		350		1998		5-40
Penn James Office Warehouse		1,028		1,991		7,041		9,032		1,170		1997		5-40
Pioneer Alburtis		357		2,433		7,523		9,956		421		1999		5-40
Poplar Gateway Truck Terminal		—		4,551		3,152		7,703		—		2002		5-40
Porete Avenue Warehouse		10,667		4,067		22,869		26,936		3,670		1998		5-40
Portland Air Cargo Center		9,588		—		9,614		9,614		235		2002		5-40
Presidents Drive		1,724		5,770		19,379		25,149		2,970		1997		5-40
Preston Court		323		2,313		7,515		9,827		1,089		1997		5-40
Production Drive		344		425		1,630		2,055		375		1997		5-40
Puget Sound Airfreight		139		1,329		1,969		3,298		37		2002		5-40
Renton Northwest Corp. Park		123		25,959		14,915		40,874		220		2002		5-40
Richardson Tech Center		—		1,320		5,887		7,206		124		1997		5-40
The Rotunda		3,006		4,400		20,742		25,142		2,660		1999		5-40
Round Lake Business Center		477		875		3,102		3,977		498		1998		5-40
Sand Lake Service Center		2,351		3,483		12,936		16,419		2,145		1998		5-40
Santa Barbara Court		881		1,617		5,910		7,527		1,027		1997		5-40
Scripps Sorrento		101		1,110		3,432		4,542		392		1998		5-40

F-40

AMB PROPERTY CORPORATION

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION — (Continued)



									Initial Cost to Company

	No. of										Building &
Property	Bldgs./ Ctrs.		Location		Type		Encumbrances		Land		Improvements


	(In thousands, except number of buildings/centers)
Sea Tac I Air Cargo Centre		2		WA		IND		4,855		—		15,594
Sea Tac II Air Cargo Centre		1		WA		IND		—		—		3,056
Seattle Airport Industrial		1		WA		IND		—		619		1,923
Shawnee Industrial		1		GA		IND		—		2,481		7,531
Silicon Valley R&D Portfolio*		6		CA		IND		—		8,024		24,205
Skyland Crossdock		1		NJ		IND		—		—		7,250
Slauson Distribution Center		8		CA		IND		20,499		7,806		23,552
South Bay Industrial		8		CA		IND		18,064		14,992		45,016
South Point Business Park		5		NC		IND		8,481		3,130		10,452
South Ridge at Hartsfield		1		GA		IND		4,132		2,096		4,008
Southfield Industrial Portfolio		13		GA		IND		34,641		12,533		35,730
Southfield Logistics Center		2		GA		IND		—		3,200		10,012
Southside Distribution Center		1		GA		IND		1,274		766		2,480
Stadium Business Park		9		CA		IND		—		3,768		11,345
Sunrise Industrial		4		FL		IND		12,349		6,266		18,798
Sunset Distribution Center		1		CA		IND		—		3,126		1,284
Suwanee Creek Distribution		3		GA		IND		13,799		5,186		23,330
Sylvan		1		GA		IND		—		1,946		5,905

[Additional columns below]

[Continued from above table, first column(s) repeated]



			Gross Amount Carried at 12/31/02
	Costs
	Capitalized						Total				Year of		Depreciable
	Subsequent to				Building &		Costs(1)		Accumulated		Construction/		Life
Property	Acquisition		Land		Improvements		(2)		Depreciation		Acquisition		(Years)


	(In thousands, except number of buildings/centers)
Sea Tac I Air Cargo Centre		75		—		15,668		15,668		861		2000		5-40
Sea Tac II Air Cargo Centre		130		—		3,185		3,185		211		2000		5-40
Seattle Airport Industrial		173		619		2,097		2,715		156		2000		5-40
Shawnee Industrial		4,825		2,481		12,356		14,837		1,684		1999		5-40
Silicon Valley R&D Portfolio*		5,631		8,024		29,836		37,860		5,168		1997		5-40
Skyland Crossdock		249		—		7,499		7,499		38		2002		5-40
Slauson Distribution Center		2,161		7,806		25,712		33,519		1,365		2000		5-40
South Bay Industrial		5,057		14,992		50,074		65,066		7,600		1997		5-40
South Point Business Park		1,231		3,130		11,684		14,814		1,428		1998		5-40
South Ridge at Hartsfield		33		2,096		4,041		6,137		195		2001		5-40
Southfield Industrial Portfolio		5,826		12,533		41,555		54,088		1,972		1997		5-40
Southfield Logistics Center		5,195		3,200		15,206		18,406		709		2002		5-40
Southside Distribution Center		—		766		2,480		3,246		62		2001		5-40
Stadium Business Park		831		3,768		12,176		15,945		1,825		1997		5-40
Sunrise Industrial		1,649		6,266		20,447		26,713		2,196		1998		5-40
Sunset Distribution Center		47		3,126		1,331		4,457		3		2002		5-40
Suwanee Creek Distribution		3,402		5,186		26,732		31,918		1,711		1998		5-40
Sylvan		89		1,946		5,993		7,940		549		1999		5-40

F-41

AMB PROPERTY CORPORATION

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION — (Continued)



									Initial Cost to Company

	No. of										Building &
Property	Bldgs./ Ctrs.		Location		Type		Encumbrances		Land		Improvements


	(In thousands, except number of buildings/centers)
Systematics		1		CA		IND		—		911		2,773
Technology I		2		MD		IND		—		1,657		5,049
Technology II		9		MD		IND		—		10,206		3,761
TechRidge Phase IA		3		TX		IND		15,074		7,132		21,396
TechRidge Phase II		1		TX		IND		11,476		7,261		13,484
Teterboro Meadowlands 15		1		NJ		IND		9,900		4,961		9,618
Thorndale Distribution		1		IL		IND		—		4,130		4,216
Torrance Commerce Center		6		CA		IND		—		2,045		6,136
Twin Cities		2		MN		IND		—		4,873		14,638
Two South Middlesex		1		NJ		IND		—		2,247		6,781
Valwood		2		TX		IND		3,625		1,983		5,989
Van Nuys Airport Industrial		4		CA		IND		—		9,393		9,399
Viscount		1		FL		IND		—		984		3,016
Walnut Drive (Formerly East Walnut Drive)		1		CA		IND		—		964		2,918
Watson Industrial Center		1		CA		IND		4,600		2,417		4,617
Weigman Road		1		CA		IND		—		1,563		4,688
West North Carrier		1		TX		IND		2,935		1,375		4,165
West Pac Air Cargo Centre		1		PA		IND		—		—		9,716
Williams & Bouroughs		4		CA		IND		6,650		2,337		6,981
Willow Lake Industrial Park		10		TN		IND		19,988		12,415		35,990

[Additional columns below]

[Continued from above table, first column(s) repeated]



			Gross Amount Carried at 12/31/02
	Costs
	Capitalized						Total				Year of		Depreciable
	Subsequent to				Building &		Costs(1)		Accumulated		Construction/		Life
Property	Acquisition		Land		Improvements		(2)		Depreciation		Acquisition		(Years)


	(In thousands, except number of buildings/centers)
Systematics		620		911		3,393		4,304		459		1997		5-40
Technology I		343		1,657		5,392		7,049		557		1999		5-40
Technology II		29,037		10,206		32,798		43,004		3,374		1999		5-40
TechRidge Phase IA		269		7,132		21,664		28,796		1,329		2000		5-40
TechRidge Phase II		229		7,261		13,714		20,975		600		2001		5-40
Teterboro Meadowlands 15		1,277		4,961		10,895		15,856		689		2001		5-40
Thorndale Distribution		19		4,130		4,235		8,365		71		2002		5-40
Torrance Commerce Center		792		2,045		6,928		8,974		1,013		1998		5-40
Twin Cities		5,327		4,873		19,965		24,838		3,173		1997		5-40
Two South Middlesex		842		2,247		7,623		9,870		1,158		1997		5-40
Valwood		1,220		1,983		7,209		9,192		1,254		1997		5-40
Van Nuys Airport Industrial		13,235		9,393		22,635		32,027		1,486		2000		5-40
Viscount		440		984		3,457		4,440		537		1997		5-40
Walnut Drive (Formerly East Walnut Drive)		614		964		3,532		4,496		435		1997		5-40
Watson Industrial Center		347		2,417		4,963		7,380		244		2001		5-40
Weigman Road		1,621		1,563		6,310		7,872		679		1997		5-40
West North Carrier		239		1,375		4,403		5,778		585		1997		5-40
West Pac Air Cargo Centre		218		—		9,934		9,934		617		2000		5-40
Williams & Bouroughs		2,624		2,337		9,606		11,943		702		1999		5-40
Willow Lake Industrial Park		14,368		12,415		50,358		62,773		10,008		1998		5-40

F-42

AMB PROPERTY CORPORATION

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION — (Continued)



										Initial Cost to Company

		No. of										Building &
Property		Bldgs./ Ctrs.		Location		Type		Encumbrances		Land		Improvements


		(In thousands, except number of buildings/centers)
Willow Park Industrial Portfolio			21		CA		IND		4,967		25,590		76,771
Wilmington Avenue Wharehouse			2		CA		IND		—		3,849		11,605
Wilsonville			1		OR		IND		—		3,407		13,493
Windsor Court			1		IL		IND		—		766		2,338
Wood Dale Industrial (Includes Bonnie Lane)			5		IL		IND		8,890		2,904		9,166
Yosemite Drive			1		CA		IND		—		2,350		7,051
Zanker/ Charcot Industrial			5		CA		IND		—		5,282		15,887
Bodega San Martin (Mexico City)			1		Mexico		IND		—		7,234		10,889
AMB-Accion Centro Logistico Parque I (Guadalajara)			4		Mexico		IND		17,500		9,555		22,386
Paris Nord Distribution I			1		France		IND		—		2,975		5,112

	Total		900					$	1,258,049	$	1,226,003	$	3,040,740

[Additional columns below]

[Continued from above table, first column(s) repeated]



				Gross Amount Carried at 12/31/02
		Costs
		Capitalized						Total				Year of		Depreciable
		Subsequent to				Building &		Costs(1)		Accumulated		Construction/		Life
Property		Acquisition		Land		Improvements		(2)		Depreciation		Acquisition		(Years)


		(In thousands, except number of buildings/centers)
Willow Park Industrial Portfolio			10,468		25,590		87,239		112,829		11,430		1998		5-40
Wilmington Avenue Wharehouse			2,640		3,849		14,245		18,094		1,777		1999		5-40
Wilsonville			58		3,407		13,551		16,958		1,668		1998		5-40
Windsor Court			98		766		2,436		3,202		327		1997		5-40
Wood Dale Industrial (Includes Bonnie Lane)			260		2,904		9,426		12,330		451		1999		5-40
Yosemite Drive			505		2,350		7,556		9,907		1,007		1997		5-40
Zanker/ Charcot Industrial			1,712		5,282		17,600		22,882		2,602		1997		5-40
Bodega San Martin (Mexico City)			15,577		7,234		26,466		33,700		195		2002		5-40
AMB-Accion Centro Logistico Parque I (Guadalajara)			—		9,555		22,386		31,941		20		2002		5-40
Paris Nord Distribution I			—		2,975		5,112		8,087		20		2002		5-40

	Total		526,750	$	1,236,406	$	3,557,086	$	4,793,492	$	362,540

F-43

AMB PROPERTY CORPORATION

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION — (Continued)


(1)	Reconciliation of total cost to consolidated balance sheet caption as of December 31, 2002:


Total per Schedule III(3)		$	4,793,492
Construction in process(4)			132,490

	Total investments in properties	$	4,925,982


(2)	As of December 31, 2002, the aggregate cost for federal income tax purposes of investments in real estate was $4,449,171.

(3)	A summary of activity for real estate and accumulated depreciation for the year ended December 31, 2002, is as follows:


Investments in Properties:
	Balance at beginning of year	$	4,530,711
	Acquisition of properties		395,651
	Improvements, including properties under development/redevelopment		213,875
	Divestiture of properties		(263,911	)
	Adjustment for properties held for divestiture		49,656

	Balance at end of year	$	4,925,982


Accumulated Depreciation:
	Balance at beginning of year	$	265,653
	Depreciation expense, including discontinued operations		132,136
	Adjustment for properties divested and held for divestiture		(36,399	)
	Asset impairment		1,150

	Balance at end of year	$	362,540


(4)	Includes $92.8 million of fundings for development projects as of December 31, 2002.

F-44

EXHIBIT INDEX


Exhibit
Number		Description

	3.1	Articles of Incorporation of AMB Property Corporation (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-35915)).
	3.2	Certificate of Correction of AMB Property Corporation’s Articles Supplementary establishing and fixing the rights and preferences of the 8 1/2% Series A Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.2 of AMB Property Corporation’s Annual Report on Form 10-K for the year ended December 31, 1998).
	3.3	Articles Supplementary establishing and fixing the rights and preferences of the 8 5/8% Series B Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Current Report on Form 8-K filed on January 7, 1999).
	3.4	Articles Supplementary establishing and fixing the rights and preferences of the 8.75% Series C Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.2 of AMB Property Corporation’s Current Report on Form 8-K filed on January 7, 1999).
	3.5	Articles Supplementary establishing and fixing the rights and preferences of the 7.75% Series D Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1999).
	3.6	Articles Supplementary establishing and fixing the rights and preferences of the 7.75% Series E Cumulative Preferred Stock (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Current Report on Form 8-K filed on September 14, 1999).
	3.7	Articles Supplementary establishing and fixing the rights and preferences of the 7.95% Series F Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Current Report on Form 8-K filed on April 14, 2000).
	3.8	Articles Supplementary establishing and fixing the rights and preferences of the 7.95% Series G Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Current Report on Form 8-K filed on September 29, 2000).
	3.9	Articles Supplementary establishing and fixing the rights and preferences of the 8.125% Series H Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.3 of AMB Property Corporation’s Current Report on Form 8-K filed on September 29, 2000).
	3.10	Articles Supplementary establishing and fixing the rights and preferences of the 8.00% Series I Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Current Report on Form 8-K filed on March 23, 2001).
	3.11	Articles Supplementary establishing and fixing the rights and preferences of the 7.95% Series J Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Current Report on Form 8-K filed on October 3, 2001).
	3.12	Articles Supplementary redesignating and reclassifying all 2,200,000 Shares of the 8.75% Series C Cumulative Redeemable Preferred Stock as Preferred Stock (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Current Report on Form 8-K filed on December 7, 2001).
	3.13	Articles Supplementary establishing and fixing the rights and preferences of the 7.95% Series K Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 of AMB Property Corporation’s Current Report on Form 8-K filed on April 23, 2002).
	3.14	Articles Supplementary Redesignating and Reclassifying 130,000 Shares of 7.95% Series F Cumulative Redeemable Preferred Stock as Preferred Stock (incorporated by reference to Exhibit 3.2 of AMB Property Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).
	3.15	Articles Supplementary Redesignating and Reclassifying all 20,000 Shares of 7.95% Series G Cumulative Redeemable Preferred Stock as Preferred Stock (incorporated by reference to Exhibit 3.3 of AMB Property Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).
	3.16	Second Amended and Restated Bylaws of AMB Property Corporation (incorporated by reference to Exhibit 3.11 of AMB Property Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000).


Exhibit
Number		Description

	4.1	Form of Certificate for Common Stock of AMB Property Corporation (incorporated by reference to Exhibit 3.3 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-35915)).
	4.2	Form of Certificate for 8.5% Series A Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 3.5(2) of Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998).
	4.3	$30,000,000 7.925% Fixed Rate Note No. 1 dated August 18, 2000, attaching the Parent Guarantee dated August 18, 2000 (incorporated by reference to Exhibit 4.5 of AMB Property Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000).
	4.4	$25,000,000,000 7.925% Fixed Rate Note No. 2 dated September 12, 2000, attaching the Parent Guarantee dated September 12, 2000 (incorporated by reference to Exhibit 4.6 of AMB Property Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000).
	4.5	$50,000,000 8.00% Fixed Rate Note No. 3 dated October 26, 2000, attaching the Parent Guarantee dated October 26, 2000 (incorporated by reference to Exhibit 4.7 of AMB Property Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000).
	4.6	$25,000,000 8.000% Fixed Rate Note No. 4 dated October 26, 2000, attaching the Parent Guarantee dated October 26, 2000 (incorporated by reference to Exhibit 4.8 of AMB Property Corporation’s Annual Report on Form 10-K for the year ended December 31, 2000).
	4.7	$50,000,000 7.20% Fixed Rate Note No. 5 dated December 19, 2000, attaching the Parent Guarantee dated December 19, 2000 (incorporated herein by reference to Exhibit 4.1 of AMB Property Corporation’s Current Report on Form 8-K filed on January 8, 2001).
	4.8	$50,000,000 7.20% Fixed Rate Note No. 6 dated December 19, 2000, attaching the Parent Guarantee dated December 19, 2000 (incorporated herein by reference to Exhibit 4.2 of AMB Property Corporation’s Current Report on Form 8-K filed on January 8, 2001).
	4.9	$50,000,000 7.20% Fixed Rate Note No. 7 dated December 19, 2000, attaching the Parent Guarantee dated December 19, 2000 (incorporated herein by reference to Exhibit 4.3 of AMB Property Corporation’s Current Report on Form 8-K filed on January 8, 2001).
	4.10	Indenture dated as of June 30, 1998, by and among AMB Property, L.P., AMB Property Corporation and State Street Bank and Trust Company of California, N.A., as trustee (incorporated by reference to Exhibit 4.1 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-49163)).
	4.11	First Supplemental Indenture dated as of June 30, 1998 by and among AMB Property, L.P., AMB Property Corporation and State Street Bank and Trust Company of California, N.A., as trustee (incorporated by reference to Exhibit 4.2 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-49163)).
	4.12	Second Supplemental Indenture dated as of June 30, 1998, by and among AMB Property, L.P., AMB Property Corporation and State Street Bank and Trust Company of California, N.A., as trustee (incorporated by reference to Exhibit 4.3 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-49163)).
	4.13	Third Supplemental Indenture dated as of June 30, 1998, by and among AMB Property, L.P., AMB Property Corporation and State Street Bank and Trust Company of California, N.A., as trustee (incorporated by reference to Exhibit 4.4 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-49163)).
	4.14	Fourth Supplemental Indenture, by and among AMB Property, L.P., AMB Property Corporation and State Street Bank and Trust Company of California, N.A., as trustee (incorporated herein by reference as Exhibit 4.1 of AMB Property Corporation’s Current Report on Form 8-K/ A filed on November 9, 2000).
	4.15	Fifth Supplemental Indenture dated as of May 7, 2002, by and among AMB Property, L.P., AMB Property Corporation and State Street Bank and Trust Company of California, N.A., as trustee.
	4.16	Specimen of 7.10% Notes due 2008 (included in the First Supplemental Indenture incorporated by reference as Exhibit 4.2 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-49163)).


Exhibit
Number		Description

	4.17	Specimen of 7.50% Notes due 2018 (included in the Second Supplemental Indenture incorporated by reference as Exhibit 4.3 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-49163)).
	4.18	Specimen of 6.90% Reset Put Securities due 2015 (included in the Third Supplemental Indenture incorporated by reference as Exhibit 4.4 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-49163)).
	4.19	$25,000,000 6.90% Fixed Rate Note No. 8 dated January 9, 2001, attaching the Parent Guarantee dated January 9, 2001 (incorporated by reference to Exhibit 4.1 of AMB Property Corporation’s Current Report on Form 8-K filed on January 31, 2001).
	4.20	$50,000,000 7.00% Fixed Rate Note No. 9 dated March 7, 2001, attaching the Parent Guarantee dated March 7, 2001 (incorporated by reference to Exhibit 4.1 of AMB Property Corporation’s Current Report on Form 8-K filed on March 16, 2001).
	4.21	$25,000,000 6.75% Fixed Rate Note No. 10 dated September 6, 2001, attaching the Parent Guarantee dated September 6, 2001 (incorporated by reference to Exhibit 4.1 of AMB Property Corporation’s Current Report on Form 8-K filed on September 18, 2001).
	4.22	$20,000,000 5.90% Fixed Rate Note No. 11 dated January 17, 2002, attaching the Parent Guarantee dated January 17, 2002 (incorporated by reference to Exhibit 4.1 of AMB Property Corporation’s Current Report on Form 8-K filed on January 23, 2002).
	10.1	Distribution Agreement dated August 15, 2000 by and among AMB Property Corporation, AMB Property, L.P., Morgan Stanley & Co., Incorporated, Banc of America Securities LLC, Banc One Capital Markets, Inc., Chase Securities, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities Inc., and Salomon Smith Barney Inc. (incorporated herein by reference to Exhibit 1.1 of Registrant’s Current Report on Form 8-K/ A filed on November 9, 2000).
	10.2	Terms Agreement dated as of December 14, 2000, by and between Morgan Stanley & Co., Incorporated and J.P. Morgan Securities Inc. and AMB Property, L.P. (incorporated herein by reference to Exhibit 1.1 of AMB Property Corporation’s Current Report on Form 8-K filed on January 8, 2001).
	10.3	Terms Agreement dated as of January 4, 2001, by and between A.G. Edwards & Sons, Inc. and AMB Property, L.P. (incorporated herein by reference to Exhibit 1.1 of AMB Property Corporation’s Current Report on Form 8-K filed on January 31, 2001).
	10.4	Terms Agreement dated as of March 2, 2001, by and among First Union Securities, Inc., AMB Property, L.P. and AMB Property Corporation (incorporated by reference to Exhibit 1.1 of Registrants’ current report on Form 8-K filed on March 16, 2001).
	10.5	Sixth Amended and Restated Partnership Agreement of Limited Partnership of AMB Property, L.P. dated April 17, 2002 (incorporated by reference to Exhibit 10.1 of AMB Property Corporation’s Current Report on Form 8-K filed on April 23, 2002).
	10.6	First Amendment to the Sixth Amended and Restated Agreement of Limited Partnership of AMB Property, L.P. dated October 30, 2002 (incorporated by reference to Exhibit 10.1 of AMB Property Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002).
	10.7	Form of Registration Rights Agreement among AMB Property Corporation and the persons named therein (incorporated by reference to Exhibit 10.2 of AMB Property Corporation’s Registration Statement on Form S-11 (No. 333-35915)).
	10.8	Form of Change in Control and Noncompetition Agreement between AMB Property Corporation and Executive Officers (incorporated by reference to AMB Property Corporation’s Annual Report on Form 10-K for the year ended December 31, 1998).
	10.9	Dividend Reinvestment and Direct Purchase Plan, dated July 9, 1999 (incorporated by reference to Exhibit 10.4 of AMB Property Corporation’s Quarterly Report on Report Form 10-Q for the quarter ended June 30, 1999).
	10.10	Eleventh Amended and Restated Agreement of Limited Partnership of AMB Property II, L.P., dated July 31, 2002 (incorporated by reference to Exhibit 10.2 of AMB Property Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).


Exhibit
Number		Description

	10.11	Revolving Credit Agreement dated as of August 23, 2001, among AMB Institutional Alliance Fund II, L.P., AMB Institutional Alliance REIT II, Inc., the banks and financial institutions listed therein, Bank of America, N.A. as Administrative Agent, Dresdner Bank AG, as Syndication Agent, and Bank One, NA, as Documentation Agent (incorporated by reference to Exhibit 10.4 of AMB Property Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001).
	10.12	Amended and Restated Revolving Credit Agreement, dated as of December 11, 2002, by and among AMB Property, L.P., the banks listed therein, JPMorgan Chase Bank, as administrative agent, J.P. Morgan Europe Limited, as administrative agent for alternate currencies, Bank of America, N.A., as syndication agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as joint lead arrangers and joint bookrunners, Bank One, NA, Commerzbank Aktiengesellschaft, New York and Grand Cayman Branches and Wachovia Bank, N.A., as documentation agents, PNC Bank, National Association, The Bank of Nova Scotia, acting through its San Francisco Agency, and Wells Fargo Bank, N.A., as managing agents, and KeyBank National Association, as co-agent (incorporated by reference to Exhibit 10.1 of AMB Property Corporation’s Current Report on Form 8-K filed on December 18, 2002).
	10.13	Guaranty of Payment, dated as of December 11, 2002, by AMB Property Corporation for the benefit of JPMorgan Chase Bank, as administrative agent, and J.P. Morgan Europe Limited, as administrative agent for alternate currencies, for the banks listed on the signature page to the Revolving Credit Agreement (incorporated by reference to Exhibit 10.2 of AMB Property Corporation’s Current Report on Form 8-K filed on December 18, 2002).
	10.14	Qualified Borrower Guaranty, dated as of December 11, 2002, by AMB Property, L.P. for the benefit of JPMorgan Chase Bank and J.P. Morgan Europe Limited, as administrative agents for the banks listed on the signature page to the Revolving Credit Agreement (incorporated by reference to Exhibit 10.3 of AMB Property Corporation’s Current Report on Form 8-K filed on December 18, 2002).
	10.15	Terms Agreement dated as of August 30, 2001, by and among Lehman Brothers Inc., AMB Property, L.P., and AMB Property Corporation (incorporated by reference to Exhibit 1.1 of AMB Property Corporation’s Current Report on Form 8-K filed on September 18, 2001).
	10.16	Terms Agreement dated as of January 14, 2002, by and among Lehman Brothers Inc., AMB Property, L.P., and AMB Property Corporation (incorporated by reference to Exhibit 1.1 of AMB Property Corporation’s Current Report on Form 8-K filed on January 23, 2002).
	10.17	Third Amended and Restated 1997 Stock Option and Incentive Plan of AMB Property Corporation and AMB Property, L.P. (incorporated by reference to Exhibit 10.22 of AMB Property Corporation’s Annual Report on Form 10-K for the year ended December 31, 2001).
	10.18	Amendment No. 1 to the Third Amended and Restated 1997 Stock Option and Incentive Plan of AMB Property Corporation and AMB Property, L.P. (incorporated by reference to Exhibit 10.23 of AMB Property Corporation’s Annual Report on Form 10-K for the year ended December 31, 2001).
	10.19	2002 Stock Option and Incentive Plan of AMB Property Corporation and AMB Property, L.P. (incorporated by reference to Exhibit 4.15 of AMB Property Corporation’s Registration Statement on Form S-8 (No. 333-90042)).


Exhibit
Number		Description

	10.20	Amended and Restated AMB Nonqualified Deferred Compensation Plan (incorporated by reference to Exhibit 4.17 of AMB Property Corporation’s Registration Statement on Form S-8 (No. 333-100214)).
	21.1	Subsidiaries of AMB Property Corporation.
	23.1	Consent of PricewaterhouseCoopers LLP.
	24.1	Powers of Attorney (included in Part IV of this Form 10-K)
	99.1	Audit Committee Charter

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