BUILDINGTable TYPE DESCRIPTION % OF PORTFOLIO ------------- ----------- -------------- Warehouse 15,000-75,000 SF, single or multi-customer 40.3% Bulk Warehouse Over 75,000 SF, single or multi-customer 37.8% Flex Industrial May include assembly or R&D, single or multi-customer, higher parking ratios 9.6% Light Industrial Smaller customers, 15,000 SF or less, higher office finish 7.3% Trans-Shipment Unique configurations for truck terminals and specialized cross-docking 1.8% Air Cargo On-tarmac or airport land for transfer of air cargo goods 1.6% Office Single or multi-customer, used strictly for office 1.5%Contents

~~NO.~~ UNITED ~~NEW~~STATES ~~SAN~~SECURITIES ~~DALLAS/~~AND EXCHANGE JERSEY/ FRANCISCO SOUTHERN ATLANTA CHICAGO(1) FT. WORTH NEW YORK BAY AREA CALIFORNIA(2) MIAMI ---------- ---------- ---------- ---------- ----------- ------------- ---------- Square feet owned........ 6COMMISSION Washington,~~010,428 8,101,685 5,589,196 6,047,153 11,192,942 11,904,910 4,432,368 Occupancy Percentage~~ D.C.... 91.0% 95.8% 96.8% 91.8% 94.9% 95.9% 94.9% Annualized base rent (000's)................. $ 24,372 $ 35,097 $ 25,942 $ 38,372 $ 99,624 $ 64,589 $ 31,958 Annualized base rent per square foot............. $ 4.46 $ 4.52 $ 4.79 $ 6.91 $ 9.38 $ 5.66 $ 7.76 Lease expirations as a percentage of ABR:(3) 2002.................... 15.8% 11.0% 18.5% 9.7% 11.4% 14.0% 21.9% 2003.................... 14.5% 26.9% 17.2% 21.7% 13.6% 17.8% 12.0% 2004.................... 16.5% 17.0% 17.6% 14.1% 15.0% 18.4% 21.4% Weighted average lease terms Original................ 5.3 years 6.7 years 5.6 years 6.4 years 5.9 years 6.6 years 5.9 years Remaining............... 3.1 years 2.9 years 2.9 years 3.5 years 3.1 years 3.4 years 2.9 years Tenant Retention (Year-to-date).......... 69.9% 84.4% 71.7% 65.2% 34.4% 73.5% 62.9% Rent increases on renewals and rollovers............... 0.5% 8.3% 7.6% 12.9% 56.2% 20.6% (4.3)% Square feet leased....... 772,074 1,496,943 833,228 481,766 1,385,835 1,075,779 1,100,524 Same store cash basis NOI growth.............. (4.9)% 1.1% 9.7% 3.1% 23.7% 4.3% (0.5)% Square feet owned in same store pool(4)........... 4,258,623 6,942,817 4,737,897 3,652,692 7,563,658 5,625,212 2,193,976 TOTAL TOTAL HUB OTHER SEATTLE MARKETS MARKETS TOTAL ---------- ----------- ----------- ----------- Square feet owned........ 3,763,469 56,952,144 24,598,736 81,550,880 Occupancy Percentage..... 88.2% 94.2% 95.2% 94.5% Annualized base rent (000's)................. $ 19,812 $ 339,766 $ 123,651 $ 463,417 Annualized base rent per square foot............. $ 5.97 $ 6.33 $ 5.28 $ 6.01 Lease expirations as a percentage of ABR:(3) 2002.................... 17.1% 13.7% 18.4% 14.9% 2003.................... 29.0% 17.5% 12.9% 16.3% 2004.................... 20.7% 16.9% 13.6% 16.0% Weighted average lease terms Original................ 5.3 years 6.1 years 6.8 years 6.3 years Remaining............... 2.5 years 3.1 years 3.6 years 3.3 years Tenant Retention (Year-to-date).......... 77.0% 67.6% 65.2% 66.8% Rent increases on renewals and rollovers............... 9.1% 21.3% 19.1% 20.4% Square feet leased....... 812,412 7,958,561 3,988,612 11,947,173 Same store cash basis NOI growth.............. (0.4)% 8.1% 2.6% 6.3% Square feet owned in same store pool(4)........... 3,479,316 38,454,191 21,711,246 60,165,437 20549

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(3) SQUARE FEET LEASED (000'S) BASE RENT OF LEASES SQUARE FOOT --------------------- --------- ---------- ----------- ---------- ---------- ---------- --------- ----------- HUB AND GATEWAY MARKETS: Atlanta................. 55 6,010,428 7.4% 91.0% $ 24,372 5.3% 171 $4.46 Chicago (1)............. 91 8,101,685 9.9 95.8 35,097 7.6 190 4.52 Dallas/Ft. Worth........ 65 5,589,196 6.9 96.8 25,942 5.6 211 4.79 Northern New Jersey/New York City............. 67 6,047,153 7.4 91.8 38,372 8.3 228 6.91 San Francisco Bay Area.................. 142 11,192,942 13.7 94.9 99,624 21.5 386 9.38 Southern California (2)................... 144 11,904,910 14.6 95.9 64,589 13.9 352 5.66 Miami................... 42 4,342,361 5.3 94.9 31,958 6.9 219 7.76 Seattle................. 42 3,763,469 4.6 88.2 19,812 4.3 163 5.97 --- ---------- ----- ----- -------- ----- ----- ----- Subtotal/Weighted Average............. 648 56,952,144 69.8 94.2 339,766 73.4 1,920 6.33 OTHER MARKETS: Austin.................. 9 1,365,873 1.7 93.5 9,754 2.1 28 7.64 Baltimore/Washington D.C. ................. 60 3,790,944 4.6 96.3 28,704 6.2 279 7.86 Boston.................. 39 4,632,528 5.7 99.6 22,866 4.9 56 4.96 Charlotte............... Form 10 729,836 0.9 55.4 1,665 0.4 24 4.12 Cincinnati.............. 6 812,053 1.0 92.7 2,587 0.6 12 3.44 Columbus................ 2 465,433 0.6 100.0 1,415 0.3 2 3.04 Houston................. 28 2,788,474 3.4 92.8 9,907 2.1 136 3.83 Memphis................. 17 1,883,845 2.3 98.6 9,537 2.1 47 5.13 Minneapolis............. 42 4,441,909 5.5 96.9 17,836 3.8 204 4.14 New Orleans............. 5 411,689 0.5 99.7 2,004 0.4 47 4.88 Newport News............ 1 60,215 0.1 100.0 745 0.2 3 12.37 Orlando................. 19 1,845,494 2.3 96.0 7,476 1.6 85 4.22 Portland................ 5 676,104 0.8 98.4 2,816 0.6 10 4.23 San Diego............... 5 276,167 0.3 86.8 1,974 0.4 19 8.23 Other On-Tarmac......... 9 418,172 0.5 86.4 4,365 0.9 36 12.08 --- ---------- ----- ----- -------- ----- ----- ----- Subtotal/Weighted Average............. 257 24,598,736 30.2 95.2 123,651 26.6 988 5.28 --- ---------- ----- ----- -------- ----- ----- ----- Total/Weighted Average.......... 905 81,550,880 100.0% 94.5% $463,417 100.0% 2,908 $6.01 === ========== ===== ===== ======== ===== ===== =====K

RENTABLE ANNUALIZED PERCENTAGE OF SQUARE BASE RENT ANNUALIZED YEAR OF LEASE EXPIRATION(1) FEET (000S)(2) BASE RENT --------------------------- ---------- ---------- ------------- 2002(3)..................................................... 13,350,901 $ 73,908 14.9% 2003........................................................ 14,728,382 80,699 16.3 2004........................................................ 12,906,827 79,341 16.0 2005........................................................ 11,288,877 74,129 15.0 2006........................................................ 8,784,213 57,282 11.6 2007........................................................ 5,079,752 32,259 6.5 2008........................................................ 3,435,363 17,830 3.6 2009........................................................ 2,473,353 15,053 3.1 2010........................................................ 1,878,760 27,908 5.6 Thereafter.................................................. 3,116,389 36,448 7.4 ---------- -------- ----- Total/Weighted Average.................................... 77,042,917 $494,857 100.0% ========== ======== =====


(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, 2008
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~PERCENTAGE~~ Commission OFFile ~~PERCENTAGE OF NUMBER AGGREGATE AGGREGATE AGGREGATE OF RENTABLE LEASED ANNUALIZED ANNUALIZED INDUSTRIAL CUSTOMER NAME(1) LEASES SQUARE FEET SQUARE FEET(2) BASE RENT BASE RENT(3)~~ Number 001--------------------------- ------ ----------- -------------- ---------- ------------- FedEx Corporation......................... 27 586,238 0.7% $ 6,251 1.3% International Paper Company............... 7 557,299 0.7 4,353 0.9 Abgenix, Inc. ............................ 2 97,887 0.1 3,489 0.7 Harmonic Inc. ............................ 2 198,480 0.3 3,481 0.7 United Liquors, Ltd. ..................... 2 755,000 1.0 3,286 0.7 Hyseq, Inc. .............................. 3 59,300 0.1 3,176 0.7 Novera Optics, Inc. ...................... 1 55,610 0.1 2,776 0.6 Wells Fargo and Company................... 5 215,052 0.3 2,663 0.6 Integrated Airline Services(4)............ 4 231,161 0.3 2,595 0.5 County of Los Angeles(5).................. 9 168,519 0.2 2,586 0.5 CNF Inc. ................................. 11 358,165 0.5 2,307 0.5 Forward Air Corporation................... 7 344,765 0.4 2,212 0.5 Exel plc.................................. 7 520,404 0.7 2,168 0.5 Applied Materials, Inc. .................. 1 290,557 0.4 2,152 0.4 Iron Mountain Records Management.......... 9 415,008 0.5 2,106 0.4 Acer America Corporation.................. 4 261,932 0.3 2,067 0.4 United States Government(4)(6)............ 11 421,063 0.5 2,065 0.4 Cirrus Logic.............................. 1 48,384 0.1 2,032 0.4 FMI International......................... 2 367,771 0.5 1,999 0.4 Danzas AEI International.................. 6 288,476 0.4 1,965 0.4 AM Cosmetics Inc. ........................ 1 326,500 0.4 1,954 0.4 Airborne Express(4)....................... 7 242,967 0.3 1,950 0.4 NCS Pearson............................... 1 226,076 0.3 1,919 0.4 Johnson & Johnson......................... 4 129,449 0.2 1,918 0.4 Rite Aid Corporation...................... 3 550,116 0.7 1,883 0.4 --------- ------- Total............................ 7,716,179 9.9% $65,353 13.6% ========= =======14245

~~2001~~ AMB ~~2000 1999 ----------- ----------- ----------- Square feet owned at December 31(2)................... 81~~Property,~~550,880~~ ~~77,795,989 65,194,364 Occupancy percentage at December 31~~L.P.................. 94.5% 96.4% 95.9% Weighted average lease term: Original......................................... 6.3 years 6.4 years 6.4 years Remaining........................................ 3.3 years 3.5 years 3.5 years Tenant retention...................................... 66.8% 59.0% 72.0% Rent increases on renewals and rollovers.............. 20.4% 25.6% 12.9% SF leased........................................... 11,947,173 11,940,560 7,567,062 Second generation tenant improvements and leasing commissions per sq. ft.: Renewals......................................... $ 0.99 $ 1.22 $ 1.22 Re-tenanted(3)................................... 3.25 2.27 2.74 ----------- ----------- ----------- Weighted average(3)............................ $ 2.05 $ 1.86 $ 1.64 =========== =========== =========== Recurring capital expenditures: Tenant improvements.............................. $ 8,168 $ 10,237 $ 10,515 Lease commissions and other lease costs.......... 19,822 17,679 10,430 Building improvements............................ 19,852 11,031 5,521 ----------- ----------- ----------- Sub-total...................................... 47,842 38,947 26,466 JV Partners' share of capital expenditures....... (5,824) (3,323) (1,576) ----------- ----------- ----------- Our share of recurring capital expenditures.... $ 42,018 $ 35,624 $ 24,890 =========== =========== ===========

~~2001~~ (Exact ~~2000~~name ~~1999~~of ~~----------~~registrant ~~----------~~as specified ~~---------- Square feet~~ in ~~same~~its store pool........................... 60,165,437 52,145,350 35,128,748 % of total industrial square feet...................... 73.8% 68.8% 53.8% Occupancy percentage at period end....................... 94.6% 96.8% 96.2% Tenant retention......................................... 64.5% 59.2% 69.2% Rent increases on renewals and rollovers................. 23.5% 27.0% 12.8% SF leased.............................................. 9,964,366 9,868,579 4,994,868 Cash basis net operating income growth % increase Revenues............................................... 6.4% 7.3% 4.3% Expenses............................................... 6.9% 3.5% (0.6charter)~~% NOI.................................................... 6.3% 8.5% 5.9%~~

ANNUALIZED TOTAL ANNUALIZED BASE RENT RENTABLE PERCENTAGE BASE RENT NUMBER PER LEASED RETAIL PROPERTIES SQUARE FEET LEASED (000'S)(1) OF LEASES SQUARE FOOT(2) ----------------- ----------- ---------- ---------- --------- -------------- Around Lenox(3)(4)................... 121,517 71.9% $ 2,139 16 $24.47 Beacon Center........................ 150,245 100.0 2,395 8 15.94 Charles & Chase...................... 48,000 100.0 300 1 6.25 Howard & Western(4).................. 88,544 88.0 1,088 10 13.97 Mazzeo Drive(4)...................... 88,420 100.0 717 1 8.11 Northridge Plaza(3)(4)............... 229,010 90.7 3,190 34 15.35 Novato Fair Shopping Center (3)...... 126,069 93.3 955 18 8.12 Palm Aire(3)(4)...................... 130,865 100.0 1,709 29 13.06 Springs Gate(3)(4)................... n/a n/a N/a n/a n/a The Plaza at Delray(3)(4)............ 331,863 80.2 3,559 43 13.37 --------- ----- ------- --- ------ Total/Weighted Average..... 1,314,533 89.3% $16,052 160 $13.67 ========= ===== ======= === ======


Delaware		94-3285362
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)
Pier 1, Bay 1, San Francisco, California		94111 (Zip Code)
(Address of Principal Executive Offices)

~~ESTIMATED ESTIMATED DEVELOPMENT STABILIZATION SQUARE FEET AT PROJECT LOCATION ALLIANCE PARTNER~~ (TM415) ~~DATE COMPLETION~~ 394-~~------ ---------------- -------------------- ------------- -------------- 2002 DELIVERIES 1. Portland Air Cargo............... Portland, OR Trammell Crow Company February 159,000 2. Van Nuys~~ 9000 (~~Buildings~~Registrant’s ~~3-6).........~~telephone ~~Van Nuys~~number, CAincluding ~~Trammell~~area ~~Crow Company February 315,000 3. Monte Vista Spectrum............. Chino, CA Majestic Realty June 577,000 4. Cabot Business Park (Lot 1-2~~code)~~....~~ Securities ~~Mansfield,~~registered MApursuant National Development of NE June 114,000 5. Dulles Airport park (Phase I).... Dulles, VA Seefried Properties July 168,000 6. Suwanee Creek (Phase IV)......... Atlanta, GA Seefried Properties August 233,000 7. Airport South Building 800....... College Park, GA Seefried Properties September 60,000 8. Airport South Building 900....... College Park, GA Seefried Properties September 30,000 9. Southfield Logistics Center (3)............................... Forest Park, GA None October 799,000 10. Airport South Building 400....... College Park, GA Seefried Properties December 103,000 --------- Total 2002 Deliveries.......... 2,558,000 % Pre-leased/funded-to~~-date(2)~~ ~~61% 2003 DELIVERIES 11. Carson Town Center, SE........... Carson, CA Mar Ventures May 349,000~~ Section 12~~. Houston Air Cargo................ Houston, TX Trammell Crow Company October 156,000 --------- Total 2003 Deliveries.......... 505,000 --------- % Pre-leased/funded-to-date~~ (2b) ~~14%~~of ~~TOTAL~~the Act: None Securities ~~SCHEDULED~~registered ~~DELIVERIES(1)~~pursuant ~~3,063,000 ========= % Pre-leased/funded-~~to~~-date~~ ~~(2) 54% ESTIMATED OUR TOTAL OWNERSHIP PROJECT INVESTMENT(1) PERCENTAGE ------- ------------- ---------- (DOLLARS IN THOUSANDS) 2002 DELIVERIES 1. Portland Air Cargo............... $~~ Section 12~~,800 95% 2. Van Nuys~~ (~~Buildings 3-6~~g)~~.........~~ ~~23,000~~of 95% 3. Monte Vista Spectrum............. 23,200 50% 4. Cabot Business Park (Lot 1-2).... 14,600 90% 5. Dulles Airport park (Phase I).... 12,000 21% 6. Suwanee Creek (Phase IV)......... 7,600 100% 7. Airport South Building 800....... 3,200 50% 8. Airport South Building 900....... 1,700 50% 9. Southfield Logistics Center (3)............................... 17,600 21% 10. Airport South Building 400....... 4,800 50% --------- Total 2002 Deliveries.......... 120,500 64% % Pre-leased/funded-to-date(2) $ 91,900 2003 DELIVERIES 11. Carson Town Center, SE........... 23,100 95% 12. Houston Air Cargo................ 10,800 19% --------- Total 2003 Deliveries.......... 33,900 71% --------- % Pre-leased/funded-to-date (2) $ 9,300 TOTAL SCHEDULED DELIVERIES(1) $ 154,400 66% ========= % Pre-leased/funded-to-date (2) $ 100,300the Act: None

~~DEVELOPMENT~~ Indicate ~~ESTIMATED~~by ~~ESTIMATED~~check ~~ESTIMATED~~mark ~~OUR~~if ~~ALLIANCE~~the ~~STABILIZATION~~registrant ~~SQUARE~~is ~~FEET~~a ~~AT TOTAL OWNERSHIP PROJECT(2) MARKET PARTNER(TM) DATE COMPLETION INVESTMENT(3) PERCENTAGE~~ well-~~---------~~known seasoned ------------------- ------------ ------------- -------------- ------------- ---------- (DOLLARS IN THOUSANDS) DEVELOPMENT PROPERTIES VALUE-ADDED CONVERSION(4) None BUILD-TO-SELL(5) 1. Novato Fair Shopping Center................. SF Bay Area AIG August 2002 134issuer,~~000~~ ~~$15,700~~as ~~50%~~defined 2.in ~~Carson~~Rule 405 ~~Town~~of ~~Center~~the SWSecurities Act... Southern California Mar Ventures July 2003 431,000 34,300 100% ------- ------- Total Build-to-Sell Properties............. 565,000 50,000 84% ------- ------- % Pre-leased/funded-to- date(6).............. 32% 27,000 TOTAL SCHEDULED DELIVERIES........... 565,000 $50,000 84% ======= ======= % Pre-leased/funded-to- date(6).............. 32% 27,000 Yes o No þ

~~OUR~~ Indicate JVby ~~PARTNERS'~~check ~~OWNERSHIP~~mark ~~NUMBER~~if OFthe ~~SQUARE~~registrant ~~GROSS~~is ~~BOOK~~not ~~SHARE~~required ~~JOINT~~to ~~VENTURES~~file reports ~~PERCENTAGE~~pursuant ~~BUILDINGS~~to ~~FEET(1)~~Section 13 ~~VALUE(2)~~or ~~DEBT OF DEBT -------------- ---------- --------- ---------- ---------- -------- ------------~~ Section 15(~~DOLLARS IN THOUSANDS~~d) ~~OPERATING~~of ~~PROPERTIES: Co-investment joint ventures: AMB-SGP(3)~~the Act............... 50% 59 6,783,749 $ 304,902 $206,790 $103,395 AMB Institutional Alliance Fund I(4).... 21% 100 4,947,862 356,298 155,856 124,090 AMB Erie(5).............. 50% 52 3,855,178 195,218 101,431 50,941 AMB Partners II(6)....... 50% 47 3,637,122 184,426 113,485 58,492 AMB Institutional Alliance Fund II(4)... 20% 33 3,600,936 223,184 208,215 166,572 --- ---------- ---------- -------- -------- Total co-investment joint ventures...... 37% 291 22,824,847 1,264,028 785,777 503,490 Other Joint Ventures....... 92% 33 2,778,065 233,124 48,814 2,626 --- ---------- ---------- -------- -------- TOTAL OPERATING PROPERTIES............ 45% 324 25,602,912 1,497,152 835,591 506,116 --- ---------- ---------- -------- -------- DEVELOPMENT ALLIANCE JOINT VENTURES: AMB Institutional Alliance Fund I(4).... 21% 5 1,123,000 29,564 8,453 6,678 AMB Partners II(6)....... 50% 3 193,000 7,488 -- -- Other Development Alliance Joint Ventures.............. 93% 9 937,000 31,503 -- -- --- ---------- ---------- -------- -------- TOTAL DEVELOPMENT ALLIANCES............. 57% 17 2,253,000 68,555 8,453 6,678 --- ---------- ---------- -------- -------- TOTAL INDUSTRIAL CONSOLIDATED JOINT VENTURES............ 46% 341 27,855,912 $1,565,707 $844,044 $512,794 === ========== ========== ======== ======== Yes o No þ

~~OUR~~ Indicate JVby ~~PARTNERS'~~check ~~OWNERSHIP~~mark ~~SQUARE~~whether ~~GROSS~~the ~~BOOK~~registrant: ~~SHARE PROPERTIES MARKET PERCENTAGE FEET~~(1) has filed ~~VALUE(2)~~all ~~DEBT~~reports OFrequired ~~DEBT~~to ~~----------~~be ~~-------~~filed ~~----------~~by ~~-------~~Section 13 ~~---------- ------- ------------~~ or 15(~~DOLLARS IN THOUSANDS~~d) ~~DEVELOPMENT~~of ~~ALLIANCE~~the ~~JOINT~~Securities ~~VENTURE~~Exchange 1.Act ~~Springs~~of ~~Gate(3)(4)..........~~1934 ~~Miami~~during ~~100%~~the preceding --12 months ~~$ 10,214 $ -- $ -- ------- -------- ------- ------ Subtotal.................. 100% -- 10,214 -- -- ------- -------- ------- ------ OTHER JOINT VENTURES 2. Around Lenox~~(~~3).............~~or ~~Atlanta~~for ~~90%~~such ~~121,517~~shorter ~~20,925~~period ~~9,730~~that ~~973~~the registrant 3.was ~~Palm~~required ~~Aire(3)................~~to ~~Miami~~file ~~100%~~such ~~130,865 19,905 7,071 1,011 4. Northridge Plaza(3~~reports)~~......... Miami 100% 229~~,~~010~~ ~~36,341~~and ~~-- -- 5. Plaza Delray~~(32)~~.............~~ has been ~~Miami~~subject ~~98%~~to ~~331,863~~such ~~39,165~~filing ~~22,029~~requirements ~~4,428~~for ~~-------~~the ~~-------- ------- ------ Subtotal~~past 90 days.~~................. 813,255 116,336 38,830 6,412 ------- -------- ------- ------ Total..................... 98% 813,255 $126,550 $38,830 $6,412 ======= ======== ======= ======~~ Yes þ No o

~~OUR~~ Indicate ~~OUR~~by ~~OUR~~check ~~TOTAL~~mark ~~NET~~if ~~EQUITY~~disclosure ~~OWNERSHIP~~of ~~SHARE~~delinquent ~~PROPERTIES~~filers pursuant ~~MARKET~~to ~~SQUARE~~Item 405 ~~FEET(1) INVESTMENT PERCENTAGE OF DEBT~~ of Regulation S-~~--------- ------------------- -------------- ---------- ---------- -------~~ K (~~DOLLARS IN THOUSANDS) OPERATING JOINT VENTURES: 1~~§ 229.405 ~~Elk~~of ~~Grove~~this Duchapter) ~~Page..........~~is ~~Chicago~~not ~~4,046,721~~contained ~~$59~~herein,~~447~~ and ~~56%~~will ~~$15,300~~not 2.be ~~Pico Rivera................ Southern California 855~~contained,~~600~~ ~~9,430~~to ~~50%~~the ~~17,084~~best ~~---------~~of ~~------- ------- TOTAL OPERATING JOINT VENTURES.................... 4~~registrant’s knowledge,~~902,321~~ ~~68,918~~in ~~55%~~definitive ~~32,084~~proxy ~~---------~~or ~~-------~~information ~~-------~~statements incorporated ~~DEVELOPMENT~~by ~~ALLIANCE~~reference ~~JOINT~~in ~~VENTURE:~~Part III 3.of ~~Monte Vista Spectrum....... Southern California 577,000 2,179 50% 6,844~~ this Form 10-~~--------~~K or ~~-------~~any ~~-------~~amendment ~~TOTAL~~to ~~UNCONSOLIDATED JOINT VENTURES~~this Form 10-K.~~... 5,479,321 $71,097 55% $38,928 ========= ======= =======~~ o

~~MORTGAGE~~ Indicate ~~PROPERTIES~~by ~~MARKET~~check ~~MATURITY~~mark ~~RECEIVABLE~~whether ~~RATE~~the ~~----------~~registrant ~~-------------------~~is ~~--------------~~a ~~----------~~large accelerated ~~-----~~filer, ~~MORTGAGE~~an ~~INVESTMENT~~accelerated 1.filer, ~~Pier~~a ~~1..............................~~non-accelerated filer, SFor ~~Bay~~a ~~Area~~smaller ~~May~~reporting ~~2026 $13,214 13~~company.~~00%~~ 2.See ~~Manhattan~~the ~~Village~~definitions ~~Shopping~~of “large ~~Southern~~accelerated ~~California~~filer,” ~~September~~“accelerated filer” ~~2002~~and ~~74,000~~“smaller ~~9.50%~~reporting ~~Center(2)............................~~company” in Rule 12b-~~------~~2 of ~~Total~~the ~~Mortgage~~Exchange ~~Investments~~Act... ~~$87,214~~(Check ~~=======~~one):

~~YEAR~~Large ~~DISTRIBUTION~~accelerated ~~----~~filer ~~------------~~o ~~2001~~Accelerated ~~1st~~filer ~~Quarter...............................................~~o ~~0.395~~Non-accelerated ~~2nd~~filer ~~Quarter...............................................~~(Do ~~0.395~~not ~~3rd~~check ~~Quarter...............................................~~if ~~0.395~~a ~~4th~~smaller ~~Quarter...............................................~~reporting ~~0.395~~company) ~~2000~~þ ~~1st~~Smaller ~~Quarter...............................................~~reporting ~~0.37~~company 2nd Quarter............................................... 0.37 3rd Quarter............................................... 0.37 4th Quarter............................................... 0.37 1999 1st Quarter............................................... 0.35 2nd Quarter............................................... 0.35 3rd Quarter............................................... 0.35 4th Quarter............................................... 0.35o

~~PRO~~ Indicate FORMA(1) HISTORICAL(2) 2001 2000 1999 1998 1997 1997 ---------- ---------- ---------- ---------- ------------ ------------- (DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS) OPERATING DATA Total revenues............................... $ 600,845 $ 480,207 $ 448,183 $ 358,887 $ 284,674 $ 27,110 Income before minority interests............. 165,672 165,599 159,321 123,750 103,903 9,291 Net income available to common unitholders attributable to general partner............ 125,053 113,282 167,603 108,954 99,508 9,174 Net income per common unit: Basic(3)................................... 1.49 1.35 1.94 1.27 1.16 0.10 Diluted(3)................................. 1.47 1.35 1.94 1.26 1.15 0.10 Distributions per common unit................ 1.58 1.48 1.40 1.37 1.37 OTHER DATA EBITDA(4).................................... $ 431,543 $ 349,353 $ 318,319 $ 252,353 $ 195,218 Operating earnings(5)........................ 93,631 112,138 116,810 108,954 99,508 Funds from operations(6)..................... 213,513 208,651 191,147 170,407 147,409 Cash flows provided by ~~(used~~check ~~in):~~mark ~~Operating~~whether ~~activities.......................~~the ~~288,562~~registrant ~~261,175~~is ~~190,391~~a ~~177,180~~shell ~~131,621 Investing activities.......................~~ company (~~363,152)~~as ~~(726,499)~~defined ~~63,732 (793,366) (607,768) Financing activities....................... 127,303 452,370 (240,721) 604,202 553,199 BALANCE SHEET DATA Investments~~ in ~~real estate at cost........... $4,530,711 $4,026,597 $3,249,452 $3,369,060 $~~ Rule 12b-2~~,442,999~~ of ~~Total assets................................. 4,760,893 4,425,626 3,621,550 3,562,885 2,506,255 Total consolidated debt(7~~the Act)................... 2,135,664 1,836,276 1,270,037 1,368,196 685,652 Our share of total debt...................... 1,655,386 1,681,161 1,168,218 1,348,107 672,945 General partner's capital.................... 1,752,342 1,767,930 1,829,259 1,765,360 1,668,030 Yes o No þ

~~RENTAL~~ DOCUMENTS INCORPORATED ~~REVENUES~~BY 2001 2000 $ CHANGE % CHANGE --------------- ------ ------ -------- -------- 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.................................... 27.0 14.6 12.4 84.9% Divestitures.................................... 10.9 37.1 (26.2) (70.6)% Straight-line rents............................. 10.1 10.2 (0.1) (1.0)% ------ ------ ------ ----- Total.................................... $568.1 $464.2 $103.9 22.4% ====== ====== ====== =====REFERENCE

~~INVESTMENT~~ Part III ~~MANAGEMENT~~incorporates ~~AND~~by ~~OTHER~~reference ~~INCOME~~portions ~~2001~~of ~~2000~~AMB $Property Corporation’s, ~~CHANGE~~the %registrant’s ~~CHANGE~~general partner’s, ~~--------------------------------------~~Proxy ~~-----~~Statement ~~-----~~for ~~--------~~its ~~--------~~Annual ~~Equity~~Meeting ~~in earnings~~ of Stockholders ~~unconsolidated~~which ~~joint~~our ~~ventures........................................~~general $partner ~~5.5~~anticipates $will ~~5.2~~be $filed no ~~0.3~~later ~~5.8%~~than ~~Investment~~120 days ~~management~~after ~~income......................~~the ~~11.0~~end ~~4.3~~of ~~6.7~~its ~~155.8%~~fiscal ~~Interest~~year pursuant ~~and~~to ~~other income~~Regulation 14A.~~........................ 16.3 6.5 9.8 150.8% ----- ----- ----- ----- Total...................................... $32.8 $16.0 $16.8 105.0% ===== ===== ===== =====~~

~~PROPERTY~~ TABLE OPERATING EXPENSES AND REAL ESTATE TAXES 2001 2000 $ CHANGE % CHANGE ------------------------------------------------- ------ ------ -------- -------- (Exclusive of depreciation and amortization) Rental expenses................................. $ 69.0 $ 50.6 $18.4 36.4% Real estate taxes............................... 69.2 57.2 12.0 21.0% ------ ------ ----- ----- Property operating expenses................... $138.2 $107.8 $30.4 28.2% ====== ====== ===== ===== 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)% ------ ------ ----- ----- Total.................................... $138.2 $107.8 $30.4 28.2% ====== ====== ===== =====OF CONTENTS

OTHER EXPENSES 2001 2000 $ CHANGE % CHANGE -------------- ------ ------ -------- -------- Interest, including amortization................ $129.0 $ 90.3 $38.7 42.9% Depreciation and amortization................... 111.4 90.4 21.0 23.2% General and administrative...................... 35.8 23.7 12.1 51.1% ------ ------ ----- ---- Total.................................... $276.2 $204.4 $71.8 35.1% ====== ====== ===== ====


Item		Description	Page

PART I
	1.	Business		5
		The Company		5
		Investment Strategy		5
		Operating Strategy		6
		Long Term Growth Strategies		6
	1A.	Risk Factors		9
	1B.	Unresolved Staff Comments		23
	2.	Properties		23
		Industrial Properties		23
		Owned and Managed Operating Statistics		28
		Development Properties		30
		Properties Held Through Co-investment Ventures, Limited Liability Companies and Partnerships		32
	3.	Legal Proceedings		36
	4.	Submission of Matters to a Vote of Security Holders		36

PART II
	5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		37
	6.	Selected Financial Data		38
	7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		40
		Management’s Overview		40
		Summary of Key Transactions		45
		Critical Accounting Policies		46
		Consolidated Results of Operations		49
		Liquidity and Capital Resources		56
		Off-Balance Sheet Arrangements		74
		Supplemental Earnings Measures		76
	7A.	Quantitative and Qualitative Disclosures About Market Risk		78
	8.	Financial Statements and Supplementary Data		81
	9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		81
	9A.	Controls and Procedures		81
	9B.	Other Information		81

PART III
	10.	Directors, Executive Officers and Corporate Governance		82
	11.	Executive Compensation		82
	12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		82
	13.	Certain Relationships and Related Transaction, and Director Independence		82
	14.	Principal Accountant Fees and Services		82

PART IV
	15.	Exhibits and Financial Statement Schedules		82
EX-10.34
EX-21.1
EX-23.1
EX-31.1
EX-32.1

~~RENTAL REVENUES 2000 1999 $ CHANGE % CHANGE --------------- ------ ------ -------- -------- Same store...................................... $314.4 $293.3 $ 21.1 7.~~ 2% 1999 acquisitions............................... 85.1 41.0 44.1 107.6% 2000 acquisitions............................... 28.0 -- 28.0 -- Developments.................................... 7.0 4.2 2.8 66.7% Divestitures.................................... 19.5 90.4 (70.9) (78.4)% Straight-line rents............................. 10.2 10.8 (0.6) (5.6)% ------ ------ ------ ----- Total.................................... $464.2 $439.7 $ 24.5 5.6% ====== ====== ====== =====

INVESTMENTTable MANAGEMENTof AND OTHER INCOME 2000 1999 $ CHANGE % CHANGE -------------------------------------- ----- ---- -------- -------- Equity earnings in unconsolidated joint ventures... $ 5.2 $4.7 $0.5 10.6% Investment management and other income............. 10.8 3.8 7.0 184.2% ----- ---- ---- ----- Total....................................... $16.0 $8.5 $7.5 88.2% ===== ==== ==== =====Contents

~~PROPERTY OPERATING EXPENSES 2000 1999 $ CHANGE % CHANGE~~ FORWARD--------------------------- ------ ------ -------- -------- Rental expenses................................. $ 50.6 $ 51.7 $ (1.1) (2.1)% Real estate taxes............................... 57.2 56.2 1.0 1.8% ------ ------ ------ ----- Property operating expenses................... $107.8 $107.9 $ (0.1) (0.1)% ====== ====== ====== ===== Same store...................................... $ 72.1 $ 69.6 $ 2.5 3.6% 1999 acquisitions............................... 20.4 12.2 8.2 67.2% 2000 acquisitions............................... 7.7 -- 7.7 -- Developments.................................... 2.5 1.8 0.7 38.9% Divestitures.................................... 5.1 24.3 (19.2) (79.0)% ------ ------ ------ ----- Total.................................... $107.8 $107.9 $ (0.1) (0.1)% ====== ====== ====== =====LOOKING STATEMENTS

~~OTHER~~ Some ~~EXPENSES~~of ~~2000~~the ~~1999~~information $included ~~CHANGE~~in %this ~~CHANGE~~annual report on Form 10-K contains forward-looking statements, which are made pursuant to the safe-harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Because these forward-looking statements involve numerous risks and uncertainties, there are important factors that could cause our actual results to differ materially from those in the forward-~~---------~~looking statements, and you should not rely on the forward-~~-----~~looking statements as predictions of future events. The events or circumstances reflected in the forward-~~-----~~looking statements might not occur. You can identify forward-~~-------~~looking statements by the use of forward-~~-------~~looking ~~Interest~~terminology ~~expense................................~~such $as “believes,” ~~90.3~~“expects,” $“may,” “will,” ~~88.7~~“should,” $“seeks,” “approximately,” ~~1.6~~“intends,” “plans,” ~~1.8%~~“forecasting,” ~~Depreciation~~“pro forma,” ~~expense............................~~“estimates” ~~90.4~~or ~~67.0~~“anticipates,” or ~~23.4~~the ~~34.9%~~negative ~~General~~of these words and ~~administrative~~phrases, ~~expense..............~~or ~~23.7~~similar ~~25.2~~words (1or phrases.5) ~~(6.0)%~~You ~~------~~can ~~------~~also ~~-----~~identify forward-~~---~~looking ~~Total....................................~~statements ~~$204.4~~by discussions ~~$180~~of strategy, plans or intentions.9 ~~$23~~Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indicators of whether, or the time at which, such performance or results will be achieved.5 13There is no assurance that the events or circumstances reflected in forward-looking statements will occur or be achieved.0% ~~======~~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.

OP The ~~JOINT~~following ~~UNSECURED SECURED VENTURE SENIOR DEBT CREDIT TOTAL DEBT(1) DEBT SECURITIES FACILITIES(1) DEBT -------- --------- ----------- ------------- ---------- 2002................................ $ 28~~factors,~~193~~ $among 68others,~~505~~ $could --cause $actual results --and $future ~~96,698~~events ~~2003................................~~to ~~76,295~~differ ~~13,577~~materially --from ~~135,500~~those ~~225,372~~set forth ~~2004................................~~or ~~65,284~~contemplated ~~47,607~~in --the forward--looking 112,891 2005................................ 62,826 37,796 250,000 -- 350,622 2006................................ 94,965 74,115 25,000 -- 194,080 2007................................ 30,198 25,682 55,000 -- 110,880 2008................................ 33,619 147,552 175,000 -- 356,171 2009................................ 5,176 32,351 -- -- 37,527 2010................................ 52,780 71,966 75,000 -- 199,746 2011................................ 1,311 167,878 75,000 -- 244,189 Thereafter.......................... 3,307 72,345 125,000 -- 200,652 -------- --------- -------- -------- ---------- Subtotal.......................... 453,954 759,374 780,000 135,500 2,128,828 Unamortized premiums.............. 5,090 1,746 -- -- 6,836 -------- --------- -------- -------- ---------- Total consolidated debt...... 459,044 761,120 780,000 135,500 2,135,664 Our share of unconsolidated joint venture debt(2)................... -- 38,928 -- -- 38,928 -------- --------- -------- -------- ---------- Total debt................... 459,044 800,048 780,000 135,500 2,174,592 Joint venture partners' share of consolidated joint venture debt... -- (420,406) -- (98,800) (519,206) -------- --------- -------- -------- ---------- Our share of total debt........ $459,044 $ 379,642 $780,000 $ 36,700 $1,655,386 ======== ========= ======== ======== ========== Weighed average interest rate....... 8.1% 7.1% 7.3% 2.8% 7.1% Weighed average maturity (in years)............................ 4.7 7.4 7.6 1.6 6.5statements:

~~UNITS~~• ~~OUTSTANDING~~changes ~~MARKET~~in ~~PRICE~~general ~~MARKET~~economic ~~VALUE~~conditions, ~~-----------~~global ~~------------~~trade ~~------------~~or in the real estate sector (~~DOLLARS~~including INrisks ~~THOUSANDS,~~relating ~~EXCEPT~~to ~~UNIT~~decreasing ~~PRICE~~real estate valuations and impairment charges); ~~Common~~• ~~general~~risks ~~partnership~~associated ~~units........................~~with 83using debt to fund our business activities,~~821,829~~ ~~$26.00~~including $2re-financing and interest rate risks; • our failure to obtain,~~179~~ renew,~~368~~ ~~Common~~or ~~limited~~extend ~~partnership~~necessary ~~units~~financing or access the debt or equity markets; • our failure to maintain our current credit agency ratings or comply with our debt covenants; • risks related to our obligations in the event of certain defaults under co-investment venture and other debt; • risks associated with equity and debt securities financings and issuances (including the risk of dilution); • a continued or prolonged downturn in the California, U.S.~~......................~~, 4or the global economy or real estate conditions and other financial market fluctuations; • defaults on or non-renewal of leases by customers or renewal at lower than expected rent; • risks and uncertainties relating to the disposition of properties to third parties and our ability to effect such transactions on advantageous terms and to timely reinvest proceeds from any such dispositions; • our failure to contribute properties to our co-investment ventures due to such factors as our inability to acquire,~~969~~ develop,~~027~~ ~~26.00~~or ~~129~~lease properties that meet the investment criteria of such ventures,~~195~~ or our co-~~---------~~investment ventures’ inability to access debt and equity capital to pay for property contributions or their allocation of available capital to cover other capital requirements such as future redemptions; • difficulties in identifying properties to acquire and in effecting acquisitions on advantageous terms and the failure of acquisitions to perform as we expect; • risks and uncertainties affecting property development, redevelopment and value-~~---------~~added ~~Total............................................~~conversion 88(including construction delays,~~790~~ cost overruns,~~856~~ $2our inability to obtain necessary permits and financing,~~308~~ our inability to lease properties at all or at favorable rents and terms,~~563~~ ~~==========~~public ~~==========~~opposition to these activities); • risks of doing business internationally and global expansion, including unfamiliarity with new markets and currency risks; • risks of changing personnel and roles; • losses in excess of our insurance coverage; • unknown liabilities acquired in connection with acquired properties or otherwise; • our failure to successfully integrate acquired properties and operations;

DIVIDEND LIQUIDATION REDEMPTION RATE PREFERENCE PROVISIONS -------- ----------- -------------- (DOLLARS IN THOUSANDS) Series A preferred units................................ 8.50% $100,000 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% 19,872 March 2005 Series G preferred units................................ 7.95% 1,000 August 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 ---- -------- Weighted average/total................................ 8.18% $384,161 ==== ======== 3

SECURITYTable PAYINGof ENTITY 2001 2000 -------- --------------------- ----- ----- Operating partnership units.................... AMB Property, L.P. $1.58 $1.48 Series A preferred units....................... AMB Property, L.P. $2.13 $2.13 Series B preferred units....................... AMB Property, L.P. $4.31 $4.31 Series C preferred units....................... AMB Property II, L.P. $3.88 $4.38 Series D preferred units....................... AMB Property II, L.P. $3.88 $3.88 Series E preferred units....................... AMB Property II, L.P. $3.88 $3.88 Series F preferred units....................... AMB Property II, L.P. $3.98 $3.09 Series G preferred units....................... AMB Property II, L.P. $3.98 $1.35 Series H preferred units....................... AMB Property II, L.P. $4.06 $1.30 Series I preferred units....................... AMB Property II, L.P. $3.04 n/a Series J preferred units....................... AMB Property, L.P. $1.24 n/aContents

~~2001~~• ~~2000~~changes ~~1999~~in ~~-------- -------- -------- Income before minority interests............................ $165~~local,~~672~~ ~~$165,599~~state ~~$159,321 Gains on developments held for sale......................... 13,169 -- -- Real estate related depreciation~~ and ~~amortization:~~federal ~~Total~~regulatory ~~depreciation and amortization....................... 111~~requirements,~~414~~ ~~90,358~~including ~~67,035~~changes ~~Furniture,~~in ~~fixtures,~~real ~~and~~estate ~~equipment depreciation~~ and ~~ground~~zoning ~~lease~~laws; ~~amortization(1)..................................~~• ~~(1,963)~~increases ~~(1,114)~~in ~~(1,002)~~real ~~FFO~~property ~~attributable~~tax torates; ~~minority~~• ~~interests:~~risks ~~Joint~~associated ~~venture~~with ~~partners(2).................................~~our ~~(40,144)~~tax ~~(15,055)~~structuring; ~~(8,182)~~• ~~Series~~increases ~~C-I preferred unit distributions................... (22,201) (19,005) (13,893) Adjustments to derive FFO~~ in ~~unconsolidated~~interest ~~joint~~rates ~~venture(3):~~and ~~Our~~operating ~~share~~costs ofor ~~net~~greater ~~income...................................~~than ~~(5,467)~~expected ~~(5,212)~~capital ~~(4,701)~~expenditures; ~~Our~~• ~~share~~environmental ofuncertainties ~~FFO..........................................~~and ~~8,014~~risks ~~7,188~~related ~~6,677~~to ~~Series~~natural Adisasters; ~~preferred~~and ~~unit~~• ~~distributions.......................~~our ~~(8,500)~~general ~~(8,500)~~partner’s ~~(8,500)~~failure ~~Series~~to Bqualify ~~preferred~~and ~~unit~~maintain ~~distributions.......................~~its ~~(5,608)~~status ~~(5,608)~~as ~~(5,608)~~a ~~Series~~real Jestate ~~preferred~~investment ~~unit~~trust ~~distributions.......................~~under ~~(873)~~the --Internal --Revenue ~~--------~~Code ~~--------~~of ~~-------- FFO.................................................. $213~~1986,~~513~~ ~~$208,651~~as ~~$191,147 ======== ======== ========~~amended.

~~EXPECTED~~ Our ~~MATURITY~~success ~~DATE~~also ~~----------------------------------------------------------------------------~~depends ~~TOTAL~~upon ~~2002~~economic ~~2003~~trends ~~2004~~generally, various ~~2005~~market ~~2006~~conditions ~~THEREAFTER~~and ~~DEBT~~fluctuations ~~-------~~and ~~--------~~those ~~-------~~other ~~--------~~risk factors ~~--------~~discussed ~~----------~~under ~~----------~~the ~~Fixed~~heading ~~rate~~“Risk ~~debt(1)~~Factors” in Item 1A of this report.~~.........~~ ~~$73,603~~We $caution ~~89,319~~you ~~$92,364~~not ~~$350,029~~to ~~$186,452~~place ~~$1,149,166~~undue reliance $1on forward-looking statements,~~940,933~~ ~~Average~~which ~~interest~~reflect ~~rate.......~~our analysis ~~8.3%~~only ~~7.8%~~and ~~8.0%~~speak ~~7.3%~~as ~~7.3%~~of ~~7.5%~~the ~~7.5%~~date ~~Variable~~of ~~rate~~this ~~debt(2)~~report or as of the dates indicated in the statements.~~......~~ ~~$23,093~~All ~~$136,053~~of ~~$20~~our forward-looking statements,~~526~~ $including ~~594~~those $in 7this report,~~629~~ --are qualified $in ~~187,895~~their ~~Average~~entirety ~~interest~~by ~~rate.......~~this 3statement.5% ~~2.8%~~We ~~4.1%~~assume ~~3.5%~~no obligation ~~3.5%~~to --update 3or supplement forward-looking statements.0%

~~PAGE~~ Unless ~~----~~the ~~Report~~context ofotherwise ~~Independent~~requires, ~~Public~~the ~~Accountants.................... F-1 Consolidated Balance Sheets as of December 31~~terms “AMB,” ~~2001 and 2000...................................................... F-2 Consolidated Statements of Operations for~~ the ~~years ended December 31~~“Company,” ~~2001~~“we,” “us” ~~2000,~~ and ~~1999.........................~~“our” ~~F-3~~refer ~~Consolidated~~to ~~Statements~~AMB ~~of Partners' Capital for the years ended December 31~~Property, ~~2001, 2000, and 1999~~L.P.~~................. F-4 Consolidated Statements of Cash Flows for the years ended December 31~~, ~~2001, 2000,~~ and ~~1999.........................~~our ~~F-5~~other ~~Notes~~controlled ~~to Consolidated Financial Statements~~subsidiaries.~~.................~~ ~~F-6~~The ~~Schedule~~following ~~III~~marks --are our ~~Real~~registered ~~Estate~~ trademarks: AMB®; and ~~Accumulated~~High ~~Depreciation~~Throughput Distribution® (HTD®).~~... S-1~~

EXHIBIT NUMBER DESCRIPTION ------- ----------- 3.1 Fifth Amended and Restated Partnership Agreement of Limited Partnership of AMB Property, L.P. dated September 21, 2001 (incorporated herein by reference as Exhibit 10.1 to AMB Property, L.P.'s Current Report on Form 8-K filed on October 3, 2001). 3.2 First Amendment to the Fifth Amended and Restated Agreement of Limited Partnership of AMB Property, L.P. dated January 1, 2002. 4.1 $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, L.P.'s Annual Report on Form 10-K for the year ended December 31, 2000). 4.2 $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, L.P.'s Annual Report on Form 10-K for the year ended December 31, 2000). 4.3 $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, L.P.'s Annual Report on Form 10-K for the year ended December 31, 2000). 4.4 $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, L.P.'s Annual Report on Form 10-K for the year ended December 31, 2000). 4.5 $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, L.P.'s Current Report on Form 8-K filed on January 8, 2001). 4.6 $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, L.P.'s Current Report on Form 8-K filed on January 8, 2001). 4.7 $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, L.P.'s Current Report on Form 8-K filed on January 8, 2001).

EXHIBITTable NUMBER DESCRIPTION ------- ----------- 4.8 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, L.P.'s Registration Statement on Form S-11 (No. 333-49163)). 4.9 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, L.P.'s Registration Statement Form S-11 (No. 333-49163)). 4.10 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, L.P.'s Registration Statement on Form S-11 (No. 333-49163)). 4.11 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, L.P.'s Registration Statement on Form S-11 (No. 333-49163)). 4.12 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, L.P.'s Current Report on Form 8-K/A filed on November 9, 2000). 4.13 Specimen of 7.10% Notes due 2008 (included in the First Supplemental Indenture incorporated by reference as Exhibit 4.2 of AMB Property, L.P.'s Registration Statement on Form S-11 (No. 333-49163)). 4.14 Specimen of 7.50% Notes due 2018 (included in the Second Supplemental Indenture incorporated by reference as Exhibit 4.3 of AMB Property, L.P.'s Registration Statement on Form S-11 (No. 333-49163)). 4.15 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, L.P.'s Registration Statement on Form S-11 (No. 333-49163)). 4.16 $25,000,000 6.90% Fixed Rate Note No. 8 dated January 9, 2001, attaching the Parent Guarantee dated January 9, 2001 (incorporated herein by reference to Exhibit 4.1 of AMB Property, L.P.'s Current Report on Form 8-K filed on January 31, 2001). 4.17 $50,000,000 7.00% Fixed Rate Note No. 9 dated March 7, 2001, attaching the Parent Guarantee dated March 7, 2001 (incorporated herein by reference to Exhibit 4.1 of AMB Property, L.P.'s Current Report on Form 8-K filed on March 16, 2001). 4.18 $25,000,000 6.75% Fixed Rate Note No. 10 dated September 6, 2001, attaching the Parent Guarantee dated September 6, 2001 (incorporated herein by reference to Exhibit 4.1 of AMB Property, L.P.'s Current Report on Form 8-K filed on September 18, 2001). 4.19 $20,000,000 5.90% Fixed Rate Note No. 11 dated January 17, 2002, attaching the Parent Guarantee dated January 17, 2002 (incorporated herein by reference to Exhibit 4.1 of AMB Property, L.P.'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, L.P.'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, L.P.'s Current Report on Form 8-K filed on January 31, 2001).Contents

~~EXHIBIT~~ITEM NUMBER DESCRIPTION ------- ----------- 10.18 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, L.P.'s Current Report on Form 8-K filed on January 23, 2002). 10.19 Third Amended and Restated 1997 Stock Option and Incentive Plan. 10.20 Amendment No. 1 to the Third Amended and Restated 1997 Stock Option and Incentive Plan. 10.21 2002 Stock Option and Incentive Plan. 10.22 AMB Nonqualified Deferred Compensation Plan. 21.1 Subsidiaries of AMB Property, L.P. 23.1 Consent of Arthur Andersen LLP. 24.1 Powers of Attorney (included in Part IV of this Form 10-K). 99.1 Letter, dated March 28, 2002, from AMB Property, L.P. to the Securities and Exchange Commission.Business

~~NAME~~ AMB ~~TITLE~~Property, ~~DATE~~L.P., ~~----~~a ~~-----~~Delaware ~~----~~limited ~~/s/~~partnership, ~~LYNN~~organized M.in 1997, ~~SEDWAY~~owns, ~~Director~~acquires, ~~March~~develops ~~27,~~and ~~2002~~operates ~~---------------------------------------------------~~industrial properties ~~Lynn~~in M.key ~~Sedway~~distribution ~~/s/~~markets ~~JEFFREY~~tied L.to ~~SKELTON~~global trade in the Americas, PHEurope and Asia.D. ~~Director~~We ~~March~~use 27the terms “industrial properties” or “industrial buildings” to describe various types of industrial properties in our portfolio and use these terms interchangeably with the following: logistics facilities, ~~2002~~centers ~~---------------------------------------------------~~or ~~Jeffrey~~warehouses; L.distribution ~~Skelton~~facilities, centers ~~Ph.D.~~or ~~/s/~~warehouses; ~~THOMAS~~High WThroughput Distribution® (HTD®) facilities; or any combination of these terms. ~~TUSHER~~We ~~Director~~use ~~March~~the ~~27,~~term “owned ~~2002~~and ~~---------------------------------------------------~~managed” ~~Thomas~~to W.describe ~~Tusher~~assets ~~/s/~~in ~~CARYL~~which B.we have ~~WELBORN~~at least a 10% ownership interest, ~~ESQ~~we are the property or asset manager and we currently intend to hold for the long-term. We ~~Director~~use ~~March~~the 27term “joint venture” to describe all joint ventures, ~~2002~~which include co-~~--------------------------------------------------~~investment ~~Caryl~~ventures, Bas well as ventures with third parties. ~~Welborn~~We earn asset management distributions or fees, ~~Esq~~or ~~/s/~~earn ~~MICHAEL~~incentive Adistributions or promote interests from the joint ventures. ~~COKE~~In ~~Chief~~certain ~~Financial~~cases, ~~Officer~~we might ~~and~~provide ~~March~~development, 27leasing, ~~2002~~property ~~---------------------------------------------------~~management and/or accounting ~~Executive~~services, ~~Vice~~for ~~President~~which ~~(Duly~~we ~~Michael~~may Areceive compensation. ~~Coke~~We use ~~Authorized~~the ~~Officer~~term ~~and~~“co-investment ~~Principal~~venture” ~~Financial~~to describe joint ventures with institutional investors that are managed by us, from which we receive acquisition fees for third-party acquisitions, portfolio and ~~Accounting~~asset ~~Officer)~~management distributions or fees, as well as incentive distributions or promote interests.

~~2001~~ As ~~2000~~of ~~---------- ---------- (DOLLARS IN THOUSANDS~~December 31, ~~EXCEPT UNIT AMOUNTS) ASSETS Investments in real estate: Land...................................................... $1~~2008,~~064,422~~ $AMB ~~833,325~~Property ~~Buildings~~Corporation ~~and~~owned ~~improvements................................~~an approximate ~~3,285,110 2,915,537 Construction in progress~~96.~~.................................~~6% ~~181,179~~general ~~277,735~~partnership ~~----------~~interest ~~---------- Total investments~~ in ~~properties........................ 4~~us,~~530,711~~ ~~4,026,597~~excluding preferred ~~Accumulated depreciation and amortization~~units.~~................~~ ~~(265,653)~~As ~~(177,467)~~our ~~----------~~sole ~~----------~~general ~~Net investments in properties.......................... 4~~partner,~~265,058~~ ~~3,849,130~~AMB ~~Investment~~Property Corporation inhas ~~unconsolidated~~the ~~joint ventures................. 71~~full,~~097~~ ~~80,432~~exclusive ~~Properties held for divestiture, net........................ 157,174 197,146 ---------- ---------- Net investments in real estate......................... 4,493,329 4,126,708 Cash~~ and ~~cash~~complete equivalents................................... 73,071 20,358 Restricted cash............................................. 8,661 22,364 Mortgages receivable........................................ 87,214 115,969 Accounts receivable, net of allowance responsibility for ~~doubtful accounts of $9,354~~ and ~~$7,677,~~discretion ~~respectively........................ 70,794 69,874 Investments~~ in ~~affiliated companies.........................~~ our day-to-day management 35,731 Investments in other companies, net......................... -- 15,965 Other assets................................................ 27,824 18,657 ---------- ---------- Total assets........................................... $4,760,893 $4,425,626 ========== ========== LIABILITIES AND PARTNERS' CAPITAL Debt: Secured debt.............................................. $1,220,164 $ 940,276 Unsecured senior debt securities.......................... 780,000 680,000 Alliance Fund II credit facility.......................... 123,500 -- Unsecured credit facility................................. 12,000 216,000 ---------- ---------- Total debt............................................. 2,135,664 1,836,276 Accounts payable............................................ 73,310 56,577 Other liabilities........................................... 65,291 90,465 ---------- ---------- Total liabilities...................................... 2,274,265 1,983,318 Commitments and ~~contingencies (Note 15) Minority interests~~control.......................................... 534,276 496,405 Partners' capital: General Partner, 83,592,418 and 83,909,340 units, respectively, and 4,000,000 Series A preferred units with a $100,000 liquidation preference................. 1,752,342 1,767,930 Limited Partners, 4,969,027 and 5,827,917 units, respectively, 1,300,000 Series B preferred units with a $65,000 liquidation preference, and 800,000 Series J preferred units with a $40,000 liquidation preference............................................. 200,010 177,973 ---------- ---------- Total partners' capital................................ 1,952,352 1,945,903 ---------- ---------- Total liabilities and partners' capital................ $4,760,893 $4,425,626 ========== ==========

~~2001~~ Our ~~2000~~own ~~1999~~employees ~~-----------~~perform ~~-----------~~our ~~-----------~~corporate ~~(DOLLARS~~administrative IN THOUSANDS, EXCEPT UNIT AND PER UNIT AMOUNTS) REVENUES Rental revenues........................................... $ 568,066 $ 464,164 $ 439,658 Equity in earnings of unconsolidated joint ventures....... 5,467 5,212 4,701 Investment and management ~~income.............................. 10~~functions,~~972~~ ~~4,282~~rather ~~1,511~~than ~~Interest~~our ~~and~~relying other income................................. 16,340 6,549 2,313 ----------- ----------- ----------- Total revenues..................................... 600,845 480,207 448,183 EXPENSES Property operating expenses............................... 69,016 50,566 51,739 Real estate taxes......................................... 69,180 57,164 56,184 Interest, including amortization.......................... 128,985 90,270 88,681 Depreciation and amortization............................. 111,414 90,358 67,035 General and administrative................................ 35,820 23,750 25,223 Loss on ~~investments~~an inoutside manager ~~other~~for ~~companies....................~~these ~~20,758 2,500 -- ----------- ----------- ----------- Total expenses~~services.~~....................................~~ ~~435,173~~We ~~314,608~~manage ~~288,862~~our ~~-----------~~portfolio ~~----------- ----------- Income before minority interests and net gains from disposition~~ of properties ~~real~~generally ~~estate.......................~~through ~~165,672~~direct ~~165,599~~property ~~159,321~~management performed ~~Minority~~by ~~interests:~~our ~~Preferred~~own ~~units~~employees.~~........................................~~ ~~(22~~Additionally,~~201)~~ ~~(19,005)~~within ~~(13,893)~~our flexible ~~Joint~~operating ~~venture partners' minority interests.............. (27~~model,~~156)~~ ~~(12,306)~~we ~~(5,721)~~may ~~----------- ----------- ----------- Minority interests' share of income................... (49,357) (31,311) (19,614) Gains~~ from ~~dispositions~~time ofto ~~real~~time ~~estate,~~establish relationships ~~net~~with ~~of minority interests: Gains on developments held for sale..................... 13,169~~ third--party ~~-- Net gains from disposition of~~ real estate, ~~net~~management ~~of impairment charges of $18.6 million~~firms, brokers ~~$5.9 million,~~ and ~~$0.5~~developers ~~million,~~that ~~respectively............................~~provide ~~23,259~~some ~~1,144 53,283~~ property-~~----------~~level administrative ~~-----------~~and ~~-----------~~management ~~Total~~services ~~net~~under ~~gains~~our ~~from dispositions of real estate~~direction... 36,428 1,144 53,283 ----------- ----------- ----------- Net income before extraordinary items.............. 152,743 135,432 192,990 Extraordinary items (early debt extinguishments).......... (606) -- (2,490) ----------- ----------- ----------- Net income......................................... 152,137 135,432 190,500 Series A preferred unit distributions..................... (8,500) (8,500) (8,500) Series B preferred unit distributions..................... (5,608) (5,608) (5,608) Series J preferred unit distributions..................... (873) -- -- Preferred unit redemption premium......................... (4,400) -- -- ----------- ----------- ----------- Net income available to common unitholders......... $ 132,756 $ 121,324 $ 176,392 =========== =========== =========== Income available to common unitholders attributable to: General partner........................................... 125,053 113,282 167,603 Limited partners.......................................... 7,703 8,042 8,789 ----------- ----------- ----------- Net income available to common unitholders......... $ 132,756 $ 121,324 $ 176,392 =========== =========== =========== BASIC INCOME PER COMMON UNIT Before extraordinary items................................ $ 1.49 $ 1.35 $ 1.97 Extraordinary items....................................... -- -- (0.03) ----------- ----------- ----------- Net income available to common unitholders......... $ 1.49 $ 1.35 $ 1.94 =========== =========== =========== DILUTED INCOME PER COMMON UNIT Before extraordinary items................................ $ 1.47 $ 1.35 $ 1.97 Extraordinary items....................................... -- -- (0.03) ----------- ----------- ----------- Net income available to common unitholders......... $ 1.47 $ 1.35 $ 1.94 =========== =========== =========== WEIGHED AVERAGE COMMON UNITS OUTSTANDING Basic..................................................... 89,286,379 89,566,375 90,792,310 =========== =========== =========== Diluted................................................... 90,325,801 90,024,511 90,867,934 =========== =========== ===========

~~GENERAL~~ Our ~~PARTNER~~global ~~---------------------------------------------~~headquarters ~~PREFERRED~~are ~~UNITS~~located ~~COMMON~~at ~~UNITS~~Pier ------------------- ----------------------- UNITS AMOUNT UNITS AMOUNT --------- ------- ---------- ---------- (DOLLARS IN THOUSANDS, EXCEPT UNIT AMOUNTS) BALANCE AT DECEMBER 31, 1998............... 4,000,000 $96,100 85,688,109 $1,~~669,260~~ ~~Comprehensive~~Bay income: Net Income................................. -- 8,500 -- 167,603 Unrealized gain on securities.............. -- -- -- 28,993 Total comprehensive income............... Contributions.............................. -- -- -- -- Issuance of common limited partnership units in connection with issuance of restricted stock......................... -- -- 98,368 2,215 Issuance of common limited partnership units in connection with the exercise of stock options............................ -- -- 25,000 526 Conversion of operating partnership units to common stock.......................... -- -- 535,753 11,053 Retirement of operating partnership units.................................... -- -- (1,~~443~~ San Francisco,~~600)~~ ~~(27,300)~~California ~~Deferred~~94111; ~~compensation......................~~our --telephone --number -- is (~~3,080~~415) ~~Deferred compensation amortization.........~~ 394-~~- -- -- 952 Reallocation of interests~~9000.~~.................~~ Our --other --principal --office ~~3,451~~locations ~~Distributions..............................~~are -- (8,500) -- (120,514) --------- ------- ---------- ---------- BALANCE AT DECEMBER 31, 1999............... 4,000,000 96,100 84,903,630 1,733,159 Comprehensive income: Net Income................................. -- 8,500 -- 113,282 Unrealized loss on securities.............. -- -- -- (32,725) Total comprehensive income............... Contributions.............................. -- -- -- -- Issuance of common limited partnership units in ~~connection with issuance of restricted stock......................... -- -- 161~~Amsterdam,~~996~~ 3Boston,~~270 Issuance of common limited partnership units in connection with the exercise of stock options............................ -- -- 103~~ Chicago,~~217~~ ~~2,180~~Los ~~Conversion of operating partnership units to common stock.......................... -- -- 206~~Angeles,~~423~~ ~~4,913~~Mexico ~~Conversion of operating partnership units to cash.................................. -- -- -- -- Reallocation of operating partnership units.................................... -- -- (1~~City,~~465,926)~~ ~~(29~~Shanghai,~~318)~~ ~~Deferred~~Singapore ~~compensation~~and Tokyo.~~.....................~~ --As ~~-- -- (3,270) Deferred compensation amortization......... -- -- -- 1,022 Reallocation~~ of ~~interests and other........ -- -- -- 3,622 Distributions.............................. -- (8,500) -- (124,305) --------- ------- ---------- ---------- BALANCE AT DECEMBER~~ December 31, ~~2000............... 4~~2008,~~000,000~~ ~~96,100~~we ~~83,909,340~~employed ~~1,671,830 Contributions.............................. -- -- -- -- Comprehensive income~~645 individuals: ~~Net~~171 Income................................. -- 8,500 -- 129,453 Preferred unit redemption premium.......... -- -- -- (4,400) Reversal of unrealized loss on securities............................... -- -- -- 3,732 Total comprehensive income............... Issuance of common limited partnership units in ~~connection~~our ~~with~~San Francisco ~~issuance of restricted stock......................... -- -- 237~~headquarters,~~920~~ ~~5,853~~46 ~~Issuance of common limited partnership units~~ in our ~~connection~~Boston ~~with the exercise of stock options............................ -- -- 201~~office,~~960~~ ~~4,274~~54 Conversion of operating partnership units to common stock.......................... -- -- 635,798 15,255 Conversion of operating partnership units to cash.................................. -- -- -- -- Retirement of operating partnership units.................................... -- -- (1,392,600) (32,892) Deferred compensation...................... -- -- -- (5,853) Deferred compensation amortization......... -- -- -- 2,725 Reallocation of interests.................. -- -- -- (256) Distributions.............................. -- (8,500) -- (133,479) --------- ------- ---------- ---------- BALANCE AT DECEMBER 31, 2001............... 4,000,000 $96,100 83,592,418 $1,656,242 ========= ======= ========== ========== LIMITED PARTNERS ------------------------------------------- PREFERRED UNITS COMMON UNITS -------------------- -------------------- UNITS AMOUNT UNITS AMOUNT TOTAL --------- -------- --------- -------- ---------- (DOLLARS IN THOUSANDS, EXCEPT UNIT AMOUNTS) BALANCE AT DECEMBER 31, 1998............... 1,300,000 $ 62,190 4,447,839 $ 86,707 $1,914,257 Comprehensive income: Net Income................................. -- 5,608 -- 8,789 Unrealized gain on securities.............. -- -- -- 5,048 Total comprehensive income............... 224,541 Contributions.............................. -- -- 595,603 14,094 14,094 Issuance of common limited partnership units in ~~connection~~our ~~with~~Tokyo ~~issuance of restricted stock......................... -- -- -- -- 2~~office,~~215~~ ~~Issuance~~58 ~~of common limited partnership units~~ in ~~connection~~our ~~with the exercise of stock options............................ -- -- -- -- 526 Conversion of operating partnership units to common stock.......................... -- -- (535~~Amsterdam office,~~753)~~ ~~(12,761)~~64 (1,708) Retirement of operating partnership units.................................... -- -- -- -- (27,300) Deferred compensation...................... -- -- -- -- (3,080) Deferred compensation amortization......... -- -- -- -- 952 Reallocation of interests.................. -- -- -- (3,451) -- Distributions.............................. -- (5,608) -- (6,326) (140,948) --------- -------- --------- -------- ---------- BALANCE AT DECEMBER 31, 1999............... 1,300,000 62,190 4,507,689 92,100 1,983,549 Comprehensive income: Net Income................................. -- 5,608 -- 8,042 Unrealized loss on securities.............. -- -- -- (2,275) Total comprehensive income............... 100,432 Contributions.............................. -- -- 94,771 2,228 2,228 Issuance of common limited partnership units in ~~connection~~our ~~with~~Mexico ~~issuance~~City ofoffice ~~restricted~~and ~~stock.........................~~the --remainder ~~-- -- -- 3,270 Issuance of common limited partnership units~~ in connection with the exercise of stock options............................ -- -- -- -- 2,180 Conversion of operating partnership units to common stock.......................... -- -- (206,423) (4,153) 760 Conversion of operating partnership units to cash.................................. -- -- (34,046) (681) (681) Reallocation of operating partnership units.................................... -- -- 1,465,926 29,318 -- Deferred compensation...................... -- -- -- -- (3,270) Deferred compensation amortization......... -- -- -- -- 1,022 Reallocation of interests and our other~~........~~ ~~-- -- -- (237) 3,385 Distributions~~offices.............................. -- (5,479) -- (8,688) (146,972) --------- -------- --------- -------- ---------- BALANCE AT DECEMBER 31, 2000............... 1,300,000 62,319 5,827,917 115,654 1,945,903 Contributions.............................. 800,000 38,906 -- -- 38,906 Comprehensive income: Net Income................................. -- 6,481 -- 7,703 Preferred unit redemption premium.......... -- -- -- -- Reversal of unrealized loss on securities............................... -- -- -- 230 Total comprehensive income............... 151,699 Issuance of common limited partnership units in connection with issuance of restricted stock......................... -- -- -- -- 5,853 Issuance of common limited partnership units in connection with the exercise of stock options............................ -- -- -- -- 4,274 Conversion of operating partnership units to common stock.......................... -- -- (635,798) (12,650) 2,605 Conversion of operating partnership units to cash.................................. -- -- (223,092) (4,343) (4,343) Retirement of operating partnership units.................................... -- -- -- -- (32,892) Deferred compensation...................... -- -- -- -- (5,853) Deferred compensation amortization......... -- -- -- -- 2,725 Reallocation of interests.................. -- -- -- 256 -- Distributions.............................. -- (6,481) -- (8,065) (156,525) --------- -------- --------- -------- ---------- BALANCE AT DECEMBER 31, 2001............... 2,100,000 $101,225 4,969,027 $ 98,785 $1,952,352 ========= ======== ========= ======== ==========

~~DEPRECIATION~~ Our ~~AND~~strategy ~~AMORTIZATION~~focuses ~~EXPENSES~~on ~~ESTIMATED~~providing ~~LIVES~~industrial ~~2001~~distribution warehouse ~~2000~~space ~~1999~~to ~~--------------------------------------~~customers ~~-------------------------~~whose ~~--------~~businesses ~~-------~~are ~~-------~~tied ~~Building~~to ~~costs....................~~global trade 40and $who ~~73,462~~value ~~$62,097~~the ~~$54,198~~efficient ~~Buildings~~movement ~~and~~of ~~improvements:~~goods ~~Roof/HVAC/parking~~through ~~lots~~the global supply chain.~~.........~~ 10Our ~~3,836~~properties ~~2,404~~are ~~1,106~~primarily ~~Plumbing/signage................~~located 7in ~~805~~the world’s ~~484~~busiest ~~144~~distribution ~~Painting~~markets: ~~and~~large, supply-constrained ~~other..............~~infill 5locations ~~7,664~~with ~~6,345~~dense 2populations and proximity to airports,~~546~~ ~~Tenant~~seaports ~~improvements...............~~and ~~Term~~major ofhighway ~~the~~systems. ~~related~~When measured ~~lease~~by ~~12,305~~annualized ~~9,165~~base 4rent,~~091~~ ~~Lease~~on ~~commissions.................~~an ~~Term~~owned and managed basis, a substantial majority of ~~the~~our ~~related~~portfolio ~~lease~~of ~~11,311~~industrial ~~8,641~~properties is ~~3,902~~located ~~--------~~in ~~-------~~our ~~-------~~target ~~Total~~markets ~~real~~and ~~estate~~much ~~depreciation..~~of ~~109,383~~this ~~89,136~~is ~~65,987~~in ~~Other~~infill submarkets ~~depreciation~~within ~~and~~our ~~amortization~~target markets... ~~Various~~Infill ~~2,031~~locations ~~1,222~~are characterized ~~1,048~~by ~~--------~~supply ~~-------~~constraints ~~-------~~on ~~Total~~the ~~depreciation~~availability ~~and~~of ~~amortization...............~~land for ~~$111,414~~competing ~~$90,358~~projects ~~$67~~as well as physical,~~035~~ ~~========~~political ~~=======~~or economic ~~=======~~barriers to new development.

~~2001~~ In ~~2000~~many ~~1999~~of ~~-------~~our ~~-------~~target ~~-------~~markets, ~~Rental~~we ~~revenues.........................................~~focus ~~$20~~on HTD® facilities,~~203~~ ~~$16,990~~which ~~$15,993~~are ~~Property~~buildings ~~operating~~designed ~~expenses~~to facilitate the rapid distribution of our customers’ products rather than the storage of goods. Our investment focus on HTD® assets is based on what we believe to be a global trend toward lower inventory levels and ~~real~~expedited ~~estate~~supply ~~taxes~~chains.~~......~~ HTD® facilities ~~(8,067)~~generally ~~(6,289)~~have ~~(5,691)~~a ~~-------~~variety ~~-------~~of physical characteristics that allow for the rapid transport of goods from point-to-~~-----~~point. These ~~Net~~physical ~~operating~~characteristics ~~income..................................~~could ~~12,136~~include ~~10,701~~numerous 10dock doors,~~302~~ ~~Depreciation~~shallower ~~expense....................................~~building (1depths,~~864)~~ ~~(2,206)~~fewer (2columns,~~161)~~ ~~Interest~~large ~~expense~~truck courts and more space for trailer parking.~~.......................................~~ ~~(3,546)~~We ~~(4,216)~~believe ~~(3,870)~~that ~~-------~~these building ~~-------~~characteristics ~~-------~~help ~~Net~~our ~~income~~customers to reduce their costs and become more efficient in their delivery systems.~~...........................................~~ $Our customers 6include air express,~~726~~ $logistics 4and freight forwarding companies that have time-sensitive needs,~~279~~ $and 4that value facilities located in convenient proximity to transportation infrastructure,~~271~~ ~~=======~~such ~~=======~~as ~~=======~~major airports and seaports.

2001 2000 ---------- ---------- OP secured debt, varying interest rates from 4.0% to 10.4% due July 2002 to April 2014 (weighted average interest rate of 8.1% as of December 31, 2001)..................... $ 453,954 $ 568,650 Joint venture secured debt, varying interest rates from 5.9% to 10.6% due February 2002 to June 2023 (weighted average interest rate of 7.1% as of December 31, 2001)............ 759,374 361,768 Unsecured senior debt securities, weighted average interest rate of 7.3%, due June 2005 to June 2018.................. 780,000 680,000 Unsecured credit facility, variable interest at LIBOR plus 0.75% (interest rate of 2.8% as of December 31, 2001), due May 2003.................................................. 12,000 216,000 Alliance Fund II credit facility, variable interest at LIBOR plus 0.875% (weighted average interest rate of 2.8% as of December 31, 2001)........................................ 123,500 -- ---------- ---------- Subtotal............................................. 2,128,828 1,826,418 Unamortized premiums...................................... 6,836 9,858 ---------- ---------- Total consolidated debt.............................. $2,135,664 $1,836,276 ========== ==========

JOINTTable UNSECUREDof VENTURE SENIOR SECURED SECURED DEBT CREDIT DEBT DEBT SECURITIES FACILITIES TOTAL -------- -------- ---------- ---------- ---------- 2002........................... $ 28,193 $ 68,505 $ -- $ -- $ 96,698 2003........................... 76,295 13,577 -- 135,500 225,372 2004........................... 65,284 47,607 -- -- 112,891 2005........................... 62,826 37,796 250,000 -- 350,622 2006........................... 94,965 74,115 25,000 -- 194,080 2007........................... 30,198 25,682 55,000 -- 110,880 2008........................... 33,619 147,552 175,000 -- 356,171 2009........................... 5,176 32,351 -- -- 37,527 2010........................... 52,780 71,966 75,000 -- 199,746 2011........................... 1,311 167,878 75,000 -- 244,189 Thereafter..................... 3,307 72,345 125,000 -- 200,652 -------- -------- -------- -------- ---------- $453,954 $759,374 $780,000 $135,500 $2,128,828 ======== ======== ======== ======== ==========Contents

~~2001~~ As ~~2000~~of ~~1999~~December 31, ~~---------~~2008, ~~--------~~we ~~--------~~owned, ~~Net~~or ~~income~~had ~~available~~investments toin, on ~~common~~a ~~unitholders..........~~consolidated $basis ~~132,756~~or ~~$121,324~~through ~~$176~~unconsolidated co-investment ventures,~~392~~ ~~Add:~~properties ~~Book depreciation~~ and ~~amortization...........~~development ~~111,414~~projects ~~90,358~~expected ~~67,035~~to ~~Less:~~total approximately ~~Tax~~160.0 million ~~depreciation~~square ~~and~~feet ~~amortization~~(14.~~..........~~9 million square ~~(117,400~~meters) ~~(87,338)~~in ~~(69,264)~~49 ~~Book/tax~~markets ~~difference~~within on15 ~~gain~~countries. onAdditionally, as ~~divestiture~~ of ~~real estate.................................. (7~~December 31,~~563)~~ 242008,~~688~~ ~~(15~~we managed,~~001)~~ ~~Other~~but ~~book/tax~~did ~~differences,~~not ~~net(1).............~~have ~~11,458~~an ownership ~~(11,055)~~interest ~~(12~~in,~~012)~~ ~~---------~~industrial ~~--------~~and ~~--------~~other ~~Taxable~~properties ~~income~~totaling approximately ~~available to common unitholders~~1.~~.....~~1 million $rentable ~~130,665~~square ~~$137,977 $147,150 ========= ======== ========~~feet.

~~MINORITY~~ Of ~~INTEREST~~the ~~MINORITY~~approximately INTEREST SHARE OF LIABILITY NET INCOME FOR THE YEARS ENDED AS OF DECEMBER 31, DECEMBER 31, ------------------- ------------------------------ 2001 2000 2001 2000 1999 -------- -------- -------- -------- -------- Joint venture partners160.~~....................~~0 million ~~$359,514~~square ~~$240,671~~feet ~~$27,156~~as ~~$12,306 $ 5,721 Held through AMB Property II, L.P.: Series C Preferred Units................. -- 105,845 8,540 9,624 9,624 Series D Preferred Units (liquidation preference~~ of $79,767)................ 77,687 77,687 6,180 6,180 3,949 Series E Preferred Units (liquidation preference of $11,022)................ 10,788 10,789 856 856 320 Series F Preferred Units (liquidation preference of $19,872)................ 19,597 19,534 1,580 1,228 -- Series G Preferred Units (liquidation preference of $1,000)................. 954 957 80 27 -- Series H Preferred Units (liquidation preference of $42,000)................ 40,915 40,922 3,412 1,090 -- Series I Preferred Units (liquidation preference of $25,500)................ 24,821 -- 1,553 -- -- -------- -------- ------- ------- ------- $534,276 $496,405 $49,357 $ December 31,~~311~~ ~~$19,614 ======== ======== ======= ======= =======~~2008:

~~SECURITY~~• ~~PAYING~~on ~~ENTITY~~an ~~2001~~owned ~~2000~~and ~~1999~~managed ~~--------~~basis, ~~---------------------~~which ~~-----~~includes ~~-----~~investments ~~-----~~held ~~Common~~on ~~limited~~a ~~partnership~~consolidated ~~units~~basis ~~Operating~~or ~~Partnership~~through ~~$1.58~~unconsolidated ~~$1.48~~joint ~~$1.40~~ventures, ~~Series~~we Aowned ~~Preferred~~or ~~Units~~partially ~~Operating~~owned ~~Partnership~~approximately $2131.135 ~~$2.13~~million ~~$2.13~~square ~~Series~~feet B(principally, ~~Preferred~~warehouse ~~Units~~distribution ~~Operating~~buildings) ~~Partnership~~that ~~$4.31~~were $495.311% ~~$4.31~~leased; ~~Series~~we Chad ~~Preferred~~investments ~~Units~~in ~~AMB~~53 ~~Property~~development IIprojects, ~~L.P.~~which ~~$3.88~~are ~~$4.38~~expected ~~$4.38~~to ~~Series~~total Dapproximately ~~Preferred~~16.4 ~~Units~~million ~~AMB~~square ~~Property~~feet ~~II,~~upon ~~L.P.~~completion; ~~$3.88~~and ~~$3.88~~we ~~$2.48~~owned ~~Series~~16 Edevelopment ~~Preferred~~projects, ~~Units~~totaling ~~AMB~~approximately ~~Property~~4.6 ~~II,~~million ~~L.P.~~square ~~$3.88~~feet, ~~$3.88~~which ~~$1.30~~are ~~Series~~available Ffor ~~Preferred~~sale ~~Units~~or ~~AMB~~contribution; ~~Property~~• ~~II,~~through ~~L.P.~~non-managed ~~$3.98~~unconsolidated ~~$3.09~~joint ~~n/a~~ventures, ~~Series~~we Ghad ~~Preferred~~investments ~~Units~~in ~~AMB~~46 ~~Property~~industrial IIoperating properties, ~~L.P.~~totaling ~~$3.98~~approximately $17.354 ~~n/a~~million ~~Series~~square Hfeet; ~~Preferred~~and ~~Units~~• ~~AMB~~we ~~Property~~held ~~II,~~approximately L0.~~P. $4.06 $~~1~~.30~~ ~~n/a~~million ~~Series~~square Ifeet ~~Preferred~~through ~~Units~~a ~~AMB~~ground ~~Property II~~lease, ~~L.P.~~which ~~$3.04~~is ~~n/a~~the ~~n/a~~location ~~Series~~of Jour ~~Preferred~~global ~~Units Operating Partnership $1~~headquarters.~~24 n/a n/a~~

~~2001~~ We ~~2000~~believe ~~1999~~that ~~----------~~real ~~----------~~estate ~~----------~~is ~~WEIGHTED~~fundamentally ~~AVERAGE~~a ~~COMMON~~local ~~UNITS~~business and ~~Basic~~is best operated by local teams in each of our markets.~~.........................................~~ ~~89,286,379~~As ~~89,566,375~~a vertically 90integrated company,~~792,310~~ ~~Stock~~we ~~options~~actively ~~and~~manage ~~restricted~~our ~~stock~~portfolio of properties.~~............~~ 1In select markets,~~039,422~~ ~~458~~we may,~~136~~ 75from time to time,~~624~~ establish ~~----------~~relationships with third-~~---------~~party real estate management firms, brokers and developers that provide some property-~~---------~~level administrative ~~Diluted~~and management services under our direction.~~....................................~~ ~~90,325,801~~We offer ~~90,024,511~~a 90broad array of service offerings,~~867,934~~ ~~==========~~including ~~==========~~access ~~==========~~to multiple locations worldwide and build-to-suit developments.

~~QUARTER~~ Long ~~(UNAUDITED)(1)~~Term Growth ------------------------------------------------------ MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 YEAR ----------- ----------- ------------ ----------- ----------- (DOLLARS IN THOUSANDS) 2001 Total revenues.............. $ 144,834 $ 146,026 $ 155,457 $ 154,528 $ 600,845 Income before minority interests and gains....... 40,670 29,553 49,355 46,094 165,672 Minority interests' share of income.................... (9,820) (12,989) (14,699) (11,849) (49,357) Net gains from dispositions of real estate............ 16,767 17,792 114 1,755 36,428 Extraordinary items (early debt extinguishments)..... -- (438) 87 (255) (606) ----------- ----------- ----------- ----------- ----------- Net income................ 47,617 33,918 34,857 35,745 152,137 Series A preferred unit distributions............. (2,125) (2,125) (2,125) (2,125) (8,500) Series B preferred unit distributions............. (1,402) (1,402) (1,402) (1,402) (5,608) Series J preferred unit distributions............. -- -- (78) (795) (873) Preferred unit redemption premium................... -- -- -- (4,400) (4,400) ----------- ----------- ----------- ----------- ----------- Net income available to common unitholders..... $ 44,090 $ 30,391 $ 31,252 $ 27,023 $ 132,756 =========== =========== =========== =========== =========== NET INCOME PER COMMON UNIT(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 UNITS OUTSTANDING Basic..................... 89,669,950 89,691,164 89,550,154 88,243,249 88,915,176 =========== =========== =========== =========== =========== Diluted................... 90,494,874 90,608,347 90,799,887 89,317,086 89,954,598 =========== =========== =========== =========== ===========Strategies

~~QUARTER~~ Growth through (UNAUDITED) ------------------------------------------------------ MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31 YEAR ----------- ----------- ------------ ----------- ----------- (DOLLARS IN THOUSANDS) 2000 Total revenues.............. $ 110,323 $ 113,479 $ 121,371 $ 135,034 $ 480,207 Income before minority interests and gains (losses).................. 40,465 39,774 42,116 43,244 165,599 Minority interests' share of income.................... (6,065) (6,866) (9,208) (9,172) (31,311) Net gains (losses) from dispositions of real estate.................... (11) 416 5,815 (5,076) 1,144 ----------- ----------- ----------- ----------- ----------- Net income................ 34,389 32,324 38,723 28,996 135,432 Series A preferred unit distributions............. (2,125) (2,125) (2,125) (2,125) (8,500) Series B preferred unit distributions............. (1,402) (1,402) (1,402) (1,402) (5,608) ----------- ----------- ----------- ----------- ----------- Net income available to common unitholders..... $ 30,862 $ 29,797 $ 35,196 $ 25,469 $ 121,324 =========== =========== =========== =========== =========== NET INCOME PER COMMON UNIT(2) Basic..................... $ 0.34 $ 0.33 $ 0.39 $ 0.28 $ 1.35 =========== =========== =========== =========== =========== Diluted................... $ 0.34 $ 0.33 $ 0.39 $ 0.28 $ 1.35 =========== =========== =========== =========== =========== WEIGHTED AVERAGE COMMON UNITS OUTSTANDING Basic..................... 89,693,900 89,822,498 89,898,511 89,619,042 89,566,375 =========== =========== =========== =========== =========== Diluted................... 89,707,941 90,098,892 90,508,007 90,332,931 90,024,511 =========== =========== =========== =========== ===========Operations

~~RENTAL~~ We ~~REVENUES(1)~~seek ~~PROPERTY~~to ~~NOI(1)(2)~~generate long-~~-----------------------------~~term ~~------------------------------~~internal ~~SEGMENTS~~growth ~~2001~~through ~~2000~~rent increases ~~1999~~on ~~2001~~existing ~~2000~~space ~~1999~~and ~~--------~~renewals ~~--------~~on ~~--------~~rollover ~~--------~~space, striving ~~--------~~to ~~--------~~maintain ~~--------~~a ~~Industrial~~high ~~hub~~occupancy &rate ~~gateway~~at ~~markets:~~our ~~Atlanta.....................~~properties $and to ~~28,268~~control $expenses ~~23,458~~by $capitalizing ~~17,085~~on $the ~~27,726~~economies $of ~~19,368~~scale inherent $in 13owning,~~932~~ ~~Chicago.....................~~operating ~~41,195~~and ~~38,228~~growing ~~35,155~~a 28large,~~389~~ ~~26,447 24,887 Dallas/Fort Worth~~global portfolio.~~..........~~ ~~25,210~~We ~~24,081~~actively ~~20,177~~manage ~~17,641~~our 16portfolio,~~984~~ ~~14,003~~whether ~~Northern~~directly ~~New~~or with ~~Jersey/New~~an ~~York~~alliance ~~City..................... 44~~partner,~~924~~ ~~34,618~~by ~~19,626~~establishing ~~31,648~~leasing ~~26,444~~strategies ~~15,568~~and negotiating ~~San~~lease ~~Francisco Bay Area...... 106~~terms,~~229~~ 79pricing,~~155~~ ~~59,741~~and ~~88,925~~level ~~64,972~~and ~~47,673~~timing ~~Southern~~of property ~~California~~improvements.~~........~~ ~~61,627~~We ~~37,187~~believe ~~29,207~~that ~~49,102~~our ~~30,366 23,812 Miami....................... 33,176 22,853 15,741 24,366 16,775 12,349 Seattle..................... 23,229 22,081 12,587 18,634 18,048 10,392~~ long-~~-------~~standing ~~--------~~focus on ~~--------~~customer ~~--------~~relationships ~~--------~~and ~~--------~~ability ~~Total~~to ~~hub~~provide &global solutions ~~gateway~~in ~~markets................~~fifteen ~~363,858~~countries ~~281,661~~for ~~209,319~~a ~~281,431 219,404 162,616 Total other industrial markets..................... 169,684 145,516 134,778 122,124 107,568 98,011~~ well-~~-------~~diversified ~~--------~~customer base ~~--------~~in ~~--------~~the ~~-------- -------- Total industrial markets.... 533~~shipping,~~542~~ ~~427,177~~air ~~344,097~~cargo ~~403,555~~and ~~326,972~~logistics ~~260,627~~industries ~~Total~~will enable ~~retail~~us ~~markets..........~~to ~~24,431~~capitalize ~~26,784~~on ~~84,713~~opportunities ~~16,222~~as ~~19,259~~they ~~60,260 -------- -------- -------- -------- -------- -------- Total properties~~arise.~~...... $557,973 $453,961 $428,810 $419,777 $346,231 $320,887 ======== ======== ======== ======== ======== ========~~

~~TOTAL~~ We ~~GROSS~~believe ~~INVESTMENT(1)~~that ASour OFproperties ~~DECEMBER~~benefit ~~31,~~from ~~-------------------------~~cost ~~2001~~efficiencies produced ~~2000~~by ~~-----------~~an experienced, cycle-~~----------~~tested ~~Industrial~~operations ~~hub~~team attentive &to ~~gateway~~preventive ~~markets:~~maintenance ~~Atlanta...................................................~~and $energy ~~271,663~~management $and from ~~225,555~~our ~~Chicago...................................................~~ongoing ~~330,127~~programs ~~295,398~~to ~~Dallas/Fort~~ensure ~~Worth.........................................~~that ~~171,263~~our ~~189,265~~property ~~Northern~~management personnel ~~New~~remain ~~Jersey/New~~focused ~~York~~on ~~City~~customer relations.~~........................~~ ~~406,077~~Our ~~313,739~~goal ~~San~~is ~~Francisco~~to be ~~Bay~~well-situated ~~Area....................................~~to ~~806,528~~attract ~~641,142~~new ~~Southern~~customers ~~California.......................................~~and ~~694,602~~achieve ~~554,671~~solid rental ~~Miami.....................................................~~rates ~~288,046~~as ~~281,710~~a ~~Seattle...................................................~~result ~~193,154~~of ~~185,150~~properties ~~----------~~that are well-located, well-~~--------~~designed ~~Total~~and ~~hub & gateway markets............................. 3~~well-maintained,~~161,460~~ ~~2,686,630~~a ~~Total~~reputation ~~other~~for ~~industrial markets.............................. 1,321,959 1,160,433~~ high-~~---------~~quality building ~~----------~~services ~~Total~~and ~~industrial~~responsiveness ~~markets..................................~~to ~~4,483,419~~customers ~~3,847,063~~and ~~Total~~an ~~retail~~ability to ~~markets........................................~~offer 47expansion,~~292~~ ~~179,534~~consolidation ~~----------~~and ~~----------~~relocation ~~Total~~alternatives within ~~properties......................................~~our ~~$4,530,711 $4,026,597 ========== ==========~~submarkets.

~~FOR~~ Growth through THE YEARS ENDED DECEMBER 31, ---------------------------------- 2001 2000 1999 ---------- --------- --------- RENTAL REVENUES Total rental revenues for reportable segments............... $ 557,973 $453,961 $428,810 Straight-line rents......................................... 10,093 10,203 10,848 --------- -------- -------- Total rental revenues................................... $ 568,066 $464,164 $439,658 ========= ======== ======== INCOME BEFORE MINORITY INTERESTS AND NET GAINS FROM DISPOSITION OF REAL ESTATE Property net operating income for reportable segments....... $ 419,777 $346,231 $320,887 Straight-line rents......................................... 10,093 10,203 10,848 Equity in earnings of unconsolidated joint ventures......... 5,467 5,212 4,701 Investment management income................................ 10,972 4,282 1,511 Other income................................................ 16,340 6,549 2,313 Less: Interest, including amortization.......................... (128,985) (90,270) (88,681) Depreciation and amortization............................. (111,414) (90,358) (67,035) General, administrative, and other........................ (35,820) (23,750) (25,223) Loss on investments in other companies.................... (20,758) (2,500) -- --------- -------- -------- Income before minority interests and gains.............. $ 165,672 $165,599 $159,321 ========= ======== ========Development

~~INITIAL~~ We ~~COST~~think TOthat ~~COMPANY~~the ------------------------- COSTS CAPITALIZED NO. OF BUILDING & SUBSEQUENT TO PROPERTY BLDGS./CTRS. LOCATION TYPE ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION -------- ------------ -------- ---- ------------ ---------- ------------ ----------------- (IN THOUSANDSdevelopment, ~~EXCEPT~~redevelopment ~~NUMBER~~and OFexpansion BUILDINGS/CENTERS) Acer Distribution Center..... 1 CA IND $ 0 $ 3,146 $ 9,479 $ 1,295 Activity Distribution Center...................... 4 CA IND 4,925 3,736 11,248 1,130 Addison Business Center...... 1 IL IND of well-~~- 1~~located,~~060~~ ~~3,228 83 Addison Technology Center.... 1 TX IND~~ high--quality ~~899~~industrial ~~2,696~~properties ~~494~~provide ~~Airport~~us ~~South~~with attractive ~~Business~~investment ~~Park........................~~opportunities 4at GAhigher ~~IND~~rates ~~17,629~~of ~~7,718~~return than ~~14,658~~may ~~214~~be ~~Albrae~~obtained ~~Business~~from ~~Center.......~~the 1purchase CAof ~~IND~~existing ~~-- 6,299 6,227 38 Alsip Industrial~~properties.~~............~~ Through 1the ILdeployment ~~IND~~of --our ~~1,200 3,744 233 Alvarado Business Center..... 5 CA IND 21,710 7,783 23,757 485 AMB Meadowlands Park......... 9 NJ IND~~ in--house ~~5,838~~development ~~17,923~~and redevelopment ~~803 AMB O'Hare Rosemont.......... 14 IL IND 8~~expertise,~~000~~ ~~3,131~~we ~~8,995~~seek ~~742~~to ~~AMB~~create ~~Port~~value ~~O'Hare..............~~both 2through new ILconstruction ~~IND~~and --the ~~4,913~~acquisition ~~5,761~~and --management ~~Amwiler-Gwinnett~~of redevelopment ~~Industial Portfolio~~opportunities.~~..................~~ ~~9 GA IND 12~~Additionally,~~892~~ ~~6,641~~we ~~19,964~~believe ~~2,346~~that ~~Anaheim~~our historical ~~Industrial...........~~focus 1on CAinfill ~~IND~~locations --creates ~~1,457~~a ~~4,341~~unique opportunity ~~333~~to ~~Ardenwood~~enhance ~~Corporate~~value ~~Park.....~~through 4the CAselect ~~IND~~conversion ~~9,502~~of industrial ~~7,321~~properties ~~22,002~~to ~~1,924~~higher ~~Artesia~~and ~~Industrial~~better ~~Portfolio................... 25 CA IND 51~~uses,~~025~~ ~~22,758~~within ~~68,254 6,095 Arthur Distribution Center... 1 IL IND 4,950 2,726 5,216 20 Atlanta South Business Park........................ 9 GA IND~~ our value--added ~~8,047~~conversion ~~24,180 1,160 Atlantic Business Center (Formerly Peachtree North East)~~business.~~......................~~ ~~3 GA IND~~ Value--added ~~2,197~~conversion ~~6,592~~projects generally ~~1,488~~involve ~~Atlantic~~a ~~Distribution~~significant ~~Center......................~~enhancement 1or GAa ~~IND~~change ~~3,945~~in ~~1,519~~use of ~~4,679~~the ~~106~~property ~~Beacon~~from ~~Centre~~industrial --distribution ~~OP..........~~warehouse 18to FLa higher ~~IND~~and ~~70,552~~better 31use,~~704~~ ~~96,681~~such ~~7,675~~as ~~Beacon Centre -- AF I........ 4 FL IND 17~~office,~~618~~ ~~7,229~~retail ~~22,238~~or ~~466 Beacon Centre -- Headlands~~residential... New ~~2 FL RET -- 4~~developments,~~692~~ ~~14,373~~redevelopments 52and ~~Beacon Industrial Park....... 8 FL IND 17,006 10,466 31,437 6,486 Bedford Warehouse............ 1 IL IND~~ value--added ~~1,354~~conversions require 3,225 -- Belden Avenue................ 3 IL IND 10,930 4,812 15,186 493 Bell Ranch Distribution...... 5 CA IND -- 6,904 12,915 22 Beltway Distribution......... 1 VA IND -- 4,800 15,159 5,253 Bennington Corporate Center...................... 2 MD IND -- 2,671 8,181 962 Bensenville Industrial Park........................ 13 IL IND 38,663 20,799 62,438 6,958 Black River.................. 1 WA IND -- 1,845 3,559 62 Blue Lagoon Business Park.... 2 FL IND 11,001 4,945 14,875 797 GROSS AMOUNT CARRIED AT 12/31/01 --------------------------------------- YEAR OF BUILDING & TOTAL ACCUMULATED CONSTRUCTION/ DEPRECIABLE LIFE PROPERTY LAND IMPROVEMENTS COSTS(1)(2) DEPRECIATION ACQUISITION (YEARS) -------- ---------- ------------ ----------- ------------ ------------- ---------------- (IN THOUSANDS, EXCEPT NUMBER OF BUILDINGS/CENTERS) Acer Distribution Center..... $ 3,146 $ 10,773 $ 13,920 $ 850 1997 5-40 Activity Distribution Center...................... 3,736 12,378 16,115 984 1997 5-40 Addison Business Center...... 1,060 3,311 4,371 267 2000 5-40 Addison Technology Center.... 899 3,191 4,090 250 1998 5-40 Airport South Business Park........................ 7,718 14,872 22,589 1,380 2001 5-40 Albrae Business Center....... 6,299 6,266 12,564 767 2001 5-40 Alsip Industrial............. 1,200 3,977 5,177 316 1998 5-40 Alvarado Business Center..... 7,783 24,242 32,025 1,956 1997 5-40 AMB Meadowlands Park......... 5,838 18,727 24,564 1,500 2000 5-40 AMB O'Hare Rosemont.......... 3,131 9,737 12,868 786 1999 5-40 AMB Port O'Hare.............. 4,913 5,761 10,675 652 2001 5-40 Amwiler-Gwinnett Industial Portfolio................... 6,641 22,310 28,951 1,768 1997 5-40 Anaheim Industrial........... 1,457 4,674 6,130 374 1997 5-40 Ardenwood Corporate Park..... 7,321 23,926 31,246 1,908 1997 5-40 Artesia Industrial Portfolio................... 22,758 74,349 97,107 5,931 1997 5-40 Arthur Distribution Center... 2,726 5,236 7,961 486 2001 5-40 Atlanta South Business Park........................ 8,047 25,340 33,386 2,039 1997 5-40 Atlantic Business Center (Formerly Peachtree North East)....................... 2,197 8,079 10,277 628 1998 5-40 Atlantic Distribution Center...................... 1,519 4,786 6,305 385 2000 5-40 Beacon Centre -- OP.......... 31,705 104,355 136,060 8,310 2000 5-40 Beacon Centre -- AF I........ 7,230 22,703 29,933 1,828 2000 5-40 Beacon Centre -- Headlands... 4,692 14,425 19,117 1,168 2000 5-40 Beacon Industrial Park....... 10,466 37,923 48,389 2,955 1997 5-40 Bedford Warehouse............ 1,354 3,225 4,579 280 2001 5-40 Belden Avenue................ 4,812 15,678 20,491 1,251 1997 5-40 Bell Ranch Distribution...... 6,904 12,937 19,840 1,212 2001 5-40 Beltway Distribution......... 4,800 20,412 25,212 1,540 1999 5-40 Bennington Corporate Center...................... 2,671 9,144 11,815 722 2000 5-40 Bensenville Industrial Park........................ 20,799 69,396 90,195 5,509 1997 5-40 Black River.................. 1,845 3,622 5,466 334 2001 5-40 Blue Lagoon Business Park.... 4,945 15,672 20,617 1,259 1997 5-40significant

INITIAL COST TO COMPANY ------------------------- COSTS CAPITALIZED NO. OF BUILDING & SUBSEQUENT TO PROPERTY BLDGS./CTRS. LOCATION TYPE ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION -------- ------------ -------- ---- ------------ ---------- ------------ ----------------- (IN THOUSANDS, EXCEPT NUMBER OF BUILDINGS/CENTERS) Boston Industrial Portfolio................... 20 MA IND 19,056 19,320 56,900 16,155 Braemar Business Center...... 2 MA IND -- 1,422 4,613 685 Brennan Distribution......... 1 CA IND -- 3,683 3,022 -- Bridgeview Industrial (Formerly Lake Michigan Industrial)................. 1 IL IND -- 1,332 3,996 11 Burnsville Business Center... 1 MN IND -- 932 2,796 1,028 BWI Air Cargo Centre......... 1 MD IND 3,035 -- 6,367 86 Cabot Business Park.......... 16 MA IND -- 17,231 51,726 20,082 Cabot Business Park (KYKJ)... 2 MA IND -- 1,396 2,310 15,365 Carson Industrial............ 12 CA IND -- 4,231 10,418 3,561 Cascade Business Center...... 4 OR IND -- 2,825 7,860 1,966 Central Bay.................. 2 CA IND 7,400 3,896 7,400 330 Chancellor................... 1 FL IND 2,707 1,587 4,802 213 Chancellor Square............ 3 FL IND 15,636 7,575 22,721 2,453 Charles and Chase............ 1 MD RET -- 751 2,287 10 Chartwell Distribution Center...................... 1 CA IND -- 2,711 8,191 32 Chemway Industrial Portfolio................... 5 NC IND -- 2,875 8,625 860 Chicago Industrial Portfolio................... 1 IL IND 1,634 762 2,285 231 Chicago Ridge Freight Terminal.................... 1 IL IND -- 3,705 3,576 -- Chicago/O'Hare Industrial Portfolio................... 5 IL IND -- 4,816 9,603 75 Circle Freeway............... 1 OH IND -- 530 1,591 574 Columbia Business Center..... 9 MD IND 4,026 3,856 11,736 1,493 Component Drive Ind Port..... 3 CA IND -- 12,688 6,974 323 Concord Industrial Portfolio................... 10 CA IND 9,883 3,872 11,647 1,859 Corporate Park/Hickory Hill........................ 7 TN IND 16,137 6,789 20,366 853 Corporate Square Industrial.................. 6 MN IND -- 4,024 12,113 1,376 Corridor Industrial.......... 1 MD IND 2,433 996 3,019 133 Crysen Industrial............ 1 DC IND 2,823 1,425 4,275 668 D/FW Int'l Air Cargo -- AF I........................... 1 TX IND 4,700 -- 19,683 1,830 D/FW Air Cargo 2............. 1 TX IND -- -- 4,286 13,779 GROSS AMOUNT CARRIED AT 12/31/01 --------------------------------------- YEAR OF BUILDING & TOTAL ACCUMULATED CONSTRUCTION/ DEPRECIABLE LIFE PROPERTY LAND IMPROVEMENTS COSTS(1)(2) DEPRECIATION ACQUISITION (YEARS) -------- ---------- ------------ ----------- ------------ ------------- ---------------- (IN THOUSANDS, EXCEPT NUMBER OF BUILDINGS/CENTERS) Boston Industrial Portfolio................... 19,320 73,055 92,375 5,642 1998 5-40 Braemar Business Center...... 1,422 5,297 6,720 410 1998 5-40 Brennan Distribution......... 3,683 3,022 6,705 410 2001 5-40 Bridgeview Industrial (Formerly Lake Michigan Industrial)................. 1,332 4,007 5,339 326 1997 5-40 Burnsville Business Center... 932 3,824 4,757 291 1998 5-40 BWI Air Cargo Centre......... 0 6,453 6,453 394 2000 5-40 Cabot Business Park.......... 21,118 67,921 89,039 5,438 1998 5-40 Cabot Business Park (KYKJ)... 1,396 17,674 19,070 1,165 1998 5-40 Carson Industrial............ 4,231 13,980 18,211 1,112 1999 5-40 Cascade Business Center...... 2,825 9,826 12,651 773 1998 5-40 Central Bay.................. 3,896 7,731 11,626 710 2001 5-40 Chancellor................... 1,587 5,016 6,603 403 1997 5-40 Chancellor Square............ 7,575 25,174 32,749 2,000 1998 5-40 Charles and Chase............ 751 2,297 3,047 186 1998 5-40 Chartwell Distribution Center...................... 2,711 8,223 10,934 668 2000 5-40 Chemway Industrial Portfolio................... 2,875 9,485 12,360 755 1998 5-40 Chicago Industrial Portfolio................... 762 2,516 3,278 200 1997 5-40 Chicago Ridge Freight Terminal.................... 3,705 3,576 7,282 445 2001 5-40 Chicago/O'Hare Industrial Portfolio................... 4,816 9,678 14,495 885 2001 5-40 Circle Freeway............... 530 2,166 2,696 165 1998 5-40 Columbia Business Center..... 3,856 13,229 17,085 1,043 1999 5-40 Component Drive Ind Port..... 12,688 7,297 19,985 1,221 2001 5-40 Concord Industrial Portfolio................... 3,872 13,506 17,378 1,061 1999 5-40 Corporate Park/Hickory Hill........................ 6,789 21,219 28,008 1,711 1998 5-40 Corporate Square Industrial.................. 4,024 13,489 17,513 1,070 1997 5-40 Corridor Industrial.......... 996 3,152 4,147 253 1999 5-40 Crysen Industrial............ 1,425 4,943 6,368 389 1998 5-40 D/FW Int'l Air Cargo -- AF I........................... 0 21,513 21,513 1,314 1999 5-40 D/FW Air Cargo 2............. 0 18,065 18,065 1,103 1999 5-40

INITIALTable COSTof TO COMPANY ------------------------- COSTS CAPITALIZED NO. OF BUILDING & SUBSEQUENT TO PROPERTY BLDGS./CTRS. LOCATION TYPE ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION -------- ------------ -------- ---- ------------ ---------- ------------ ----------------- (IN THOUSANDS, EXCEPT NUMBER OF BUILDINGS/CENTERS) Dado Distribution............ 1 CA IND -- 7,221 3,739 23 Dallas Industrial (Formerly Taxas Industrial Fortfolio).................. 12 TX IND -- 5,938 17,836 3,402 Dayton Air Cargo Centre...... 5 OH IND 6,810 -- 7,163 324 Del Amo Industrial Center.... 1 CA IND -- 2,529 7,651 37 DFW Air Cargo Centre......... 3 TX IND 6,234 -- 20,632 139 DFW Airfreight Portfolio..... 6 TX IND 6,800 950 8,492 400 Diablo Industrial Park....... 14 CA IND 9,539 3,653 10,045 1,598 Dixie Highway................ 2 KY IND -- 1,700 5,149 120 Dock's Corner................ 1 NJ IND 36,869 5,125 22,516 26,973 Dock's Corner II............. 1 NJ IND -- 2,272 6,917 349 Doolittle Distribution Center...................... 1 CA IND -- 2,644 8,014 137 Dowe Industrial Center....... 2 CA IND -- 2,665 8,034 1,263 Dublin Industrial Portfolio................... 1 CA IND -- 2,980 9,042 117 Dulles Airport -- Alliance... 1 VA IND 8,453 767 3,669 885 East Bay Doolittle........... 1 CA IND -- 7,128 11,023 416 East Bay Whipple............. 1 CA IND 7,000 5,333 8,126 2 East Valley Warehouse........ 1 WA IND -- 6,813 20,511 1,294 Eaves Distribution Center.... 3 CA IND 8,327 11,893 12,708 -- Edenvale Business Center..... 1 MN IND -- 919 2,411 667 Edgewater Industrial Center...................... 1 CA IND -- 4,038 15,113 2,551 Elk Grove Village Industrial.................. 10 IL IND 18,381 6,874 21,143 1,083 Elmwood Business Park........ 5 LA IND -- 4,163 12,488 1,193 Empire Drive................. 1 KY IND -- 1,590 4,815 252 Executive Drive.............. 1 IL IND -- 1,399 4,236 672 Fairway Drive Industrial..... 4 CA IND 10,829 4,233 9,677 3,383 Ford Distribution Cntr....... 8 CA IND -- 25,443 23,529 -- Fordyce Distribution Center...................... 1 CA IND 7,600 4,340 8,335 255 Garland Industrial........... 20 TX IND 19,477 8,161 24,484 4,005 Gateway 58................... 3 MD IND -- 3,256 9,940 9 Gateway Commerce Center...... 5 MD IND -- 4,083 12,336 1,200 Gateway Corporate Center..... 9 WA IND 27,000 9,981 32,201 766 Gateway North................ 6 WA IND 14,000 5,932 18,365 263 GROSS AMOUNT CARRIED AT 12/31/01 --------------------------------------- YEAR OF BUILDING & TOTAL ACCUMULATED CONSTRUCTION/ DEPRECIABLE LIFE PROPERTY LAND IMPROVEMENTS COSTS(1)(2) DEPRECIATION ACQUISITION (YEARS) -------- ---------- ------------ ----------- ------------ ------------- ---------------- (IN THOUSANDS, EXCEPT NUMBER OF BUILDINGS/CENTERS) Dado Distribution............ 7,221 3,762 10,983 671 2001 5-40 Dallas Industrial (Formerly Taxas Industrial Fortfolio).................. 5,938 21,238 27,176 1,660 1997 5-40 Dayton Air Cargo Centre...... 0 7,487 7,487 457 2000 5-40 Del Amo Industrial Center.... 2,529 7,688 10,217 624 2000 5-40 DFW Air Cargo Centre......... 0 20,770 20,770 1,269 2000 5-40 DFW Airfreight Portfolio..... 950 8,892 9,842 601 2000 5-40 Diablo Industrial Park....... 3,653 11,644 15,297 934 1999 5-40 Dixie Highway................ 1,700 5,268 6,969 426 1997 5-40 Dock's Corner................ 12,502 42,112 54,614 3,336 1997 5-40 Dock's Corner II............. 2,272 7,267 9,539 583 1997 5-40 Doolittle Distribution Center...................... 2,644 8,151 10,794 659 2000 5-40 Dowe Industrial Center....... 2,665 9,297 11,962 731 1997 5-40 Dublin Industrial Portfolio................... 2,980 9,158 12,138 741 2000 5-40 Dulles Airport -- Alliance... 767 4,554 5,321 325 2000 5-40 East Bay Doolittle........... 7,128 11,440 18,568 1,134 2001 5-40 East Bay Whipple............. 5,333 8,128 13,462 822 2001 5-40 East Valley Warehouse........ 6,813 21,805 28,618 1,748 1999 5-40 Eaves Distribution Center.... 11,893 12,708 24,601 1,503 2001 5-40 Edenvale Business Center..... 919 3,078 3,997 244 1998 5-40 Edgewater Industrial Center...................... 4,038 17,664 21,701 1,325 2000 5-40 Elk Grove Village Industrial.................. 6,874 22,226 29,100 1,777 1997 5-40 Elmwood Business Park........ 4,163 13,680 17,843 1,090 1998 5-40 Empire Drive................. 1,590 5,066 6,657 407 1997 5-40 Executive Drive.............. 1,399 4,908 6,306 385 1997 5-40 Fairway Drive Industrial..... 4,233 13,061 17,294 1,056 1997 5-40 Ford Distribution Cntr....... 25,443 23,529 48,971 2,991 2001 5-40 Fordyce Distribution Center...................... 4,340 8,590 12,930 790 2001 5-40 Garland Industrial........... 8,161 28,489 36,650 2,238 1998 5-40 Gateway 58................... 3,256 9,949 13,205 807 2000 5-40 Gateway Commerce Center...... 4,083 13,536 17,620 1,076 1999 5-40 Gateway Corporate Center..... 9,981 32,967 42,949 2,623 1999 5-40 Gateway North................ 5,932 18,629 24,560 1,500 1999 5-40Contents

~~INITIAL~~ management COST TO COMPANY ------------------------- COSTS CAPITALIZED NO. OF BUILDING & SUBSEQUENT TO PROPERTY BLDGS./CTRS. LOCATION TYPE ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION -------- ------------ -------- ---- ------------ ---------- ------------ ----------------- (IN THOUSANDSattention, ~~EXCEPT~~and ~~NUMBER~~development OFand ~~BUILDINGS/CENTERS)~~redevelopment ~~Greater~~require significant ~~Dallas~~capital ~~Industrial Portfolio................... 6 TX IND -- 6~~investment,~~269~~ ~~18,414~~to ~~6,589~~maximize ~~Greater~~their ~~Houston Industrial Portfolio~~returns.~~..................~~ Completed 14development TXand ~~IND~~redevelopment --properties ~~6,197~~are ~~18,592~~generally contributed ~~4,715~~to ~~Greenwood~~our ~~Industrial......... 3 MD IND~~ co--investment ~~4,729~~ventures ~~14,188~~and ~~1,209~~held ~~Hamilton~~in ~~Parkway~~our ~~(Formerly~~owned and ~~Lake~~managed ~~Michigan~~portfolio ~~Industrial)...~~or 1sold ILto ~~IND~~third ~~-- 1,554 4,703 134 Harris Business Center -- AF I~~parties.~~..........................~~ ~~10 CA IND 27,657 19,194 26,368 881 Harris Business Center~~ Value--added conversion AFproperties ~~II..........................~~are 10generally CAsold ~~IND~~to ~~33,500~~third ~~13,376~~parties ~~40,428~~at some ~~3,236~~point ~~Harvest~~in ~~Business~~the ~~Park........ 3 WA IND~~ re-- 2,371 7,153 915 Hawthorne LAX Cargo Center... 1 CA IND 6,550 2,775 8,377 209 Hayward Industrial -- Hathaway...... 2 CA IND -- 4,473 13,546 48 Hayward Industrial -- Wiegman....... 1 CA IND 6,525 2,773 8,393 373 Hempstead Highway Distribution Center......... 2 TX IND -- 1,255 9,087 726 Hintz Building............... 1 IL IND -- 420 1,259 269 Holton Drive................. 1 KY IND -- 2,633 7,899 368 Houston Industrial (Formerly Texas Industrial Portfolio).................. 5 TX IND -- 3,009 9,066 1,271 Houston Service Center....... 3 TX IND -- 3,800 11,401 2,590 Industrial Drive............. 1 OH IND -- 1,743 5,230 360 International Multifoods..... 1 CA IND -- 1,613 4,879 941 Itasca Industrial Portfolio................... 6 IL IND -- 6,416 19,289 2,047 Jacksonville Air Cargo Centre...................... 1 FL IND 3,150 -- 3,028 -- Jamesburg.................... 3 NJ IND 22,987 11,700 35,101 1,099 Janitrol..................... 1 OH IND -- 1,797 5,390 246 JFK Air Cargo -- OP.......... 15 NY IND -- 15,434 45,660 1,677 JFK Air Cargo -- AF I........ 15 NY IND 19,410 10,260 30,128 1,912 JFK Airport Park............. 1 NY IND -- 2,350 7,251 422 Junction Industrial Park..... 4 CA IND -- 7,875 23,975 1,091 Kent Centre Corporate Park... 4 WA IND -- 3,042 9,165 690 Kingsport Industrial Park.... 7 WA IND 16,534 7,919 23,798 2,216 GROSS AMOUNT CARRIED AT 12entitlement/~~31/01~~conversion --------------------------------------- YEAR OF BUILDING & TOTAL ACCUMULATED CONSTRUCTION/ DEPRECIABLE LIFE PROPERTY LAND IMPROVEMENTS COSTS(1)(2) DEPRECIATION ACQUISITION (YEARS) -------- ---------- ------------ ----------- ------------ ------------- ---------------- (IN THOUSANDSprocess, ~~EXCEPT~~thus recognizing ~~NUMBER~~the OFenhanced ~~BUILDINGS/CENTERS)~~value ~~Greater~~of ~~Dallas~~the ~~Industrial~~underlying ~~Portfolio...................~~land ~~6,269~~that supports ~~25,003~~the ~~31,272~~property’s ~~1,910~~repurposed ~~1997 5-40 Greater Houston Industrial Portfolio~~use.~~..................~~ ~~6,197~~We ~~23,307~~think ~~29,504~~our ~~1,802~~global market ~~1998~~presence ~~5-40~~and ~~Greenwood~~expertise ~~Industrial.........~~will ~~4,729~~enable ~~15,397~~us ~~20,126~~to ~~1,229~~generate ~~1998~~and capitalize ~~5-40~~on ~~Hamilton~~a ~~Parkway~~diverse ~~(Formerly~~range ~~Lake~~of ~~Michigan~~development ~~Industrial)...~~opportunities ~~1,554~~in the ~~4,837~~long ~~6,391 390 1997 5-40 Harris Business Center -- AF I~~term.~~..........................~~ ~~19,194~~At ~~27,248~~this 46time,~~442~~ 2however,~~837~~ ~~2000~~while ~~5-40 Harris Business Center -- AF II.......................... 13~~development,~~376~~ redevelopment ~~43,664~~and ~~57,040~~value ~~3,484~~added ~~2000~~conversions ~~5-40~~will ~~Harvest~~continue ~~Business~~to ~~Park........~~be ~~2,371~~a fundamental ~~8,068~~part ~~10,439~~of ~~638~~our ~~1997~~long ~~5-40~~term ~~Hawthorne~~growth ~~LAX Cargo Center... 2~~strategy,~~775~~ ~~8,586~~we ~~11,361~~will ~~694~~limit this ~~2000~~activity ~~5-40~~to ~~Hayward~~situations ~~Industrial~~where --we ~~Hathaway......~~are ~~4,473~~fulfilling ~~13,593~~prior commitments ~~18,066~~until ~~1,103~~the ~~2000~~financial ~~5-40~~and ~~Hayward~~real ~~Industrial~~estate ~~-- Wiegman~~markets stabilize....... 2,773 8,766 11,539 705 2000 5-40 Hempstead Highway Distribution Center......... 1,255 9,812 11,067 676 2000 5-40 Hintz Building............... 420 1,527 1,947 119 1998 5-40 Holton Drive................. 2,633 8,267 10,900 666 1997 5-40 Houston Industrial (Formerly Texas Industrial Portfolio).................. 3,009 10,337 13,345 815 1997 5-40 Houston Service Center....... 3,800 13,991 17,791 1,087 1998 5-40 Industrial Drive............. 1,743 5,589 7,332 448 1997 5-40 International Multifoods..... 1,613 5,820 7,433 454 1997 5-40 Itasca Industrial Portfolio................... 6,416 21,336 27,753 1,695 1997 5-40 Jacksonville Air Cargo Centre...................... 0 3,028 3,028 185 2000 5-40 Jamesburg.................... 11,700 36,200 47,901 2,926 1998 5-40 Janitrol..................... 1,797 5,635 7,432 454 1997 5-40 JFK Air Cargo -- OP.......... 15,434 47,337 62,771 3,834 2000 5-40 JFK Air Cargo -- AF I........ 10,260 32,040 42,300 2,584 2000 5-40 JFK Airport Park............. 2,350 7,673 10,022 612 2000 5-40 Junction Industrial Park..... 7,875 25,067 32,942 2,012 1999 5-40 Kent Centre Corporate Park... 3,042 9,855 12,897 788 1997 5-40 Kingsport Industrial Park.... 7,919 26,014 33,934 2,073 1997 5-40

~~INITIAL~~ Although ~~COST~~we TOhave ~~COMPANY~~reduced ~~-------------------------~~our ~~COSTS~~development ~~CAPITALIZED~~staff ~~NO.~~in OFcorrelation ~~BUILDING~~to reduced &levels ~~SUBSEQUENT~~of TOdevelopment ~~PROPERTY BLDGS./CTRS. LOCATION TYPE ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION -------- ------------ -------- ---- ------------ ---------- ------------ ----------------- (IN THOUSANDS~~activity, ~~EXCEPT~~our ~~NUMBER~~core OFteam ~~BUILDINGS/CENTERS)~~possesses multidisciplinary ~~L.A. County Industrial Portfolio................... 6 CA IND 28~~backgrounds,~~076~~ ~~9,233~~which ~~28,247~~positions ~~674~~us LAto ~~Media~~complete the ~~Tech~~build ~~Center.........~~out 7of CAour ~~IND~~development ~~22,716~~pipeline ~~12,810~~and ~~12,531~~for ~~16,051~~future development ~~Laurelwood~~or ~~Drive.............~~redevelopment 2opportunities CAwhen ~~IND~~stability returns --to ~~2,750~~the ~~8,538~~financial ~~115~~and ~~Lawrence~~real ~~SSF.................~~estate ~~1 CA IND -- 2,870 5,521 1,093 LAX Air Cargo Centre~~markets.~~........~~ 3We CAbelieve ~~IND~~our development ~~7,825~~team --has ~~13,445~~extensive 95experience ~~Lincoln~~in ~~Industrial~~real ~~Center.... 1 TX IND -- 671 2~~estate development,~~052~~ ~~211~~both ~~Linden~~with ~~Industrial............~~us 1and NJwith ~~IND -- 900 2~~local,~~753~~ 48national ~~Locke~~or international ~~Drive..................~~development ~~1 MA IND -- 1,074 3,227 69 Lonestar~~firms.~~....................~~ 7We TXpursue ~~IND~~development ~~16,817~~projects directly ~~7,129~~and ~~21,428~~in ~~1,951 Los Nietos................... 4 CA IND 8,236 2,517 7,624 118 MCI I Air Cargo Centre....... 1 MO IND 5,445~~ co--investment ~~5,793~~ventures 44and ~~MCI~~development ~~II Air Cargo Centre...... 1 MO IND 9~~joint ventures,~~535~~ --providing ~~8,134~~us --with ~~Mahwah~~the ~~Corporate~~flexibility ~~Center......~~to 6pursue development NJprojects ~~IND~~independently --or ~~9,762~~in 29partnerships,~~285~~ ~~1,140~~depending on ~~Marietta~~market ~~Industrial.......... 3 GA IND -- 1~~conditions,~~830~~ ~~5,489~~submarkets ~~800~~or ~~Martin/Scott~~building ~~Ind~~sites ~~Port........~~and availability 2of ~~CA IND -- 9,052 5,309 98 Meadow Lane 495~~capital.............. 1 NJ IND -- 838 2,594 156 Meadowlands AF II............ 4 NJ IND 12,400 6,755 13,093 938 Meadowlands Cross Dock....... 1 NJ IND -- 1,110 3,485 935 Meadowridge.................. 3 MD IND -- 3,716 11,147 298 Melrose Park................. 1 IL IND -- 2,936 9,190 1,177 Mendota Heights.............. 1 MN IND 668 1,367 4,565 1,946 Metric Center................ 5 TX IND -- 10,968 32,944 640 Miami Airport Business Center...................... 6 FL IND -- 6,400 19,634 1,130 Milmont Page Business Center...................... 3 CA IND 9,541 3,076 9,338 98 Minneapolis Distribution Portfolio................... 4 MN IND -- 6,227 18,692 1,893 Minneapolis Industrial Portfolio IV................ 4 MN IND 7,612 4,938 14,854 1,743 Minneapolis Industrial V..... 7 MN IND 5,476 4,426 13,317 1,511 Minnetonka................... 10 MN IND 11,648 6,690 20,380 2,707 Moffett Business Center (MBC Industrial)................. 4 CA IND 11,881 5,892 17,716 3,193 Moffett Distribution......... 7 CA IND -- 26,916 11,277 -- GROSS AMOUNT CARRIED AT 12/31/01 --------------------------------------- YEAR OF BUILDING & TOTAL ACCUMULATED CONSTRUCTION/ DEPRECIABLE LIFE PROPERTY LAND IMPROVEMENTS COSTS(1)(2) DEPRECIATION ACQUISITION (YEARS) -------- ---------- ------------ ----------- ------------ ------------- ---------------- (IN THOUSANDS, EXCEPT NUMBER OF BUILDINGS/CENTERS) L.A. County Industrial Portfolio................... 9,233 28,921 38,154 2,330 1997 5-40 LA Media Tech Center......... 12,810 28,582 41,392 2,528 1998 5-40 Laurelwood Drive............. 2,750 8,653 11,403 696 1997 5-40 Lawrence SSF................. 2,870 6,614 9,484 579 2001 5-40 LAX Air Cargo Centre......... 0 13,540 13,540 827 2000 5-40 Lincoln Industrial Center.... 671 2,262 2,933 179 1997 5-40 Linden Industrial............ 900 2,800 3,700 226 1999 5-40 Locke Drive.................. 1,074 3,296 4,369 267 1998 5-40 Lonestar..................... 7,129 23,379 30,508 1,863 1997 5-40 Los Nietos................... 2,517 7,742 10,259 627 1999 5-40 MCI I Air Cargo Centre....... 0 5,838 5,838 357 2000 5-40 MCI II Air Cargo Centre...... 0 8,134 8,134 497 2000 5-40 Mahwah Corporate Center...... 9,762 30,425 40,187 2,454 1998 5-40 Marietta Industrial.......... 1,830 6,289 8,119 496 1998 5-40 Martin/Scott Ind Port........ 9,052 5,407 14,459 883 2001 5-40 Meadow Lane 495.............. 838 2,750 3,588 219 1999 5-40 Meadowlands AF II............ 6,755 14,030 20,785 1,269 2001 5-40 Meadowlands Cross Dock....... 1,110 4,419 5,529 338 2000 5-40 Meadowridge.................. 3,716 11,446 15,161 926 1998 5-40 Melrose Park................. 2,936 10,367 13,303 812 1997 5-40 Mendota Heights.............. 1,367 6,511 7,878 481 1998 5-40 Metric Center................ 10,968 33,584 44,552 2,721 1997 5-40 Miami Airport Business Center...................... 6,400 20,764 27,164 1,659 1999 5-40 Milmont Page Business Center...................... 3,076 9,436 12,512 764 1997 5-40 Minneapolis Distribution Portfolio................... 6,227 20,585 26,811 1,638 1997 5-40 Minneapolis Industrial Portfolio IV................ 4,938 16,597 21,535 1,315 1997 5-40 Minneapolis Industrial V..... 4,426 14,828 19,254 1,176 1997 5-40 Minnetonka................... 6,690 23,088 29,778 1,819 1998 5-40 Moffett Business Center (MBC Industrial)................. 5,892 20,909 26,802 1,637 1997 5-40 Moffett Distribution......... 26,916 11,277 38,193 2,333 2001 5-40

~~INITIAL~~ Growth through ~~COST~~Acquisitions TOand ~~COMPANY~~Capital ------------------------- COSTS CAPITALIZED NO. OF BUILDING & SUBSEQUENT TO PROPERTY BLDGS./CTRS. LOCATION TYPE ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION -------- ------------ -------- ---- ------------ ---------- ------------ ----------------- (IN THOUSANDS, EXCEPT NUMBER OF BUILDINGS/CENTERS) Moffett Park R&D Portfolio... 14 CA IND -- 14,807 44,462 7,850 Moonachie Industrial......... 2 NJ IND 4,825 2,731 5,228 100 Murray Hill Parkway.......... 2 NJ IND -- 1,670 2,568 5,009 NDP -- Chicago (Formerly Glen Ellyn Rd. & Mitel Drive).... 3 IL IND -- 1,496 4,487 654 NDP -- Los Angeles........... 6 CA IND 9,758 5,948 17,844 1,118 NDP -- Seattle............... 4 WA IND -- 3,888 11,663 659 Newark Airport I& II......... 2 NJ IND 3,766 1,755 5,400 117 Nicholas Warehouse........... 1 IL IND -- 2,599 1,883 177 Norcross/Brookhollow Portfolio................... 4 GA IND -- 3,721 11,180 630 Normandie Industrial......... 1 CA IND -- 2,398 7,491 740 Northbrook Distribution Center...................... 1 GA IND -- 1,170 3,823 495 Northpointe Commerce......... 2 CA IND -- 1,773 5,358 331 Northwest Crossing Distribution Center......... 2 TX IND -- 745 4,792 1,342 Northwest Distribution Center...................... 3 WA IND -- 3,533 10,751 761 Novato Fair Shopping Center...................... 1 CA RET -- 4,393 8,424 202 Oakland Ridge Industrial Center...................... 12 MD IND 7,023 5,571 16,933 4,614 O'Hare Industrial Portfolio................... 15 IL IND -- 7,357 22,112 2,004 Orlando Central Park......... 2 FL IND -- 1,779 979 8,945 Pacific Business Center...... 2 CA IND 9,119 5,417 16,291 795 Pacific Service Center....... 1 GA IND -- 504 1,511 620 Pardee Drive................. 1 CA IND 1,583 619 1,850 -- Parkway Business Center...... 1 MN IND -- 475 1,425 456 Patuxent Range Road.......... 2 MD IND -- 1,696 5,127 429 Patuxent Alliance 8280....... 1 MD IND -- 887 1,706 10 Peninsula Business Center III......................... 1 VA IND -- 992 2,976 65 Penn James Office Warehouse................... 2 MN IND -- 1,991 6,013 738 Pioneer Alburtis............. 5 CA IND 7,150 2,433 7,166 285 Porete Avenue Warehouse...... 1 NJ IND 8,811 4,067 12,202 9,552 GROSS AMOUNT CARRIED AT 12/31/01 --------------------------------------- YEAR OF BUILDING & TOTAL ACCUMULATED CONSTRUCTION/ DEPRECIABLE LIFE PROPERTY LAND IMPROVEMENTS COSTS(1)(2) DEPRECIATION ACQUISITION (YEARS) -------- ---------- ------------ ----------- ------------ ------------- ---------------- (IN THOUSANDS, EXCEPT NUMBER OF BUILDINGS/CENTERS) Moffett Park R&D Portfolio... 14,805 52,315 67,120 4,099 1997 5-40 Moonachie Industrial......... 2,731 5,328 8,058 492 2001 5-40 Murray Hill Parkway.......... 1,670 7,577 9,247 565 1999 5-40 NDP -- Chicago (Formerly Glen Ellyn Rd. & Mitel Drive).... 1,496 5,141 6,637 405 1998 5-40 NDP -- Los Angeles........... 5,948 18,962 24,909 1,521 1998 5-40 NDP -- Seattle............... 3,888 12,322 16,209 990 1998 5-40 Newark Airport I& II......... 1,755 5,516 7,271 444 2000 5-40 Nicholas Warehouse........... 2,599 2,060 4,659 285 2001 5-40 Norcross/Brookhollow Portfolio................... 3,721 11,810 15,531 949 1997 5-40 Normandie Industrial......... 2,398 8,231 10,628 649 2000 5-40 Northbrook Distribution Center...................... 1,170 4,318 5,488 335 2000 5-40 Northpointe Commerce......... 1,773 5,690 7,463 456 1997 5-40 Northwest Crossing Distribution Center......... 745 6,134 6,879 420 2000 5-40 Northwest Distribution Center...................... 3,533 11,512 15,044 919 1997 5-40 Novato Fair Shopping Center...................... 4,393 8,626 13,018 795 2001 5-40 Oakland Ridge Industrial Center...................... 5,571 21,546 27,118 1,656 1999 5-40 O'Hare Industrial Portfolio................... 7,357 24,116 31,473 1,922 1997 5-40 Orlando Central Park......... 1,779 9,924 11,703 715 1998 5-40 Pacific Business Center...... 5,417 17,086 22,504 1,374 1997 5-40 Pacific Service Center....... 504 2,131 2,635 161 1998 5-40 Pardee Drive................. 619 1,850 2,468 151 1999 5-40 Parkway Business Center...... 475 1,881 2,356 144 1998 5-40 Patuxent Range Road.......... 1,696 5,556 7,252 443 1997 5-40 Patuxent Alliance 8280....... 887 1,716 2,603 159 2001 5-40 Peninsula Business Center III......................... 992 3,041 4,033 246 1998 5-40 Penn James Office Warehouse................... 1,991 6,751 8,742 534 1997 5-40 Pioneer Alburtis............. 2,433 7,451 9,884 604 1999 5-40 Porete Avenue Warehouse...... 4,067 21,754 25,822 1,577 1998 5-40Redeployment

~~INITIAL~~ Our ~~COST~~acquisition TOexperience ~~COMPANY~~and ~~-------------------------~~our ~~COSTS~~network ~~CAPITALIZED~~of NO. OF BUILDING & SUBSEQUENT TO PROPERTY BLDGS./CTRS. LOCATION TYPE ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION -------- ------------ -------- ---- ------------ ---------- ------------ ----------------- (IN THOUSANDSproperty management, ~~EXCEPT~~leasing ~~NUMBER~~and OFacquisition ~~BUILDINGS/CENTERS)~~resources ~~Port~~should ~~Northwest~~continue ~~Phase~~to provide ~~I.......~~opportunities 2for ~~TX IND 7,450 1,825 1,438 9,234 Presidents Drive~~growth.~~............~~ 6In FLaddition ~~IND~~to --our 3internal resources,~~687~~ ~~11,307~~we ~~1,657~~have ~~Preston Court................ 1 MD IND~~ long--term ~~2,313~~relationships ~~7,192~~with ~~261~~leasing ~~Production~~and investment ~~Drive.............~~sales ~~1 KY IND -- 425 1~~brokers,~~286~~ ~~338~~as ~~Richardson~~well ~~Tech~~as ~~Center II.... 1 TX IND 1,929 530 1,577~~ third--party ~~Riverside~~local ~~Business~~property management ~~Center (Formerly North GSW)........ 2 TX IND -- 1~~firms,~~000~~ --which ~~10,654~~may ~~Round~~give ~~Lake~~us ~~Business~~access ~~Center...~~to 1additional acquisition MNopportunities ~~IND~~because --such ~~875~~managers ~~2,625~~frequently market ~~463~~properties ~~Sand~~on ~~Lake~~behalf ~~Service~~of ~~Center~~sellers.~~....~~ 6In ~~FL IND -- -- -- 2~~addition,~~150~~ ~~Santa~~we ~~Barbara~~seek ~~Court..........~~to redeploy 1capital MDfrom ~~IND~~ non--strategic ~~1,617~~assets ~~5,029~~into ~~881~~properties ~~Scripps~~that better ~~Sorrento.............~~fit 1our CAcurrent ~~IND~~investment ~~-- 1,110 3,330 32 Sea Tac I Air Cargo Centre~~focus... 2See ~~WA IND 5,074 -- 15,594 51 Sea Tac~~ Part II ~~Air Cargo Centre...................... 1 WA IND -- -- 3~~,~~056 89 Seattle Airport Industrial... 1 WA IND -- 619 1,923 119 Shawnee Industrial........... 1 GA IND -- 2,481~~ Item 7~~,531~~: ~~2,026~~“Management’s ~~Silicon~~Discussion ~~Valley~~and ~~R&D~~Analysis ~~Portfolio*..................~~of Financial 6Condition CAand ~~IND~~Results --of ~~8,024~~Operations — Summary ~~24,205~~of ~~4,349~~Key ~~Slauson~~Transactions ~~Distribution~~in ~~Center~~2008.~~.....................~~” 8At CAthis ~~IND 20~~time,~~500~~ ~~7,806~~while acquisitions ~~23,552~~will ~~1,197~~continue ~~South~~to ~~Bay~~be ~~Industrial.........~~a 8fundamental CApart ~~IND~~of ~~18,392~~our ~~14,992~~long term ~~45,016~~growth 4strategy,~~356~~ ~~South~~we ~~Point~~will ~~Business~~limit ~~Park....~~this 5activity NCto ~~IND~~situations where ~~8,623~~we ~~3,130~~are ~~10,452~~fulfilling ~~825~~prior ~~South~~commitments ~~Ridge~~until atthe ~~Hartsfield....~~financial and 1real GAestate ~~IND~~markets ~~4,195 2,096 4,008 28 Southfield Industrial Portfolio~~stabilize................... 13 GA IND 35,661 12,855 35,730 4,471 Southside Distribution Center...................... 1 GA IND 1,388 766 2,480 -- Stadium Business Park........ 9 CA IND 4,477 3,768 11,345 620 Sunrise Industrial........... 4 FL IND 13,001 6,266 18,798 651 Suwannee Creek Distribution Center...................... 3 GA IND 14,015 4,922 -- 19,157 Sylvan....................... 1 GA IND -- 1,946 5,905 150 Systematics.................. 1 CA IND -- 911 2,773 40 Technology I................. 2 MD IND -- 1,657 5,049 103 Technology II................ 9 MD IND 1,942 10,206 3,761 27,416 TechRidge Phase IA........... 3 TX IND 15,304 7,132 19,044 2,607 TechRidge Phase II........... 1 TX IND 11,662 7,261 13,484 214 Teterboro Meadowlands 15..... 1 NJ IND 9,900 4,961 9,618 1,226 GROSS AMOUNT CARRIED AT 12/31/01 --------------------------------------- YEAR OF BUILDING & TOTAL ACCUMULATED CONSTRUCTION/ DEPRECIABLE LIFE PROPERTY LAND IMPROVEMENTS COSTS(1)(2) DEPRECIATION ACQUISITION (YEARS) -------- ---------- ------------ ----------- ------------ ------------- ---------------- (IN THOUSANDS, EXCEPT NUMBER OF BUILDINGS/CENTERS) Port Northwest Phase I....... 1,825 10,672 12,496 763 1999 5-40 Presidents Drive............. 3,687 12,964 16,651 1,017 1997 5-40 Preston Court................ 2,313 7,452 9,765 596 1997 5-40 Production Drive............. 425 1,624 2,049 125 1997 5-40 Richardson Tech Center II.... 530 1,577 2,107 129 1997 5-40 Riverside Business Center (Formerly North GSW)........ 1,000 10,654 11,654 712 1998 5-40 Round Lake Business Center... 875 3,088 3,963 242 1998 5-40 Sand Lake Service Center..... 0 2,150 2,150 131 1998 5-40 Santa Barbara Court.......... 1,617 5,910 7,527 460 1997 5-40 Scripps Sorrento............. 1,110 3,363 4,473 273 1998 5-40 Sea Tac I Air Cargo Centre... 0 15,645 15,645 956 2000 5-40 Sea Tac II Air Cargo Centre...................... 0 3,145 3,145 192 2000 5-40 Seattle Airport Industrial... 619 2,043 2,661 163 2000 5-40 Shawnee Industrial........... 2,481 9,557 12,038 735 1999 5-40 Silicon Valley R&D Portfolio*.................. 8,024 28,554 36,579 2,234 1997 5-40 Slauson Distribution Center...................... 7,806 24,748 32,555 1,988 2000 5-40 South Bay Industrial......... 14,992 49,372 64,364 3,931 1997 5-40 South Point Business Park.... 3,130 11,277 14,407 880 1998 5-40 South Ridge at Hartsfield.... 2,096 4,036 6,132 374 2001 5-40 Southfield Industrial Portfolio................... 12,855 40,201 53,056 3,240 1997 5-40 Southside Distribution Center...................... 766 2,480 3,246 198 2001 5-40 Stadium Business Park........ 3,768 11,965 15,733 961 1997 5-40 Sunrise Industrial........... 6,266 19,449 25,715 1,571 1998 5-40 Suwannee Creek Distribution Center...................... 4,922 19,157 24,079 1,471 1998 5-40 Sylvan....................... 1,946 6,055 8,001 489 1999 5-40 Systematics.................. 911 2,813 3,724 227 1997 5-40 Technology I................. 1,657 5,153 6,809 416 1999 5-40 Technology II................ 10,206 31,178 41,384 2,528 1999 5-40 TechRidge Phase IA........... 7,132 21,651 28,783 1,758 2000 5-40 TechRidge Phase II........... 7,261 13,699 20,960 1,280 2001 5-40 Teterboro Meadowlands 15..... 4,961 10,844 15,805 965 2001 5-40

~~INITIAL~~ We ~~COST~~are TOgenerally ~~COMPANY~~engaged ~~-------------------------~~in ~~COSTS~~various ~~CAPITALIZED~~stages ~~NO.~~of OFnegotiations ~~BUILDING~~for &a number ~~SUBSEQUENT~~of TOacquisitions ~~PROPERTY~~and ~~BLDGS./CTRS.~~other ~~LOCATION TYPE ENCUMBRANCES LAND IMPROVEMENTS ACQUISITION -------- ------------ -------- ---- ------------ ---------- ------------ ----------------- (IN THOUSANDS~~transactions, ~~EXCEPT~~some ~~NUMBER~~of OFwhich ~~BUILDINGS/CENTERS)~~may be ~~The Rotunda.................. 2 MD IND 12~~significant,~~852~~ ~~4,400~~that ~~17,736~~may 2include,~~229~~ ~~Torrance~~but ~~Commerce~~are ~~Center.....~~not 6limited ~~CA IND -- 2~~to,~~045~~ individual 6properties,~~136~~ ~~542~~large ~~Twin Cities.................. 2 MN IND~~ multi--property ~~4,873~~portfolios ~~14,638~~or property ~~3,286~~owning ~~Two~~or ~~South~~real ~~Middlesex.......... 1 NJ IND~~ estate--related ~~2,247 6,781 453 Valwood~~entities.~~.....................~~ 2We TXcannot assure ~~IND~~you ~~3,718~~that ~~1,983~~we ~~5,989~~will ~~1,069~~consummate ~~Van~~any ~~Nuys~~of ~~Airport~~these ~~Industrial~~transactions.~~.................~~ Such ~~3 CA IND -- 2~~transactions,~~481~~ ~~7,508~~if ~~5,020~~we ~~Viscount.....................~~consummate ~~1 FL IND -- 984 3~~them,~~016~~ ~~325~~may ~~Walnut~~be ~~Drive~~material individually ~~(Formerly~~or ~~East~~in ~~Walnut~~the ~~Drive)~~aggregate............... 1 CA IND -- 964 2,918 41 Watson Industrial Center..... 1 CA IND 4,600 2,417 4,617 159 Weigman Road................. 1 CA IND -- 1,563 4,688 219 West North Carrier........... 1 TX IND 3,010 1,375 4,165 187 West Pac Air Cargo Centre.... 1 PA IND -- -- 9,716 89 Williams & Bouroughs......... 4 CA IND 6,650 2,337 6,981 1,612 Willow Lake Industrial Park........................ 10 TN IND 29,137 11,997 35,990 11,885 Willow Park Industrial Portfolio................... 21 CA IND 5,077 25,590 76,771 7,824 Wilmington Avenue Wharehouse.................. 2 CA IND -- 3,849 11,605 2,582 Wilsonville.................. 1 OR IND -- 3,407 13,493 58 Windsor Court................ 1 IL IND -- 766 2,338 94 Wood Dale Industrial (Includes Bonnie Lane)...... 5 IL IND 9,029 2,967 8,456 750 Yosemite Drive............... 1 CA IND -- 2,350 7,051 334 Zanker/Charcot Industrial.... 5 CA IND -- 5,282 15,887 1,073 --- ---------- ---------- ---------- -------- Total........................ 906 $1,170,947 $1,053,157 $2,847,345 $449,030 === ========== ========== ========== ======== GROSS AMOUNT CARRIED AT 12/31/01 --------------------------------------- YEAR OF BUILDING & TOTAL ACCUMULATED CONSTRUCTION/ DEPRECIABLE LIFE PROPERTY LAND IMPROVEMENTS COSTS(1)(2) DEPRECIATION ACQUISITION (YEARS) -------- ---------- ------------ ----------- ------------ ------------- ---------------- (IN THOUSANDS, EXCEPT NUMBER OF BUILDINGS/CENTERS) The Rotunda.................. 4,400 19,965 24,366 1,488 1999 5-40 Torrance Commerce Center..... 2,045 6,678 8,724 533 1998 5-40 Twin Cities.................. 4,873 17,923 22,796 1,392 1997 5-40 Two South Middlesex.......... 2,247 7,234 9,481 579 1997 5-40 Valwood...................... 1,983 7,058 9,041 552 1997 5-40 Van Nuys Airport Industrial.................. 2,481 12,528 15,010 917 2000 5-40 Viscount..................... 984 3,341 4,325 264 1997 5-40 Walnut Drive (Formerly East Walnut Drive)............... 964 2,959 3,922 240 1997 5-40 Watson Industrial Center..... 2,417 4,775 7,192 439 2001 5-40 Weigman Road................. 1,563 4,907 6,470 395 1997 5-40 West North Carrier........... 1,375 4,352 5,727 350 1997 5-40 West Pac Air Cargo Centre.... 0 9,805 9,805 599 2000 5-40 Williams & Bouroughs......... 2,337 8,594 10,931 668 1999 5-40 Willow Lake Industrial Park........................ 11,997 47,875 59,872 3,657 1998 5-40 Willow Park Industrial Portfolio................... 25,590 84,595 110,185 6,730 1998 5-40 Wilmington Avenue Wharehouse.................. 3,849 14,187 18,036 1,102 1999 5-40 Wilsonville.................. 3,407 13,551 16,958 1,036 1998 5-40 Windsor Court................ 766 2,432 3,198 195 1997 5-40 Wood Dale Industrial (Includes Bonnie Lane)...... 2,967 9,206 12,173 743 1999 5-40 Yosemite Drive............... 2,350 7,385 9,736 595 1997 5-40 Zanker/Charcot Industrial.... 5,282 16,961 22,243 1,359 1997 5-40 ---------- ---------- ---------- -------- Total........................ $1,064,430 $3,285,110 $4,349,532 $265,653 ========== ========== ========== ========

~~EXHIBIT~~ Growth through ~~NUMBER~~Global DESCRIPTION ------- ----------- 3.1 Fifth Amended and Restated Partnership Agreement of Limited Partnership of AMB Property, L.P. dated September 21, 2001 (incorporated herein by reference as Exhibit 10.1 to AMB Property, L.P.'s Current Report on Form 8-K filed on October 3, 2001). 3.2 First Amendment to the Fifth Amended and Restated Agreement of Limited Partnership of AMB Property, L.P. dated January 1, 2002. 4.1 $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, L.P.'s Annual Report on Form 10-K for the year ended December 31, 2000). 4.2 $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, L.P.'s Annual Report on Form 10-K for the year ended December 31, 2000). 4.3 $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, L.P.'s Annual Report on Form 10-K for the year ended December 31, 2000). 4.4 $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, L.P.'s Annual Report on Form 10-K for the year ended December 31, 2000). 4.5 $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, L.P.'s Current Report on Form 8-K filed on January 8, 2001). 4.6 $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, L.P.'s Current Report on Form 8-K filed on January 8, 2001). 4.7 $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, L.P.'s Current Report on Form 8-K filed on January 8, 2001). 4.8 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, L.P.'s Registration Statement on Form S-11 (No. 333-49163)). 4.9 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, L.P.'s Registration Statement Form S-11 (No. 333-49163)). 4.10 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, L.P.'s Registration Statement on Form S-11 (No. 333-49163)). 4.11 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, L.P.'s Registration Statement on Form S-11 (No. 333-49163)). 4.12 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, L.P.'s Current Report on Form 8-K/A filed on November 9, 2000). 4.13 Specimen of 7.10% Notes due 2008 (included in the First Supplemental Indenture incorporated by reference as Exhibit 4.2 of AMB Property, L.P.'s Registration Statement on Form S-11 (No. 333-49163)).Expansion

~~EXHIBIT~~ Our ~~NUMBER~~long-term ~~DESCRIPTION~~capital ~~-------~~allocation ~~-----------~~goal ~~4.14~~is ~~Specimen~~to ofhave 7.approximately 50% ~~Notes due 2018 (included in the Second Supplemental Indenture incorporated by reference as Exhibit 4.3~~ of ~~AMB~~our ~~Property,~~owned ~~L.P.'s~~and ~~Registration~~managed ~~Statement~~operating onportfolio ~~Form~~invested ~~S-11 (No. 333-49163)). 4.15 Specimen of 6.90% Reset Put Securities due 2015 (included~~ in markets ~~the~~outside Third Supplemental Indenture incorporated by reference as Exhibit 4.4 of AMB Property, L.P.'s Registration Statement on Form S-11 (No. 333-49163)). 4.16 $25,000,000 6.90% Fixed Rate Note No. 8 dated January 9, 2001, attaching the ~~Parent~~United ~~Guarantee~~States ~~dated~~based ~~January 9, 2001 (incorporated herein by reference to Exhibit 4.1 of AMB Property, L.P.'s Current Report~~ on ~~Form~~annualized ~~8-K~~base ~~filed on January 31, 2001)~~rent. Expansion ~~4.17~~into ~~$50,000,000~~target ~~7.00%~~markets ~~Fixed~~outside ~~Rate Note No. 9 dated March 7, 2001, attaching~~ the ~~Parent~~United ~~Guarantee~~States represents ~~dated~~a ~~March~~natural 7,extension ~~2001 (incorporated herein by reference to Exhibit 4.1~~ of ~~AMB~~our ~~Property,~~strategy L.P.'s Current Report on Form 8-K filed on March 16, 2001). 4.18 $25,000,000 6.75% Fixed Rate Note No. 10 dated September 6, 2001, attaching the Parent Guarantee dated September 6, 2001 (incorporated herein by reference to ~~Exhibit~~invest ~~4.1~~in industrial ofproperty ~~AMB~~markets ~~Property,~~with ~~L.P.'s~~high ~~Current~~population ~~Report on Form 8-K filed on September 18~~densities, proximity ~~2001). 4.19 $20,000,000 5.90% Fixed Rate Note No. 11 dated January 17, 2002, attaching the Parent Guarantee dated January 17, 2002 (incorporated herein by reference~~ to ~~Exhibit~~large ~~4.1~~customer ofclusters ~~AMB~~and ~~Property,~~available ~~L.P.'s~~labor ~~Current Report on Form 8-K filed on January 23~~pools, ~~2002). 10.1 Distribution Agreement dated August 15, 2000 by~~ and ~~among~~major ~~AMB~~distribution ~~Property~~centers ~~Corporation,~~serving ~~AMB~~global ~~Property, L~~trade.~~P.,~~ ~~Morgan~~Our international ~~Stanley~~expansion &strategy ~~Co.,~~mirrors ~~Incorporated,~~our ~~Banc~~focus ofin ~~America~~the ~~Securities~~United States 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~~supply-~~K/A~~constrained ~~filed~~submarkets onwith ~~November 9~~political, ~~2000).~~economic or ~~10.2~~physical ~~Terms~~constraints ~~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~~new 1development.1 ofOur ~~AMB~~international investments ~~Property,~~extend ~~L.P.'s~~our ~~Current~~offering ~~Report on Form 8-K filed on January 8, 2001). 10.3 Terms Agreement dated as~~ of HTD® facilities ~~January 4, 2001, by and between A.G. Edwards & Sons, Inc. and AMB Property, L.P. (incorporated herein by reference~~ to ~~Exhibit~~customers ~~1.1~~who ~~of AMB Property, L.P.'s Current Report on Form 8~~value speed-Kto-market over ~~filed on January 31, 2001)~~storage. ~~10.4~~We ~~Terms~~think ~~Agreement~~that ~~dated~~our asestablished ~~of March 2~~customer relationships, ~~2001,~~our bycontacts ~~and~~in ~~among~~the ~~First~~air ~~Union Securities~~cargo, ~~Inc.,~~shipping ~~AMB Property, L.P.~~ and logistics ~~AMB Property Corporation (incorporated by reference to Exhibit 1.1 of Registrants' current report on Form 8-K filed on March 16~~industries, ~~2001).~~our ~~10.5~~underwriting ~~Form~~ of ~~Change~~markets ~~in Control~~ and ~~Noncompetition Agreement between AMB Property Corporation and Executive Officers (incorporated by reference to AMB Property~~ investments, ~~L.P.'s~~our ~~Annual Report on Form 10~~in-Khouse ~~for~~expertise ~~the year ended December 31, 1998). 10.6 Agreement for Purchase~~ and ~~Exchange~~our ~~entered~~strategic ~~into~~alliances with asknowledgeable ofdevelopers ~~March 9, 1999, by~~ and ~~among~~managers ~~AMB~~will ~~Property,~~assist ~~L.P.,~~us ~~AMB~~in competing ~~Property II, L~~internationally.~~P.,~~ ~~Long~~For ~~Gate,~~a ~~L.L.C.~~discussion ~~and BPP Retail, LLC, regarding the transaction which closed on June 15, 1999 (incorporated by reference to Exhibit 10.1~~ of ~~AMB Property, L.P.'s Quarterly Report on Form 10-Q for~~ the ~~quarter~~amount ~~ended June 30, 1999). 10.7 Agreement for Purchase and Exchange entered into as~~ of ~~March~~our revenues 9,attributable ~~1999, by and among AMB Property, L.P., AMB Property II, L.P., Long Gate, L.L.C. and BPP Retail, LLC, regarding the transaction which closed on August 4, 1999 (incorporated by reference~~ to ~~Exhibit 10.2 of AMB Property, L.P.'s Quarterly Report on Form 10-Q for~~ the ~~quarter~~United ~~ended~~States ~~June 30, 1999). 10.8 Agreement for Purchase~~ and ~~Exchange entered into as of March 9~~international markets, ~~1999,~~please bysee ~~and among AMB Property~~Part IV, ~~L.P.,~~Item 15: ~~AMB~~Note 16 ~~Property II, L.P., Long Gate, L.L.C. and BPP Retail, LLC, regarding the transaction which closed on December 1, 1999 (incorporated by reference to Exhibit 10.3~~ of ~~AMB Property, L.P.'s Quarterly Report on Form 10-Q for~~ the ~~quarter~~“Notes ~~ended June 30, 1999). 10.9 Second Amended and Restated 1997 Stock Option and Incentive Plan (incorporated by reference~~ to ~~Exhibit~~Consolidated ~~10.5~~Financial ~~of AMB Property, L~~Statements.~~P.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999).~~”

~~EXHIBIT~~ Growth through NUMBER DESCRIPTION ------- ----------- 10.10 Tenth Amended and Restated Agreement of Limited Partnership of AMB Property II, L.P., dated December 6, 2001 (incorporated by reference to Exhibit 10.1 of AMB Property, L.P.'s Current Report on Form 8-K filed on December 7, 2001). 10.11 First Amendment to Tenth Amended and Restated Agreement of Limited Partnership of AMB Property II, L.P., dated January 1, 2002. 10.12 Second Amendment to Tenth Amended and Restated Agreement of Limited Partnership of AMB Property II, L.P., dated February 25, 2002. 10.13 Revolving Credit Agreement dated as of May 24, 2000, among AMB Property, L.P., the banks listed therein, Morgan Guaranty Trust Company of New York, as Administrative Agent, Bank of America, N.A., as Syndication Agent, the Chase Manhattan Bank, as Documentation Agent, J.P. Morgan Securities Inc. and Banc of America Securities LLC, as Joint Lead Arrangers and Joint Bookmanagers, Bank one, NA, Commerzbank Aktiengesellschaft, PNC Bank National Association and Wachovia Bank, N.A., as Managing Agents and Banks Trust Company and Dresdner Bank AG, New York and Grand Cayman Branches, as Co-Agents (incorporated by reference to Exhibit 10.1 of AMB Property, L.P.'s Current Report on Form 8-K filed on June 16, 2000). 10.14 Guaranty of Payment made as of May 24, 2000, between AMB Property Corporation and Morgan Guaranty Trust Company of New York, as administrative agent for the banks listed on the signature page of the Revolving Credit Agreement (incorporated herein by reference to Exhibit 10.2 of AMB Property, L.P.'s Current Report on Form 8-K filed on June 16, 2000). 10.15 Credit Agreement dated as of September 27, 1999, among AMB Institutional Alliance Fund I, L.P., AMB Institutional Alliance REIT I, Inc., the Lenders and issuing parties thereto, BT Realty Resources, Inc. and Chase Manhattan Bank (incorporated by reference to Exhibit 10.3 of AMB Property, L.P.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999). 10.16 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, L.P.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001). 10.17 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, L.P.'s Current Report on Form 8-K filed on September 18, 2001). 10.18 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, L.P.'s Current Report on Form 8-K filed on January 23, 2002). 10.19 Third Amended and Restated 1997 Stock Option and Incentive Plan. 10.20 Amendment No. 1 to the Third Amended and Restated 1997 Stock Option and Incentive Plan. 10.21 2002 Stock Option and Incentive Plan. 10.22 AMB Nonqualified Deferred Compensation Plan. 21.1 Subsidiaries of AMB Property, L.P. 23.1 Consent of Arthur Andersen LLP. 24.1 Powers of Attorney (included in Part IV of this Form 10-K). 99.1 Letter, dated March 28, 2002, from AMB Property, L.P. to the Securities and Exchange Commission.Investments

We, through AMB Capital Partners, LLC, our private capital group, were one of the pioneers of the real estate investment trust (REIT) industry’s co-investment private capital investment model and have more than 25 years of experience meeting institutional investors’ real estate needs. We co-invest in properties with private capital

investors through partnerships, limited liability companies or other joint ventures. We have a direct and long-standing relationship with institutional investors. More than 60% of our owned and managed operating portfolio is owned through our eight co-investment ventures. We tailor industrial portfolios to investors’ specific needs — in separate or commingled accounts — deploying capital in both close-ended and open-ended structures and providing complete portfolio management and financial reporting services. Generally, we will own a 10-50% interest in our co-investment ventures. Our co-investment ventures typically allow us to earn acquisition and development fees, asset management fees or priority distributions, as well as promote interests or incentive distributions based on the performance of the co-investment ventures. As of December 31, 2008, we owned approximately 78.7 million square feet of our properties (49.2% of the total operating and development portfolio) through our consolidated and unconsolidated co-investment ventures.

Our website address is http://www.amb.com. Our annual reports 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 Securities Exchange Act of 1934 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 U.S. Securities and Exchange Commission, or SEC. The public may read and copy these materials at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains such reports, proxy and information statements and other information, and the Internet address is http://www.sec.gov. Our Corporate Governance Principles and Code of Business Conduct are also posted on our website. Information contained on our website is not and should not be deemed a part of this report or any other report or filing filed with or furnished to the SEC.


ITEM 1A.	Risk Factors

BUSINESS RISKS

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

Risks of the Current Economic Environment

If the global market and economic crisis intensifies or continues in the long term, disruptions in the capital and credit markets may adversely affect our business, results of operations, cash flows and financial condition.

Recent global market and economic conditions have been unprecedented and challenging with tighter credit conditions, slower growth through the fourth quarter of 2008 and recession in most major economies continuing into 2009. Continued concerns about the systemic impact of inflation, the availability and cost of credit, declining real estate market, energy costs and geopolitical issues have contributed to increased market volatility and diminished expectations for the global economy. In the fourth quarter of 2008, added concerns fueled by the failure of several large financial institutions and government interventions in the credit markets led to increased market uncertainty and instability in the capital and credit markets. These conditions, combined with declining business activity levels and consumer confidence, increased unemployment and volatile oil prices, have contributed to unprecedented levels of volatility in the capital markets. If the global market and economic crisis intensifies or continues in the long term, disruptions in the capital and credit markets may adversely affect our business, results of operations, cash flows and financial condition.

As a result of these market conditions, the cost and availability of credit have been and may continue to be adversely affected by illiquid credit markets and wider credit spreads. Concern about the stability of the markets generally and the strength of counterparties specifically has led many lenders and institutional investors to reduce, and in some cases, cease to provide funding to businesses and consumers. These factors have led to a decrease in spending by businesses and consumers alike, and a corresponding decrease in global infrastructure spending. While we currently believe that we have sufficient working capital and capacity under our credit facilities in the near term, continued turbulence in the global markets and economies and prolonged declines in business and consumer spending may adversely affect our liquidity and financial condition, as well as the liquidity and financial condition of our customers. If these market conditions persist in the long term, they may limit our ability, and the ability of our customers, to timely replace maturing liabilities and access the credit markets to meet liquidity needs.

If our long-term debt ratings fall below our current levels, the borrowing cost of debt under our unsecured credit facilities and certain term loans may increase. In addition, if our long-term debt ratings fall below investment grade, we may be unable to request borrowings in currencies other than U.S. dollars or Japanese Yen, as applicable; however, the lack of other currency borrowings does not affect our ability to fully draw down under the credit facilities or term loans. While we currently do not expect our long-term debt ratings to fall below investment grade, in the event that our ratings do fall below those levels, we may be unable to exercise our options to extend the term of our credit facilities or our $230 million secured term loan credit agreement, and the loss of our ability to borrow in foreign currencies could affect our ability to optimally hedge our borrowings against foreign currency exchange rate changes. In addition, while based on publicly available information regarding our lenders, we currently do not expect to lose borrowing capacity under our existing lines of credit and term loans as a result of a dissolution, bankruptcy, consolidation, merger or other business combination among our lenders, we cannot assure you that continuing long-term disruptions in the global economy and the continuation of tighter credit conditions among, and potential failures of, third-party financial institutions as a result of such disruptions will not have an adverse effect on our borrowing capacity and liquidity position. Our access to funds under our credit facilities is dependent on the ability of the lenders that are parties to such facilities to meet their funding commitments to us. We can not assure you that if one of our lenders fails (some of whom are lenders under a number of our facilities), we will be successful in finding a replacement lender and, as a result, our borrowing capacity under the applicable facilities may be permanently reduced. If we do not have sufficient cash flows and income from our operations to meet our financial commitments and those lenders are not able to meet their funding commitments to us, our business, results of operations, cash flows and financial condition could be adversely affected.

Certain of our third-party indebtedness is held by our consolidated or unconsolidated joint ventures. In the event that our joint venture partner is unable to meet its obligations under our joint venture agreements or the third-party debt agreements, we may elect to pay our joint venture partner’s portion of debt to avoid foreclosure on the mortgaged property or permit the lender to foreclose on the mortgaged property to meet the joint venture’s debt obligations. In either case, we could face a loss of income and asset value on the property.

Until the financial and real estate markets stabilize, we have limited our capital deployment activities to situations where we are fulfilling prior commitments. There can be no assurance that the markets will stabilize in the near future or that we will choose to or be able to increase our levels of capital deployment at such time or ever. In addition, a continued increase in the cost of credit and inability to access the capital and credit markets may adversely impact the occupancy of our properties, the disposition of our properties, private capital raising and contribution of properties to our co-investment ventures. For example, an inability to fully lease our properties may result in such properties not meeting our investment criteria for contributions to our co-investment ventures. If we are unable to contribute completed development properties to our co-investment ventures or sell our completed development projects to third parties, we will not be able to recognize gains from the contribution or sale of such properties and, as a result, our net income available to our common unitholders and our funds from operations will decrease. Additionally, business layoffs, downsizing, industry slowdowns and other similar factors that affect our customers may adversely impact our business and financial condition. Furthermore, general uncertainty in the real estate markets has resulted in conditions where the pricing of certain real estate assets may be difficult due to uncertainty with respect to capitalization rates and valuations, among other things, which may add to the difficulty of buyers or our co-investment ventures to obtain financing on favorable terms to acquire such properties or cause potential buyers to not complete acquisitions of such properties. The market uncertainty with respect to capitalization rates and real estate valuations also adversely impacts our net asset value. In addition, we may face difficulty in refinancing our mortgage debt, or may be unable to refinance such debt at all, if our property values significantly decline. Such a decline may also cause a default under the loan-to-value covenants in some of our joint ventures’ mortgage debt, which may require our joint ventures to re-margin or pay down a portion of the applicable debt. There can be no assurance, however, that in such an event, we will be able to do so to prevent foreclosure.

In the event that we do not have sufficient cash available to us through our operations to continue operating our business as usual, we may need to find alternative ways to increase our liquidity. Such alternatives may include, without limitation, divesting ourselves of properties, whether or not they otherwise meet our strategic objectives to keep in the long term, at less than optimal terms; issuing and selling our debt and equity in public or private transactions under less than optimal conditions; entering into leases with our customers at lower rental rates or less than optimal terms; or entering into lease renewals with our existing customers without an increase in rental rates at turnover. There can be no assurance, however, that such alternative ways to increase our liquidity will be available to us. Additionally, taking such measures to increase our liquidity may adversely affect our business, results of operations and financial condition.

As of December 31, 2008, we had $223.9 million in cash and cash equivalents. Our available cash and cash equivalents are held in accounts managed by third party financial institutions and consist of invested cash and cash in our operating accounts. The invested cash is invested in money market funds that invest solely in direct obligations of the government of the United States or in time deposits with certain financial institutions. To date, we have experienced no loss or lack of access to our invested cash or cash equivalents; however, we can provide no assurances that access to our invested cash and cash equivalents will not be impacted by adverse conditions in the financial markets.

At any point in time, we also have a significant amount of cash deposits in our operating accounts that are with third-party financial institutions, and, as of December 31, 2008, the amount in such deposits was approximately $176.6 million on a consolidated basis. These balances exceed the Federal Deposit Insurance Corporation insurance limits. While we monitor daily the cash balances in our operating accounts and adjust the cash balances as appropriate, these cash balances could be impacted if the underlying financial institutions fail or be subject to other adverse conditions in the financial markets. To date, we have experienced no loss or lack of access to cash in our operating accounts.

Debt Financing Risks

We face risks associated with the use of debt to fund our business activities, including refinancing and interest rate risks.

As of December 31, 2008, we had total debt outstanding of $4.0 billion. As of December 31, 2008, AMB Property Corporation guaranteed $1.2 billion of our obligations with respect to the senior debt securities referenced in our financial statements. We are subject to risks normally associated with debt financing, including the risk that our cash flow will be insufficient to meet required payments of principal and interest. We anticipate that we will repay only a small portion of the principal of our debt prior to maturity. Accordingly, we will likely need to refinance at least a portion of our outstanding debt as it matures. There is a risk that we may not be able to refinance existing debt or that the terms of any refinancing will not be as favorable as the terms of our existing debt. 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 repay all such maturing debt and to make distributions to our unitholders and payments to our noteholders. 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. Higher interest rates on newly incurred debt may negatively impact us as well. If interest rates increase, our interest costs and overall costs of capital will increase, which could adversely affect our financial condition, results of operation and cash flow, our ability to make payments to our noteholders, our ability to pay principal and interest on our debt, our ability to make distributions to our unitholders and our capital deployment activity. In addition, there may be circumstances that will require us to obtain amendments or waivers to provisions in our credit facilities or other financings. There can be no assurance that we will be able to obtain necessary amendments or waivers at all or without significant expense. In such case, we may not be able to fund our business activities as planned, within budget or at all.

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 lender 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 make distributions to our unitholders and payments to noteholders.

As of December 31, 2008, we had outstanding bank guarantees in the amount of $27.8 million used to secure contingent obligations, primarily obligations under development and purchase agreements, including $0.7 million guaranteed under a purchase agreement entered into by an unconsolidated joint venture. As of December 31, 2008, we also guaranteed $49.6 million and $231.8 million on outstanding loans for six of our consolidated co-investment ventures and four of our unconsolidated co-investment ventures, respectively, as well as the following credit facility held by AMB Europe Fund I, FCP-FIS, one of our unconsolidated co-investment ventures. In December 2008, we agreed to guarantee 50.2 million Euros (approximately $70.1 million in U.S. dollars using the exchange rate as of December 31, 2008) that our European affiliate borrowers and/or their affiliates borrowed under an existing credit facility held by AMB Europe Fund I, FCP-FIS. The European affiliate borrowers are in the process of granting security interests to the lender, as the security agent, under and in accordance with the terms of such facility, all of which security interests are expected to become effective in the first half of 2009. We agreed to guarantee the 50.2 million Euro amount borrowed under such existing credit facility only until the security interests are granted, at which time the guarantees will be extinguished. Also, we have entered into contribution agreements with certain of our unconsolidated co-investment venture funds. These contribution agreements require us to make additional capital contributions to the applicable co-investment venture fund upon certain defaults by the co-investment venture of its debt obligations to the lenders. Such additional capital contributions will cover all or part of the applicable co-investment venture’s debt obligation and may be greater than our share of the co-investment venture’s debt obligation or the value of our share of any property securing such debt. Our contribution obligations under these agreements will be reduced by the amounts recovered by the lender and the fair market value of the property, if any, used to secure the debt and obtained by the lender upon default. Our potential obligations under these contribution agreements were $260.6 million as of December 31, 2008. We intend to continue to guarantee debt of our unconsolidated co-investment venture funds and make additional contributions to our unconsolidated co-investment venture funds in connection with property contributions to the funds. Such payment obligations under such guarantees and contribution obligations under such contribution agreements, if required to be paid, could be of

a magnitude that could adversely affect our financial condition, results of operations, cash flow and ability to make distributions to our unitholders and payments to our noteholders.

Adverse changes in our credit ratings could negatively affect our financing activity.

The credit ratings of our senior unsecured long-term debt are based on our operating performance, liquidity and leverage ratios, overall financial position and other factors employed by the credit rating agencies in their rating analyses of us. Our credit ratings can affect the amount of capital we can access, as well as the terms and pricing of any debt we may incur. There can be no assurance that we will be able to maintain our current credit ratings, and in the event our current credit ratings are downgraded, we would likely incur higher borrowing costs and may encounter difficulty in obtaining additional financing. Also, a downgrade in our credit ratings may trigger additional payments or other negative consequences under our current and future credit facilities and debt instruments. For example, if our credit ratings of our senior unsecured long-term debt are downgraded to below investment grade levels, we may not be able to obtain or maintain extensions on certain of our existing debt. Adverse changes in our credit ratings could negatively impact our refinancing activities, our ability to manage our debt maturities, our future growth, our financial condition, our development and acquisition activity and our ability to make distributions to our unitholders and payments to our noteholders.

Covenants in our debt agreements could adversely affect our financial condition.

The terms of our credit agreements and other indebtedness require that we comply with a number of financial and other covenants, such as maintaining debt service coverage and leverage ratios and maintaining insurance coverage. These covenants may limit flexibility in our operations, and our failure to comply with these covenants could cause a default under the applicable debt agreement even if we have satisfied our payment obligations. As of December 31, 2008, we had certain non-recourse, secured loans, which are cross-collateralized by multiple properties. If we default on any of these loans, we may then be required to repay such 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 make distributions to our unitholders and make payments to our noteholders. 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 make distributions to our unitholders and make payments to our noteholders.

Failure to hedge effectively against exchange and interest rates may adversely affect results of operations.

We seek to manage our exposure to exchange and interest rate volatility by using exchange and interest rate hedging arrangements, such as cap agreements and swap agreements. These agreements involve risks, such as the risk that the counterparties may fail to honor their obligations under these arrangements, that these arrangements may not be effective in reducing our exposure to exchange or interest rate changes and that a court could rule that such agreements are not legally enforceable. Hedging may reduce overall returns on our investments. Failure to hedge effectively against exchange and interest rate changes may materially adversely affect our results of operations.

We are dependent on external sources of capital.

In order for our general partner, AMB Property Corporation, to qualify as a real estate investment trust, it is required each year to distribute to its stockholders at least 90% of its real estate investment trust taxable income (determined without regard to the dividends-paid deduction and by excluding any net capital gain) and it is subject to tax to the extent its income is not fully distributed. We are required to make distributions to AMB Property Corporation that will enable it to satisfy this distribution requirement and avoid tax liability. While historically our general partner has satisfied these distribution requirements by making cash distributions to its stockholders, it may choose to satisfy these requirements by making distributions of cash or other property, including, in limited circumstances, its own stock. For distributions with respect to taxable years ending on or before December 31, 2009, recent Internal Revenue Service guidance allows our general partner to satisfy up to 90% of the distribution

requirements discussed above through the distribution of shares of its stock, if certain conditions are met. Assuming our general partner continues to satisfy these distribution requirements with cash, it may not be able to fund all future capital needs, including acquisition and development activities, from cash retained from operations and may have to rely on third-party sources of capital. Further, in order for our general partner to maintain its real estate investment trust status and avoid the payment of federal income and excise taxes, it may need to borrow funds on a short-term basis to meet the real estate investment trust distribution requirements even if the then-prevailing market conditions are not favorable for these borrowings. These short-term borrowing needs could result from differences in timing between the actual receipt of cash and inclusion of income for federal income tax purposes, or the effect of non-deductible capital expenditures, the creation of reserves or required debt or amortization payments. Our ability, and that of our general partner, to access private debt and equity capital on favorable terms or at all is dependent 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 AMB Property Corporation’s securities.

We could incur more debt, increasing our debt service.

As of December 31, 2008, our share of total debt-to-our share of total market capitalization ratio was 61.4%. Our definition of “our share of total market capitalization” is our share of total debt plus preferred equity liquidation preferences plus market equity. See footnote 1 to the Capitalization Ratios table contained in Part II, Item 7: “Management’s Discussion and Analysis of Financial Condition and Results of Operation — Liquidity and Capital Resources” for our definitions of “market equity” and “our share of total debt.” As this ratio percentage increases directly with a decrease in the market price per share of AMB Property Corporation’s capital stock, an unstable market environment will impact this ratio in a volatile manner. However, there can be no assurance that we would not also become more highly leveraged, resulting in an increase in debt service that could adversely affect the cash available for distribution to our unitholders. Furthermore, if we become more highly leveraged, we may not be in compliance with the debt covenants contained in the agreements governing our co-investment ventures, which could adversely impact our private capital business.

Other Real Estate Industry Risks

Our performance and value are subject to general economic conditions and risks associated with our real estate assets.

The investment returns available from equity investments in real estate depend on the amount of income earned and capital appreciation generated by the 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 make distributions to our unitholders and payments to our noteholders could be adversely affected. In addition, there are significant expenditures associated with an investment in real estate (such as mortgage payments, real estate taxes and maintenance costs) that generally do not decline when circumstances reduce the income from the property. Income from, and the value of, our properties may be adversely affected by:


	•	changes in the general economic climate, such as the current one, including diminished access to or availability of capital (including difficulties in financing, refinancing and extending existing debt) and rising inflation;

	•	local conditions, such as oversupply of 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;

	•	increased operating costs;

	•	increased cost of compliance with regulations;

	•	the potential for liability under applicable laws (including changes in tax laws); and

	•	disruptions in the global supply chain caused by political, regulatory or other factors, including terrorism.

In addition, periods of economic slowdown or recession in the United States and in other countries, rising interest rates, diminished access to or availability of capital or declining demand for real estate, may result in a general decrease in rents, an increased occurrence of defaults under existing leases or greater difficulty in financing our acquisition and development activities, which would adversely affect our financial condition and results of operations. Future terrorist attacks may result in declining economic activity, which could reduce the demand for and the value of our properties. To the extent that future attacks impact our customers, their businesses similarly could be adversely affected, including their ability to continue to honor their existing leases.

Our properties are concentrated predominantly in the industrial real estate sector. As a result of this concentration, we feel the impact of an economic downturn in this sector more acutely than if our portfolio included other property types.

Declining real estate valuations and impairment charges could adversely affect our earnings and financial condition.

The current economic downturn has generally resulted in lower real estate valuations, which has required us to recognize real estate impairment charges on our assets. In the quarter ended December 31, 2008, we recognized non-cash impairment charges of approximately $207.2 million on an owned and managed basis, including $195.4 million of real estate impairment losses ($193.9 million on a consolidated basis) and $11.8 million of charges for the write-off of pursuit costs related to development projects that we no longer plan to commence and reserves against tax assets associated with the reduction in development activity. To the extent that the book value of a land parcel or development asset exceeded the fair market value of the property, based on its intended holding period, a non-cash impairment charge was recognized for the shortfall. We examined the estimated fair value of all of our assets under development and assets held for sale or contribution. The estimated fair value of each of these assets was calculated based upon our intent to sell or contribute these properties, assumptions regarding rental rates, costs to complete, lease-up and holding periods and sales prices or contribution values. To determine the fair market value for our land holdings, we considered our intent to sell or to develop the parcels and, in the case of the latter, assumptions regarding rental rates, costs to complete, lease-up and holding periods and sales prices or contribution values are taken into account. There can be no assurance that the estimates and assumptions we use to assess impairments are accurate and will reflect actual results. Further deterioration in real estate market conditions may lead to additional impairment charges in the future, possibly against other assets we hold or of a greater magnitude than we have currently recognized. A worsening real estate market may cause us to reevaluate the assumptions used in our impairment analysis and our intent to hold, sell, develop or contribute properties. Impairment charges could adversely affect our financial condition, results of operations and our ability to make distributions to our unitholders and make payments to our noteholders. See Part IV, Item 15: Note 3 of the “Notes to Consolidated Financial Statements” for a more detailed discussion of the real estate impairment losses recorded in our results of operations during the fourth quarter of 2008.

We may be unable to renew leases or relet space as leases expire.

As of December 31, 2008, on an owned and managed basis, leases on a total of 16.8% of our industrial properties (based on annualized base rent) will expire on or prior to December 31, 2009. We derive most of our income from rent received from our customers. Accordingly, our financial condition, results of operations, cash flow and our ability to make distributions to our unitholders and payments to our noteholders could be adversely affected if we are unable to promptly relet or renew these expiring leases or if the rental rates upon renewal or reletting are significantly lower than expected. Periods of economic slowdown or recession are likely to adversely affect our leasing activities. If a customer experiences a downturn in its business or other type of financial distress, then it may be unable to make timely rental payments or renew its lease. Further, our ability to rent space and the rents that we can charge are impacted, not only by customer demand, but by the number of other properties we have to compete with to appeal to customers.

We could be adversely affected if a significant number of our customers are unable to meet their lease obligations.

Our results of operations, distributable cash flow and the value of our units would be adversely affected if a significant number of our customers were unable to meet their lease obligations to us. In the current economic environment, it is likely that customer bankruptcies will increase. If a customer seeks the protection of bankruptcy,

insolvency or similar laws, such customer’s lease may be terminated in the process and result in a reduction of cash flow to us. In the event of a significant number of lease defaults and/or tenant bankruptcies, our cash flow may not be sufficient to make distributions to our unitholders and repay maturing debt and any other obligations. As of December 31, 2008, on an owned and managed basis, we did not have any single customer account for annualized base rent revenues greater than 4.1%. However, in the event of lease defaults by a significant number of our customers, we may incur substantial costs in enforcing our rights as landlord.

We may be unable to complete divestitures on advantageous terms or at all.

We intend to continue to divest ourselves of properties, which are currently in our pipeline, are held for sale or which otherwise do not meet our strategic objectives, and we may, in certain circumstances, divest ourselves of properties to increase our liquidity or to capitalize on opportunities that arise. Our ability to dispose of properties on advantageous terms or at all depends on factors beyond our control, including competition from other sellers, current market conditions (including capitalization rates applicable to our properties) and the availability of financing for potential buyers of our properties. If we are unable to dispose of properties at all or on favorable terms or redeploy the proceeds of property divestitures in accordance with our investment strategy, then our financial condition, results of operations, cash flow, ability to meet our debt obligations in a timely manner and ability to make distributions to our unitholders and payments to our noteholders could be adversely affected.

Actions by our competitors may affect our ability to divest properties and may decrease or prevent increases of the occupancy and rental rates of our properties.

We compete with other owners, operators and developers of real estate, some of which own properties similar to ours in the same submarkets in which our properties are located. If our competitors sell assets similar to assets we intend to divest in the same markets and/or at valuations below our valuations for comparable assets, we may be unable to divest our assets at all or at favorable pricing or on favorable terms. In addition, if our competitors offer space at rental rates below current market rates or below the rental rates we currently charge our customers, we may lose potential customers, and we may be pressured to reduce our rental rates below those we currently charge in order to retain customers when our customers’ leases expire. As a result, our financial condition, cash flow, cash available for distribution, payments to our noteholders and ability to satisfy our debt service obligations could be materially adversely affected.

We may not be successful in contributing properties to our co-investment ventures.

Although we are curtailing our capital deployment activities until the financial and real estate markets stabilize, we may contribute or sell properties to our co-investment ventures on a case-by-case basis. However, we may fail to contribute properties to our co-investment ventures due to such factors as our inability to acquire, develop, or lease properties that meet the investment criteria of such ventures, or our co-investment ventures’ inability to access debt and equity capital to pay for property contributions or their allocation of available capital to cover other capital requirements such as forward commitments, loan maturities and future redemptions. If the co-investment ventures are unable to raise additional capital on favorable terms after currently available capital is depleted or if the value of such properties are appraised at less than the cost of such properties, then such contributions or sales could be delayed or prevented, adversely affecting our financial condition, results of operations, cash flow and ability to make distributions to our unitholders and payments to our noteholders. For example, although we have acquired land for development and made capital commitments, we cannot be assured that we ultimately will be able to contribute such properties to our co-investment ventures as we have planned.

A delay in these contributions could result in adverse effects on our liquidity and on our ability to meet projected earnings levels in a particular reporting period. Failure to meet our projected earnings levels in a particular reporting period could have an adverse effect on our results of operations, distributable cash flow and the value of our general partner’s securities.

We are subject to risks and liabilities in connection with properties owned through co-investment ventures, limited liability companies, partnerships and other investments.

As of December 31, 2008, approximately 89.9 million square feet of our properties were held through several joint ventures, limited liability companies or partnerships with third parties. Our organizational documents do not limit the amount of available funds that we may invest in partnerships, limited liability companies or co-investment

ventures, and we may continue to develop and acquire properties through co-investment ventures, limited liability companies, partnerships with and investments in other entities when warranted by the circumstances. Such partners may share certain approval rights over major decisions and some partners may manage the properties in the joint venture partnership, limited liability company or joint venture investments. Partnership, limited liability company or co-investment venture investments involve certain risks, including:


	•	if our partners, co-members or co-venturers go bankrupt, then we and any other remaining general partners, members or co-venturers may generally remain liable for the partnership’s, limited liability company’s or co-investment venture’s liabilities;

	•	if our partners fail to fund their share of any required capital contributions, then we may choose to or be required to contribute such capital;

	•	our partners, co-members or co-venturers might have economic or other business interests or goals that are inconsistent with our business interests or goals that would affect our ability to operate the property;

	•	our partners, co-members or co-venturers may have the power to act contrary to our instructions, requests, policies or objectives, including our general partner’s current policy with respect to maintaining its qualification as a real estate investment trust;

	•	the joint venture, limited liability company and partnership agreements often restrict the transfer of a co-venturer’s, member’s or partner’s interest or may otherwise restrict our ability to sell the interest when we desire or on advantageous terms;

	•	our relationships with our partners, co-members or co-venturers are generally contractual in nature and may be terminated or dissolved under the terms of the agreements, and in such event, we may not continue to own or operate the interests or assets underlying such relationship or may need to purchase such interests or assets at an above-market price to continue ownership;

	•	disputes between us and our partners, co-members or co-investment venturers may result in litigation or arbitration that would increase our expenses and prevent AMB Property Corporation’s officers and directors from focusing their time and effort on our business and result in subjecting the properties owned by the applicable partnership, limited liability company, or joint venture to additional risk; and

	•	we may in certain circumstances be liable for the actions of our partners, co-members or co-venturers.

We generally seek to maintain sufficient control or influence over our partnerships, limited liability companies and joint ventures to permit us to achieve our business objectives, however, we may not be able to do so, and 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 make distributions to our unitholders and payments to our noteholders.

We may be unable to complete renovation, development and redevelopment projects at all or on advantageous terms.

On a strategic and selective basis, we may develop, renovate and redevelop properties. In the long term after the credit markets stabilize, we may expand and increase our investment in our development, renovation and redevelopment business. The real estate development, renovation and redevelopment business involves significant risks that could adversely affect our financial condition, results of operations, cash flow and ability to make distributions to our unitholders and payments to our noteholders, which include the following risks:


	•	we may not be able to obtain financing for development projects at all or on favorable terms and complete construction on schedule or within budget, resulting in increased debt service expense and construction costs and delays in leasing the properties, generating cash flow and, if applicable, contributing properties to a joint venture;

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

	•	the properties may perform below anticipated levels, producing cash flow below budgeted amounts;

	•	we may not be able to lease properties at all or on favorable terms;


	•	construction costs, total investment amounts and our share of remaining funding may exceed our estimates and projects may not be completed, delivered or stabilized as planned;

	•	we may not be able to capture the anticipated enhanced value created by our value-added conversion projects ever or on our expected timetables;

	•	we may fail to contribute properties to our co-investment ventures due to such factors as our inability to acquire, develop, or lease properties that meet the investment criteria of such ventures, or our co-investment ventures’ inability to access debt and equity capital to pay for property contributions or their allocation of available capital to cover other capital requirements such as future redemptions;

	•	we may experience delays (temporary or permanent) if there is public opposition to our activities;

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

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

We may be unable to consummate acquisitions at all or on advantageous terms or acquisitions may not perform as we expect.

On a strategic and selective basis, we may continue to acquire properties, primarily industrial in nature. The acquisition of properties entails various risks, including the risks that our investments may not perform or grow in value as we expect, that we may be unable to quickly and efficiently integrate our new acquisitions into our existing operations or, if applicable, contribute the acquired properties to a joint venture, and that our cost estimates for bringing an acquired property up to market standards may prove inaccurate. In addition, we expect to finance future acquisitions through a combination of borrowings under our unsecured credit facilities, proceeds from debt or limited partnership unit offerings by us or our subsidiaries and proceeds from property divestitures, which may not be available and which could adversely affect our cash flow. Further, we face significant competition for attractive investment opportunities from other real estate investors, including both publicly-traded real estate investment trusts and private institutional investors and funds. This competition increases as investments in real estate become increasingly attractive relative to other forms of investment. As a result of competition, we may be unable to acquire additional properties as we desire or the purchase price may be significantly elevated. Any of the above risks could adversely affect our financial condition, results of operations, cash flow and the ability to make distributions to our unitholders and payments to our noteholders.

Real estate investments are relatively illiquid, making it difficult for us to respond promptly to changing conditions.

Real estate assets are not as liquid as certain other types of assets. Further, the Internal Revenue Code regulates the number of properties that our general partner, as a real estate investment trust, can dispose of in a year, their tax bases and the cost of improvements that we make to the properties. In addition, a portion of the properties held directly or indirectly by certain of our subsidiary partnerships were acquired in exchange for limited partnership units in the applicable partnership. The contribution agreements for such properties may contain restrictions on certain sales, exchanges or other dispositions of these properties, or a portion thereof, that result in a taxable transaction for specified periods, following the contribution of these properties to the applicable partnership. These limitations may affect our ability to sell properties. This lack of liquidity and the Internal Revenue Code restrictions may limit our ability to vary our portfolio promptly in response to changes in economic or other conditions and, as a result, could adversely affect our financial condition, results of operations, cash flow, ability to make distributions to our unitholders and payments to our noteholders and our ability to access capital necessary to meet our debt payments and other obligations.

Risks Associated With Our International Business

Our international activities are subject to special risks and we may not be able to effectively manage our international business.

We have acquired and developed, and may continue to acquire and develop on a strategic and selective basis, properties outside the United States. Because local markets affect our operations, our international investments are subject to economic fluctuations in the international locations in which we invest. Access to capital may be more restricted, or unavailable entirely or on favorable terms, in certain locations. In addition, our international operations are subject to the usual risks of doing business abroad such as revisions in tax treaties or other laws and regulations, including those governing the taxation of our international revenues, restrictions on the transfer of funds, and, in certain parts of the world, uncertainty over property rights and political instability. We cannot predict the likelihood that any of these developments may occur. Further, we have entered, and may in the future 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. Further, 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 or at all.

We also have offices in many countries outside the United States and, as a result, our operations may be subject to risks that may limit our ability to effectively establish, staff and manage our offices outside the United States, including:


	•	differing employment practices and labor issues;

	•	local business and cultural factors that differ from our usual standards and practices;

	•	regulatory requirements and prohibitions that differ between jurisdictions; and

	•	health concerns.

Our global growth (including growth in new regions in the United States) subjects us to certain risks, including risks associated with funding increasing headcount, integrating new offices, and establishing effective controls and procedures to regulate the operations of new offices. In addition, payroll expenses are paid in local currencies and, therefore, we are exposed to risks associated with fluctuations in the rate of exchange between the U.S. dollar and these currencies.

Further, our business has grown rapidly and may continue to grow in a strategic and deliberate manner. If we fail to effectively manage our international growth, then our financial condition, results of operations, cash flow and ability to make distributions to our unitholders and payments to our noteholders could be adversely affected.

We are subject to risks from potential fluctuations in exchange rates between the U.S. dollar and the currencies of the other countries in which we invest.

We may pursue growth opportunities in international markets on a strategic and selective basis. As we invest in countries where the U.S. dollar is not the national currency, we are subject to international currency risks from the potential fluctuations in exchange rates between the U.S. dollar and the currencies of those other countries. A significant depreciation in the value of the currency of one or more countries where we have a significant investment may materially affect our results of operations. We attempt to mitigate any such effects by borrowing in the currency of the country in which we are investing and, under certain circumstances, by putting in place international currency put option contracts to hedge exchange rate fluctuations. For leases denominated in international currencies, we may use derivative financial instruments to manage the international currency exchange risk. We cannot assure you, however, that our efforts will successfully neutralize all international currency risks.

Acquired properties may be located in new markets, where we may face risks associated with investing in an unfamiliar market.

We have acquired and may continue to acquire properties on a strategic and selective basis in international markets that are new to us. When we acquire properties located in these markets, we may face risks associated with a lack of market knowledge or understanding of the local economy, forging new business relationships in the area and unfamiliarity with local government and permitting procedures. We work to mitigate such risks through

extensive diligence and research and associations with experienced partners; however, there can be no guarantee that all such risks will be eliminated.

General Business Risks

Our performance and value are impacted by the local economic conditions of and the risks associated with doing business in California.

As of December 31, 2008, our industrial properties located in California represented 23.7% of the aggregate square footage of our industrial operating properties and 22.3% of our industrial annualized base rent, on an owned and managed basis. Our revenue from, and the value of, our properties located in California may be affected by local real estate conditions (such as an 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 California’s economic climate. Because of the number of properties we have located in California, a downturn in California’s economy or real estate conditions could adversely affect our financial condition, results of operations, cash flow and ability to make distributions to our unitholders and payments to our notetholders.

We may experience losses that our insurance does not cover.

We carry commercial liability, property and rental loss insurance covering all the properties that we own and manage in types and amounts that we believe are adequate and appropriate given the relative risks applicable to the property, the cost of coverage and industry practice. Certain losses, such as those 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 consider commercially reasonable given the cost and availability of such coverage, we cannot be certain that we will be able to renew coverage on comparable terms or collect under such policies. In addition, there are other types of losses, such as those from riots, bio-terrorism or acts of war, that are not generally insured in our industry because it is not economically feasible to do so. 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. Given current market conditions, there can also be no assurance that the insurance companies providing our coverage will not fail or have difficulty meeting their coverage obligations to us. Furthermore, we cannot assure you that our insurance companies will be able to continue to offer products with sufficient coverage at commercially reasonable rates. If we experience a loss that is uninsured or that exceeds our insured limits with respect to one or more of our properties or if our insurance companies fail to meet their coverage commitments to us in the event of an insured loss, then we could lose the capital invested in the damaged properties, as well as the anticipated future revenue from those properties and, if there is recourse debt, then we would remain obligated for any mortgage debt or other financial obligations related to the properties. Moreover, as the general partner of the co-investment ventures, we generally will be liable for all of the co-investment ventures’ unsatisfied recourse obligations. Any such losses or higher insurance costs could adversely affect our financial condition, results of operations, cash flow and ability to make distributions to our unitholders and payments to our noteholders.

A number of our properties are located in areas that are known to be subject to earthquake activity. U.S. properties located in active seismic areas include properties in the San Francisco Bay Area, Los Angeles, and Seattle. Our largest concentration of such properties is in California where, on an owned and managed basis, as of December 31, 2008, we had 296 industrial buildings, aggregating approximately 31.2 million square feet and representing 23.7% of our industrial operating properties based on aggregate square footage and 22.3% based on industrial annualized base rent, on an owned and managed basis. International properties located in active seismic areas include Tokyo and Osaka, Japan and Mexico City, Mexico. We carry 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. We evaluate our earthquake insurance coverage annually in light of current industry practice through an analysis prepared by outside consultants.

A number of our properties are located in areas that are known to be subject to hurricane and/or flood risk. We carry hurricane and flood hazard insurance on all of our properties located in areas historically subject to such activity, subject to coverage limitations and deductibles that we believe are commercially reasonable. We evaluate our insurance coverage annually in light of current industry practice through an analysis prepared by outside consultants.

Contingent or unknown liabilities could adversely affect our financial condition.

We have acquired and may in the future acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities. As a result, if a liability were asserted against us based upon ownership of any of these entities or properties, then we might have to pay substantial sums to settle it, which could adversely affect our cash flow. Contingent or unknown liabilities with respect to entities or properties acquired might include:


	•	liabilities for environmental conditions;

	•	losses in excess of our insured coverage;

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

	•	tax, legal and regulatory liabilities;

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

	•	claims for indemnification by the general partners, officers and directors and others indemnified by the former owners of our properties.

Risks Associated With Our General Partner’s Dependence on Key Personnel

We depend on the efforts of our general partner’s executive officers and other key employees. From time to time, our personnel and their roles may change. As part of our cost savings plan, we have reduced our total global headcount and may do so again in the future. While we believe that we have retained our key talent and left our global platform intact and can find suitable employees to meet our personnel needs, the loss of key personnel, any change in their roles, or the limitation of their availability could adversely affect our financial condition, results of operations, cash flow and ability to make distributions to our unitholders and payments to our noteholders. AMB Property Corporation does not have employment agreements with any of its executive officers.

Because our compensation packages include equity-based incentives, pressure on our general partner’s stock price or limitations on our ability to award such incentives could affect our ability to offer competitive compensation packages to our general partner’s executives and our key employees. If we are unable to continue to attract and retain our general partner’s executive officers, or if compensation costs required to attract and retain key employees become more expensive, our performance and competitive position could be materially adversely affected.

Conflicts of Interest Risks

Some of AMB Property Corporation’s directors and executive officers are involved in other real estate activities and investments and, therefore, may have conflicts of interest with us.

From time to time, certain of AMB Property Corporation’s executive officers and directors may own interests in other real-estate related businesses and investments, including de minimis holdings of the equity securities of public and private real estate companies. AMB Property Corporation’s executive officers’ involvement in other real estate-related activities could divert their attention from our day-to-day operations. AMB Property Corporation’s executive officers have entered into non-competition agreements with AMB Property Corporation 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 certain specified investments. State law may limit AMB property Corporation’s ability to enforce these agreements. We will not acquire any properties from AMB Property Corporation’s executive officers, directors or their affiliates unless the transaction is approved by a majority of the disinterested and independent (as defined by the rules of the New York Stock Exchange) members of AMB Property Corporation’s board of directors with respect to that transaction.

AMB Property Corporation’s duty to its stockholders may conflict with the interests of our limited partners and noteholders.

AMB Property Corporation has fiduciary obligations to its stockholders, the discharge of which may conflict with the interests of our limited partners and noteholders.

Risks Associated with Government Regulations

The costs of compliance with environmental laws and regulations and any related potential liability could exceed our budgets for these items.

Under various environmental laws, ordinances and regulations, a current or previous owner or operator of real estate may be liable for the costs of investigation, removal or remediation of certain hazardous or toxic substances or petroleum products at, on, under, in or from its property. The costs of removal or remediation of such substances could be substantial. 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 the environmental contamination.

Environmental laws in some countries, including the United States, also require that owners or operators of buildings containing asbestos properly manage and maintain the asbestos, adequately inform or train those who may come into contact with asbestos and undertake special precautions, including removal or other abatement, in the event that asbestos is disturbed during building renovation or demolition. These laws may impose fines and penalties on building owners or operators who fail 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. Some of our properties are known to contain asbestos-containing building materials.

In addition, 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, creating a potential for the release of such hazardous or toxic substances. Further, certain of our properties are on, adjacent to or near other properties that have contained or currently contain petroleum products or other hazardous or toxic substances, or upon which others have engaged, are engaged or may engage in activities that may release such 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 that the acquisition will yield a superior risk-adjusted return. In such an instance, we underwrite the costs of environmental investigation, clean-up and monitoring into the acquisition cost and obtain appropriate environmental insurance for the property. Further, 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.

At the time of acquisition, we subject all of our properties to a Phase I or similar environmental assessment by independent environmental consultants, and we may have additional Phase II testing performed upon the consultant’s recommendation. These environmental assessments have not revealed, and we are not aware of, any environmental liability that we believe would have a material adverse effect on our financial condition or results of operations taken as a whole. Nonetheless, it is possible that the assessments did not reveal all environmental liabilities and that there are material environmental liabilities unknown to us, or that known environmental conditions may give rise to liabilities that are greater than we anticipated. Further, our properties’ current environmental condition 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 unrelated third parties. 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 make distributions to our unitholders and payments to our noteholders could be adversely affected.

Compliance or failure to comply with the Americans with Disabilities Act and other similar regulations could result in substantial costs.

Under the Americans with Disabilities Act, places of public accommodation must meet certain federal requirements related to access and use by disabled persons. Noncompliance could result in the imposition of fines by the federal government or the award of damages to private litigants. If we are required to make unanticipated expenditures to comply with the Americans with Disabilities Act, including removing access barriers, then our cash flow and the amounts available for distributions to our unitholders and payments to our noteholders may be adversely affected. Our properties are also subject to various federal, state and local regulatory requirements, such as state and local fire and life-safety requirements. We could incur fines or private damage awards if we fail to comply with these requirements. While we believe that our properties are currently in material compliance with these regulatory requirements, the requirements may change or new requirements may be imposed that could require significant unanticipated expenditures by us that will affect our cash flow and results of operations.

Federal Income Tax Risks

Our general partner’s failure to qualify as a real estate investment trust would have serious adverse consequences to our unitholders.

Our general partner elected to be taxed as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), commencing with its taxable year ended December 31, 1997. Our general partner believes it has operated so as to qualify as a real estate investment trust under the Internal Revenue Code and believes that its current organization and method of operation comply with the rules and regulations promulgated under the Internal Revenue Code to enable it to continue to qualify as a real estate investment trust. However, it is possible that our general partner has been organized or has operated in a manner that would not allow it to qualify as a real estate investment trust, or that its future operations could cause it to fail to qualify. Qualification as a real estate investment trust requires our general partner to satisfy numerous requirements (some on an annual and others on a quarterly basis) established under highly technical and complex sections of the Internal Revenue Code for which there are only limited judicial and administrative interpretations, and involves the determination of various factual matters and circumstances not entirely within its control. For example, in order to qualify as a real estate investment trust, our general partner must derive at least 95% of its gross income in any year from qualifying sources. In addition, it must pay dividends to its stockholders aggregating annually at least 90% of its 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. While historically our general partner has satisfied the distribution requirement by making cash distributions to its stockholders, it may choose to satisfy this requirement by making distributions of cash or other property, including, in limited circumstances, its own stock. For distributions with respect to taxable years ending on or before December 31, 2009, recent Internal Revenue Service guidance allows our general partner to satisfy up to 90% of this distribution requirement through the distribution of shares of its stock, if certain conditions are met. The provisions of the Internal Revenue Code and applicable Treasury regulations regarding qualification as a real estate investment trust are more complicated in our general partner’s case because it holds its assets through us. 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 general partner’s ability to qualify as a real estate investment trust.

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

Furthermore, we own a direct or indirect interest in certain subsidiary REITs which elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code. Provided that each subsidiary REIT qualifies

as a REIT, our interest in such subsidiary REIT will be treated as a qualifying real estate asset for purposes of the REIT asset tests, and any dividend income or gains derived by us from such subsidiary REIT will generally be treated as income that qualifies for purposes of the REIT gross income tests. To qualify as a REIT, the subsidiary REIT must independently satisfy various REIT qualification requirements. If such subsidiary REIT were to fail to qualify as a REIT, and certain relief provisions did not apply, it would be treated as a regular taxable corporation and its income would be subject to United States federal income tax. In addition, a failure of the subsidiary REIT to qualify as a REIT would have an adverse effect on our general partner’s ability to comply with the REIT income and asset tests, and thus our general partner’s ability to qualify as a REIT.

Certain property transfers may generate prohibited transaction income, resulting in a penalty tax on gain attributable to the transaction.

From time to time, we may transfer or otherwise dispose of some of our properties, including by contributing properties to our co-investment venture funds. Under the Internal Revenue Code, any gain resulting from transfers of properties we hold as inventory or primarily for sale to customers in the ordinary course of business is treated as income from a prohibited transaction subject to a 100% penalty tax. We do not believe that our transfers or disposals of property or our contributions of properties into our co-investment ventures are prohibited transactions. 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 dispositions of properties by us or contributions of properties into our co-investment venture funds are prohibited transactions. While we believe that the Internal Revenue Service would not prevail in any such dispute, if the Internal Revenue Service were to argue successfully that a transfer, disposition, or contribution of property constituted a prohibited transaction, our general partner would be required to pay a 100% penalty tax on any gain allocable to us from the prohibited transaction. In addition, income from a prohibited transaction might adversely affect our general partner’s ability to satisfy the income tests for qualification as a real estate investment trust.

Risks Associated with Our Disclosure Controls and Procedures and Internal Control over Financial Reporting

Our business could be adversely impacted if we have deficiencies in our disclosure controls and procedures or internal control over financial reporting.

The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors, misstatements or misrepresentations. While management will continue to review the effectiveness of our disclosure controls and procedures and internal control over financial reporting, there can be no guarantee that our internal control over financial reporting will be effective in accomplishing all control objectives all of the time. Furthermore, our disclosure controls and procedures and internal control over financial reporting with respect to entities that we do not control or manage or third-party entities that we may acquire may be substantially more limited than those we maintain with respect to the subsidiaries that we have controlled or managed over the course of time. Deficiencies, including any material weakness, in our internal control over financial reporting which may occur in the future could result in misstatements of our results of operations, restatements of our financial statements, or otherwise materially adversely affect our business, reputation, results of operations, financial condition or liquidity.


ITEM 1B.	Unresolved Staff Comments

None.


ITEM 2.	Properties

INDUSTRIAL PROPERTIES

As of December 31, 2008, we owned and managed 1,116 industrial buildings aggregating approximately 131.5 million rentable square feet (on a consolidated basis, we had 696 industrial buildings aggregating approximately 72.8 million rentable square feet), excluding development and renovation projects and recently completed development projects available for sale or contribution, located in 49 global markets throughout the Americas, Europe and Asia. Our industrial properties were 95.1% leased to 2,602 customers, the largest of which accounted

for no more than 4.1% of our annualized base rent from our industrial properties. See Part IV, Item 15: Note 16 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 types and characteristics of our industrial buildings and each type’s percentage, based on square footage, of our total owned and managed operating portfolio:


		December 31,
Building Type	Description	2008			2007

Warehouse	Customers typically 15,000-75,000 square feet, single or multi-customer		53.6	%		51.6	%
Bulk Warehouse	Customers typically over 75,000 square feet, single or multi-customer		36.2	%		37.1	%
Flex Industrial	Includes assembly or research & development, single or multi-customer		3.4	%		3.6	%
Light Industrial	Smaller customers, 15,000 square feet or less, higher office finish		2.7	%		3.0	%
Air Cargo	On-tarmac or airport land for transfer of air cargo goods		2.5	%		2.8	%
Trans-Shipment	Unique configurations for truck terminals and cross-docking		1.1	%		1.3	%
Office	Single or multi-customer, used strictly for office		0.5	%		0.6	%

			100.0	%		100.0	%

Lease Terms. Our industrial properties are typically subject to leases 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 Consumer Price Index-based rental increases. Lease terms typically range from three to ten years, with a weighted average of six years, excluding renewal options. However, the majority of our industrial leases do not include renewal options.

Overview of Our Global Market Presence. Our industrial properties are located in the following markets:


The Americas		Europe	Asia

Atlanta	Northern New Jersey/	Amsterdam	Beijing
Austin	New York City	Bremerhaven	Guangzhou
Baltimore/Washington D.C.	Orlando	Brussels	Nagoya
Boston	Querétaro	Frankfurt	Osaka
Chicago	Reynosa	Hamburg	Seoul
Dallas/Ft. Worth	San Francisco Bay Area	Le Havre	Shanghai
Guadalajara	Savannah	London	Singapore
Houston	Seattle	Lyon	Tokyo
Mexico City	South Florida	Madrid
Minneapolis	Southern California	Milan
Monterrey	Tijuana	Paris
New Orleans	Toronto	Rotterdam
		Warsaw

Within these metropolitan areas, our industrial properties are generally 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 infill locations are typically near major airports or seaports or convenient to major highway systems and rail lines, and are proximate to large and diverse labor pools. 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.

Portfolio Overview

The following includes our owned and managed operating portfolio and development properties, investments in operating properties through non-managed unconsolidated joint ventures, and recently completed developments that have not yet been placed in operations but are being held for sale or contribution:


											Year-to-Date			Trailing Four
			AMB’s Share						Annualized		Same Store NOI			Quarters Rent
	Square Feet		of Square			2008			Base Rent(1)		Growth Without			Change on
	as of		Feet as of			Average			psf as of		Lease			Renewals and
Markets	12/31/2008		12/31/2008			Occupancy			12/31/2008		Termination Fees(2)			Rollovers(3)

Southern California		20,135,479		55.2	%		97.1	%	$	6.43		6.2	%		8.4	%
Chicago		13,395,861		52.6	%		90.3	%		5.45		(2.4	)%		0.1	%
No. New Jersey/New York		11,351,674		48.4	%		98.5	%		7.45		4.8	%		3.0	%
San Francisco Bay Area		10,908,232		71.3	%		93.0	%		6.64		1.4	%		4.7	%
Seattle		8,645,277		47.1	%		96.9	%		5.23		7.9	%		7.6	%
South Florida		6,279,591		70.8	%		95.3	%		7.54		0.6	%		10.1	%
U.S. On-Tarmac(4)		2,630,724		92.7	%		92.3	%		19.09		(1.4	)%		(2.8	)%
Other U.S. Markets		28,690,611		63.2	%		93.3	%		5.63		1.4	%		0.5	%

U.S. Subtotal/Wtd Avg		102,037,449		59.3	%		94.6	%	$	6.50		2.6	%		3.8	%

Canada		2,441,076		100.0	%		97.2	%	$	4.96		0.0	%		4.9	%

Mexico City		3,590,942		47.4	%		98.0	%	$	5.94		11.3	%		(3.0	)%
Guadalajara		2,890,526		21.6	%		96.1	%		4.66		4.3	%		0.9	%
Other Mexico Markets		419,845		26.8	%		100.0	%		5.20		1.3	%		n/a

Mexico Subtotal/Wtd Avg		6,901,313		35.4	%		97.4	%	$	5.36		8.8	%		(0.7	)%

The Americas Total/Wtd Avg		111,379,838		58.7	%		94.8	%	$	6.39		2.8	%		3.7	%


France		3,432,527		22.3	%		94.8	%	$	8.86		5.7	%		(21.5	)%
Germany		3,191,670		30.3	%		97.0	%		8.92		(2.0	)%		3.5	%
Benelux		2,835,213		20.8	%		99.2	%		10.11		17.2	%		5.9	%
Other Europe Markets		343,077		61.9	%		100.0	%		13.50		0.0	%		n/a

Europe Subtotal/Wtd Avg(5)		9,802,487		25.9	%		97.0	%	$	9.42		5.9	%		(14.6	)%


Tokyo		5,263,053		20.0	%		93.0	%	$	15.17		12.4	%		4.5	%
Osaka		2,000,037		59.2	%		93.0	%		11.83		17.1	%		0.9	%

Japan Subtotal/Wtd Avg(5)		7,263,090		30.8	%		93.0	%	$	14.25		13.2	%		3.3	%

China		1,908,646		100.0	%		94.2	%	$	4.59		9.4	%		11.1	%
Singapore		935,926		100.0	%		99.3	%		9.48		14.2	%		4.2	%
Other Asia Markets		218,132		100.0	%		100.0	%		6.65		0.0	%		n/a

Asia Total/Wtd Avg(5)		10,325,794		51.3	%		93.9	%	$	12.00		11.4	%		4.0	%


Owned and Managed Total/Wtd Avg(6)		131,508,119		55.7	%		94.9	%	$	7.05		3.7	%		3.1	%
Other Real Estate Investments(7)		7,495,659		54.3	%		94.1	%		5.32

Total Operating Portfolio		139,003,778		55.6	%		94.9	%	$	6.96

Development
Pipeline		16,437,557		90.2	%
Available for Sale or Contribution(8)		4,553,798		93.4	%

Development Subtotal		20,991,355		90.9	%

Total Global Portfolio		159,995,133		60.2	%


(1)		Annualized base rent (“ABR”) is calculated as monthly base rent (cash basis) per the terms of the lease, as of December 31, 2008, multiplied by 12.

(2)		See Part II, Item 7: “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Supplemental Earnings Measures” for a reconciliation to net income and a discussion of why management believes same store cash basis NOI is a useful supplemental measure for our management and investors, ways to use this measure when assessing our financial performance, and the limitations of the measure as a measurement tool.

(3)		Rent changes on renewals and rollovers are calculated as the difference, weighted by square feet, of the net ABR due the first month of a term commencement and the net ABR due the last month of the former tenant’s term. If free rent is granted, then the first positive full rent value is used as a point of comparison. The rental amounts exclude base stop amounts, holdover rent and premium rent charges. If either the previous or current


		lease terms are under 12 months, then they are excluded from this calculation. If the lease is first generation or there is no prior lease for comparison, then it is excluded from this calculation.

(4)		Includes domestic on-tarmac air cargo facilities at 14 airports.

(5)		Annualized base rent for leases denominated in foreign currencies is translated using the currency exchange rate at December 31, 2008.

(6)		Owned and managed is defined by us as assets in which we have at least a 10% ownership interest, for which we are the property or asset manager, and which we currently intend to hold for the long term.

(7)		Includes investments in operating properties through our investments in unconsolidated joint ventures that we do not manage, and are therefore excluded from our owned and managed portfolio, and the location of our global headquarters.

(8)		Represents development projects available for sale or contribution that are not included in the operating portfolio.

Lease Expirations(1)

The following table summarizes the lease expirations for our owned and managed operating properties for leases in place as of December 31, 2008, without giving effect to the exercise of renewal options or termination rights, if any, at or prior to the scheduled expirations:


	Square		Annualized Base		% of Annualized
Year	Feet		Rent (000’s)(2)(3)		Base Rent(2)

2009		23,444,706	$	149,454		16.8	%
2010		19,278,934		131,344		14.7	%
2011		22,593,857		158,835		17.8	%
2012		15,059,276		118,395		13.3	%
2013		13,692,677		98,151		11.0	%
2014		10,522,141		80,243		9.0	%
2015		6,007,611		44,524		5.0	%
2016		3,157,107		20,962		2.3	%
2017		3,685,865		26,806		3.0	%
2018+		8,235,934		63,319		7.1	%

Total		125,678,108	$	892,033		100.0	%


(1)		Schedule includes leases that expire on or after December 31, 2008. Schedule includes owned and managed operating properties which we define as properties in which we have at least a 10% ownership interest, for which we are the property or asset manager, and which we currently intend to hold for the long term.

(2)		Annualized base rent is calculated as monthly base rent (cash basis) per the terms of the lease, as of December 31, 2008, multiplied by 12. If free rent is granted, then the first positive rent value is used. Leases denominated in foreign currencies are translated using the currency exchange rate at December 31, 2008.

(3)		Apron rental amounts (but not square footage) are included.

Customer Information(1)

Top Customers. As of December 31, 2008, our largest customers by annualized base rent, on an owned and managed basis, are set forth in the table below:


				Annualized
		Square		Base (000’s)		% of Annualized
Customer(2)		Feet		Rent(3)		Base Rent(3)(4)

1	Deutsche Post World Net (DHL)(5)		4,546,771	$	35,812		4.1	%
2	United States Government(5)(6)		1,393,646		20,770		2.4	%
3	FedEx Corporation(5)		1,469,895		15,035		1.7	%
4	Nippon Express		1,074,128		13,096		1.5	%
5	Sagawa Express		729,135		11,992		1.4	%
6	BAX Global Inc/Schenker/DeutscheBahn(5)		1,044,503		9,924		1.1	%
7	Panalpina		1,316,351		8,727		1.0	%
8	La Poste		902,391		8,249		0.9	%
9	UPS		1,263,715		8,075		0.9	%
10	Caterpillar Logistics Services		543,039		7,977		0.9	%

	Subtotal		14,283,574	$	139,657		15.9	%
	Top 11-20 Customers		6,784,688		52,058		5.9	%

	Total		21,068,262	$	191,715		21.8	%


(1)		Schedule includes owned and managed operating properties.

(2)		Customer(s) may be a subsidiary of or an entity affiliated with the named customer.

(3)		Annualized base rent is calculated as monthly base rent (cash basis) per the terms of the lease, as of December 31, 2008, multiplied by 12. If free rent is granted, then the first positive rent value is used. Leases denominated in foreign currencies are translated using the currency exchange rate at December 31, 2008.

(4)		Computed as aggregate annualized base rent divided by the aggregate annualized base rent of operating properties.

(5)		Airport apron rental amounts (but not square footage) are included.

(6)		United States Government includes the United States Postal Service, United States Customs, United States Department of Agriculture and various other U.S. governmental agencies.

OWNED AND MANAGED OPERATING STATISTICS

Owned and Managed Operating and Leasing Statistics(1)

The following table summarizes key operating and leasing statistics for all of our owned and managed operating properties as of and for the years ended December 31, 2008, 2007 and 2006:


Operating Portfolio	2008			2007			2006

Square feet owned(2)(3)		131,508,119			118,180,295			100,702,915
Occupancy percentage(3)		95.1	%		96.0	%		96.1	%
Average occupancy percentage		94.9	%		95.1	%		95.3	%

Weighted average lease terms (years):
Original		6.2			6.2			6.1
Remaining		3.4			3.5			3.3

Trailing four quarters tenant retention		71.5	%		74.0	%		70.9	%

Trailing four quarters rent change on renewals and rollovers:(4)
Percentage		3.1	%		4.9	%		(0.1	)%
Same space square footage commencing (millions)		18.4			19.2			16.2

Trailing four quarters second generation leasing activity:(5)
Tenant improvements and leasing commissions per sq. ft.:
Retained	$	1.43		$	1.19		$	1.41
Re-tenanted	$	3.23		$	3.25		$	3.19
Weighted average	$	2.02		$	2.03		$	2.20
Square footage commencing (millions)		22.0			22.8			19.1


(1)		Schedule includes owned and managed operating properties. This excludes development and renovation projects and recently completed development projects available for sale or contribution.

(2)		As of December 31, 2008, one of our subsidiaries also managed approximately 1.1 million additional square feet of properties representing the IAT portfolio on behalf of the IAT Air Cargo Facilities Income Fund. In December 2008, we entered into a definitive agreement to terminate our management agreement with IAT Air Cargo Facilities Income Fund, effective in the first quarter of 2009. As of December 31, 2008, we also had investments in 7.4 million square feet of operating properties through our investments in non-managed unconsolidated joint ventures and 0.1 million square feet, which is the location of our global headquarters.

(3)		On a consolidated basis, we had approximately 72.8 million rentable square feet with an occupancy rate of 94.5% at December 31, 2008.

(4)		Rent changes on renewals and rollovers are calculated as the difference, weighted by square feet, of the net ABR due the first month of a term commencement and the net ABR due the last month of the former customer’s term. If free rent is granted, then the first positive full rent value is used as a point of comparison. The rental amounts exclude base stop amounts, holdover rent and premium rent charges. If either the previous or current lease terms are under 12 months, then they are excluded from this calculation. If the lease is first generation or there is no prior lease for comparison, then it is excluded from this calculation.

(5)		Second generation tenant improvements and leasing commissions per square foot are the total cost of tenant improvements, leasing commissions and other leasing costs incurred during leasing of second generation space divided by the total square feet leased. Costs incurred prior to leasing available space are not included until such space is leased. Second generation space excludes newly developed square footage or square footage vacant at acquisition.

Owned and Managed Same Store Operating Statistics(1)

The following table summarizes key operating and leasing statistics for our owned and managed same store operating properties as of and for the years ended December 31, 2008, 2007 and 2006:


Same Store Pool(2)	2008			2007			2006

Square feet in same store pool(3)		100,912,256			85,192,781			77,291,866
% of total square feet		76.7	%		72.1	%		76.8	%
Occupancy percentage(3)		94.8	%		96.4	%		97.0	%
Average occupancy percentage		94.6	%		95.9	%		95.9	%

Weighted average lease terms (years):
Original		5.8			6.1			6.0
Remaining		2.8			3.1			3.0

Trailing four quarters tenant retention		71.7	%		73.4	%		72.5	%

Trailing four quarters rent change on renewals and rollovers:(4)
Percentage		2.7	%		5.0	%		(0.4	)%
Same space square footage commencing (millions)		17.3			17.6			15.7

Growth % increase (including straight-line rents):
Revenues(5)		3.4	%		4.3	%		2.1	%
Expenses(5)		5.0	%		6.7	%		3.5	%
Net operating income, excluding lease termination fees(5)(6)		2.8	%		3.4	%		1.6	%

Growth % increase (excluding straight-line rents):
Revenues(5)		4.0	%		5.6	%		2.8	%
Expenses(5)		5.0	%		6.7	%		3.5	%
Net operating income, excluding lease termination fees(5)(6)		3.7	%		5.1	%		2.6	%


(1)		Schedule includes owned and managed operating properties. This excludes development and renovation projects and recently completed development projects available for sale or contribution.

(2)		Same store pool includes all properties that are owned as of both the current and prior year reporting periods and excludes development properties for both the current and prior reporting years. The same store pool is set annually and excludes properties purchased and developments stabilized (generally defined as properties that are 90% leased or properties that have been substantially complete for at least 12 months) after December 31, 2006, 2005 and 2004 for the years ended December 31, 2008, 2007 and 2006, respectively.

(3)		On a consolidated basis, we had approximately 65.0 million square feet with an occupancy rate of 94.8% at December 31, 2008.

(4)		Rent changes on renewals and rollovers are calculated as the difference, weighted by square feet, of the net ABR due the first month of a term commencement and the net ABR due the last month of the former customer’s term. If free rent is granted, then the first positive full rent value is used as a point of comparison. The rental amounts exclude base stop amounts, holdover rent and premium rent charges. If either the previous or current lease terms are under 12 months, then they are excluded from this calculation. If the lease is first generation or there is no prior lease for comparison, then it is excluded from this calculation.

(5)		As of December 31, 2008, on a consolidated basis, the percentage change was 1.4%, 2.4% and 1.0%, respectively, for revenues, expenses and NOI (including straight-line rents) and 2.1%, 2.4% and 2.0%, respectively, for revenues, expenses and NOI (excluding straight-line rents).

(6)		See Part II, Item 7: “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Supplemental Earnings Measures” for a discussion of same store net operating income and cash-basis same store net operating income and a reconciliation of same store net operating income and cash-basis same store net operating income and net income.

DEVELOPMENT PROPERTIES

Development Pipeline(1)

The following table sets forth the properties owned by us as of December 31, 2008, that are currently under development.

Industrial Projects Under Development
(dollars in thousands)


	2009 Expected Stabilizations					2010 Expected Stabilizations					Total
	Estimated		Estimated			Estimated		Estimated			Estimated		Estimated			% of Total
	Square Feet at		Total			Square Feet at		Total			Square Feet at		Total			Estimated
	Stabilization(2)		Investment(3)(4)			Stabilization(2)		Investment(3)(4)			Stabilization(2)		Investment(3)(4)			Investment(2)(3)(4)

The Americas
United States		5,580,595	$	449,120			189,740	$	16,552			5,770,335	$	465,672			35.3	%
Other Americas		3,741,731		229,681			875,533		55,362			4,617,264		285,043			21.6	%

The Americas Total		9,322,326	$	678,801			1,065,273	$	71,914			10,387,599	$	750,715			56.9	%

Europe
France		460,050	$	44,244			340,441	$	28,944		$	800,491	$	73,188			5.5	%
Germany		—		—			413,958		48,781			413,958		48,781			3.7	%
Benelux		1,054,754		122,429			—		—			1,054,754		122,429			9.3	%
Other Europe		436,916		38,715			—		—			436,916		38,715			2.9	%

Europe Total		1,951,720	$	205,388			754,399	$	77,725			2,706,119	$	283,113			21.5	%

Asia
Japan		685,757	$	122,762			417,833	$	55,215			1,103,590		177,977			13.5	%
China		617,062		29,211			1,623,187		78,001			2,240,249		107,212			8.1	%
Other Asia		—		—			—		—			—		—			0.0	%

Asia Total		1,302,819	$	151,973			2,041,020	$	133,216			3,343,839	$	285,189			21.6	%


Total		12,576,865	$	1,036,162			3,860,692	$	282,855			16,437,557	$	1,319,017			100.0	%

Real estate impairment losses(5)														(42,368	)

Estimated total investment, net of real estate impairment losses													$	1,276,649


Number of Projects				43					10					53
Funded-to-Date(6)			$	920,346				$	136,862				$	1,057,208
AMB’s Weighted Average Ownership Percentage				90.5	%				98.8	%				92.3	%
AMB’s Share of Amounts Funded to Date(6)			$	834,025				$	134,682				$	968,707
AMB’s Share of Amounts Funded to Date Percentage(6)(7)(8)				88.9	%				48.2	%				79.6	%
AMB’s Share of Remainder to Fund(6)(7)			$	103,862				$	144,697				$	248,559
Weighted Average Estimated Yield(7)(9)				7.5	%				7.4	%				7.5	%
Percent Pre-Leased(10)				46.0	%				3.8	%				36.1	%


(1)		Includes investments held through unconsolidated joint ventures.

(2)		Stabilization is generally defined as properties that are 90% leased or properties that have been substantially complete for at least 12 months.

(3)		Represents total estimated cost of development, renovation, or expansion, including initial acquisition costs, prepaid ground leases, buildings, tenant improvements and associated capitalized interest and overhead costs. Estimated total investments are based on current forecasts and are subject to change. Non-U.S. dollar investments are translated to U.S. dollars using the exchange rate at December 31, 2008. We cannot assure you that any of these projects will be completed on schedule or within budgeted amounts.

(4)		Includes value-added conversion projects.

(5)		See Part IV, Item 15: Note 3 of “Notes to Consolidated Financial Statements” for discussion of real estate impairment losses.

(6)		Amounts include capitalized interest and overhead costs, as applicable.

(7)		Calculated using estimated total investment before the impact of real estate impairment losses.

(8)		Calculated as our share of amounts funded to date to our share of estimated total investment.

(9)		Yields exclude value-added conversion projects and are calculated on an after-tax basis for international projects.

(10)		Percent pre-leased represents the executed lease percentage of total square feet as of the reporting data.

Completed Development Projects Available for Sale or Contribution(1)

The following table sets forth completed development projects that we intend to either sell or contribute to co-investment funds as of December 31, 2008 (dollars in thousands):


			Total
	Square Feet		Investment(2)

The Americas
United States		928,751	$	86,882
Other Americas		—		—

The Americas Total		928,751	$	86,882
Europe
France		277,817	$	23,304
Germany		139,608		18,850
Benelux		110,712		16,606
Other Europe		585,971		70,138

Europe Total		1,114,108	$	128,898
Asia
Japan		2,148,194	$	387,511
China		—		—
Other Asia		362,745		25,767

Asia Total		2,510,939	$	413,278

Total		4,553,798	$	629,058

Real estate impairment losses(3)				(16,205	)

Total investment, net of real estate impairment losses			$	612,853

AMB’s Weighted Average Ownership Percentage				92.9	%
Weighted Average Estimated Yield(4)				7.0	%
Percent Pre-leased				45.2	%


(1)		Represents projects where development activities have been completed and which we intend to sell or contribute within two years of construction completion. Includes investments held through unconsolidated joint ventures.

(2)		Represents total estimated cost of development, renovation, or expansion, including initial acquisition costs, prepaid ground leases, buildings, tenant improvements and associated capitalized interest and overhead costs. Estimated total investments are based on current forecasts and are subject to change. Non-U.S. dollar investments are translated to U.S. dollars using the exchange rate at December 31, 2008.

(3)		See Part IV, Item 15: Note 3 of “Notes to Consolidated Financial Statements” for discussion of real estate impairment losses.

(4)		Calculated using estimated total investment before the impact of real estate impairment losses.

Properties Held Through Co-investment Ventures, Limited Liability Companies and Partnerships

The following table summarizes our eight consolidated and unconsolidated significant co-investment ventures as of December 31, 2008:

Principal

Incentive

Date

Geographic

Venture

Functional

Distribution

Co-investment Venture

Established

Focus

Investors

Currency

Frequency

Term

Consolidated

AMB-SGP

March 2001

United States

Subsidiary of GIC Real Estate Pte Ltd.

USD

10 years

March 2011; extendable 10 years

AMB Institutional Alliance Fund II

June 2001

United States

Various

USD

At dissolution

December 2014 (estimated)

AMB-AMS

June 2004

United States

Various

USD

At dissolution

December 2012; extendable 4 years

Unconsolidated

AMB Institutional Alliance Fund III

October 2004

United States

Various

USD

3 years (next 2Q11)

Open ended

AMB-SGP Mexico

December 2004

Mexico

Subsidiary of GIC Real Estate Pte Ltd.

USD

7 years

December 2011; extendable 7 years

AMB Japan Fund I

June 2005

Japan

Various

JPY

At dissolution

June 2013; extendable 2 years

AMB DFS Fund I

October 2006

United States

GE Real Estate

USD

Upon project sales

Perpetual

AMB Europe Fund I

June 2007

Europe

Various

EUR

3 years (next 2Q10)

Open ended

Consolidated Joint Ventures

As of December 31, 2008, we held interests in co-investment ventures, limited liability companies and partnerships with institutional investors and other third parties, which we consolidate in our financial statements. We determine consolidation based on standards set forth in FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities — An Interpretation of ARB No. 51 (FIN 46) or EITF Issue No. 04-5 (EITF 04-5), Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights and SOP 78-9, Accounting for Investments in Real Estate Ventures. Based on the guidance set forth in EITF 04-5, we consolidate certain joint venture investments because we exercise significant control over major operating decisions, such as approval of budgets, selection of property managers, asset management, investment activity and changes in financing. We are the general partner (or equivalent of a general partner in entities not structured as partnerships) in a number of our consolidated joint venture investments. In all such cases, the limited partners in such investments (or equivalent of limited partners in such investments which are not structured as partnerships) do not have rights described in EITF 04-5, which would preclude consolidation. We consolidate certain other joint ventures where we are not the general partner (or equivalent of a general partner in entities not structured as partnerships) because we have control over those entities through majority ownership, retention of the majority of economics, and a combination of substantive kick-out rights and/or substantive participating rights.

Under the agreements governing the co-investment ventures, we and the other party to the co-investment venture may be required to make additional capital contributions and, subject to certain limitations, the co-investment ventures may incur additional debt. Such agreements also impose certain restrictions on the transfer of co-investment venture interests by us or the other party to the co-investment venture and typically provide certain rights to us or the other party to the co-investment venture to sell our or their interest in the co-investment venture to the co-investment venture or to the other co-investment venture partner on terms specified in the agreement. In addition, under certain circumstances, many of the co-investment ventures include buy/sell provisions. See Part IV, Item 15: Notes 9 and 10 of the “Notes to Consolidated Financial Statements” for additional details.

The table that follows summarizes our consolidated joint ventures as of December 31, 2008 (dollars in thousands):


	Our					Gross
	Ownership			Square		Book		Property		Other
Consolidated Joint Ventures	Percentage			Feet(1)		Value(2)		Debt		Debt

Operating Co-investment Ventures
AMB-SGP(3)		50	%		8,288,663	$	461,981	$	341,855	$	—
AMB Institutional Alliance Fund II(4)		20	%		8,006,081		533,491		232,856		50,000
AMB-AMS(5)		39	%		2,172,137		157,034		83,337		—

Total Operating Co-investment Ventures		35	%		18,466,881		1,152,506		658,048		50,000
Development Co-investment Ventures
AMB Institutional Alliance Fund II(4)		20	%		98,560		5,415		—		—

Total Development Co-investment Ventures		20	%		98,560		5,415		—		—

Total Consolidated Co-investment Ventures		35	%		18,565,441		1,157,921		658,048		50,000
Other Industrial Operating Joint Ventures		92	%		2,196,134		212,472		21,544		—
Other Industrial Development Joint Ventures		65	%		1,551,047		299,687		128,501		—

Total Consolidated Joint Ventures		47	%		22,312,622	$	1,670,080	$	808,093	$	50,000


(1)		For development properties, represents the estimated square feet upon completion for committed phases of development projects.

(2)		Represents the book value of the property (before accumulated depreciation) owned by the joint venture and excludes net other assets as of December 31, 2008. Development book values include uncommitted land.

(3)		AMB-SGP, L.P. 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.

(4)		AMB Institutional Alliance Fund II, L.P. is a co-investment partnership formed in 2001 with institutional investors, which invest through a private real estate investment trust, and a third-party limited partner.

(5)		AMB-AMS, L.P. is a co-investment partnership formed in 2004 with three Dutch pension funds.

Unconsolidated Joint Ventures

As of December 31, 2008, we held interests in five significant equity investment co-investment ventures that are not consolidated in our financial statements. We determine consolidation based on standards set forth in FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities — An Interpretation of ARB No. 51 (FIN 46) or EITF Issue No. 04-5 (EITF 04-5), Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights and SOP 78-9, Accounting for Investments in Real Estate Ventures. For joint ventures that are variable interest entities as defined under FIN 46 where we are not the primary beneficiary, we do not consolidate the joint venture for financial reporting purposes. For joint ventures under EITF 04-5 where we do not exercise significant control over major operating and management decisions, but where we exercise significant influence, we use the equity method of accounting and do not consolidate the joint venture for financial reporting purposes. In such unconsolidated joint ventures, either we are not the general partner (or general partner equivalent) and do not hold sufficient capital or any rights that would require consolidation or, alternatively, we are the general partner (or the general partner equivalent) and the other partners (or equivalent) hold substantive participating rights that override the presumption of control.

The table that follows summarizes our unconsolidated joint ventures as of December 31, 2008 (dollars in thousands):


	Our					Gross						Our		Estimated		Planned
	Ownership		Square			Book		Property		Other		Net Equity		Investment		Gross
Unconsolidated Joint Ventures	Percentage		Feet(1)			Value(2)		Debt		Debt		Investment(3)		Capacity		Capitalization

Operating Co-Investment Ventures
AMB Institutional Alliance Fund III(4)(5)		19%		36,869,518		$	3,339,952	$	1,761,477	$	40,000	$	184,645	$	—	$	3,340,000
AMB Europe Fund I(5)(6)		21%		9,165,082			1,223,167		705,522		—		64,665		—		1,223,000
AMB Japan Fund I(7)		20%		6,281,928			1,350,958		775,254		132,168		65,705		189,000		1,540,000
AMB-SGP Mexico(8)		22%		6,331,990			353,983		170,403		58,825		19,519		245,000		599,000

Total Operating Co-investment Ventures		20%		58,648,518			6,268,060		3,412,656		230,993		334,534		434,000		6,702,000
Development Co-investment Ventures:
AMB DFS Fund I(9)		15%		1,237,764			132,989		—		—		20,663		306,000		439,000
AMB Institutional Alliance Fund III(4)(5)		19%		178,567			10,047		5,996		—		785		n/a		n/a
AMB Europe Fund I(5)(6)		21%		63,507			8,616		4,290		—		898		n/a		n/a

Total Development Co-investment Ventures		16%		1,479,838			151,652		10,286		—		22,346		306,000		439,000

Total Unconsolidated Co-investment Ventures		20%		60,128,356			6,419,712		3,422,942		230,993		356,880		740,000		7,141,000
Other Industrial Operating Joint Ventures		51%		7,418,749	(10)		278,214		164,206		—		49,791		n/a		n/a

Total Unconsolidated Joint Ventures		21%		67,547,105		$	6,697,926	$	3,587,148	$	230,993	$	406,671	$	740,000	$	7,141,000


(1)		For development properties, represents the estimated square feet upon completion for committed phases of development projects.

(2)		Represents the book value of the property (before accumulated depreciation) owned by the joint venture and excludes net other assets as of December 31, 2008. Development book values include uncommitted land.

(3)		On June 13, 2008, we acquired an additional approximate 19% interest in G. Accion, S.A. de C.V., a Mexican real estate company that holds equity method investments, and as a result of our increased ownership, we began consolidating our interest in G. Accion, effective as of that date. On July 18, 2008, we acquired the remaining equity interest (approximately 42%) in G. Accion. As of December 31, 2008 and December 31, 2007, we had a 100% consolidated interest and 39% unconsolidated equity interest, respectively, in G. Accion. As our wholly-owned subsidiary, G. Accion has been renamed AMB Property Mexico, S.A. de C.V. and it continues to provide management and development services for industrial, retail and residential properties in Mexico. Through our investment in AMB Property Mexico, we hold equity interests in various other unconsolidated ventures totaling approximately $24.6 million as of December 31, 2008. At December 31, 2007, we had equity interests in G. Accion totaling approximately $32.7 million.

(4)		AMB Institutional Alliance Fund III, L.P. is an open-ended co-investment partnership formed in 2004 with institutional investors, which invest through a private real estate investment trust. On July 1, 2008, the partners of AMB Partners II, L.P. (previously, a consolidated co-investment venture) contributed their interests in AMB Partners II, L.P. to AMB Institutional Alliance Fund III, L.P. in exchange for interests in AMB Institutional Alliance Fund III, L.P., an unconsolidated co-investment venture.

(5)		The planned capitalization and investment capacity of AMB Institutional Alliance Fund III, L.P. and AMB Europe Fund I, FCP-FIS, as open-ended funds are not limited. The planned capitalization represents the gross book value of real estate assets as of the most recent quarter end.

(6)		AMB Europe Fund I, FCP-FIS, is an open-ended co-investment venture formed in 2007 with institutional investors. The venture is Euro-denominated. U.S. dollar amounts are converted at the exchange rate in effect at December 31, 2008.

(7)		AMB Japan Fund I, L.P. is a co-investment venture formed in 2005 with institutional investors. The venture is Yen-denominated. U.S. dollar amounts are converted at the exchange rate in effect at December 31, 2008.

(8)		AMB-SGP Mexico, LLC is a co-investment venture formed in 2004 with Industrial (Mexico) JV Pte. Ltd., a subsidiary of GIC Real Estate Pte. Ltd., the real estate investment subsidiary of the Government of Singapore Investment Corporation.


(9)		AMB DFS Fund I, LLC is a co-investment venture formed in 2006 with a subsidiary of GE Real Estate to build and sell properties.

(10)		Includes investments in 7.4 million square feet of operating properties through our investments in unconsolidated joint ventures that we do not manage, which we exclude from our owned and managed portfolio. Our owned and managed operating portfolio includes properties in which we have at least a 10% ownership interest, for which we are the property or asset manager, and which we currently intend to hold for the long-term.

On December 30, 2004, we formed AMB-SGP Mexico, LLC, a co-investment venture with Industrial (Mexico) JV Pte. Ltd., a subsidiary of GIC Real Estate Pte. Ltd., the real estate investment subsidiary of the Government of Singapore Investment Corporation, in which we retained an approximate 20% interest. This interest increased to approximately 22% upon our acquisition of AMB Property Mexico. During 2008, we contributed three completed development projects totaling approximately 1.4 million square feet to this co-investment venture for approximately $90.5 million. During 2007, we contributed one approximately 0.1 million square foot operating property for approximately $4.6 million to this co-investment venture. In addition, we recognized development profits from the contribution to this co-investment venture of two completed development projects aggregating approximately 0.3 million square feet with a contribution value of $22.9 million.

On June 30, 2005, we formed AMB Japan Fund I, L.P., a co-investment venture with 13 institutional investors, in which we retained an approximate 20% interest. The 13 institutional investors have committed 49.5 billion Yen (approximately $545.9 million in U.S. dollars, using the exchange rate at December 31, 2008) for an approximate 80% equity interest. During 2008, we contributed to this co-investment venture two completed development projects, aggregating approximately 0.9 million square feet for approximately $174.9 million (using the exchange rate on the date of contribution). During 2007, we contributed to this co-investment venture one completed development project aggregating approximately 0.5 million square feet for approximately $84.4 million (using the exchange rate on the date of contribution).

On October 17, 2006, we formed AMB DFS Fund I, LLC, a merchant development co-investment venture with GE Real Estate (“GE”), in which we retained an approximate 15% interest. The co-investment venture has total investment capacity of approximately $500.0 million to pursue development-for-sale opportunities primarily in U.S. markets other than those we identify as our target markets. GE and we have committed $425.0 million and $75.0 million of equity, respectively. No properties were contributed to this co-investment venture during 2008. During the year ended December 31, 2007, we contributed to this co-investment venture approximately 82 acres of land with a contribution value of approximately $30.3 million.

Effective October 1, 2006, we deconsolidated AMB Institutional Alliance Fund III, L.P., an open-ended co-investment partnership formed in 2004 with institutional investors, on a prospective basis, due to the re-evaluation of our accounting for our investment because of changes to the partnership agreement regarding the general partner’s rights effective October 1, 2006. On July 1, 2008, the partners of AMB Partners II, L.P. (previously, a consolidated co-investment venture) contributed their interests in AMB Partners II, L.P. to AMB Institutional Alliance Fund III, L.P. in exchange for interests in AMB Institutional Alliance Fund III, L.P., an unconsolidated co-investment venture. During 2008, we contributed to this co-investment venture one approximately 0.8 million square foot operating property and four completed development projects, aggregating approximately 2.7 million square feet, for approximately $274.3 million. During 2007, we contributed to this co-investment venture one approximately 0.2 million square foot operating property and four completed development projects, aggregating approximately 1.0 million square feet for approximately $116.6 million.

On June 12, 2007, we formed AMB Europe Fund I, FCP-FIS, a Euro-denominated open-ended co-investment venture with institutional investors, in which we retained an approximate 20% interest upon formation. At the time of formation, the institutional investors committed approximately 263.0 million Euros (approximately $367.5 million in U.S. dollars, using the exchange rate at December 31, 2008) for an approximate 80% equity interest. During 2008, we contributed to this co-investment venture two development projects, aggregating approximately 0.2 million square feet, for approximately $35.2 million (using the exchange rate on the date of contribution). During 2007, we contributed approximately 4.2 million square feet of operating properties and approximately 1.8 million square feet of completed development projects to this co-investment venture for approximately $799.3 million (using the exchange rates on the dates of contribution).

During 2008, we recognized gains from the contribution of real estate interests, net, of approximately $20.0 million, representing the portion of our interest in the contributed properties acquired by the third-party investors for cash, as a result of the contribution of approximately 0.8 million square feet of operating properties to AMB Institutional Alliance Fund III, L.P. These gains are presented in gains from sale or contribution of real estate interests, in the consolidated statements of operations.

During 2008, we recognized development profits of approximately $73.9 million, as a result of the contribution of 11 completed development projects, aggregating approximately 5.2 million square feet, to AMB Institutional Alliance Fund III, L.P., AMB Europe Fund I, FCP-FIS, AMB Japan Fund I, L.P. and AMB-SGP Mexico, LLC. During 2007, we recognized development profits of approximately $95.7 million, as a result of the contribution of 15 completed development projects and two land parcels, aggregating approximately 82 acres of land, to AMB Europe Fund I, FCP-FIS, AMB-SGP Mexico, LLC, AMB Institutional Alliance Fund III, L.P., AMB DFS Fund I, LLC, and AMB Japan Fund I, L.P.

Under the agreements governing the co-investment ventures, we and the other parties to the co-investment ventures may be required to make additional capital contributions and, subject to certain limitations, the co-investment ventures may incur additional debt.

AMB Pier One, LLC, is a joint venture related to the 2000 redevelopment of the pier which holds our global headquarters in San Francisco, California. On June 30, 2007, we exercised our option to purchase the remaining equity interest from an unrelated third party, based on the fair market value as stipulated in the joint venture agreement in AMB Pier One, LLC, for a nominal amount. As a result, the investment was consolidated as of June 30, 2007.

In August 2008, a subsidiary of ours sold its approximate 5% interest in IAT Air Cargo Facilities Income Fund, a Canadian income trust specializing in aviation-related real estate at Canada’s international airports, as part of a tender offer for interests in the income trust. This equity investment of approximately $2.1 million (valued as of December 31, 2007) was included in other assets on the consolidated balance sheets as of December 31, 2007.

Secured Debt

As of December 31, 2008, we had $1.5 billion of secured indebtedness, net of unamortized premiums, secured by deeds of trust or mortgages. As of December 31, 2008, the total gross investment book value of those properties securing the debt was $2.1 billion. Of the $1.5 billion of secured indebtedness, $808.1 million was consolidated co-investment venture debt secured by properties with a gross investment value of $1.4 billion. For additional details, see Part II, Item 7: “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” and Part IV, Item 15: Note 6 of “Notes to Consolidated Financial Statements” included in this report.


ITEM 3.	Legal Proceedings

As of December 31, 2008, there were no material 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, Related Stockholder Matters and Issuer Purchases of Equity Securities

There is no established public trading market for our partnership units. As of December 31, 2008, we had outstanding 109,721,270 partnership units, consisting of 107,540,461 general partnership units (consisting of 98,240,461 common units, 2,000,000 61/2% Series L Cumulative Redeemable Preferred Units, 2,300,000 63/4% Series M Cumulative Redeemable Preferred Units, 3,000,000 7.00% Series O Cumulative Redeemable Preferred Units and 2,000,000 6.85% Series P Cumulative Redeemable Preferred Units) held by AMB Property Corporation and 2,180,809 common limited partnership units. The series L preferred units were issued on June 23, 2003 to AMB Property Corporation for total consideration of $50.0 million. The series M preferred units were issued on November 25, 2003 to AMB Property Corporation for total consideration of $57.5 million. The series O preferred units were issued on December 13, 2005 to AMB Property Corporation for total consideration of $75.0 million. The series P preferred units were issued on August 25, 2006 to AMB Property Corporation for total consideration of $50.0 million. Subject to certain terms and conditions, the common limited partnership units are redeemable by the holders thereof or, at our option, exchangeable on a one-for-one basis for shares of the common stock of AMB Property Corporation. As of December 31, 2008, there were 51 holders of our common partnership units (including AMB Property Corporation’s general partnership interest).

During 2008, we redeemed 495,306 common limited partnership units for the same number of shares of AMB Property Corporation’s common stock. In addition, during 2008, we redeemed 57,779 common limited partnership units for approximately $1.1 million. Set forth below are the distributions per common limited partnership unit paid by us during the years ended December 31, 2007 and 2008:


Year	Distribution

2007
1st Quarter	$	0.500
2nd Quarter	$	0.500
3rd Quarter	$	0.500
4th Quarter	$	0.500
2008
1st Quarter	$	0.520
2nd Quarter	$	0.520
3rd Quarter	$	0.520
4th Quarter	$	—


ITEM 6.	Selected Financial Data

SELECTED COMPANY FINANCIAL AND OTHER DATA (1)

The following table sets forth selected consolidated historical financial and other data for AMB Property, L.P. on a historical basis as of and for the years ended December 31:

Note: Effective October 1, 2006, we deconsolidated AMB Institutional Alliance Fund III, L.P. on a prospective basis. See footnote 2 below for further discussion of the comparability of selected financial and other data.


	2008(2)			2007			2006(2)			2005			2004
	(dollars in thousands, except unit and per unit amounts)

Operating Data
Total revenues	$	715,045		$	671,290		$	712,391		$	648,384		$	565,229
(Loss) income before minority interests, discontinued operations and cumulative effect of change in accounting principle(3)		(9,160	)		298,193			228,457			197,558			106,576
(Loss) income from continuing operations before cumulative effect of change in accounting principle(3)		(51,637	)		253,568			179,304			135,369			59,155
Income from discontinued operations		1,545			73,979			60,378			142,380			79,361
Net (loss) income before cumulative effect of change in accounting principle		(50,092	)		327,547			239,682			277,749			138,516
Net (loss) income		(50,092	)		327,547			239,875			277,749			138,516
(Loss) income available to common unitholders attributable to general partner		(65,116	)		295,524			209,420			250,419			118,340
(Loss) income from continuing operations per common unit:
Basic		(0.67	)		2.30			1.72			1.37			0.53
Diluted		(0.67	)		2.24			1.66			1.31			0.51
Net income from discontinued operations per common unit:
Basic		0.02			0.73			0.66			1.61			0.91
Diluted		0.02			0.71			0.63			1.54			0.88
Net (loss) income available to common unitholders per common unit:
Basic		(0.65	)		3.03			2.38			2.98			1.44
Diluted		(0.65	)		2.95			2.29			2.85			1.39
Weighted average common units outstanding — basic		101,253,972			101,550,001			92,047,678			88,684,262			86,885,250
Weighted average common units outstanding — diluted		101,253,972			104,168,707			95,444,072			92,508,725			90,120,250
Distributions declared per common unit		1.56			2.00			1.84			1.76			1.70
Other Data
Funds from operations(4)	$	80,530		$	365,492		$	297,912		$	254,363		$	207,314
Funds from operations per common unit:(4)
Basic		0.80			3.60			3.24			2.87			2.39
Diluted		0.78			3.51			3.12			2.75			2.30
Cash flows provided by (used in):
Operating activities		301,020			240,543			335,855			295,815			297,349
Investing activities		(881,768	)		(632,240	)		(880,560	)		(60,407	)		(731,402	)
Financing activities		581,765			420,025			483,621			(101,856	)		409,705
Balance Sheet Data
Investments in real estate at cost	$	6,603,856		$	6,709,545		$	6,575,733		$	6,798,294		$	6,526,144
Total assets		7,301,648			7,262,403			6,713,512			6,802,739			6,386,943
Total consolidated debt		3,990,185			3,494,844			3,437,415			3,401,561			3,257,191
Our share of total debt(5)		4,293,510			3,272,513			3,088,624			2,601,878			2,395,046
General partner’s capital		2,515,107			2,763,952			2,166,657			1,916,299			1,671,140


(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 partners’ capital.

(2)		Effective October 1, 2006, we deconsolidated AMB Institutional Alliance Fund III, L.P. on a prospective basis, due to the re-evaluation of the accounting for our investment in the fund because of changes to the partnership agreement regarding the general partner’s rights effective October 1, 2006. On July 1, 2008, the partners of AMB Partners II, L.P. (previously, a consolidated co-investment venture) contributed their interests in AMB Partners II, L.P. to AMB Institutional Alliance Fund III, L.P. in exchange for interests in AMB Institutional Alliance Fund III, L.P., an unconsolidated co-investment venture. As a result, the financial measures for the years 2008, 2007, 2006, 2005 and 2004, included in our operating data, other data and balance sheet data above are not comparable.

(3)		(Loss) income from continuing operations for the year ended December 31, 2008 includes real estate impairment losses of $193.9 million and restructuring charges of $12.3 million.

(4)		See Part II, Item 7: “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Supplemental Earnings Measures,” for a reconciliation to net income and a discussion of why we believe FFO is a useful supplemental measure of operating performance, ways in which investors might use FFO when assessing our financial performance, and FFO’s limitations as a measurement tool.

(5)		Our share of total debt is the pro rata portion of the total debt based on our percentage of equity interest in each of the consolidated and unconsolidated joint ventures holding the debt. We believe that our share of total debt is a meaningful supplemental measure, which enables both management and investors to analyze our leverage and to compare our leverage to that of other companies. In addition, it allows for a more meaningful comparison of our debt to that of other companies that do not consolidate their joint ventures. Our share of total debt is not intended to reflect our actual liability should there be a default under any or all of such loans or a liquidation of the co-investment ventures. For a reconciliation of our share of total debt to total consolidated debt, a GAAP financial measure, please see the table of debt maturities and capitalization in Part II, Item 7: “Management Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Capital Resources.”


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

Please read the following discussion and analysis of our consolidated financial condition and results of operations in conjunction with the notes to the consolidated financial statements.

Management’s Overview

Current Global Market and Economic Conditions

Recent global market and economic conditions have been unprecedented, challenging and unpredictable with significantly tighter credit and declining economic growth through the fourth quarter of 2008. Continued concerns about the availability and cost of credit, declining real estate market and geopolitical issues have contributed to increased market volatility and decreased expectations for the global economy. In the fourth quarter, added concerns fueled by the failure of several large financial institutions and government interventions in the U.S. financial system led to increased market uncertainty and instability in the global capital and credit markets. These conditions, combined with declining business activity levels and consumer confidence and increased unemployment, have contributed to unprecedented levels of volatility.

In light of this economic downturn, we are increasing our focus on our operations with a special emphasis on tenant retention and occupancy. Until the financial and real estate markets stabilize, we are limiting our acquisition and development activities to fulfilling prior commitments. We have realigned and streamlined internal resources as well as our overhead structure to meet the current and future needs of the business and have taken further steps to strengthen our capital and liquidity position. Our priorities are the strength of our balance sheet, controlling expenses and managing our business for the long term. Our goal is to do what we consider best for long-term value creation and enhancement of our net asset value. As we look forward, our objective is to emerge from this downturn in a competitive position to take advantage of opportunities as they arise, with our long-term earnings capacity enhanced.

Primary sources of revenue and earnings

The primary source of our revenue and earnings is rent received from customers under long-term (generally three to ten years) operating leases at our properties, including reimbursements from customers for certain operating costs. We may also generate earnings from our private capital business, which consists of asset management fees and priority distributions, acquisition and development fees, and promote interests and incentive distributions from our co-investment ventures. Additionally, we may generate earnings from the contributions of development properties to our co-investment ventures, from the disposition of projects in our development-for-sale and value-added conversion programs and from land sales. We believe that our long-term growth will be driven by our ability to:


	•	maintain and increase occupancy rates and/or increase rental rates at our properties;

	•	raise third-party equity in our co-investment ventures and to grow our earnings from our private capital business from the acquisition of new properties or through the possible contribution of properties; and

	•	develop properties profitably and sell to third parties or contribute to our select co-investment ventures.

Focus on our balance sheet and cost structure

To position ourselves to meet the challenges of the current business environment, we implemented a broad based cost reduction plan in the fourth quarter of 2008. As a result, we recognized a restructuring charge of approximately $12.3 million in the quarter, associated with severance, office closures and the termination of certain contractual obligations. About one-third of the restructuring charges were non-cash. As part of this plan, we reduced our total global headcount by approximately 22% as well as certain forecasted third party expenditures. In executing these cost saving efforts, we believe that we have preserved our ability to serve our global customers and manage our operating portfolio. While we have removed excess capacity in our deployment teams, we believe that we have retained our key talent and left our global platforms intact. Cost reductions were also made to the back office, support functions and third party costs, particularly those that related to our global expansion efforts in India and Poland.

During the fourth quarter, our general partner, AMB Property Corporation, suspended its regular quarterly common stock dividend as it had met its 2008 dividend distribution requirement. Accordingly, we made no

distributions to our common limited partnership unitholders in the fourth quarter of 2008. In addition, our general partner aligned its 2009 regular dividend payments with the projected taxable income from recurring operations alone, which distribution policy we will follow for our common limited partners. Together, we believe these actions will improve our cash position by allowing us to retain $53.0 million of cash in the fourth quarter of 2008 and an additional $98 million over the course of 2009. Our general partner may make special distributions going forward, as necessary, related to taxable income associated with any asset dispositions and gain activity.

We are currently exploring various options to monetize some of our development and operating assets, including asset sales and the formation of new joint ventures. On an owned and managed basis, we have properties available for sale or contribution with an estimated total investment upon completion of $1.1 billion as of December 31, 2008. We may use some or all of the proceeds from these transactions to decrease our debt obligations, but there can be no assurance that we will consummate any such transactions or use the proceeds to pay our debt obligations.

Our liquidity position

As a result of the current market conditions, the cost and availability of credit has been and may continue to be adversely affected by illiquid credit markets and wider credit spreads. Concern about the stability of the markets generally and the strength of counterparties specifically has led many lenders and institutional investors to reduce, and in some cases, cease to provide funding to businesses and consumers. We believe our current maturity schedule is well-laddered. As of December 31, 2008, our total consolidated debt maturities for 2009 were $782.6 million, excluding principal amortization. Assuming that we exercise available extension options, our total 2009 consolidated debt maturities would be $340.7 million, excluding principal amortization. Our total unconsolidated debt maturities for 2009 were $212.1 million as of December 31, 2008, excluding principal amortization. Assuming we exercise available extension options, our total 2009 unconsolidated debt maturities would be $173.4 million, excluding principal amortization. As of December 31, 2008, we had $710.2 million available for future borrowings under our three multi-currency lines of credit and had cash and cash equivalents of $223.9 million. While we believe that we have sufficient working capital and capacity under our credit facilities to continue our business operations as usual in the near-term, continued turbulence in the global markets and economies and prolonged declines in business and consumer spending may adversely affect our liquidity and financial condition, as well as the liquidity and financial condition of our customers. If these market conditions persist in the long-term, they may limit our ability, and the ability of our customers, to timely replace maturing liabilities and access the capital markets to meet liquidity needs.

If our long-term debt ratings fall below current levels, the borrowing cost of debt under our unsecured credit facilities and certain term loans may increase. In addition, if our long-term debt ratings fall below investment grade, we may be unable to request borrowings in currencies other than U.S. dollars or Japanese Yen, as applicable. However, the lack of other currency borrowings does not affect our ability to fully draw down under the credit facilities or term loans. While we currently do not expect our long-term debt ratings to fall below investment grade, in the event that the ratings do fall below those levels, we may be unable to exercise our options to extend the term of our credit facilities or our $230.0 million secured term loan credit agreement, and the loss of our ability to borrow in foreign currencies could affect our ability to optimally hedge our borrowings against foreign currency exchange rate changes. In addition, based on publicly available information regarding our lenders, we currently do not expect to lose borrowing capacity under our existing lines of credit as a result of a dissolution, bankruptcy, consolidation, merger or other business combination among our lenders. Our access to funds under our credit facilities is dependent on the ability of the lenders that are parties to such facilities to meet their funding commitments to us. If we do not have sufficient cash flows and income from our operations to meet our financial commitments and lenders are not able to meet their funding commitments to us, our business, results of operations, cash flows and financial condition could be adversely affected.

Certain of our third party indebtedness is held by our consolidated or unconsolidated joint ventures. In the event that our joint venture partner is unable to meet its obligations under our joint venture agreements or the third party debt agreements, we may elect to pay our joint venture partner’s portion of debt to avoid foreclosure on the mortgaged property or permit the lender to foreclose on the mortgaged property to meet the joint venture’s debt obligations. In either case, we would face a loss of income and asset value on the property.

In addition, a continued increase in the cost of credit and inability to access the capital and credit markets may adversely impact the occupancy of our properties, the disposition of our properties, private capital raising and

contribution of properties to our co-investment ventures. If we are unable to contribute completed development properties to our co-investment ventures or sell our completed development projects to third parties, we will not be able to recognize gains from the contribution or sale of such properties and, as a result, our net income available to our common unitholders and our funds from operations will decrease. Additionally, business layoffs, downsizing, industry slowdowns and other similar factors that affect our customers may adversely impact our business and financial condition. Furthermore, general uncertainty in the real estate markets has resulted in conditions where the pricing of certain real estate assets may be difficult due to uncertainty with respect to capitalization rates and valuations, among other things, which may add to the difficulty of buyers or our co-investment ventures to obtain financing on favorable terms to acquire such properties or cause potential buyers to not complete acquisitions of such properties. The market uncertainty with respect to capitalization rates and real estate valuations also adversely impacts our net asset value.

Our main financial covenants with respect to our credit facilities generally relate to fixed charge or debt service coverage, liabilities to asset value, debt to asset value and unencumbered cash flow. As of December 31, 2008, we were in compliance with all of these covenants. There can be no assurance, however, that if the financial markets and economic conditions continue to deteriorate, that we will be able to continue to comply with our financial covenants.

Impairment and restructuring charges

We recognized charges in the fourth quarter of 2008 related to the valuation of our development program and reduction in personnel of approximately $219.5 million on an owned and managed basis ($218.0 million on a consolidated basis); these charges were almost entirely non-cash. The impairment charge on the assets under development and those available for sale or contribution on an owned and managed basis totaled approximately $100.7 million ($99.2 million on a consolidated basis), reflecting a 16% decline from the $617.4 million cost basis of the assets written down. The majority of the impairment charges related to assets in the Americas, with the remainder primarily in Europe. The impairment charge on the land inventory totaled approximately $94.7 million, reflecting a 34% decline from the $278.9 million cost basis of the land written down. These impairments were related to land inventory in the Americas. We also incurred approximately $11.8 million in charges for the write-off of pursuit costs related to development projects that we no longer plan to commence and reserves against tax assets associated with the reduction in development activity, as well as approximately $12.3 million of restructuring charges associated with severance, office closures and the termination of certain contractual obligations.

An impairment charge is recognized when the book value of a property or land parcel is greater than its estimated fair value, based on the intended use and holding period. The intended use of an asset, either held for sale or held for the long term, can significantly impact how impairment is measured. If an asset is intended to be sold, impairment is determined using the estimated fair value. If an asset is intended to be held for the long term, impairment is recognized if undiscounted cash flows over the entire holding period, including a residual value, are less than the cost basis. We determined impairment based upon estimated fair market values which are consistent with our business model to sell or contribute the assets we develop. When available, current market information was used to determine capitalization and rental growth rates. When market information was not readily available, the inputs were based on our understanding of market conditions and the experience of the management team, although actual results could differ significantly from our estimates. In a few instances, current comparative sales values were available and used to establish fair value. Additional impairments may be necessary in the future in the event that market conditions continue to deteriorate and impact the factors used to estimate fair value. We also utilized the knowledge of our regional teams and the recent valuations of our two open-ended funds, which contain a large, geographically-diversified pool of assets, all of which were subject to third-party appraisals at year end.

In order to comply with disclosure requirements as outlined in SFAS No. 157, the designation of the level of inputs used in the fair value models must be determined. Inputs used in establishing fair value for real estate assets generally fall within level three, which are characterized as requiring significant judgment as little or no current market activity may be available for validation. The main indicator used to establish the classification of the inputs was current market conditions that, in many instances, resulted in the use of significant unobservable inputs in establishing fair value measurements. See Part IV, Item 15: Note 3 of the “Notes to Consolidated Financial Statements” for a more detailed discussion of the real estate impairment losses recorded in our results of operations during the fourth quarter of 2008.

Customer bankruptcies

From a customer receivables standpoint, as of December 31, 2008, we believe that account receivables delinquency levels were consistent with our historical norms and we believe that we maintain adequate bad debt reserves. Although we believe that the number of bankruptcies of our customers increased during the fourth quarter of 2008, we believe the impact of such bankruptcies on our business was not significant for the year ended December 31, 2008. Our account receivables delinquencies may not continue at the same levels, our bad debt reserves may not be sufficient to cover such delinquencies as they occur and the level of customer bankruptcies may increase to levels that could be significant to our operations.

Real estate operations

Real estate fundamentals in the United States continued to weaken in the fourth quarter of 2008 as the national economy slowed further. We anticipate that the U.S. and global economies will decline further in 2009. Customer decision-making is prolonged, as commitments for new space are being eliminated or put on hold with only time critical leasing decisions being made. According to data provided by Torto Wheaton Research as of February 19, 2009, availability in the United States was 11.4% for the quarter ended December 31, 2008, up 70 basis points from the prior quarter and 200 basis points from the fourth quarter of 2007. Also, according to Torto Wheaton Research, absorption was negative 47.1 million square feet in the fourth quarter of 2008, and construction completions were 44.5 million square feet, down from 45.6 million square feet in the prior quarter. For 2008, absorption was negative 94.1 million square feet, the lowest since 2001. While we expect the delivery pipeline to decline substantially, we expect net absorption to be negative in 2009.

We believe the strongest industrial markets in the United States continue to be the primary infill coastal markets tied to global trade. While demand has weakened notably across the U.S., due primarily to the weakening economy, we believe our coastal markets will continue to outperform other U.S. industrial markets. Outside the United States, while activity is moderating, we believe that we will continue to experience demand for our distribution facilities due to the reconfiguration of supply chains and customer requirements for upgraded distribution space to modern facilities.

The table below summarizes key operating and leasing statistics for our owned and managed operating properties for the years ended December 31, 2008 and 2007:


										Total/Weighted
Owned and Managed Property Data(1)	The Americas			Europe			Asia			Average

For the year ended December 31, 2008:
Rentable square feet		111,379,838			9,802,487			10,325,794			131,508,119
Occupancy percentage at period end(2)		95.1	%		97.0	%		92.7	%		95.1	%
Trailing four quarter same space square footage leased		17,452,675			421,051			513,354			18,387,080
Trailing four quarter rent change on renewals and rollovers(2)(3)		3.7	%		(14.6	)%		4.0	%		3.1	%
For the year ended December 31, 2007:
Rentable square feet		101,627,803			8,500,962			8,051,530			118,180,295
Occupancy percentage at period end(2)		96.0	%		96.1	%		96.6	%		96.0	%
Trailing four quarter same space square footage leased		18,144,411			690,569			405,912			19,240,892
Trailing four quarter rent change on renewals and rollovers(2)(3)		4.1	%		7.6	%		19.5	%		4.9	%


(1)		Schedule includes owned and managed operating properties which we define as properties in which we have at least a 10% ownership interest, for which we are the property or asset manager and which we currently intend to hold for the long term. This excludes development and renovation projects and recently completed development projects available for sale or contribution.

(2)		On a consolidated basis, for the Americas, Europe and Asia, occupancy percentage at period end for 2008 was 94.8%, 90.8% and 90.0%, and trailing four quarter rent change on renewals and rollovers at period end for 2008 was 4.2%, n/a and 5.7%, respectively. On a consolidated basis, for the Americas, Europe and Asia, occupancy percentage at period end for 2007 was 96.6%, 100.0% and 100.0%, and trailing four quarter rent change on renewals and rollovers at period end for 2007 was 4.2%, n/a and 48.7% respectively. Properties in Europe are primarily held in the unconsolidated co-investment venture AMB Europe Fund I, FCP-FIS.

(3)		Rent changes on renewals and rollovers are calculated as the difference, weighted by square feet, of the net annualized base rent (ABR) due the first month of a term commencement and the net ABR due the last month of the former customer’s term. If free rent is granted, then the first positive full rent value is used as a point of comparison. The rental amounts exclude base stop amounts, holdover rent and premium rent charges. If either the previous or current lease terms are under 12 months, then they are excluded from this calculation. If the lease is first generation or there is no prior lease for comparison, then it is excluded from this calculation.

Although the economy continued to slow, we maintained strong occupancy levels at December 31, 2008 compared to September 30, 2008 and December 31, 2007. Our owned and managed portfolio occupancy at December 31, 2008 was 95.1%, down from 95.4% at September 30, 2008 and 96.0% at December 31, 2007, while average occupancy was 94.9%, down from 95.0% at September 30, 2008 and 95.1% at December 31, 2007. During the three months ended December 31, 2008, rent on renewed and re-leased space in our operating portfolio increased 2.5% on an owned and managed basis, excluding expense reimbursements, rental abatements, percentage rents and straight-line rents. Rental rates on lease renewals and rollovers in our portfolio increased 3.1% for the trailing four quarters ended December 31, 2008. During 2008, cash-basis same store net operating income, with and without the effect of lease termination fees, grew by 4.0% and 0.2%, respectively, on an owned and managed basis. Excluding the impact of foreign currency exchange rate movements against the U.S. dollar, cash-basis same store net operating income without the effect of lease termination fees increased 2.3% during the year ended December 31, 2008. At December 31, 2008, cash-basis same store net operating income, with and without the effect of lease termination fees, increased by 4.4% and 3.7%, respectively, on an owned and managed basis. See “Supplemental Earnings Measures” for a discussion of cash-basis same store net operating income and a reconciliation of cash-basis same store net operating income and net income.

Development Business

Our development business consists of conventional development, build-to-suit development, redevelopment, value-added conversions and land sales. We generate earnings from our development business through the disposition or contribution of projects from these activities.

Despite the cyclical downturn in the U.S. and global economies, we believe that, over the long term, customer demand for new industrial space in strategic markets tied to global trade will continue to outpace supply, most notably in major gateway markets in Asia and Europe. To capitalize on this demand, we intend to opportunistically develop in many of our global markets that are essential to global trade. However, given the uncertainty in the global economy, we curtailed development activity, and as a result, development starts for the full year decreased 50% over 2007 with 69% of our 2008 development starts outside the United States. For 2009, our development activity will be limited to fulfilling prior commitments until the financial and real estate markets stabilize. In addition to our committed development pipeline, we hold a total of 2,503 acres of land for future development or sale, approximately 86% of which is located in North America, including 79 acres that are held in an unconsolidated joint venture. We currently estimate that these 2,503 acres of land could support approximately 45.1 million square feet of future development. Our long-term capital allocation goal is to have approximately 50% of our owned and managed operating portfolio invested in non-U.S. markets based on annualized base rent.

We believe that our historical investment focus on industrial real estate in some of the world’s most strategic infill markets positions us to create value through the select conversion of industrial properties to higher and better uses (value-added conversions). Generally, we expect to sell to third parties these value-added conversion projects

at some point in the re-entitlement/conversion process, thus recognizing the enhanced value of the underlying land that supports the property’s repurposed use. Value-added conversions involve the repurposing of industrial properties to a higher and better use, including office, residential, retail, research & development or manufacturing. Activities required to prepare the property for conversion to a higher and better use may include such activities as rezoning, redesigning, reconstructing and retenanting. The sales price of a value-added conversion project is generally based on the underlying land value, reflecting its ultimate higher and better use and as such, little to no residual value is ascribed to the industrial building. Due to dislocation in the housing industry, we do not believe that this is the optimal time to market certain value-added conversion projects, in particular, those intended to include a residential component. We remain committed to the viability of this development activity and believe that a well-timed approach to executing value-added conversion transactions will enhance unitholder value over the long term.

Private Capital Business

Since our founding in 1997, we have formed 11 co-investment ventures and raised approximately $3.1 billion of private capital from third parties as equity in such co-investment ventures. Eight of these co-investment ventures are still active in the United States, Mexico, Europe and Japan: AMB Institutional Alliance Fund III, L.P., AMB Europe Fund I, FCP-FIS, AMB Japan Fund I, L.P., AMB-SGP Mexico, LLC, AMB DFS Fund I, LLC, AMB-SGP, L.P., AMB Institutional Alliance Fund II, L.P., and AMB-AMS, L.P.

We believe that our co-investment program with private-capital investors will continue to serve as a source of revenues and capital for new investments. Through these co-investment ventures, we typically earn acquisition fees, asset management fees and priority distributions, as well as promote interests and incentive distributions based on the performance of the co-investment ventures; however, we cannot assure you that we will continue to do so. Through contribution of development properties to our co-investment ventures, we expect to recognize value creation from our development pipeline. In anticipation of the formation of future co-investment ventures, we may also hold acquired and newly developed properties for contribution to such future co-investment ventures.

Equityholders in two of our co-investment ventures, AMB Institutional Alliance Fund III, L.P. and AMB Europe Fund I, FCP-FIS, have a right to request that the ventures redeem their interests under certain conditions. The redemption right of investors in AMB Institutional Alliance Fund III, L.P. is currently exercisable, and as of December 31, 2008, this co-investment venture had $132.7 million of outstanding redemption requests based on the co-investment venture’s net asset value at December 31, 2008. The redemption right of investors in AMB Europe Fund I, FCP-FIS is exercisable beginning after July 1, 2011. Although such redemption rights generally do not require the co-investment ventures to allocate newly acquired capital to cover redemption activity, there can be no assurance that such allocation will not occur and will not occur in such magnitude that will affect our contribution of properties to the ventures. While we have no obligation to fund redemption requests, we plan to meet our redemptions as cash becomes available through property sales, financings and new capital contributions.

As of December 31, 2008, we owned approximately 78.7 million square feet of our properties (49.2% of the total operating and development portfolio) through our consolidated and unconsolidated co-investment ventures. We may make additional investments through these co-investment ventures or new co-investment ventures in the future and presently plan to do so. Given the current economic environment, however, the pace of new private capital commitments has slowed significantly.

Summary of Key Transactions in 2008

During the year ended December 31, 2008, we completed the following significant capital deployment and other transactions:


	•	Acquired, on an owned and managed basis, 21 properties in the Americas, Asia and Europe aggregating approximately 5.3 million square feet for $543.2 million, including 11 properties aggregating approximately 2.5 million square feet for $326.2 million through unconsolidated co-investment ventures and ten properties aggregating approximately 2.8 million square feet for $217.0 million acquired directly by us;

	•	Committed to 23 new development projects in the Americas, Europe and Asia totaling approximately 7.4 million square feet with an estimated total investment of approximately $544.7 million;

	•	Acquired 380 acres of land for development in the Americas, Europe and Asia for approximately $217.1 million;


	•	Sold development projects aggregating approximately 0.2 million square feet, including 0.1 million square feet that was held in an unconsolidated co-investment venture, and one seven-acre parcel of land that was held in an unconsolidated co-investment venture, for an aggregate sale price of $83.8 million;

	•	Contributed eleven completed development projects aggregating approximately 5.2 million square feet to AMB Institutional Alliance Fund III, L.P., AMB-SGP Mexico, LLC, AMB Europe Fund I, FCP-FIS, and AMB Japan Fund I, L.P., all unconsolidated co-investment ventures;

	•	On June 13, 2008, acquired approximately 19% and, on July 18, 2008, acquired the remaining equity interest (approximately 42%) in G. Accion, a Mexican real estate company, increasing our equity interest in the aggregate from approximately 39% to 100%; and

	•	On July 1, 2008, the partners of AMB Partners II, L.P. contributed their interests in AMB Partners II, L.P. (previously, a consolidated co-investment venture) to AMB Institutional Alliance Fund III, L.P., in exchange for interests in AMB Institutional Alliance Fund III, L.P., an unconsolidated co-investment venture.

See Part IV, Item 15: Notes 4 and 5 of the “Notes to Consolidated Financial Statements” for a more detailed discussion of our acquisition, development and disposition activity.

During the year ended December 31, 2008, we completed the following significant capital markets and other financing transactions:


	•	Obtained long-term secured debt financings for our consolidated joint ventures of $55.4 million with a weighted average interest rate of 5.8%;

	•	Assumed $36.4 million secured debt for our joint ventures with a weighted average interest rate of 8.6%;

	•	Obtained $239.0 million of secured debt (using the exchange rates in effect at the applicable quarter end dates) with a weighted average interest rate of 2.5% for international assets;

	•	Sold $325.0 million aggregate principal amount of our senior unsecured notes under our Series C medium-term note program;

	•	Paid off $175.0 million of medium-term notes which matured in June 2008 and had an interest rate of 7.10%;

	•	Obtained and paid off a $100.0 million unsecured money market loan which matured in June 2008 and had an interest rate of 3.6%;

	•	Obtained and paid off a $100.0 million unsecured money market loan, which matured in September 2008 and had an interest rate of 3.4%;

	•	Obtained a $325.0 million unsecured term loan facility, which had a balance of $325.0 million outstanding as of December 31, 2008, with a weighted average interest rate of 3.5%;

	•	AMB Property Corporation repurchased approximately 1.8 million shares of its common stock for an aggregate price of $87.7 million, at a weighted average price of $49.64 per share, which was paid by us in exchange for the cancellation of approximately 1.8 million common general partnership units;

	•	On July 1, 2008, the partners of AMB Partners II, L.P. contributed their interests in AMB Partners II, L.P. to AMB Institutional Alliance Fund III, L.P., in exchange for interests in AMB Institutional Alliance Fund III, L.P. At the contribution date, the outstanding balance of the $65.0 million non-recourse credit facility obtained by AMB Partners II, L.P. was repaid in full and the facility was terminated. Additionally, AMB Institutional Alliance Fund III, L.P., assumed $314.4 million of secured debt with a weighted average interest rate of 6.1%; and

	•	Obtained a $230.0 million secured term loan facility, which had a balance of $230.0 million outstanding as of December 31, 2008, and a weighted average interest rate of 4.0%.

See Part IV, Item 15: Notes 6, 9 and 11 of the “Notes to Consolidated Financial Statements” for a more detailed discussion of our capital markets transactions.

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

U.S. (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.

Investments in Real Estate. Investments in real estate and leasehold interests are stated at cost unless circumstances indicate that cost cannot be recovered, in which case, an adjustment to the carrying value of the property is made to reduce it to its estimated fair value. We also regularly review the impact of above or below-market leases, in-place leases and lease origination costs for acquisitions, and record an intangible asset or liability accordingly.

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 fully recoverable. When the carrying value of a property or land parcel is greater than its estimated fair value, based on the intended use and holding period, an impairment charge to earnings is recognized for the excess over its estimated fair value less costs to sell. The intended use of an asset, either held for sale or held for the long term, can significantly impact how impairment is measured. If an asset is intended to be held for the long term, the impairment analysis is based on a two-step test. The first test measures estimated expected future cash flows over the holding period, including a residual value (undiscounted and without interest charges), against the carrying value of the property. If the asset fails the test, then the asset carrying value is measured against the lower of cost or the present value of expected cash flows over the expected hold period. An impairment charge to earnings is recognized for the excess of the asset’s carrying value over the lower of cost or the present values of expected cash flows over the expected hold period. If an asset is intended to be sold, impairment is determined using the estimated fair value less costs to sell. The estimation of expected future net cash flows is inherently uncertain and relies on assumptions regarding current and future economic and market conditions and the availability of capital. We determine the estimated fair values based on our assumptions regarding rental rates, costs to complete, lease-up and holding periods, as well as sales prices or contribution values. When available, current market information was used to determine capitalization and rental growth rates. When market information was not readily available, the inputs were based on our understanding of market conditions and the experience of the management team. Actual results could differ significantly from our estimates. The discount rates used in the fair value estimates ranged from 8-11% and represent a rate commensurate with the indicated holding period with a premium layered on for risk. In a few instances, current comparative sales values were available and used to establish fair value. We also utilize the knowledge of our regional teams and the recent valuations of our two open-ended funds, which contain a large, geographically diversified pool of assets, all of which are subject to third-party appraisals at year end.

Revenue Recognition. 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 allowance for doubtful accounts, security deposits and letters of credit, then we may have to recognize additional doubtful account charges in future periods. We monitor the liquidity and creditworthiness of our customers on an on-going basis by reviewing their financial condition periodically as appropriate. Each period we review our outstanding accounts receivable, including straight-line rents, for doubtful accounts and provide allowances as needed. We also record lease termination fees when a customer has executed a definitive termination agreement with us and the payment of the termination fee is not subject to any conditions that must be met or waived before the fee is due to us. If a customer remains in the leased space following the execution of a definitive termination agreement, the applicable termination fees are deferred and recognized over the term of such customer’s occupancy.

Property Dispositions. We report real estate dispositions in three separate categories on our consolidated statements of operations. First, when we divest a portion of our interests in real estate entities or properties, gains from the sale represent the interests acquired by third-party investors for cash and are included in gains from sale or contribution of real estate interests in the statement of operations. Second, we dispose of value-added conversion

projects and build-to-suit and speculative development projects for which we have not generated material operating income prior to sale. The gain or loss recognized from the disposition of these projects is reported net of estimated taxes, when applicable, and are included in development profits, net of taxes, within continuing operations of the statement of operations. Third, we dispose of value-added conversion and other redevelopment projects for which we may have generated material operating income prior to sale. The gain or loss recognized is reported net of estimated taxes, when applicable, in the development gains line within discontinued operations. Lastly, Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, requires us to separately report as discontinued operations the historical operating results attributable to operating properties sold and the applicable gain or loss on the disposition of the properties, which is included in development gains and gains from dispositions of real estate, net of taxes and minority interests, in the statement of operations. The consolidated statements of operations for prior periods are also adjusted to conform with this classification. There is no impact on our previously reported consolidated financial position, net income or cash flows. In all cases, gains and losses are recognized using the full accrual method of accounting. Gains relating to transactions which do not meet the requirements of the full accrual method of accounting are deferred and recognized when the full accrual method of accounting criteria are met.

Joint Ventures. We hold interests in both consolidated and unconsolidated joint ventures. We determine consolidation based on standards set forth in FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities — An Interpretation of ARB No. 51 (FIN 46) or EITF Issue No. 04-5 (EITF 04-5), Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights and SOP 78-9, Accounting for Investments in Real Estate Ventures. For joint ventures that are variable interest entities as defined under FIN 46 where we are not the primary beneficiary, we do not consolidate the joint venture for financial reporting purposes. Based on the guidance set forth in EITF 04-5, we consolidate certain joint venture investments because we exercise significant control over major operating decisions, such as approval of budgets, selection of property managers, asset management, investment activity and changes in financing. We are the general partner (or equivalent of a general partner in entities not structured as partnerships) in a number of our consolidated joint venture investments. In all such cases, the limited partners in such investments (or equivalent of limited partners in such investments which are not structured as partnerships) do not have rights described in EITF 04-5, which would preclude consolidation. We consolidate certain other joint ventures where we are not the general partner (or equivalent of a general partner in entities not structured as partnerships) because we have control over those entities through majority ownership, retention of the majority of economics, and a combination of substantive kick-out rights and/or substantive participating rights. For joint ventures under EITF 04-5 where we do not exercise significant control over major operating and management decisions, but where we exercise significant influence, we use the equity method of accounting and do not consolidate the joint venture for financial reporting purposes. In such unconsolidated joint ventures, either we are not the general partner (or general partner equivalent) and do not hold sufficient capital or any rights that would require consolidation or, alternatively, we are the general partner (or the general partner equivalent) and the other partners (or equivalent) hold substantive participating rights that override the presumption of control.

Based on the guidance set forth in EITF 04-5, we consolidate certain co-investment venture investments because we exercise significant control over major operating decisions, such as approval of budgets, selection of property managers, asset management, investment activity and changes in financing. For co-investment ventures under EITF 04-5, where we do not exercise significant control over major operating and management decisions, but where we exercise significant influence, we use the equity method of accounting and do not consolidate the co-investment venture for financial reporting purposes.

Capitalized General and Administrative Expenses. In conformity with SFAS No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, we capitalize costs, such as general and administrative expenses that are directly related to our development projects, based on time spent on development activities.

Our General Partner’s Status as a Real Estate Investment Trust. As a real estate investment trust, AMB Property Corporation, our general partner, generally will not be subject to corporate level federal income taxes in the United States if minimum distribution requirements, and certain income, asset and share ownership tests are met. However, not all of AMB Property Corporation’s underlying entities, which are also our subsidiaries, are qualified real estate investment trust subsidiaries and may be subject to federal and state taxes. In addition, foreign entities may also be subject to the taxes of the host country. An income tax allocation is required to be estimated on

our taxable income arising from our taxable real estate investment trust subsidiaries and international entities. A deferred tax component could arise based upon the differences in GAAP versus tax income for items such as depreciation and gain recognition. However, the net deferred tax is an immaterial component of our consolidated balance sheet, due to our general partner’s status as a real estate investment trust.

Foreign Currency Remeasurement and Translation. Transactions that require the remeasurement and translation of a foreign currency are recorded according to the guidance set forth in SFAS No. 52, Foreign Currency Translation. The U.S. dollar is the functional currency for our subsidiaries formed in the United States, Mexico and certain subsidiaries in Europe. Other than Mexico and certain subsidiaries in Europe, the functional currency for our subsidiaries operating outside the United States is generally the local currency of the country in which the entity or property is located, mitigating the effect of currency exchange gains and losses. Our subsidiaries whose functional currency is not the U.S. dollar translate their financial statements into U.S. dollars. Assets and liabilities are translated at the exchange rate in effect as of the financial statement date. We translate income statement accounts using the average exchange rate for the period and significant nonrecurring transactions using the rate on the transaction date.

Our international subsidiaries may have transactions denominated in currencies other than their functional currencies. In these instances, non-monetary assets and liabilities are reflected at the historical exchange rate, monetary assets and liabilities are remeasured at the exchange rate in effect at the end of the period and income statement accounts are remeasured at the average exchange rate for the period. We also record gains or losses in the income statement when a transaction with a third party, denominated in a currency other than the entity’s functional currency, is settled and the functional currency cash flows realized are more or less than expected based upon the exchange rate in effect when the transaction was initiated.

CONSOLIDATED RESULTS OF OPERATIONS

The analysis below includes changes attributable to same store growth, acquisitions, development activity and divestitures. The same store pool includes all properties that are owned as of the end of both the current and prior year reporting periods and excludes development properties stabilized after December 31, 2006 (generally defined as properties that are 90% leased or properties that have been substantially complete for at least 12 months). As of December 31, 2008, the same store industrial pool consisted of properties aggregating approximately 65.0 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 results.


	For the Years Ended December 31,
	2008		2007		2006

Acquired:
Number of properties		10		7		31
Square feet (in thousands)		2,831		702		6,595
Acquisition cost (in thousands)	$	217,044	$	62,241	$	568,369
Sold or Contributed:
Number of properties		19		32		50
Square feet (in thousands)		5,274		8,600		7,500

For the Years Ended December 31, 2008 and 2007 (dollars in millions):


	For the Years Ended
	December 31,
Revenues	2008		2007		$ Change			% Change

Rental revenues
U.S. industrial:
Same store	$	534.1	$	569.5	$	(35.4	)		(6.2	)%
2008 acquisitions		0.2		—		0.2			100.0	%
2007 acquisitions		1.4		0.5		0.9			180.0	%
Development		9.1		8.6		0.5			5.8	%
Other industrial		16.8		8.7		8.1			93.1	%
Non-U.S. industrial		85.0		52.3		32.7			62.5	%

Total rental revenues		646.6		639.6		7.0			1.1	%
Private capital revenues		68.4		31.7		36.7			115.6	%

Total revenues	$	715.0	$	671.3	$	43.7			6.5	%

U.S. industrial same store rental revenues decreased $35.4 million from the prior year primarily due to the decrease of $40.6 million in same store revenues from the contribution of the interests in AMB Partners II, L.P. (previously, a consolidated co-investment venture) to AMB Institutional Alliance Fund III, L.P., an unconsolidated co-investment venture, on July 1, 2008. Same store rental revenues for the year ended December 31, 2008 would have been $574.7 million if the interests in AMB Partners II, L.P. had not been contributed as of December 31, 2008. The decrease of $40.6 million related to the contribution of the interests in AMB Partners II, L.P. was offset by an increase of $5.2 million, primarily due to increased rates and decreases in free rent. The increase in rental revenues from development of $0.5 million was primarily due to increased occupancy at several of our development projects. Other industrial revenues include rental revenues from development projects that have reached certain levels of operation but are not yet part of the same store operating pool of properties. The increase in these revenues of $8.1 million reflects the number of projects that have reached these levels of operation and higher rent levels during 2008. The increase in revenues from non-U.S. industrial properties of $32.7 million was primarily due to the acquisition of 2.4 million square feet of operating properties during 2008 as well as an increase in square footage leased at our completed development properties. The increase in private capital revenues of $36.7 million was primarily due to the receipt of an incentive distribution of $33.0 million for AMB Institutional Alliance Fund III, L.P., an incentive distribution of $1.0 million in connection with the sale of the partnership interests in AMB/Erie, L.P., including its final real estate asset to AMB Institutional Alliance Fund III, L.P., and an increase in asset management fees as a result of an increase in total unconsolidated assets under management, partially offset by a decrease in acquisition fees.


	For the Years Ended
	December 31,
Costs and Expenses	2008		2007		$ Change			% Change

Property operating costs:
Rental expenses	$	103.5	$	99.2	$	4.3			4.4	%
Real estate taxes		81.2		75.2		6.0			7.9	%

Total property operating costs	$	184.7	$	174.4	$	10.3			5.9	%

Property operating costs
U.S. industrial:
Same store	$	148.4	$	156.3	$	(7.9	)		(5.1	)%
2008 acquisitions		0.2		—		0.2			100.0	%
2007 acquisitions		0.3		0.1		0.2			200.0	%
Development		4.4		3.2		1.2			37.5	%
Other industrial		6.7		3.4		3.3			97.1	%
Non-U.S. industrial		24.7		11.4		13.3			116.7	%

Total property operating costs		184.7		174.4		10.3			5.9	%
Depreciation and amortization		169.1		162.3		6.8			4.2	%
General and administrative		144.0		129.5		14.5			11.2	%
Restructuring charges		12.3		—		12.3			100.0	%
Fund costs		1.1		1.1		—			—	%
Real estate impairment losses		193.9		1.2		192.7			NA	%
Other expenses		0.5		5.1		(4.6	)		(89.8	)%

Total costs and expenses	$	705.6	$	473.6	$	232.0			49.0	%

Same store properties’ operating expenses decreased $7.9 million from the prior year primarily due to a decrease of $10.5 million from the contribution of the interests in AMB Partners II, L.P. (previously, a consolidated co-investment venture) to AMB Institutional Alliance Fund III, L.P., an unconsolidated co-investment venture, on July 1, 2008. The increase of $2.6 million, excluding the effect of the AMB Partners II, L.P. contribution, was primarily due to increased real estate taxes, repairs and maintenance expense and roads and grounds expenses, partially offset by decreases in insurance and rent expenses. The increase in development operating costs of $1.2 million is primarily due to increased operations in certain development projects. Other industrial expenses include expenses from divested properties that have been contributed to unconsolidated co-investment ventures, which are not classified as discontinued operations in our consolidated financial statements, and development properties that have reached certain levels of operation but are not yet part of the same store operating pool of properties. The increase in these costs of $3.3 million during the year ended December 31, 2008 was primarily due to an increase in the number of projects that have reached certain levels of operation and are not yet part of the same store operating pool of properties during 2008. The increase in property operating costs for non-U.S. industrial properties of $13.3 million was primarily due to the acquisition of 2.4 million square feet of operating properties during 2008, as well as an increase in square footage leased at our completed development properties. The increase in depreciation and amortization expense of $6.8 million was primarily due to the recognition of $4.3 million of depreciation expense resulting from the reclassification of $76.7 million from properties held for contribution to investments in real estate. The increase in general and administrative expenses of $14.5 million was primarily due to an increase in personnel costs, resulting from increased employee headcount in the first three quarters of 2008 as well as an increase in professional services, and taxes. During the year ended December 31, 2008, we recorded $12.3 million in restructuring charges due to the implementation of a broad-based cost reduction plan, which included a reduction in global headcount, office closure costs and the termination of certain contractual obligations. The increase in real estate impairment losses was primarily a result of changes in the economic environment in addition to the write-off of pursuit costs. See Part IV, Item 15: Note 3 of the “Notes to Consolidated Financial Statements” for a more detailed discussion of the real estate impairment losses recorded in our results of operations during the fourth

quarter of 2008. The decrease in other expenses of $4.6 million was primarily due to a loss on our non-qualified deferred compensation plans during the year ended December 31, 2008, compared to a gain during the year ended December 31, 2007.


	For the Years Ended
	December 31,
Other Income and (Expenses)	2008			2007			$ Change			% Change

Development profits, net of taxes	$	81.1		$	124.3		$	(43.2	)		(34.8	)%
Gains from sale or contribution of real estate interests, net		20.0			73.4			(53.5	)		(72.8	)%
Equity in earnings of unconsolidated joint ventures, net		17.1			7.5			9.7			129.3	%
Other (expense) income		(3.2	)		22.3			(25.4	)		(114.4	)%
Interest expense, including amortization		(133.5	)		(127.0	)		6.6			5.2	%

Total other income and (expenses), net	$	(18.5	)	$	100.5		$	(118.9	)		118.4	%

Development profits represent gains from the sale or contribution of development projects including land. See the development sales and development contributions tables and “— Property Divestitures” in “Capital Resources” for a discussion of the development asset sales and contributions and the associated development profits during the years ended December 31, 2008 and 2007. During the year ended December 31, 2008, we contributed an operating property for approximately $66.2 million, aggregating approximately 0.8 million square feet, into AMB Institutional Alliance Fund III, L.P. As a result, we recognized a gain of $20.0 million on the contribution, representing the portion of our interest in the contributed property acquired by the third-party investors for cash. During the year ended December 31, 2007, we contributed 4.2 million square feet in operating properties into AMB Europe Fund I, FCP-FIS, contributed a 0.2 million square foot operating property into AMB Institutional Alliance Fund III, L.P., and contributed an operating property aggregating approximately 0.1 million square feet into AMB-SGP Mexico, LLC, for a total of approximately $524.9 million. As a result of these contributions, we recognized gains from the contribution of real estate interests of approximately $73.4 million, representing the portion of our interest in the contributed properties acquired by the third-party investors for cash.

The increase in equity in earnings of unconsolidated joint ventures of $9.7 million for the year ended December 31, 2008 as compared to the year ended December 31, 2007 was primarily due to the contribution of the interests in AMB Partners II, L.P. (previously, a consolidated co-investment venture) to AMB Institutional Alliance Fund III, L.P., an unconsolidated co-investment venture, as well as growth in our unconsolidated assets under management. Other (expense) income decreased $25.4 million from the prior year primarily due to foreign currency exchange rate loss, a loss on our non qualified deferred compensation plan of $7.8 million, the recognition of a $5.5 million loss on impairment of an investment and a decrease in interest income of approximately $3.3 million, partially offset by an increase in third party management fees. During the year ended December 31, 2007, we recognized a gain on currency remeasurement of approximately $3.1 million, compared to a loss of approximately $5.7 million in 2008. Additionally, other income during the year ended December 31, 2007 included insurance proceeds of approximately $2.9 million related to losses from Hurricanes Katrina and Wilma. Interest expense increased $6.6 million as result of increased total consolidated debt at December 31, 2008.


	For the Years Ended
	December 31,
Discontinued Operations	2008			2007		$ Change			% Change

Income attributable to discontinued operations, net of minority interests	$	(0.4	)	$	9.3	$	(9.7	)		(104.5	)%
Development gains and gains from sale of real estate interests, net of taxes and minority interests		1.9			64.7		(62.8	)		(97.1	)%

Total discontinued operations	$	1.5		$	74.0	$	(72.5	)		(98.0	)%

During the year ended December 31, 2008, we sold an approximate 0.1 million square foot industrial operating property for a sale price of $3.6 million, with a resulting net gain of $0.7 million, and also recognized a deferred gain

of approximately $1.1 million on the divestiture of one industrial building, aggregating approximately 0.1 million square feet, for a price of $3.5 million, which was disposed of on December 31, 2007. During the year ended December 31, 2007, we divested ourselves of three industrial buildings, aggregating approximately 0.3 million square feet, for an aggregate price of $120.0 million, with a resulting net gain of $2.1 million, and two value-added conversion projects resulting in a gain of approximately $62.6 million.


	For the Years Ended
	December 31,
Preferred Units	2008			2007			$ Change			% Change

Preferred unit distributions	$	(15.8	)	$	(17.4	)	$	(1.6	)		(9.2	)%
Preferred unit redemption issuance costs		—			(2.9	)		(2.9	)		(100.0	)%

Total preferred units	$	(15.8	)	$	(20.3	)	$	(4.5	)		(22.3	)%

On April 17, 2007, we redeemed all 800,000 of our outstanding 7.95% Series J Cumulative Redeemable Preferred Limited Partnership Units and all 800,000 of our outstanding 7.95% Series K Cumulative Redeemable Preferred Limited Partnership Units. In addition, on April 17, 2007, AMB Property II, L.P., one of our subsidiaries, repurchased all 510,000 of its outstanding 8.00% Series I Cumulative Redeemable Preferred Limited Partnership Units. As a result of the redemptions and repurchase, we recognized a reduction of income available to common unitholders of $2.9 million for the original issuance costs during the year ended December 31, 2007. No repurchases were made during the year ended December 31, 2008.

For the Years Ended December 31, 2007 and 2006 (dollars in millions):

Effective October 1, 2006, we deconsolidated AMB Institutional Alliance Fund III, L.P., on a prospective basis, due to the re-evaluation of the accounting for our investment in the fund because of changes to the partnership agreement regarding the general partner’s rights effective October 1, 2006. As a result, our results of operations presented below are not comparable between years presented.


	For the Years Ended
	December 31,
Revenues	2007		2006		$ Change			% Change

Rental revenues
U.S. industrial:
Same store	$	569.5	$	595.5	$	(26.0	)		(4.4	)%
2007 acquisitions		0.5		—		0.5			100.0	%
Development		8.6		2.9		5.7			196.6	%
Other industrial		8.7		5.3		3.4			64.2	%
Non-U.S. industrial		52.3		62.6		(10.3	)		(16.5	)%

Total rental revenues		639.6		666.3		(26.7	)		(4.0	)%
Private capital revenues		31.7		46.1		(14.4	)		(31.2	)%

Total revenues	$	671.3	$	712.4	$	(41.1	)		(5.8	)%

U.S. industrial same store rental revenues decreased $26.0 million from the prior year due primarily to the deconsolidation of AMB Institutional Alliance Fund III, L.P., on October 1, 2006. Same store rental revenues for the year ended December 31, 2006 would have been $542.1 million if AMB Institutional Alliance Fund III, L.P. had been deconsolidated as of January 1, 2006. The increase of $27.4 million, excluding the deconsolidation of AMB Institutional Alliance Fund III, L.P., is primarily due to increased occupancy, rent increases on renewals and rollovers as well as decreases in free rent. The 2007 acquisitions consisted of seven properties, aggregating approximately 0.7 million square feet. The increase in rental revenues from development was primarily due to increased occupancy at several of our development projects where development activities have been substantially completed as well as an increase in the number of development projects. Other industrial revenues include rental revenues from properties that have been contributed to an unconsolidated co-investment venture, and accordingly are not classified as discontinued operations in our consolidated financial statements, and development projects that

have reached certain levels of operation and are not yet part of the same store operating pool of properties. The increase in other industrial revenues was primarily due to an increase in base rents. The decrease in revenues from non-U.S. industrial properties was primarily due to the contribution of 4.2 million square feet of operating properties and approximately 1.8 million square feet of completed development projects into AMB Europe Fund I, FCP-FIS. The decrease in private capital income of $14.4 million was primarily due to a decrease in incentive fees, acquisition fees, and disposition fees offset by an increase in asset management fees as a result of an increase in total assets under management.


	For the Years Ended
	December 31,
Costs and Expenses	2007		2006		$ Change			% Change

Property operating costs:
Rental expenses	$	99.2	$	96.3	$	2.9			3.0	%
Real estate taxes		75.2		76.9		(1.7	)		(2.2	)%

Total property operating costs	$	174.4	$	173.2	$	1.2			0.7	%

Property operating costs
U.S. industrial:
Same store	$	156.3	$	158.4	$	(2.1	)		(1.3	)%
2007 acquisitions		0.1		—		0.1			100.0	%
Development		3.2		2.8		0.4			14.3	%
Other industrial		3.4		0.1		3.3			NA	%
Non-U.S. industrial		11.4		11.9		(0.5	)		(4.2	)%

Total property operating costs		174.4		173.2		1.2			0.7	%
Depreciation and amortization		162.3		175.4		(13.1	)		(7.5	)%
General and administrative		129.5		104.3		25.2			24.2	%
Fund costs		1.1		2.1		(1.0	)		(48.5	)%
Real estate impairment losses		1.2		6.3		(5.2	)		(81.7	)%
Other expenses		5.1		2.6		2.5			95.1	%

Total costs and expenses	$	473.6	$	463.9	$	9.6			2.1	%

Same store properties’ operating expenses decreased $2.1 million from the prior year due primarily to a decrease of approximately $12.7 million due to the deconsolidation of AMB Institutional Alliance Fund III, L.P., on October 1, 2006. Same store operating expenses for the year ended December 31, 2006 would have been $145.7 million if AMB Institutional Alliance Fund III, L.P. had been deconsolidated as of January 1, 2006. The increase of approximately $10.6 million, had AMB Institutional Alliance Fund III, L.P. been deconsolidated as of January 1, 2006, was primarily due to increased insurance costs, real estate taxes, roads and grounds expense, and management fees. The 2007 acquisitions consisted of seven properties, aggregating approximately 0.7 million square feet. The increase in development operating costs was primarily due to increased operations in certain development projects which have been substantially completed. This increase was primarily due to increases in real estate taxes and utilities. The increase in other industrial property operating costs was primarily due to insurance, cleaning and non-reimbursable expenses. The decrease in property operating costs from non-U.S. industrial properties is primarily due to the contribution of 4.2 million square feet of operating properties and approximately 1.8 million square feet of completed development projects into AMB Europe Fund I, FCP-FIS. The decrease in depreciation and amortization expense was due to the deconsolidation of AMB Institutional Alliance Fund III, L.P. The increase in general and administrative expenses was primarily due to additional staffing and the opening of new offices both domestically and internationally. The decrease of fund costs from the prior year was due primarily to the deconsolidation of AMB Institutional Alliance Fund III, L.P. The impairment losses during the year ended December 31, 2007 were taken on non-core assets as a result of leasing activities and changes in the economic environment. The impairment losses during the year ended December 31, 2006 were taken on several non-core assets as a result of leasing activities and changes in the economic environment and the holding period of certain

assets. Other expenses increased approximately $2.5 million from the prior year due primarily to an increase in dead deal expenditures.


	For the Years Ended
	December 31,
Other Income and (Expenses)	2007			2006			$ Change			% Change

Development profits, net of taxes	$	124.3		$	106.4		$	17.9			16.8	%
Gains from sale or contribution of real estate interests, net		73.4			—			73.4			100.0	%
Equity in earnings of unconsolidated joint ventures, net		7.5			23.2			(15.8	)		(67.9	)%
Other income		22.3			11.8			10.4			88.4	%
Interest expense, including amortization		(127.0	)		(161.4	)		(34.5	)		(21.4	)%

Total other income and (expenses), net	$	100.5		$	(20.0	)	$	120.5			602.1	%

Development profits, net of taxes, represent gains from the sale or contribution of development projects including land. See the development sales and development contributions tables and “— Property Divestitures” in “Capital Resources” for a discussion of the development asset sales and contributions and the associated development profits during the years ended December 31, 2007 and 2006. During the year ended December 31, 2007, we contributed 4.2 million square feet in operating properties into AMB Europe Fund I, FCP-FIS, contributed a 0.2 million square foot operating property into AMB Institutional Alliance Fund III, L.P., and contributed an operating property aggregating approximately 0.1 million square feet into AMB-SGP Mexico, LLC, for a total of approximately $524.9 million. As a result of these contributions, we recognized gains from contribution of real estate interests of approximately $73.4 million, representing the portion of our interest in the contributed properties acquired by the third-party investors for cash. The decrease in equity in earnings of unconsolidated joint ventures of approximately $15.8 million was primarily due to a decrease in gains from the sale of real estate interests by our unconsolidated joint ventures partially offset by the deconsolidation of AMB Institutional Alliance Fund III, L.P. Other income increased approximately $10.4 million from the prior year due primarily to an increase in the gain on currency remeasurement of approximately $3.9 million, an increase in insurance proceeds of approximately $2.9 million related to losses from Hurricanes Katrina and Wilma and an increase in interest income of $2.3 million. The decrease in interest expense, including amortization, was due primarily to decreased borrowings on unsecured credit facilities and the deconsolidation of AMB Institutional Alliance Fund III, L.P.


	For the Years Ended
	December 31,
Discontinued Operations	2007		2006		$ Change			% Change

Income attributable to discontinued operations, net of minority interests	$	9.3	$	15.7	$	(6.4	)		(40.9	)%
Development gains and gains from sale of real estate interests, net of taxes and minority interests		64.7		44.7		20.0			44.8	%

Total discontinued operations	$	74.0	$	60.4	$	13.6			22.5	%

During 2007, we divested ourselves of three industrial properties, aggregating approximately 0.3 million square feet for $120.0 million, with a resulting gain of approximately $2.1 million, and two value-added conversion projects resulting in a gain of approximately $62.6 million. During 2006, we divested ourselves of 17 industrial properties, aggregating approximately 3.5 million square feet, for an aggregate price of approximately $175.3 million, with a resulting net gain of approximately $44.7 million.


	For the Years Ended
	December 31,
Preferred Units	2007			2006			$ Change			% Change

Preferred unit distributions	$	(17.4	)	$	(19.9	)	$	(2.5	)		(12.7	)%
Preferred unit redemption issuance costs		(2.9	)		(1.1	)		1.8			164.5	%

Total preferred units	$	(20.3	)	$	(21.0	)	$	(0.7	)		(3.2	)%

In August 2006, we issued 2,000,000 shares of 6.85% Series P Cumulative Redeemable Preferred Units. The increase in preferred unit distributions is due to the then newly issued units. On April 17, 2007, we redeemed all 800,000 of our outstanding 7.95% Series J Cumulative Redeemable Preferred Limited Partnership Units and all 800,000 of our outstanding 7.95% Series K Cumulative Redeemable Preferred Limited Partnership Units. In addition, on April 17, 2007, AMB Property II, L.P., one of our subsidiaries, repurchased all 510,000 of its outstanding 8.00% Series I Cumulative Redeemable Preferred Limited Partnership Units. As a result of the redemptions and repurchase, we recognized a reduction of income available to common unitholders of $2.9 million for the original issuance costs during the year ended December 31, 2007. During the year ended December 31, 2006, AMB Property II, L.P., repurchased all 840,000 of its outstanding 8.125% Series H Cumulative Redeemable Preferred Limited Partnership Units, all 220,440 of its outstanding 7.75% Series E Cumulative Redeemable Preferred Limited Partnership Units, all 201,139 of its outstanding 7.95% Series F Cumulative Redeemable Preferred Limited Partnership Units and all 729,582 of its outstanding 5.00% Series N Cumulative Redeemable Preferred Limited Partnership Units. As a result, we recognized a decrease in income available to common unitholders of $1.1 million for the original issuance costs, net of discount on repurchase.

Liquidity and Capital Resources

Balance Sheet Strategy. In general, we use unsecured lines of credit, unsecured notes, preferred units and common units (issued by us and/or our subsidiaries) to capitalize our wholly-owned assets. Over time, we plan to retire non-recourse, secured debt encumbering our wholly-owned assets and replace that debt with unsecured notes where practicable. In managing the co-investment ventures, in general, we use non-recourse, secured debt to capitalize our co-investment ventures.

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


	•	cash on hand and cash flow from operations;

	•	private capital from co-investment partners;

	•	net proceeds from contributions of properties and completed development projects to our co-investment ventures;

	•	net proceeds from the sales of development projects, value-added conversion projects and land to third parties;

	•	net proceeds from divestitures of properties;

	•	borrowings under our unsecured credit facilities;

	•	other forms of secured or unsecured financing;

	•	assumption of debt related to acquired properties;

	•	proceeds from limited partnership unit offerings (including issuances of common and preferred limited partnership units by us and our subsidiaries); and

	•	proceeds from debt securities offerings.

We currently expect that our principal funding requirements will include:


	•	debt service;

	•	development, expansion and renovation of properties;

	•	acquisitions;

	•	distributions on outstanding common and preferred limited partnership units; and

	•	working capital.

For our general partner, AMB Property Corporation, to maintain its qualification as a real estate investment trust, it must pay dividends to its stockholders aggregating annually at least 90% of its taxable income. We are required to make distributions to AMB Property Corporation that will enable it to satisfy this distribution requirement and avoid tax liability. While historically our general partner has satisfied this distribution requirement by making cash distributions to its stockholders, it may choose to satisfy this requirement by making distributions of

cash or other property, including, in limited circumstances, its own stock. As a result of this distribution requirement, our general partner cannot rely on retained earnings to fund its on-going operations to the same extent that other corporations that are not real estate investment trusts can. It may need to continue to raise capital in both the debt and equity markets to fund its working capital needs, acquisitions and developments.

If our long-term debt ratings fall below their current levels, the borrowing cost of debt under our unsecured credit facilities and certain term loans will increase. In addition, if our long-term debt ratings fall below investment grade, we may be unable to request borrowings in currencies other than U.S. dollars or Japanese Yen, as applicable, however, the lack of other currency borrowings does not affect our ability to fully draw down under the credit facilities or term loans. In the event our long-term debt ratings fall below investment grade, we may be unable to exercise our options to extend the term of our credit facilities or our $230 million secured term loan credit agreement. However, our lenders will not be able to terminate our credit facilities or certain term loans in the event that our credit rating falls below investment grade status. None of our credit facilities or such term loans contains covenants regarding our general partner’s stock price or market capitalization, thus a decrease in our general partner’s stock price is not expected to impact our ability to borrow under our existing lines of credit and term loans. Based on publicly available information regarding our lenders, we currently do not expect to lose borrowing capacity under our existing lines of credit and term loans as a result of a consolidation, merger or other business combination among our lenders. However, our access to funds under our credit facilities is dependent on the ability of the lenders that are parties to such facilities to meet their funding commitments to us. We continue to closely monitor global economic conditions and the lenders who are parties to our credit facilities, as well as our long-term debt and credit ratings and outlooks, our customers’ financial positions, private capital raising and capital market activity.

Should we face a situation in which we do not have sufficient cash available to us through our operations to continue operating our business as usual, we may need to find alternative ways to increase our liquidity. Such alternatives may include, without limitation, divesting ourselves of properties, whether or not the sales price is optimal or if they otherwise meet our strategic objectives to keep for the long term; issuing and selling our debt and equity in public or private transactions whether or not at favorable pricing or on favorable terms; entering into leases with our customers at lower rental rates or entering into lease renewals with our existing customers without an increase in rental rates at turnover or, in either case, on suboptimal terms.

Cash Flows. As of December 31, 2008, cash provided by operating activities was $301.0 million as compared to $240.5 million for the same period in 2007. This change was primarily due to an increase in impairment losses, a decrease in income from operations, development profits and gains from sales and contributions of real estate interests, net, and changes in our accounts receivable and other assets and accounts payable and other liabilities. Cash used in investing activities was $881.8 million for the year ended December 31, 2008, as compared to cash used in investing activities of $632.2 million for the same period in 2007. This increase was primarily due to an increase in cash paid for property acquisitions, a decrease in net proceeds from divestiture of real estate and securities, an increase in loans made to affiliates and the purchase of additional equity interest in G. Accion, offset by an increase in repayment of mortgage and loan receivables and a decrease in additions to land, buildings, development costs, building improvements and lease costs. Cash provided by financing activities was $581.8 million for the year ended December 31, 2008, as compared to cash provided by financing activities of $420.0 million for the same period in 2007. This increase was due primarily to an increase in borrowings on other debt, net of payments, an increase in proceeds from issuances of senior debt, net of payments, an increase in borrowings on unsecured credit facilities, net of payments, a decrease in the repurchase of preferred units and a decrease in distributions to minority interests. This activity was partially offset by a decrease in the issuance of common units.

Subject to the above discussion, we believe our sources of working capital, specifically our cash flow from operations, and borrowings available under our unsecured credit facilities, are adequate for us to meet our current liquidity requirements. However, there can be no assurance that our sources of capital will continue to be available at all or in amounts sufficient to meet our needs. The unavailability of capital could adversely affect our financial condition, results of operations, cash flow and ability to make distributions to our unitholders and make payments to our noteholders.

Capital Resources

Development Completions. Development completions are generally defined as properties that are substantially complete and 90% occupied or pre-leased, or that have been substantially complete for at least 12 months. Development completions during the years ended December 31, 2008 and 2007 were as follows (dollars in thousands):


	For the Years Ended
	December 31,
	2008		2007

Placed in Operations:
Number of projects		1		1
Square feet		396,710		179,400
Investment	$	17,396	$	10,657
Sold:
Number of projects		2		7
Square feet		158,871		498,017
Investment	$	37,686	$	74,432
Contributed:
Number of projects		4		10
Square feet		2,122,056		2,674,044
Investment	$	139,316	$	259,678
Available for Sale or Contribution:
Number of projects		19		14
Square feet		5,834,143		4,695,036
Investment	$	751,028	$	425,754

Total:
Number of projects		26		32
Square feet		8,511,780		8,046,497
Investment	$	945,426	$	770,521

Development sales to third parties during the years ended December 31, 2008, 2007 and 2006 were as follows (dollars in thousands):


	For the Years Ended December 31,
	2008		2007		2006

Number of completed development projects		6		7		6
Number of land parcels		2		3		5
Square feet		73,927		498,017		1,323,748
Gross sales price	$	25,520	$	130,419	$	86,629
Development gains, net of taxes	$	7,235	$	28,575	$	12,440

Development contribution activity during the years ended December 31, 2008, 2007 and 2006 was as follows (dollars in thousands):


	For the Years Ended December 31,
	2008		2007		2006

Number of projects contributed to AMB Institutional Alliance Fund III, L.P.		4		4		3
Square feet		2,723,003		1,006,164		554,279
Number of projects contributed to AMB-SGP Mexico, LLC		3		2		2
Square feet		1,421,043		329,114		843,439
Number of land parcels contributed to AMB DFS Fund I, LLC		—		2		1
Square feet		—		—		—
Number of projects contributed to AMB Europe Fund I, FCP-FIS		2		8		—
Square feet		164,574		1,838,011		—
Number of projects contributed to AMB Japan Fund I, L.P.		2		1		4
Square feet		891,596		469,627		2,644,258


Total number of contributed development assets		11		17		10
Total square feet		5,200,216		3,642,916		4,041,976
Development gains, net of taxes	$	73,849	$	95,713	$	93,949

Property Divestitures. During 2008, we recognized development profits of approximately $7.2 million as a result of the sale of six development projects, aggregating approximately 73.9 million square feet, and two land parcels, aggregating approximately 95 acres. During 2007, we recognized development profits of approximately $28.6 million as a result of the sale of seven development projects and 76 acres of land. During 2006, we sold five land parcels and six development projects totaling approximately 1.3 million square feet for an aggregate sale price of $86.6 million, resulting in an after-tax gain of $13.5 million. In addition, during 2006, we received approximately $0.4 million in connection with the condemnation of a parcel of land resulting in a loss of $1.0 million, $0.8 million of which was the joint venture partner’s share.

During 2008, we recognized development profits of approximately $73.9 million, as a result of the contribution of eleven completed development projects, aggregating approximately 5.2 million square feet, to AMB Institutional Alliance Fund III, L.P., AMB Europe Fund I, FCP-FIS, AMB Japan Fund I, L.P. and AMB-SGP Mexico, LLC. During 2007, we recognized development profits of approximately $95.7 million, as a result of the contribution of 15 completed development projects and 2 land parcels, aggregating approximately 82 acres of land, to AMB Europe Fund I, FCP-FIS, AMB-SGP Mexico, LLC, AMB Institutional Alliance Fund III, L.P., AMB DFS Fund I, LLC, and AMB Japan Fund I, L.P. During 2006, we contributed a total of nine completed development projects and one land parcel into unconsolidated co-investment joint ventures. Four projects totaling approximately 2.6 million square feet were contributed into AMB Japan Fund I, L.P, two projects totaling approximately 0.8 million square feet were contributed into AMB-SGP Mexico, LLC, and three projects totaling approximately 0.6 million square feet were contributed into AMB Institutional Alliance Fund III, L.P. In addition, one land parcel was contributed into AMB DFS Fund I, LLC. As a result of these contributions, we recognized an aggregate after-tax gain of $93.9 million, representing the portion of our interest in the contributed property acquired by the third-party investors for cash.

Gains from Sale or Contribution of Real Estate Interests. During 2008, we sold an approximate 0.1 million square foot industrial operating property for a sale price of $3.6 million, with a resulting net gain of $0.7 million, and we also recognized a deferred gain of approximately $1.1 million on the divestiture of one industrial building, aggregating approximately 0.1 million square feet, for a price of $3.5 million, which was disposed of on December 31, 2007. During 2007, we divested ourselves of three industrial properties, aggregating approximately 0.3 million square feet, for an aggregate price of $120.0 million, with a resulting net gain of approximately $2.1 million, and sold two value-added conversion projects for a gain of approximately $62.6 million. During 2006,

we divested ourselves of 39 industrial buildings, aggregating approximately 3.5 million square feet, for an aggregate price of $175.3 million, with a resulting net gain of $44.7 million.

During 2008, we contributed an operating property for approximately $66.2 million, aggregating approximately 0.8 million square feet, into AMB Institutional Alliance Fund III, L.P. We recognized a gain of $20.0 million on the contribution, representing the portion of our interest in the contributed property acquired by the third-party investors for cash. During 2007, we contributed operating properties for approximately $524.9 million, aggregating approximately 4.5 million square feet, into AMB Europe Fund I, FCP-FIS, AMB Institutional Alliance Fund III, L.P. and AMB-SGP Mexico, LLC. We recognized a gain of $73.4 million on the contributions, representing the portion of our interest in the contributed properties acquired by the third-party investors for cash. During 2006, there were no contributions of operating properties.

Properties Held for Divestiture or Contribution. As of December 31, 2008, we held for divestiture two properties with an aggregate net book value of $8.2 million. These properties either are not in our core markets, do not meet our current investment objectives, or are included as part of our development-for-sale or value-added conversion programs. 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 costs to sell. As of December 31, 2007, we held for divestiture five properties with an aggregate net book value of $40.5 million.

As of December 31, 2008, we held for contribution to co-investment ventures 20 properties with an aggregate net book value of $600.8 million which, when contributed, will reduce our average ownership interest in these projects from approximately 96% to an expected range of 15-20%. As of December 31, 2008, properties with an aggregate net book value of $100.4 million were reclassified from properties held for contribution to investments in real estate as a result of the change in management’s expectations regarding the launch of a co-investment venture. These properties may be reclassified as properties held for contribution at some future time. In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, as of December 31, 2008, we recognized additional depreciation expense and related accumulated depreciation of $2.2 million as a result of this reclassification, as well as impairment charges of $21.8 million on real estate assets held for divestiture or contribution for which it was determined that the carrying value was greater than its estimated fair value. As of December 31, 2007, we held for contribution to co-investment ventures 17 properties with an aggregate net book value of $488.4 million.

Co-investment Ventures. We enter into co-investment ventures with institutional investors. These co-investment ventures are managed by our private capital group and provide us with an additional source of capital to fund certain acquisitions, development projects and renovation projects, as well as private capital income.

Third-party equity interests in the consolidated co-investment ventures are reflected as minority interests in the consolidated financial statements. As of December 31, 2008, we owned approximately 78.7 million square feet of our properties (49.2% of the total operating and development portfolio) through our consolidated and unconsolidated co-investment ventures. We may make additional investments through these co-investment ventures or new co-investment ventures in the future and presently plan to do so.

The following table summarizes our significant consolidated co-investment ventures at December 31, 2008 (dollars in thousands):


		Approximate			Original
		Ownership			Planned
Consolidated Co-investment Venture	Co-investment Venture Partner	Percentage			Capitalization(1)

AMB Institutional Alliance Fund II, L.P.(2)	AMB Institutional Alliance REIT II, Inc.		20	%	$	490,000

AMB-SGP, L.P.(3)	Industrial JV Pte. Ltd.		50	%	$	420,000
AMB-AMS, L.P.(4)	PMT, SPW and TNO(5)		39	%	$	228,000


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

(2)		AMB Institutional Alliance Fund II, L.P. is a co-investment partnership formed in 2001 with institutional investors, which invest through a private real estate investment trust, and a third-party limited partner.


(3)		AMB-SGP, L.P. 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.

(4)		AMB-AMS, L.P. is a co-investment partnership formed in 2004 with three Dutch pension funds.

(5)		PMT is Stichting Pensioenfonds Metaal en Techniek, SPW is Stichting Pensioenfonds voor de Woningcorporaties and TNO is Stichting Pensioenfonds TNO.

The following table summarizes our significant unconsolidated co-investment ventures at December 31, 2008 (dollars in thousands):


		Approximate
		Ownership			Planned
Unconsolidated Co-investment Venture	Co-investment Venture Partner	Percentage			Capitalization(1)

AMB Institutional Alliance Fund III, L.P.(2)(3)	AMB Institutional Alliance REIT III, Inc.		19	%	$	3,340,000
AMB Europe Fund I, FCP-FIS(3)(4)	Institutional investors		21	%	$	1,223,000
AMB Japan Fund I, L.P.(5)	Institutional investors		20	%	$	1,540,000
AMB-SGP Mexico, LLC(6)	Industrial (Mexico) JV Pte. Ltd.		22	%	$	599,000
AMB DFS Fund I, LLC(7)	Strategic Realty Ventures, LLC		15	%	$	439,000


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

(2)		AMB Institutional Alliance Fund III, L.P. is an open-ended co-investment partnership formed in 2004 with institutional investors, which invest through a private real estate investment trust. On July 1, 2008, the partners of AMB Partners II, L.P. (previously, a consolidated co-investment venture) contributed their interests in AMB Partners II, L.P. to AMB Institutional Alliance Fund III, L.P. in exchange for interests in AMB Institutional Alliance Fund III, L.P., an unconsolidated co-investment venture.

(3)		The planned capitalization and investment capacity of AMB Institutional Alliance Fund III, L.P. and AMB Europe Fund I, FCP-FIS, as open-ended funds are not limited. The planned capitalization represents the gross book value of real estate assets as of the most recent quarter end.

(4)		AMB Europe Fund I, FCP-FIS, is an open-ended co-investment venture formed in 2007 with institutional investors. The venture is Euro-denominated. U.S. dollar amounts are converted at the exchange rate in effect at December 31, 2008.

(5)		AMB Japan Fund I, L.P. is a co-investment venture formed in 2005 with institutional investors. The venture is Yen-denominated. U.S. dollar amounts are converted at the exchange rate in effect at December 31, 2008.

(6)		AMB-SGP Mexico, LLC is a co-investment venture formed in 2004 with Industrial (Mexico) JV Pte. Ltd., a subsidiary of GIC Real Estate Pte. Ltd., the real estate investment subsidiary of the Government of Singapore Investment Corporation.

(7)		AMB DFS Fund I, LLC is a co-investment venture formed in 2006 with a subsidiary of GE Real Estate to build and sell properties.

AMB Pier One, LLC, is a joint venture related to the 2000 redevelopment of the pier that houses our global headquarters in San Francisco, California. On June 30, 2007, we exercised our option to purchase the remaining equity interest held by an unrelated third party, based on the fair market value as stipulated in the joint venture agreement, in AMB Pier One, LLC, for a nominal amount. As a result, the investment was consolidated as of June 30, 2007.

As of December 31, 2008, we also had a 100% consolidated interest in G. Accion, a Mexican real estate company, which has been renamed AMB Property Mexico, S.A. de C.V. AMB Property Mexico owns and develops real estate and provides real estate management and development services in Mexico. On June 13, 2008, we acquired approximately 19% of additional equity interest and on July 18, 2008, we acquired the remaining equity interest (approximately 42%) in AMB Property Mexico, increasing our equity interest from approximately 39% to 100%. Through our investment in AMB Property Mexico, we hold equity interests in various other unconsolidated

ventures totaling approximately $24.6 million. In addition, in August 2008, one of our subsidiaries sold its approximate 5% interest in IAT Air Cargo Facilities Income Fund (IAT), a Canadian income trust specializing in aviation-related real estate at Canada’s international airports, as part of a tender offer for interests in the income trust. These equity investments of approximately $2.1 million (valued as of December 31, 2007) were included in other assets on the consolidated balance sheets as of December 31, 2007.

Partners’ Capital. As of December 31, 2008, we had outstanding 98,240,461 common general partnership units; 2,180,809 common limited partnership units; 2,000,000 61/2% Series L Cumulative Redeemable Preferred Partnership Units; 2,300,000 63/4% Series M Cumulative Redeemable Preferred Partnership Units; 3,000,000 7.00% Series O Cumulative Redeemable Preferred Partnership Units; and 2,000,000 6.85% Series P Cumulative Redeemable Preferred Partnership Units.

As of December 31, 2008, no preferred units become callable in 2009.

On April 17, 2007, AMB Property II, L.P. repurchased all 510,000 of its outstanding 8.00% Series I Cumulative Redeemable Preferred Limited Partnership Units from a single institutional investor for an aggregate price of $25.6 million, including accrued and unpaid distributions. In connection with this repurchase, AMB Property Corporation reclassified all 510,000 shares of its 8.00% Series I Cumulative Redeemable Preferred Stock as preferred stock.

On April 17, 2007, we redeemed all 800,000 of our outstanding 7.95% Series J Cumulative Redeemable Preferred Limited Partnership Units from a single institutional investor for an aggregate price of $40.0 million, including accrued and unpaid distributions. In connection with this redemption, AMB Property Corporation reclassified all 800,000 shares of its 7.95% Series J Cumulative Redeemable Preferred Stock as preferred stock.

On April 17, 2007, we redeemed all 800,000 of our outstanding 7.95% Series K Cumulative Redeemable Preferred Limited Partnership Units from a single institutional investor for an aggregate price of $40.0 million, including accrued and unpaid distributions. In connection with this redemption, AMB Property Corporation reclassified all 800,000 shares of its 7.95% Series K Cumulative Redeemable Preferred Stock as preferred stock.

On January 29, 2007, all of the outstanding 7.75% Series D Cumulative Redeemable Preferred Limited Partnership Units of AMB Property II, L.P. were transferred from one institutional investor to another institutional investor. In connection with that transfer, on February 22, 2007, AMB Property II, L.P. amended the terms of the series D preferred units to, among other things, change the rate applicable to the series D preferred units from 7.75% to 7.18% and change the date prior to which the series D preferred units may not be redeemed from May 5, 2004 to February 22, 2012.

On November 1, 2006, AMB Property II, L.P., issued 1,130,835 of its class B common limited partnership units in connection with a property acquisition.

In March 2007, AMB Property Corporation issued approximately 8.4 million shares of its common stock for net proceeds of approximately $472.1 million, which were contributed to us in exchange for the issuance of approximately 8.4 million general partnership units. As a result of the common stock issuance, there was a significant reallocation of partnership interests due to the difference in our general partner’s stock price at issuance as compared to the book value per share at the time of issuance. We used the proceeds from the offering for general corporate purposes and, over the long term, to expand our global development business.

On September 21, 2006, AMB Property II, L.P., repurchased all 201,139 of its outstanding 7.95% Series F Cumulative Redeemable Preferred Limited Partnership Units from a single institutional investor for an aggregate price of $10.0 million, including accrued and unpaid distributions. In connection with this repurchase, AMB Property Corporation reclassified all 267,439 shares of its 7.95% Series F Cumulative Redeemable Preferred Stock as preferred stock.

On June 30, 2006, AMB Property II, L.P., repurchased all 220,440 of its outstanding 7.75% Series E Cumulative Redeemable Preferred Limited Partnership Units from a single institutional investor for an aggregate price of $10.9 million, including accrued and unpaid distributions. In connection with this repurchase, AMB Property Corporation reclassified all 220,440 shares of its 7.75% Series E Cumulative Redeemable Preferred Stock as preferred stock.

On March 21, 2006, AMB Property II, L.P., repurchased all 840,000 of its outstanding 8.125% Series H Cumulative Redeemable Preferred Limited Partnership Units from a single institutional investor for an aggregate price of $42.8 million, including accrued and unpaid distributions. In connection with this repurchase, AMB Property Corporation reclassified all 840,000 shares of its 8.125% Series H Cumulative Redeemable Preferred Stock as preferred stock.

On August 25, 2006, AMB Property Corporation issued and sold 2,000,000 shares of 6.85% Series P Cumulative Redeemable Preferred Stock at $25.00 per share. Dividends are cumulative from the date of issuance and payable quarterly in arrears at a rate per share equal to $1.7125 per annum. The series P preferred stock is redeemable by AMB Property Corporation on or after August 25, 2011, subject to certain conditions, for cash at a redemption price equal to $25.00 per share, plus accumulated and unpaid dividends thereon, if any, to the redemption date. AMB Property Corporation contributed the net proceeds of approximately $48.1 million to us, and in exchange, we issued to AMB Property Corporation 2,000,000 6.85% Series P Cumulative Redeemable Preferred Units.

In December 2005, AMB Property Corporation’s board of directors approved a two-year common stock repurchase program for the repurchase of up to $200.0 million of its common stock. On December 18, 2007, AMB Property Corporation’s board of directors approved another two-year common stock repurchase program for the repurchase of up to $200.0 million of its common stock, which shall terminate on December 31, 2009. During the year ended December 31, 2008, AMB Property Corporation repurchased approximately 1.8 million shares of its common stock for an aggregate price of $87.7 million at a weighted average price of $49.64 per share. During the year ended December 31, 2007, AMB Property Corporation repurchased approximately 1.1 million shares of its common stock for an aggregate price of $53.4 million at a weighted average price of $49.87 per share. AMB Property Corporation has the authorization to repurchase up to an additional $112.3 million of its common stock under the 2007 program.

Debt. In order to maintain financial flexibility and facilitate the deployment of capital through market cycles, we presently intend over the long-term to operate with an our share of total debt-to-our share of total market capitalization ratio or our share of total debt-to-our share of total assets of approximately 45% or less. In order to operate at this targeted ratio over the long term, we are currently exploring various options to monetize our development assets through possible contribution to funds where capacity is available, the formation of joint ventures and the sale to third parties. We are also exploring the potential sale of operating assets to further enhance liquidity. As of December 31, 2008, our share of total debt-to-our share of total market capitalization ratio was 61.4%. (See footnote 1 to the Capitalization Ratios table below for our definitions of “our share of total market capitalization,” “market equity,” “our share of total debt” and “our share of total assets”). We typically finance our co-investment ventures with secured debt at a loan-to-value ratio of 50-65% per our co-investment venture agreements. Additionally, we currently intend to manage our capitalization in order to maintain an investment grade rating on our senior unsecured debt. Regardless of these policies, however, our organizational documents do not limit the amount of indebtedness that we may incur. Accordingly, our management could alter or eliminate these policies without unitholder or noteholder approval or circumstances could arise that could render us unable to comply with these policies. For example, decreases in the market price of our general partner’s common stock have caused an increase in the ratio of our share of total debt-to-our share of total market capitalization.

As of December 31, 2008, the aggregate principal amount of our secured debt was $1.5 billion, excluding unamortized net debt discounts of $1.2 million. Of the $1.5 billion of secured debt, $808.1 million is secured by properties in our joint ventures. The secured debt is generally non-recourse and bears interest at rates varying from 1.0% to 10.7% per annum (with a weighted average rate of 4.3%) and final maturity dates ranging from March 2009 to November 2022. As of December 31, 2008, $936.9 million of the secured debt obligations bear interest at fixed rates with a weighted average interest rate of 5.8%, while the remaining $586.8 million bear interest at variable rates (with a weighted average interest rate of 2.6%).

On February 14, 2007, seven subsidiaries of AMB-SGP, L.P., a Delaware limited partnership, which is one of our subsidiaries, entered into a loan agreement for a $305.0 million secured financing. On the same day, pursuant to the loan agreement, the same seven subsidiaries delivered four promissory notes to the two lenders, each of which matures on March 5, 2012. One note had a principal of $160.0 million and an interest rate that is fixed at 5.29%. The second note had an initial principal borrowing of $40.0 million with a variable interest rate of 81.0 basis points

above the one-month LIBOR rate. The third note has an initial principal borrowing of $84.0 million and a fixed interest rate of 5.90%. The fourth note had an initial principal borrowing of $21.0 million and bears interest at a variable rate of 135.0 basis points above the one-month LIBOR rate.

On September 4, 2008, we entered into a $230.0 million secured term loan credit agreement that matures on September 4, 2010 and had a weighted average interest rate of 4.0% at December 31, 2008. AMB Property Corporation is the guarantor of our obligations under the term loan facility. The term loan facility carries a one-year extension option, which we may exercise at our sole option so long as our long-term debt rating is investment grade, among other things, and can be increased up to $300.0 million upon certain conditions. The rate on the borrowings is generally LIBOR plus a margin, which was 130.0 basis points as of December 31, 2008, based on our long-term debt rating. Subsequent to December 31, 2008, the base rate on the term loan was fixed at 2.7% through December 11, 2009 through interest rate swaps. If our long-term debt ratings fall below current levels, our cost of debt will increase.

As of December 31, 2008, we had outstanding an aggregate of $1.2 billion in unsecured senior debt securities, which bore a weighted average interest rate of 6.0% and had an average term of 4.1 years. In May 2008, we sold $325.0 million aggregate principal amount of our senior unsecured notes under our Series C medium-term note program. AMB Property Corporation guarantees our obligations with respect to our unsecured senior debt securities. The unsecured senior debt securities are subject to various covenants. The covenants contain affirmative covenants, including compliance with financial reporting requirements and maintenance of specified financial ratios, and negative covenants, including limitations on the incurrence of liens and limitations on mergers or consolidations.

In March 2008, we obtained a $325.0 million unsecured term loan facility, which had a balance of $325.0 million outstanding as of December 31, 2008, with a weighted average interest rate of 3.5%. In February 2008, we also obtained a $100.0 million unsecured money market loan with a weighted average interest rate of 3.6% and subsequently paid off the entire balance in June 2008. In June 2008, we obtained a new $100.0 million unsecured loan with a weighted average interest rate of 3.4% and subsequently paid off the entire balance in September 2008. AMB Property Corporation guarantees our obligations with respect to our unsecured debt. The unsecured debt is subject to various covenants. The covenants contain affirmative covenants, including compliance with financial reporting requirements and maintenance of specified financial ratios, and negative covenants, including limitations on the incurrence of liens and limitations on mergers or consolidations.

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 make distributions to our unitholders 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 make distributions to our unitholders and make payments to our noteholders.

As of December 31, 2008, we had $392.8 million outstanding in other debt which bore a weighted average interest rate of 3.9% and had an average term of 1.2 years. Other debt also includes a $70.0 million credit facility obtained on August 24, 2007 by AMB Institutional Alliance Fund II, L.P., one of our subsidiaries, which had a $50.0 million balance outstanding as of December 31, 2008. We also had $342.8 million outstanding in other non-recourse debt.

We may from time to time, seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Credit Facilities. We have a $550.0 million (includes Euros, Yen, British pounds sterling or U.S. dollar denominated borrowings) unsecured revolving credit facility, which bore a weighted average interest rate of 2.85% at December 31, 2008. This facility matures on June 1, 2010. AMB Property Corporation is the guarantor of our obligations under the credit facility. The line carries a one-year extension option, which we may exercise at our sole option so long as our long-term debt rating is investment grade, among other things, and the facility can be increased to up to $700.0 million upon certain conditions. The rate on the borrowings is generally LIBOR plus a margin,

which was 42.5 basis points as of December 31, 2008, based on our long-term debt rating, with an annual facility fee of 15.0 basis points. If our long-term debt ratings fall below current levels, our cost of debt will increase. If our long-term debt ratings fall below investment grade, we will be unable to request money market loans and borrowings in Euros, Yen or British pounds sterling. The four-year credit facility includes a multi-currency component, under which up to $550.0 million can be drawn in Euros, Yen, British pounds sterling or U.S. dollars. We use the credit facility principally for acquisitions, funding development activity and general working capital requirements. As of December 31, 2008, the outstanding balance on this credit facility, using the exchange rate in effect on December 31, 2008, was $243.1 million and the remaining amount available was $281.4 million, net of outstanding letters of credit of $25.5 million. The credit agreement contains affirmative covenants, including financial reporting requirements and maintenance of specified financial ratios by us, and negative covenants, including limitations on mergers or consolidations.

AMB Japan Finance Y.K., one of our subsidiaries, has a Yen-denominated unsecured revolving credit facility with an initial borrowing limit of 55.0 billion Yen, which, using the exchange rate in effect on December 31, 2008, equaled approximately $606.5 million U.S. dollars and bore a weighted average interest rate of 1.3%. We, along with AMB Property Corporation, guarantee the obligations of AMB Japan Finance Y.K. under the credit facility, as well as the obligations of any other entity in which we directly or indirectly own an ownership interest and which is selected from time to time to be a borrower under and pursuant to the credit agreement. The borrowers intend to use the proceeds from the facility to fund the acquisition and development of properties and for other real estate purposes in Japan, China and South Korea. Generally, borrowers under the credit facility have the option to secure all or a portion of the borrowings under the credit facility with certain real estate assets or equity in entities holding such real estate assets. The credit facility matures in June 2010 and has a one-year extension option, which we may exercise at our sole option so long as our long-term debt rating is investment grade, among other things. The extension option is also subject to the satisfaction of certain other conditions and the payment of an extension fee equal to 0.15% of the outstanding commitments under the facility at that time. The rate on the borrowings is generally TIBOR plus a margin, which was 42.5 basis points as of December 31, 2008, based on the credit rating of our long-term debt. If our long-term debt ratings fall below current levels, our cost of debt will increase. In addition, there is an annual facility fee, payable in quarterly amounts, which is based on the credit rating of our long-term debt, and was 15.0 basis points of the outstanding commitments under the facility as of December 31, 2008. As of December 31, 2008, the outstanding balance on this credit facility, using the exchange rate in effect on December 31, 2008, was $342.2 million, and the remaining amount available was $264.4 million. The credit agreement contains affirmative covenants, including financial reporting requirements and maintenance of specified financial ratios, and negative covenants, including limitations on the incurrence of liens and limitations on mergers or consolidations.

On July 16, 2007, we and certain of our wholly-owned subsidiaries, each acting as a borrower, with us and AMB Property Corporation as guarantors, entered into a fifth amended and restated revolving credit agreement for a $500.0 million unsecured revolving credit facility that replaced the existing $250.0 million unsecured revolving credit facility. The fifth amended and restated credit facility amends the fourth amended and restated credit facility to, among other things, increase the facility amount to $500.0 million with an option to further increase the facility to $750.0 million, to extend the maturity date to July 2011 and to allow for future borrowing in Indian rupees. We, along with AMB Property Corporation, guarantee the obligations for such subsidiaries and other entities controlled by us that are selected us from time to time to be borrowers under and pursuant to our credit facility. Generally, borrowers under the credit facility have the option to secure all or a portion of the borrowings under the credit facility. The credit facility includes a multi-currency component under which up to $500.0 million can be drawn in U.S. dollars, Hong Kong dollars, Singapore dollars, Canadian dollars, British pounds sterling, and Euros with the ability to add Indian rupees. The line, which matures in July 2011, carries a one-year extension option, which we may exercise at our sole option so long as our long-term debt rating is investment grade, among other things, and can be increased to up to $750.0 million upon certain conditions and the payment of an extension fee equal to 0.15% of the outstanding commitments. The rate on the borrowings is generally LIBOR plus a margin, which was 60.0 basis points as of December 31, 2008, based on the credit rating of our senior unsecured long-term debt, with an annual facility fee based on the credit rating of our senior unsecured long-term debt. If our long-term debt ratings fall below current levels, our cost of debt will increase. If our long-term debt ratings fall below investment grade, we will be unable to request borrowings in any currency other than U.S. dollars. The borrowers intend to use the proceeds from the facility to fund the acquisition and development of properties and general working capital requirements. As of

December 31, 2008, the outstanding balance on this credit facility, using the exchange rates in effect at December 31, 2008, was approximately $335.6 million with a weighted average interest rate of 2.74%, and the remaining amount available was $164.4 million. The credit agreement contains affirmative covenants, including financial reporting requirements and maintenance of specified financial ratios by us, and negative covenants, including limitations on the incurrence of liens and limitations on mergers or consolidations.

On June 12, 2007, AMB Europe Fund I, FCP-FIS assumed a 328.0 million Euro facility agreement, and we were released from all of our obligations and liabilities related to this facility agreement. On June 12, 2007, there were 267.0 million Euros (approximately $355.2 million in U.S. dollars, using the exchange rate at June 12, 2007) of term loans and no acquisition loans outstanding under the facility agreement.

The table below summarizes our debt maturities, principal payments and capitalization and reconciles our share of total debt to total consolidated debt as of December 31, 2008 (dollars in thousands):


	Our Wholly-Owned												Consolidated Joint Venture
	Unsecured																		Total			Unconsolidated
	Senior			Credit			Other			Secured			Secured			Other			Consolidated			Joint			Total
	Debt			Facilities(1)			Debt			Debt			Debt			Debt			Debt			Venture Debt(2)			Debt

2009	$	100,000		$	—		$	337,590		$	257,995		$	102,452		$	—		$	798,037		$	255,397		$	1,053,434
2010		250,000			585,256			941			306,585			121,245			—			1,264,027			188,683			1,452,710
2011		75,000			335,594			1,014			112,083			75,813			—			599,504			558,378			1,157,882
2012		—			—			1,093			2,686			388,378			50,000			442,157			448,299			890,456
2013		500,000			—			920			19,614			42,270			—			562,804			707,464			1,270,268
2014		—			—			616			405			2,981			—			4,002			776,365			780,367
2015		112,491			—			664			16,272			17,610			—			147,037			274,290			421,327
2016		—			—			—			—			16,231			—			16,231			73,040			89,271
2017		—			—			—			—			1,272			—			1,272			351,574			352,846
2018		125,000			—			—			—			—			—			125,000			—			125,000
Thereafter		—			—			—			—			39,867			—			39,867			189,038			228,905

Subtotal	$	1,162,491		$	920,850		$	342,838		$	715,640		$	808,119		$	50,000		$	3,999,938		$	3,822,528		$	7,822,465
Unamortized premiums/(discount)		(8,565	)		—			—			(1,162	)		(26	)		—			(9,753	)		(4,387	)		(14,140	)

Subtotal	$	1,153,926		$	920,850		$	342,838		$	714,478		$	808,093		$	50,000		$	3,990,185		$	3,818,141		$	7,808,326
Co-investment venture partners’ share of debt(3)		—			—			—			—			(463,999	)		(40,000	)		(503,999	)		(3,010,817	)		(3,514,816	)

Our share of total debt(3)	$	1,153,926		$	920,850		$	342,838		$	714,478		$	344,094		$	10,000		$	3,486,186		$	807,324		$	4,293,510

Weighted average interest rate		6.0	%		2.2	%		3.6	%		3.7	%		4.8	%		5.8	%		4.4	%		4.8	%		4.6	%
Weighted average maturity (years)		4.1			1.8			0.8			1.7			3.4			3.7			2.7			4.9			3.8


(1)		Represents three credit facilities with total capacity of approximately $1.7 billion. Includes $80.0 million of U.S. dollar borrowings, as well as $358.7 million, $304.0 million, $146.6 million and $31.6 million in Yen, Canadian dollar, Euros and Singapore dollar-based borrowings outstanding at December 31, 2008, respectively, translated to U.S. dollars using the foreign exchange rates in effect on December 31, 2008.

(2)		The weighted average interest and average maturity for the unconsolidated joint venture debt were 4.8% and 4.9 years, respectively.

(3)		Our share of total debt represents the pro rata portion of the total debt based on our percentage of equity interest in each of the consolidated or unconsolidated joint ventures holding the debt. We believe that our share of total debt is a meaningful supplemental measure, which enables both management and investors to analyze our leverage and to compare our leverage to that of other companies. In addition, it allows for a more meaningful comparison of our debt to that of other companies that do not consolidate their joint ventures. Our share of total debt is not intended to reflect our actual liability should there be a default under any or all of such loans or a liquidation of the co-investment ventures. The above table reconciles our share of total debt to total consolidated debt, a GAAP financial measure.

As of December 31, 2008, we had debt maturing in 2009 and 2010, as well as debt maturing in 2009 and 2010 assuming extension options are exercised as follows (dollars in thousands):


	As of December 31,
	2008(1)				After Extension Options(1)(2)
Our wholly-owned debt	2009		2010		2009		2010

Credit Facilities	$	—	$	585,256	$	—	$	—
Unsecured Senior Debt		100,000		250,000		100,000		250,000
Other Debt(3)		336,718		—		11,718		325,000
AMB Secured Debt		257,069		305,618		140,174		192,512

Total our wholly-owned debt		693,787		1,140,874		251,892		767,512

Consolidated joint venture debt		88,814		111,021		88,814		60,086

Total consolidated debt	$	782,601	$	1,251,895	$	340,706	$	827,598


(1)		Excludes scheduled principal amortization, as well as debt premiums and discounts.

(2)		Subject to certain conditions.

(3)		Subsequent to December 31, 2008, the maturity of the $325.0 million term loan was extended to 2010.


Market Capital as of December 31, 2008
	Units			Market		Market
Security	Outstanding			Price(1)		Value(1)

Common general partnership units		98,240,461	(4)	$	23.42	$	2,300,792
Common limited partnership units(2)		3,439,522			23.42		80,554

Total		101,679,983				$	2,381,346

Total options outstanding							6,206,678
Dilutive effect of stock options and restricted stock(3)							45,028


(1)		Assumes that our partnership units are exchanged for AMB Property Corporation’s common stock on a one-for-one basis because there is no public market for our units. Market price is based on the closing price of AMB Property Corporation’s common stock on December 31, 2008

(2)		Includes class B common limited partnership units issued by AMB Property II, L.P.

(3)		Computed using the treasury stock method and an average share price for AMB Property Corporation’s common stock of $21.98 for the quarter ended December 31, 2008.

(4)		Includes 859,026 common general partnership units issued corresponding to unvested shares of restricted stock.


Preferred Units as of December 31, 2008
	Distribution			Liquidation		Redemption/Callable
Security	Rate			Preference		Provisions

Series D preferred units(1)		7.18	%	$	79,767	February 2012
Series L preferred units		6.50	%		50,000	June 2008
Series M preferred units		6.75	%		57,500	November 2008
Series O preferred units		7.00	%		75,000	December 2010
Series P preferred units		6.85	%		50,000	August 2011

Weighted average/total		6.90	%	$	312,267


(1)		On January 29, 2007, all of the outstanding 7.75% Series D Cumulative Redeemable Preferred Limited Partnership Units of AMB Property II, L.P. were transferred from one institutional investor to another institutional investor. In connection with that transfer, AMB Property II, L.P. agreed to amend the terms of the series D preferred units to, among other things, change the rate applicable to the series D preferred units


		from 7.75% to 7.18% and change the date prior to which the series D preferred units may not be redeemed from May 5, 2004 to February 22, 2012.


Capitalization Ratios as of December 31, 2008

Our share of total debt-to-our share of total market capitalization(1)		61.4%
Our share of total debt plus preferred-to-our share of total market capitalization(1)		65.9%
Our share of total debt-to-our share of total assets(1)		51.1%
Our share of total debt plus preferred-to-our share of total assets(1)		54.8%
Our share of total debt-to-our share of total book capitalization(1)		56.6%


(1)		Our definition of “total market capitalization” is total debt plus preferred equity liquidation preferences plus market equity. Our definition of “our share of total market capitalization” is our share of total debt plus preferred equity liquidation preferences plus market equity. Our definition of “market equity” is the total number of outstanding shares of our general partner’s common stock and common limited partnership units multiplied by the closing price per share of our general partner’s common stock as of December 31, 2008. Our definition of “preferred” is preferred equity liquidation preferences. “Our share of total book capitalization” is defined as our share of total debt plus minority interests to preferred unitholders and limited partnership unitholders plus partners’ capital. “Our share of total debt” is the pro rata portion of the total debt based on our percentage of equity interest in each of the consolidated and unconsolidated joint ventures holding the debt. “Our share of total assets” is the pro rata portion of the gross book value of real estate interests plus cash and other assets. We believe that our share of total debt is a meaningful supplemental measure, which enables both management and investors to analyze our leverage and to compare our leverage to that of other companies. In addition, it allows for a more meaningful comparison of our debt to that of other companies that do not consolidate their joint ventures. Our share of total debt is not intended to reflect our actual liability should there be a default under any or all of such loans or a liquidation of the joint ventures. For a reconciliation of our share of total debt to total consolidated debt, a GAAP financial measure, please see the table of debt maturities and capitalization above.

Liquidity

As of December 31, 2008, we had $223.9 million in cash and cash equivalents and $710.2 million of additional available borrowings under our credit facilities. As of December 31, 2008, we had $27.3 million in restricted cash.

Our available cash and cash equivalents are held in accounts managed by third party financial institutions and consist of invested cash and cash in our operating accounts. The invested cash is invested in money market funds that invest solely in direct obligations of the government of the United States or in time deposits with certain financial institutions. To date, we have experienced no loss or lack of access to our invested cash or cash equivalents; however, we can provide no assurances that access to our invested cash and cash equivalents will not be impacted by adverse conditions in the financial markets.

At any point in time, we also have a significant amount of cash deposits in our operating accounts that are with third party financial institutions, which was, as of December 31, 2008, approximately $176.6 million on a consolidated basis. These balances exceed the Federal Deposit Insurance Corporation insurance limits. While we monitor daily the cash balances in our operating accounts and adjust the cash balances as appropriate, these cash balances could be impacted if the underlying financial institutions fail or be subject to other adverse conditions in the financial markets. To date, we have experienced no loss or lack of access to cash in our operating accounts.

The following table sets forth the distributions paid or payable per unit for the years ended December 31, 2008, 2007 and 2006:


Paying Entity	Security	2008		2007		2006

AMB Property, L.P.	Common limited partnership units	$	1.56	$	2.00	$	1.84
AMB Property, L.P.	Series J preferred units(1)		n/a	$	1.01	$	3.98
AMB Property, L.P.	Series K preferred units(1)		n/a	$	1.01	$	3.98
AMB Property II, L.P.	Class B common limited partnership units	$	1.56	$	2.00	$	1.84
AMB Property II, L.P.	Series D preferred units	$	3.59	$	3.64	$	3.88
AMB Property II, L.P.	Series E preferred units(2)		n/a		n/a	$	1.78
AMB Property II, L.P.	Series F preferred units(3)		n/a		n/a	$	2.72
AMB Property II, L.P.	Series H preferred units(4)		n/a		n/a	$	0.97
AMB Property II, L.P.	Series I preferred units(5)		n/a	$	1.24	$	4.00
AMB Property II, L.P.	Series N preferred units(6)		n/a		n/a	$	0.22


(1)		In April 2007, we redeemed all of our series J and series K preferred units.

(2)		In June 2006, AMB Property II, L.P. repurchased all of its outstanding series E preferred units.

(3)		In September 2006, AMB Property II, L.P. repurchased all of its outstanding series F preferred units.

(4)		In March 2006, AMB Property II, L.P. repurchased all of its outstanding series H preferred units.

(5)		In April 2007, AMB Property II, L.P. repurchased all of its outstanding series I preferred units.

(6)		The holder of the series N preferred units exercised its put option in January 2006 and sold all of its series N preferred units to us and AMB Property II, L.P. repurchased all of such units from us.

The anticipated size of our distributions, using only cash from operations, will not allow us to pay all of our debt as it comes due. Therefore, we intend to also repay maturing debt with net proceeds from future debt or limited partnership unit offerings (including issuances of limited partnership units by our subsidiaries 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 make distributions to our unitholders and make payments to our noteholders. We are currently exploring various options to monetize our development assets including contribution to funds where investment capacity is available, the formation of joint ventures and the sale of assets to third parties. We are also exploring the potential sale of operating assets to further enhance liquidity. There can be no assurance, however, that we will choose to or be able to monetize any of our assets.

Cash flows generated by our business were sufficient to cover our distributions for the years ended December 31, 2008, 2007 and 2006. Cash flows from our real estate operations and private capital businesses, which are included in “Net cash provided by operating activities” in our Cash Flows from Operating Activities and cash flows from our real estate development and operations businesses which are included in “Net proceeds from divestiture of real estate” in our Cash Flows from Investing Activities in our Consolidated Statements of Cash Flows, were sufficient to make distributions on our and AMB Property II, L.P.’s common and preferred limited partnership units and distributions to minority interests for the years ended December 31, 2008, 2007 and 2006. Cash Flows from Operating Activities alone were not sufficient to pay such distributions for the years ended December 31, 2007 and 2006, as shown in the table below. We use proceeds from our businesses included in Cash Flows from Investing

Activities (specifically, the proceeds from sales and contributions of properties as part of our real estate development and operations businesses) to fund distributions not covered by Cash Flows from Operating Activities.


	For the Years Ended December 31,
Summary of Distributions Paid	2008			2007			2006
(dollars in thousands)

Net cash provided by operating activities	$	301,020		$	240,543		$	335,855
Distributions paid to partners		(224,549	)		(213,352	)		(180,626	)
Distributions to minority interests, including preferred units		(61,934	)		(136,114	)		(163,366	)

Excess (shortfall) of net cash provided by operating activities over distributions paid	$	14,537		$	(108,923	)	$	(8,137	)

Net proceeds from divestiture of real estate	$	421,647		$	824,628		$	616,343

Excess of net cash provided by operating activities and net proceeds from divestiture of real estate over distributions paid	$	436,184		$	715,705		$	608,206

Capital Commitments

Development starts, generally defined as projects where we have obtained building permits and have begun physical construction, during the years ended December 31, 2008 and 2007 on an owned and managed basis were as follows (dollars in thousands):


	For the Years Ended
	December 31,
	2008		2007

The Americas:
Number of new development projects		15		26
Number of value-added conversion projects(1)		—		1
Square feet		4,464,298		7,427,914
Estimated total investment(2)	$	316,995	$	559,276

Europe:
Number of new development projects		4		6
Square feet		885,611		1,687,601
Estimated total investment(2)	$	103,823	$	220,200

Asia:
Number of new development projects		4		6
Square feet		2,038,437		3,060,335
Estimated total investment(2)	$	123,910	$	305,872


Total:
Number of new development projects		23		38
Number of value-added conversion projects		—		1
Square feet		7,388,346		12,175,850
Estimated total investment(2)	$	544,728	$	1,085,348

Total development pipeline estimated investment(2)(3)	$	1,319,017	$	1,712,908
Total development pipeline funded-to-date(4)	$	1,057,207	$	1,214,257
Total development pipeline remaining-to-fund(4)(5)	$	261,810	$	498,651


(1)		Value-added conversion projects represent the repurposing of industrial properties to a higher and better use, including office, residential, retail, research and development or manufacturing. Activities required to prepare the property for conversion to a higher and better use may include such activities as rezoning, redesigning, reconstructing and retenanting. The sales price of the value-added conversion project is generally based on the underlying land value based on its ultimate use and as such, little to no residual value is ascribed to the industrial building(s).

(2)		Includes total estimated cost of development, renovation, or expansion, including initial acquisition costs, prepaid ground leases, buildings, tenant improvements and associated capitalized interest and overhead costs. Estimated total investments are based on current forecasts and are subject to change. Non-U.S. dollar investments are translated into U.S. dollars using exchange rate as of December 31, 2008 or 2007, as applicable.

(3)		Excludes the impact of real estate impairment losses and includes value-added conversions.

(4)		Amounts include capitalized interest and overhead costs, as applicable.

(5)		Calculated using estimated total investment before the impact of real estate impairment losses.

Development Pipeline. As of December 31, 2008, we had 53 projects in the development pipeline, which are expected to total approximately 16.4 million square feet and have an aggregate estimated investment of $1.3 billion upon completion. Four of these projects totaling approximately 1.4 million square feet with an aggregate estimated investment of $80.0 million are held in an unconsolidated co-investment venture. We had an additional eight development projects held for divestiture or contribution totaling approximately 1.5 million square feet, with an aggregate estimated investment of $264.3 million, net of $3.3 million of real estate impairment losses, and an aggregate net book value of $258.4 million. As of December 31, 2008, on an owned and managed basis, we and our development joint venture partners have funded an aggregate of $1.1 billion, or 80%, of the total estimated investment and will need to fund an estimated additional $261.8 million, or 20%, in order to complete our development pipeline. The development pipeline, at December 31, 2008, included projects expected to be completed through the fourth quarter of 2010. In addition to our committed development pipeline, we hold a total of 2,503 acres of land for future development or sale, on an owned and managed basis, approximately 86% of which is located in North America, including 79 acres that are held in an unconsolidated joint venture. We currently estimate that these 2,503 acres of land could support approximately 45.1 million square feet of future development.

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 1 to 54 years. These buildings and improvements subject to ground leases are amortized ratably over the lesser of the terms of the related leases or 40 years. Future minimum rental payments required under non-cancelable operating leases in effect as of December 31, 2008 were as follows (dollars in thousands):


2009	$	30,127
2010		28,693
2011		27,834
2012		27,180
2013		26,024
Thereafter		412,803

Total	$	552,661

Co-Investment Ventures. We enter into co-investment ventures with institutional investors. These co-investment ventures are managed by AMB Capital Partners, LLC and provide us with an additional source of capital to fund acquisitions, development projects and renovation projects, as well as private capital income. As of December 31, 2008, we had investments in three co-investment ventures with a gross book value of $1.2 billion, which are consolidated for financial reporting purposes, and net equity investments in five unconsolidated co-investment ventures of $356.9 million with a gross book value of $6.4 billion. As of December 31, 2008, we may make additional capital contributions to current and planned co-investment ventures of up to $120.1 million (using the exchange rates at December 31, 2008) pursuant to the terms of the co-investment venture agreements.

From time to time, we may raise additional equity commitments for AMB Institutional Alliance Fund III, L.P., an open-ended unconsolidated co-investment venture formed in 2004 with institutional investors, most of whom invest through a private real estate investment trust, and for AMB Europe Fund I, FCP-FIS, an open-ended unconsolidated co-investment venture formed in 2007 with institutional investors. This would increase our obligation to make additional capital commitments to these ventures. Pursuant to the terms of the partnership agreement of AMB Institutional Alliance Fund III, L.P., and the management regulations of AMB Europe Fund I, FCP-FIS, we are obligated to contribute 20% of the total equity commitments until such time when our total equity commitment is greater than $150.0 million or 150.0 million Euros, respectively, at which time, our obligation is reduced to 10% of the total equity commitments. We expect to fund these contributions with cash from operations, borrowings under our credit facilities, debt or limited partnership unit issuances (including issuances of limited partnership units by our subsidiaries) or net proceeds from property divestitures, which could adversely affect our cash flow; however, there can be no assurance that these sources of capital will be available at all or in amounts sufficient to meet our requirements.

Captive Insurance Company. In December 2001, we formed a wholly owned captive insurance company, Arcata National Insurance Ltd. (Arcata), which provides insurance coverage for all or a portion of losses below the attachment point of our third-party insurance policies. The captive insurance company is one element of our overall risk management program. We capitalized Arcata in accordance with the applicable regulatory requirements. Arcata establishes annual premiums based on projections derived from the past loss experience of our properties. Like premiums paid to third-party insurance companies, premiums paid to Arcata may be reimbursed by customers pursuant to specific lease terms. Through this structure, we think that we have more comprehensive insurance coverage at an overall lower cost than would otherwise be available in the market.

Potential Contingent and Unknown Liabilities. Contingent and unknown liabilities may include the following:


	•	liabilities for environmental conditions;

	•	losses in excess of insured coverage;

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

	•	claims for indemnification by the general partners, officers and directors and others indemnified by the former owners of our properties;

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

	•	tax, legal and regulatory liabilities.

Capital Deployment

Land acquisitions during the years ended December 31, 2008 and 2007 were as follows (dollars in thousands):


	For the Years Ended
	December 31,
	2008		2007

The Americas:
Acres		197		1,231
Estimated build out potential (square feet)		3,537,632		21,083,750
Investment(1)	$	88,436	$	221,645
Europe:
Acres		72		182
Estimated build out potential (square feet)		1,613,087		3,328,267
Investment(1)	$	66,850	$	38,544
Asia:
Acres		111		28
Estimated build out potential (square feet)		4,371,377		997,537
Investment(1)	$	61,776	$	20,977

Total:
Acres		380		1,441
Estimated build out potential (square feet)		9,522,096		25,409,554
Investment(1)	$	217,062	$	281,166


(1)		Represents actual cost incurred to date including initial acquisition, associated closing costs, infrastructure and associated capitalized interest and overhead costs.

Acquisition activity during the years ended December 31, 2008 and 2007 was as follows (dollars in thousands):


	For the Years Ended
	December 31,
	2008		2007

Number of properties acquired by AMB Institutional Alliance Fund III, L.P.		8		28
Square feet		1,622,649		6,213,093
Expected investment	$	171,694	$	527,264
Number of properties acquired by AMB Europe Fund I, FCP-FIS		3		7
Square feet		848,313		2,101,393
Expected investment	$	154,499	$	201,794
Number of properties acquired by AMB Japan Fund I, L.P.		—		8
Square feet		—		1,107,261
Expected investment	$	—	$	180,901
Number of properties acquired by AMB-SGP Mexico, LLC		—		3
Square feet		—		1,739,976
Expected investment	$	—	$	69,688
Number of properties acquired by AMB Property, L.P.		10		7
Square feet		2,830,936		701,629
Expected investment	$	217,044	$	62,241

Total number of properties acquired		21		53
Total square feet		5,301,898		11,863,352
Total acquisition cost	$	529,574	$	1,022,547
Total acquisition capital		13,663		19,341

Total expected investment(1)	$	543,237	$	1,041,888


(1)		Includes total estimated cost of development, renovation, or expansion, including initial acquisition costs, prepaid ground leases, buildings, tenant improvements and associated capitalized interest and overhead costs. Estimated total investments are based on current forecasts and are subject to change. Non-U.S. dollar investments are translated into U.S. dollars using the exchange rate as of December 31, 2008 or 2007, as applicable.

Overview of Contractual Obligations

The following table summarizes our debt, interest and lease payments due by period as of December 31, 2008 (dollars in thousands):


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

Debt	$	798,037	$	1,863,531	$	1,004,961	$	333,409	$	3,999,938
Debt interest payments		25,215		71,534		57,182		21,173		175,104
Operating lease commitments		30,127		56,527		53,204		412,803		552,661
Construction commitments		200,811		—		—		—		200,811

Total	$	1,054,190	$	1,991,592	$	1,115,347	$	767,385	$	4,928,514

OFF BALANCE SHEET ARRANGEMENTS

Standby Letters of Credit. As of December 31, 2008, we had provided approximately $32.7 million in letters of credit, of which $25.5 million were provided under our $550.0 million unsecured credit facility. The letters of credit were required to be issued under certain ground lease provisions, bank guarantees and other commitments.

Guarantees and Contribution Obligations. Excluding parent guarantees associated with debt or contribution obligations as discussed in Notes 6 and 10, we had outstanding guarantees and contribution obligations in the aggregate amount of $639.9 million as described below.

Also, we have entered into contribution agreements with certain of our unconsolidated co-investment ventures. These contribution agreements require us to make additional capital contributions to the applicable co-investment venture fund upon certain defaults by the co-investment venture of certain of its debt obligations to the lenders. Such additional capital contributions will cover all or part of the applicable co-investment venture’s debt obligation and may be greater than our share of the co-investment venture’s debt obligation or the value of our share of any property securing such debt. Our contribution obligations under these agreements will be reduced by the amounts recovered by the lender and the fair market value of the property, if any, used to secure the debt and obtained by the lender upon default. Our potential obligations under these contribution agreements total $260.6 million as of December 31, 2008.

On May 30, 2008, we entered into a 142.0 million Euro 364-day multi-currency revolving facility agreement (approximately $198.4 million in U.S. dollars, using the exchange rate at December 31, 2008) and related guarantee as loan guarantor with our affiliate AMB Fund Management S.à.r.l. on behalf of AMB Europe Fund I, FCP-FIS, certain of our European affiliates, ING Real Estate Finance N.V. and certain of its European affiliates and ING Real Estate Finance N.V. The facility agreement provided that certain of the affiliates of AMB Europe Fund I, FCP-FIS may borrow unsecured loans in an aggregate amount of up to 142.0 million Euros (approximately $198.4 million in U.S. dollars, using the exchange rate at December 31, 2008) all of which were repayable 364 days after the date of the facility agreement (unless otherwise agreed). All amounts owed under the facility agreement were guaranteed by us. AMB Fund Management S.á.r.l. on behalf of AMB Europe Fund I, FCP-FIS indemnified us for all of our obligations under the guarantee. On December 29, 2008, we terminated the facility agreement and related guarantee. Prior to the termination of the facility agreement, four of our European affiliates that were subsidiaries of AMB Europe Fund I, FCP-FIS holding real property interests in Germany were borrowers under such facility agreement. The outstanding borrowed amount of our European affiliate borrowers under such facility agreement was repaid in full on December 29, 2008. In connection with the payment in full under, and the termination of, this facility agreement, our European affiliate borrowers and/or their affiliates borrowed funds under an existing credit facility held by AMB Europe Fund I, FCP-FIS, and entered new 5-year term loans with the lender in the aggregate amount of 50.2 million Euros (approximately $70.1 million in U.S. dollars using the exchange rate as of December 31, 2008) under such facility. The borrowed funds were used to repay the outstanding amounts under the terminated 142.0 million Euro credit facility. The European affiliate borrowers are in the process of granting security interests to the lender, as the security agent, under and in accordance with the terms of such facility, all of which security interests are expected to become effective in the first half of 2009. We have agreed to guarantee the 50.2 million Euros amount borrowed under such existing credit facility only until the security interests are granted, at which time the guarantees will be extinguished.

Performance and Surety Bonds. As of December 31, 2008, we had outstanding performance and surety bonds in an aggregate amount of $17.8 million. These bonds were issued in connection with certain of our development projects and were posted to guarantee certain tax obligations and the construction of certain real property improvements and infrastructure. Performance and surety bonds are renewable and expire upon the payment of the taxes due or the completion of the improvements and infrastructure.

Promote Interests and Other Contractual Obligations. Upon the achievement of certain return thresholds and the occurrence of certain events, we may be obligated to make payments to certain of our joint venture partners pursuant to the terms and provisions of their contractual agreements with us. From time to time in the normal course of our business, we enter into various contracts with third parties that may obligate us to make payments, pay promotes, or perform other obligations upon the occurrence of certain events.

Supplemental Earnings Measures

Funds From Operations (“FFO”) and Funds From Operations Per Share and Unit (“FFOPS”).

We believe that net income (loss), as defined by U.S. GAAP, is the most appropriate earnings measure. However, we consider funds from operations, or FFO, and FFO per share and unit, or FFOPS, to be useful supplemental measures of our operating performance. We define FFOPS as FFO per fully diluted weighted average share of our general partner’s common stock and our units. We calculate FFO as net income (loss), calculated in accordance with U.S. GAAP, less gains (or losses) from dispositions of real estate held for investment purposes and real estate-related depreciation, and adjustments to derive our pro rata share of FFO of consolidated and unconsolidated joint ventures.

We include the gains from development, including those from value-added conversion projects, before depreciation recapture, as a component of FFO. We believe that value-added conversion dispositions are in substance land sales and as such should be included in FFO, consistent with the real estate investment trust industry’s long standing practice to include gains on the sale of land in FFO. However, our interpretation of FFO or FFOPS may not be consistent with the views of others in the real estate investment trust industry, who may consider it to be a divergence from the National Association of Real Estate Investment Trusts (“NAREIT”) definition, and may not be comparable to FFO or FFOPS reported by other real estate investment trusts that interpret the current NAREIT definition differently than we do. In connection with the formation of a joint venture, we may warehouse assets that are acquired with the intent to contribute these assets to the newly formed venture. Some of the properties held for contribution may, under certain circumstances, be required to be depreciated under U.S. GAAP. If this circumstance arises, we intend to include in our calculation of FFO gains or losses related to the contribution of previously depreciated real estate to joint ventures. Although such a change, if instituted, will be a departure from the current NAREIT definition, we believe such calculation of FFO will better reflect the value created as a result of the contributions. To date, we have not included gains or losses from the contribution of previously depreciated warehoused assets in FFO.

We believe that FFO and FFOPS are meaningful supplemental measures of our operating performance because historical cost accounting for real estate assets in accordance with U.S. GAAP implicitly assumes that the value of real estate assets diminishes predictably over time, as reflected through depreciation and amortization expenses. However, since real estate values have historically risen or fallen with market and other conditions, many industry investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient. Thus, FFO and FFOPS are supplemental measures of operating performance for real estate investment trusts that exclude historical cost depreciation and amortization, among other items, from net income (loss), as defined by U.S. GAAP. We believe that the use of FFO and FFOPS, combined with the required U.S. GAAP presentations, has been beneficial in improving the understanding of operating results of real estate investment trusts, such as AMB Property Corporation, our general partner, among the investing public and making comparisons of operating results among such companies more meaningful. We consider FFO and FFOPS to be useful measures for reviewing comparative operating and financial performance because, by excluding gains or losses related to sales of previously depreciated operating real estate assets and real estate depreciation and amortization, FFO and FFOPS can help the investing public compare the operating performance of a company’s real estate between periods or as compared to other companies. While FFO and FFOPS are relevant and widely used measures of operating performance of real estate investment trusts, FFO and FFOPS do not represent cash flow from operations or net income (loss) as defined by U.S. GAAP and should not be considered as alternatives to those measures in evaluating our liquidity or operating performance. FFO and FFOPS also do not consider the costs associated with capital expenditures related to our real estate assets nor are FFO and FFOPS necessarily indicative of cash available to fund our future cash requirements. Management compensates for the limitations of FFO and FFOPS by providing investors with financial statements prepared according to U.S. GAAP, along with this detailed discussion of FFO and FFOPS and a reconciliation of FFO and FFOPS to net income, a U.S. GAAP measurement.

Filing Compare · Prologis, L.P.