UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

(Mark One)


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

		For the quarterly period ended March 31, 2009
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended March 31, 2007
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-14245

Commission file number: 001-14245

AMB Property, L.P.

(Exact Name of Registrant as Specified in Its Charter)

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

(415) 394-9000

(Registrant’s Telephone Number, Including Area Code)

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

Indicate by check mark whether the registrant ishas ~~a large~~submitted ~~accelerated~~electronically ~~filer,~~and anposted ~~accelerated~~on ~~filer,~~its orcorporate aweb ~~non-accelerated~~site, if any, ~~filer.~~every ~~See~~Interactive ~~definition~~Data ofFile ~~“accelerated~~required ~~filer~~to be submitted and ~~large~~posted ~~accelerated~~pursuant ~~filer”~~to inRule 405 of ~~Rule~~Regulation ~~12b~~S-2T (§ 232.405 of ~~the~~this ~~Exchange~~chapter) ~~Act.~~during the preceding 12 months (~~Check~~or ~~one~~for such shorter period that the registrant was required to submit and post such files):. Yes o No o.

~~Large~~Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer ~~o Accelerated~~, or a smaller reporting company. See the definitions of “large accelerated filer ~~o Non-~~,” “accelerated filer þ” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o	Accelerated filer o	Non-accelerated filer þ	Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

AMB PROPERTY, L.P.

INDEX

			Page
PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements (unaudited)
		Consolidated Balance Sheets as of March 31, 2007 and December 31, 2006		1
		Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008		1
		Consolidated Statements of Operations for the three months ended March 31, 2007 and 2006		2
		Consolidated Statements of Operations for the Three Months Ended March 31, 2009 and 2008		2
		Consolidated Statement of Partners’ Capital for the three months ended March 31, 2007		3
		Consolidated Statement of Partners’ Capital and Noncontrolling Interests for the Three Months Ended March 31, 2009		3
		Consolidated Statements of Cash Flows for the three months ended March 31, 2007 and 2006		4
		Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2009 and 2008		4
		Notes to Consolidated Financial Statements		5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		2636
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		5375
	Item 4.	Controls and Procedures		5577
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings		5678
	Item 1A.	Risk Factors		5678
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		5678
	Item 3.	Defaults Upon Senior Securities		5678
	Item 4.	Submission of Matters to a Vote of Security Holders		5678
	Item 5.	Other Information		5678
	Item 6.	Exhibits		5678
EXHIBIT 31.1
EX-31.1
EXHIBIT 32.1
EX-32.1

PART I


Item 1.	*Financial Statements*

AMB PROPERTY, L.P.

CONSOLIDATED BALANCE SHEETS ~~As of March 31, 2007 and December 31, 2006~~

	March 31,			December 31,
	2007			2006
	(Unaudited, dollars in thousands)
ASSETS
Investments in real estate:
Land	$	1,346,220		$	1,351,123
Buildings and improvements		4,071,200			4,038,474
Construction in progress		1,360,318			1,186,136
Total investments in properties		6,777,738			6,575,733
Accumulated depreciation and amortization		(829,814	)		(789,693	)
Net investments in properties		5,947,924			5,786,040
Investments in unconsolidated joint ventures		279,422			274,381
Properties held for contribution, net		144,961			154,036
Properties held for divestiture, net		11,227			20,916
Net investments in real estate		6,383,534			6,235,373
Cash and cash equivalents		259,818			174,763
Restricted cash		26,343			21,115
Mortgage and loan receivables		18,711			18,747
Accounts receivable, net of allowance for doubtful accounts of $6,053 and $6,361, respectively		141,647			133,998
Deferred financing costs, net		30,190			20,394
Other assets		116,740			109,122
Total assets	$	6,976,983		$	6,713,512
LIABILITIES AND PARTNERS’ CAPITAL
Debt:
Secured debt	$	1,648,336		$	1,395,354
Unsecured senior debt		1,057,186			1,101,874
Unsecured credit facilities		474,849			852,033
Other debt		86,146			88,154
Total debt		3,266,517			3,437,415
Security deposits		37,274			36,106
Distributions payable		57,500			48,967
Accounts payable and other liabilities		192,598			186,807
Total liabilities		3,553,889			3,709,295
Commitments and contingencies (Note 12)
Minority interests:
Joint venture partners		506,611			555,201
Preferred unitholders		132,912			129,764
Total minority interests		639,523			684,965
Partners’ capital:
General partner, 99,089,842 and 89,433,024 units outstanding, respectively; 2,000,000 Series L preferred units issued and outstanding with a $50,000 liquidation preference, 2,300,000 Series M preferred units issued and outstanding with a $57,500 liquidation preference, 3,000,000 Series O preferred units issued and outstanding with a $75,000 liquidation preference and 2,000,000 Series P preferred units issued and outstanding with a $50,000 liquidation preference		2,623,368			2,166,657
Limited partners, 3,407,360 and 3,450,343 units, respectively; 800,000 Series J preferred units with a $40,000 liquidation preference, 800,000 Series K preferred units with a $40,000 liquidation preference		160,203			152,595
Total partners’ capital		2,783,571			2,319,252
Total liabilities and partners’ capital	$	6,976,983		$	6,713,512

As of March 31, 2009 and December 31, 2008


	March 31,			December 31,
	2009			2008
	(Unaudited, Dollars in thousands)

ASSETS
Investments in real estate:
Land	$	1,105,737		$	1,108,193
Land held for development		630,287			677,028
Buildings and improvements		3,561,628			3,525,871
Construction in progress		652,257			1,292,764

Total investments in properties		5,949,909			6,603,856
Accumulated depreciation and amortization		(986,541	)		(970,737	)

Net investments in properties		4,963,368			5,633,119
Investments in unconsolidated joint ventures		432,503			431,322
Properties held for sale or contribution, net		881,431			609,023

Net investments in real estate		6,277,302			6,673,464
Cash and cash equivalents		263,003			223,936
Restricted cash		19,295			27,295
Accounts receivable, net of allowance for doubtful accounts of $11,171 and $10,682, respectively		145,266			160,528
Deferred financing costs, net		21,163			25,277
Other assets		186,906			191,148

Total assets	$	6,912,935		$	7,301,648


LIABILITIES, PARTNERS’ CAPITAL AND NONCONTROLLING INTERESTS
Debt:
Secured debt	$	1,405,188		$	1,522,571
Unsecured senior debt		1,054,250			1,153,926
Unsecured credit facilities		380,663			920,850
Other debt		392,613			392,838

Total debt		3,232,714			3,990,185
Security deposits		48,941			59,093
Distributions payable		45,301			3,395
Accounts payable and other liabilities		280,666			282,771

Total liabilities		3,607,622			4,335,444
Commitments and contingencies (Note 12)
Partners’ capital and noncontrolling interests:
Partners’ capital:
General partner, 145,989,790 and 98,240,461 units outstanding, respectively; 2,000,000 Series L preferred units issued and outstanding with a $50,000 liquidation preference, 2,300,000 Series M preferred units issued and outstanding with a $57,500 liquidation preference, 3,000,000 Series O preferred units issued and outstanding with a $75,000 liquidation preference and 2,000,000 Series P preferred units issued and outstanding with a $50,000 liquidation preference		2,885,060			2,515,107
Limited partners, 2,176,809 and 2,180,809 units outstanding, respectively		39,702			50,831

Total partners’ capital		2,924,762			2,565,938
Noncontrolling interests:
Joint venture partners		280,033			293,367
Preferred unitholders		100,518			106,899

Total noncontrolling interests		380,551			400,266

Total partners’ capital and noncontrolling interests		3,305,313			2,966,204

Total liabilities, partners’ capital and noncontrolling interests	$	6,912,935		$	7,301,648

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

AMB PROPERTY, L.P.

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Three Months
	Ended March 31,
	2007			2006
	(Unaudited, dollars in thousands, except unit and per unit amounts)
REVENUES
Rental revenues	$	162,082		$	171,301
Private capital income		5,925			5,106
Total revenues		168,007			176,407
COSTS AND EXPENSES
Property operating expenses		(25,371	)		(24,300	)
Real estate taxes		(18,876	)		(19,843	)
Depreciation and amortization		(41,029	)		(42,754	)
Impairment losses		(257	)		—
General and administrative		(29,854	)		(23,048	)
Other expenses		(912	)		(537	)
Fund costs		(241	)		(614	)
Total costs and expenses		(116,540	)		(111,096	)
OTHER INCOME AND EXPENSES
Equity in earnings of unconsolidated joint ventures, net		2,113			2,088
Other income		5,507			3,507
Gains from dispositions of real estate interests		136			—
Development profits, net of taxes		12,192			674
Interest expense, including amortization		(33,865	)		(39,153	)
Total other income and expenses, net		(13,917	)		(32,884	)
Income before minority interests, discontinued operations and cumulative effect of change in accounting principle		37,550			32,427
Minority interests’ share of income:
Joint venture partners’ share of income before minority interests and discontinued operations		(7,193	)		(8,539	)
Joint venture partners’ share of development profits		(12	)		—
Preferred unitholders		(2,242	)		(3,437	)
Total minority interests’ share of income		(9,447	)		(11,976	)
Income from continuing operations before cumulative effect of change in accounting principle		28,103			20,451
Discontinued operations:
Income attributable to discontinued operations, net of minority interests		81			2,359
Gains from dispositions of real estate, net of minority interests		44			7,366
Total discontinued operations		125			9,725
Net income before cumulative effect of change in accounting principle		28,228			30,176
Cumulative effect of change in accounting principle		—			193
Net income		28,228			30,369
Series L, M, O and P preferred unit distributions		(3,952	)		(3,096	)
Series J and K preferred unit distributions		(1,590	)		(1,590	)
Preferred unit redemption discount/issuance costs		—			(1,097	)
Net income available to common unitholders	$	22,686		$	24,586
Income available to common unitholders attributable to:
General partner	$	21,730		$	23,384
Limited partners		956			1,202
Net income available to common unitholders	$	22,686		$	24,586
Basic income per common unit
Income from continuing operations (after preferred unit distributions and preferred unit redemption discount/issuance costs) before cumulative effect of change in accounting principle	$	0.23		$	0.16
Discontinued operations		—			0.11
Cumulative effect of change in accounting principle		—			—
Net income available to common unitholders	$	0.23		$	0.27
Diluted income per common unit
Income from continuing operations (after preferred unit distributions and preferred unit redemption discount/issuance costs) before cumulative effect of change in accounting principle	$	0.23		$	0.16
Discontinued operations		—			0.10
Cumulative effect of change in accounting principle		—			—
Net income available to common unitholders	$	0.23		$	0.26
WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
Basic		96,943,042			90,821,246
Diluted		99,776,750			94,567,680

For the Three Months Ended March 31, 2009 and 2008


	2009			2008
	(Unaudited, Dollars in
	thousands, except per
	unit amounts)

REVENUES
Rental revenues	$	153,834		$	161,935
Private capital revenues		11,695			9,923

Total revenues		165,529			171,858
COSTS AND EXPENSES
Property operating expenses		(29,310	)		(24,137	)
Real estate taxes		(20,258	)		(20,857	)
Depreciation and amortization		(42,101	)		(40,969	)
General and administrative		(31,249	)		(35,126	)
Fund costs		(261	)		(222	)
Real estate impairment losses		(165,979	)		—
Other expenses		662			92

Total costs and expenses		(288,496	)		(121,219	)

OTHER INCOME AND EXPENSES
Development profits, net of taxes		33,286			17,820
Gains from sale or contribution of real estate interests, net		—			19,967
Equity in earnings of unconsolidated joint ventures, net		(34	)		2,928
Other (expenses) income		(7,065	)		4,415
Interest expense, including amortization		(32,521	)		(29,957	)

Total other income and expenses, net		(6,334	)		15,173

(Loss) income from continuing operations		(129,301	)		65,812

Discontinued operations:
(Loss) income attributable to discontinued operations		(12,669	)		2,205
Gains from sale of real estate interests, net of taxes		18,946			1,718

Total discontinued operations		6,277			3,923

Net (loss) income		(123,024	)		69,735
Noncontrolling interests’ share of net loss (income):
Joint venture partners’ share of net loss (income)		1,846			(19,263	)
Joint venture partners’ share of development profits		—			(4,213	)
Preferred unitholders		(1,432	)		(1,432	)
Class B limited partnership unitholders		1,542			(640	)

Total noncontrolling interests’ share of net loss (income)		1,956			(25,548	)

Net (loss) income after noncontrolling interests		(121,068	)		44,187
Series L, M, O and P preferred unit distributions		(3,952	)		(3,952	)

Net (loss) income available to common unitholders	$	(125,020	)	$	40,235

(Loss) income available to common unitholders attributable to:
General partner	$	(122,350	)	$	38,980
Limited partners		(2,670	)		1,255

Net (loss) income available to common unitholders	$	(125,020	)	$	40,235

Basic (loss) income per common unit
(Loss) income from continuing operations (after noncontrolling interests’ share of loss (income) from continuing operations and preferred unit distributions)	$	(1.30	)	$	0.36
Discontinued operations		0.06			0.03

Net (loss) income available to common unitholders	$	(1.24	)	$	0.39

Diluted (loss) income per common unit
(Loss) income from continuing operations (after noncontrolling interests’ share of loss (income) from continuing operations and preferred unit distributions)	$	(1.30	)	$	0.35
Discontinued operations		0.06			0.03

Net (loss) income available to common unitholders	$	(1.24	)	$	0.38

WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
Basic		101,093,862			101,728,152

Diluted		101,093,862			103,645,553

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

AMB PROPERTY, L.P. CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL AND NONCONTROLLING INTERESTS For the Three Months Ended March 31, 2009 (Unaudited, Dollars in thousands)

CONSOLIDATED STATEMENT OF PARTNERS’ CAPITAL


	General Partner											Limited Partners
	Preferred Units					Common Units						Common Units						Noncontrolling
	Units		Amount			Units			Amount			Units			Amount			Interests			Total

Balance as of December 31, 2008		9,300,000	$	223,412			98,240,461		$	2,291,695			2,180,809		$	50,831		$	400,266		$	2,966,204
Comprehensive income:
Net (loss) income		—		3,952			—			(122,350	)		—			(2,670	)		(1,956	)
Unrealized (loss) on securities and derivatives		—		—			—			(3,301	)		—			—			—
Currency translation adjustment		—		—			—			(34,007	)		—			—			—
Total comprehensive (loss)																						(160,332	)
Contributions		—		—			—			—			—			—			2,606			2,606
Distributions and allocations		—		—			—			—			—			(609	)		(6,970	)		(7,579	)
Issuance of common units		—		—			47,437,500			552,572			—			—			—			552,572
Stock-based compensation amortization and issuance of common limited partnership units in connection with the issuance of restricted stock and options		—		—			360,533			7,304			—			—			—			7,304
Cash redemption of operating partnership units		—		—			—			—			(4,000	)		(71	)		—			(71	)
Repurchase of noncontrolling interest		—		—			—			(859	)		—			—			(8,909	)		(9,768	)
Forfeiture of common limited partnership units in connection with the forfeiture of restricted stock		—		—			(48,704	)		(787	)		—			—			—			(787	)
Reallocation of interests		—		—			—			12,265			—			(7,779	)		(4,486	)		—
Distributions		—		(3,952	)		—			(40,884	)		—			—			—			(44,836	)

Balance as of March 31, 2009		9,300,000	$	223,412			145,989,790		$	2,661,648			2,176,809		$	39,702		$	380,551		$	3,305,313

For the Three Months Ended March 31, 2007

	General Partner										Limited Partners
	Preferred Units					Common Units					Preferred Units					Common Units
	Units		Amount			Units		Amount			Units		Amount			Units			Amount			Total
	(Unaudited, dollars in thousands, except unit amounts)
Balance as of December 31, 2006		9,300,000	$	223,417			89,433,024	$	1,943,240			1,600,000	$	77,815			3,450,343		$	74,780		$	2,319,252
Comprehensive income:
Net income		—		3,952			—		21,730			—		1,590			—			956
Unrealized gain on securities and derivatives		—		—			—		(13	)		—		—			—			—
Currency translation adjustment		—		—			—		353			—		—			—			—
Total comprehensive income																							28,568
Stock-based compensation amortization and issuance of common limited partnership units in connection with the issuance of restricted stock and options		—		—			29,443		5,108			—		—			—			—			5,108
Issuance of common units		—		—			8,365,800		472,072			—		—			—			—			472,072
Issuance of common limited partnership units in connection with the exercise of stock options		—		—			1,218,592		19,333			—		—			—			—			19,333
Conversion of operating partnership units to common stock		—		—			42,983		2,600			—		—			(42,983	)		(860	)		1,740
Forfeiture of common limited partnership units in connection with the forfeiture of restricted stock		—		—			—		(1,095	)		—		—			—			—			(1,095	)
Reallocation of interests		—		—			—		(13,966	)		—		—			—			9,845			(4,121	)
Distributions		—		(3,952	)		—		(49,411	)		—		(1,590	)		—			(2,333	)		(57,286	)
Balance as of March 31, 2007		9,300,000	$	223,417			99,089,842	$	2,399,951			1,600,000	$	77,815			3,407,360		$	82,388		$	2,783,571

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

AMB PROPERTY, L.P.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, ~~2007~~2009 and 2008 ~~2006~~

	2007			2006
	2009			2008
	(Unaudited, dollars in thousands)
	(Unaudited, Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	28,228		$	30,369
Net (loss) income	$	(123,024	)	$	69,735
Adjustments to net income:
Adjustments to net (loss) income:
Straight-line rents and amortization of lease intangibles		(23,~~715~~392	)		(53,~~146~~332	)
Depreciation and amortization		4142,~~029~~101			4240,~~754~~969
Impairment losses		257			—
Real estate impairment losses		165,979			—
Stock-based compensation amortization		5,108			4,829
Foreign exchange losses (gains)		2,291			(146	)
Equity in earnings of unconsolidated joint ventures		(2,113	)		(2,088	)
Stock-based compensation amortization		7,304			6,529
Operating distributions received from unconsolidated joint ventures		3,712			326
Equity in losses (earnings) of unconsolidated joint ventures		34			(2,928	)
Gains from dispositions of real estate interests		(136	)		—
Operating distributions received from unconsolidated joint ventures		2,952			7,121
Development profits, net of taxes		(12,192	)		(674	)
Gains from sale or contribution of real estate interests, net		—			(19,967	)
Debt premiums, discounts and finance cost amortization, net		(578	)		2,850
Development profits, net of taxes		(33,286	)		(17,820	)
Total minority interests’ share of net income		9,447			11,976
Debt premiums, discounts and finance cost amortization, net		3,092			1,895
Discontinued operations:
Depreciation and amortization		(41,358	)		~~514~~704
Joint venture partners’ share of net income		(65	)		—
Real estate impairment losses		15,874			—
Gains from dispositions of real estate, net of minority interests		(44	)		(7,366	)
Gains from sale of real estate interests, net of taxes		(18,946	)		(1,718	)
Cumulative effect of change in accounting principle		—			(193	)
Changes in assets and liabilities:
Accounts receivable and other assets		~~(15~~4,~~802~~577	)		~~271~~(1,056	)
Accounts payable and other liabilities		1(5,~~828~~089	)		(2617,~~323~~542	)
Net cash provided by operating activities		5561,~~960~~825			5262,~~099~~444
CASH FLOWS FROM INVESTING ACTIVITIES
Change in restricted cash		(53,~~243~~311	)		9(34,~~032~~572	)
Cash paid for property acquisitions		~~(18,553~~—	)		(~~121~~99,~~197~~882	)
Additions to land, buildings, development costs, building improvements and lease costs		(~~243~~142,~~638~~819	)		(~~218~~229,~~630~~620	)
Net proceeds from divestiture of real estate		114,107			20,707
Net proceeds from divestiture of real estate and securities		173,426			206,784
Additions to interests in unconsolidated joint ventures		(85,~~873~~060	)		~~999~~(21,007	)
Repayment of mortgage and loan receivables		36			32
Purchase of noncontrolling interest		(8,968	)		—
Net cash used in investing activities		(162,164	)		(309,057	)
Capital distributions received from unconsolidated joint ventures		1,977			2,761
Loans made to affiliates		—			(75,789	)
Net cash provided by (used in) investing activities		15,245			(251,325	)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common units net		491,405			29,469
Issuance of common units, net		552,501			484
Borrowings on secured debt		446,351			1,631
Repurchase and retirement of common units		—			(87,696	)
Payments on secured debt		(198,351	)		(26,778	)
Borrowings on secured debt		14,010			653
Borrowings on other debt		—			43,086
Payments on secured debt		(8,070	)		(44,664	)
Payments on other debt		(2,158	)		(420	)
Borrowings on other debt		—			425,000
Borrowings on unsecured credit facilities		241,183			284,185
Payments on other debt		(212	)		(197	)
Payments on unsecured credit facilities		(625,083	)		(47,686	)
Borrowings on unsecured credit facilities		200,210			582,184
Payment of financing fees		(10,483	)		(2,997	)
Payments on unsecured credit facilities		(698,242	)		(568,857	)
Net proceeds from issuances of senior debt		24,997			—
Payment of financing fees		(2,365	)		(2,151	)
Payments on senior debt securities		(70,000	)		(25,000	)
Payments on senior debt		(100,000	)		—
Issuance costs on preferred units		—			(217	)
Contributions from joint venture partners		2,606			1,065
Repurchase of preferred units		(6	)		(77,392	)
Distributions paid to partners		(3,085	)		(53,389	)
Contributions from co-investment partners		1,111			65,859
Distributions to noncontrolling interests, including preferred units		(2,985	)		(32,914	)
Distributions paid to partners		(46,421	)		(43,710	)
Net cash (used in) provided by financing activities		(45,632	)		219,518
Distributions to minority interests, including preferred units		(61,572	)		(34,473	)
Net effect of exchange rate changes on cash		7,629			5,759
Net cash provided by financing activities		190,973			165,557
Net increase (decrease) in cash and cash equivalents		39,067			36,396
Net effect of exchange rate changes on cash		286			988
Cash and cash equivalents at beginning of period		223,936			220,224
Net increase (decrease) in cash and cash equivalents		85,055			(90,413	)
Cash and cash equivalents at end of period	$	263,003		$	256,620
Cash and cash equivalents at beginning of period		174,763			232,881
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash and cash equivalents at end of period	$	259,818		$	142,468
Cash paid for interest, net of capitalized interest	$	24,798		$	27,905
Supplemental Disclosures of Cash Flow Information
Cash paid for interest, net of capitalized interest	$	34,932		$	29,678
Non-cash transactions:
Acquisition of properties	$	~~18,109~~—		$	~~153~~101,~~355~~420
Assumption of secured debt		—			~~(28,300~~—	)
Assumption of other assets and liabilities		~~473~~—			(~~802~~572	)
Acquisition capital		~~(29~~—	)		(~~3,056~~966	)
Net cash paid for property acquisitions	$	~~18,553~~—		$	~~121~~99,~~197~~882
Preferred unit redemption issuance costs	$	—		$	1,097
Contribution of properties to unconsolidated joint ventures, net	$	8,879		$	4,406
Contribution of properties to unconsolidated joint ventures, net	$	8,751		$	—

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

AMB PROPERTY, L.P. ~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2007 (unaudited)~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)


1.	Organization and Formation of the Company

AMB Property, L.P., a Delaware limited partnership (the “Operating Partnership”), commenced operations shortly before the consummation of AMB Property Corporation’s, a Maryland corporation (the “Company”), initial public offering on November 26, 1997. The Company elected to be taxed as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 1997, and believes its current organization and method of operation will enable it to maintain its status as a REIT. The ~~Operating Partnership~~Company, ~~is engaged~~through ~~in the acquisition, development and operation of~~its ~~industrial~~controlling ~~properties~~interest in ~~key~~the ~~distribution markets throughout North America, Europe and Asia. The~~ Operating Partnership, ~~uses the~~is ~~terms~~engaged ~~“industrial properties” or “industrial buildings” to describe various types of industrial properties~~ in ~~its portfolio and uses these terms interchangeably~~ ~~with~~ the ~~following: logistics facilities~~ownership, ~~centers or warehouses; distribution facilities~~acquisition, ~~centers~~development orand ~~warehouses;~~operation ~~High Throughput Distribution® (HTD®) facilities; or any combination~~ of ~~these terms. The Operating~~ ~~Partnership~~industrial ~~uses~~properties ~~the term “owned and managed” to describe assets~~ in ~~which~~key itdistribution ~~has~~markets atthroughout ~~least a 10% ownership~~the ~~interest~~Americas, ~~for~~Europe ~~which it is the property or asset manager,~~ and ~~which~~ ~~it intends to hold for the long-term~~Asia. Unless the context otherwise ~~otherwise~~ requires, the “Company” means AMB Property Corporation, the Operating Partnership and their other controlled subsidiaries and the “Operating Partnership” means AMB Property, L.P., and its controlled subsidiaries.

AsThe ofOperating ~~March 31,~~Partnership ~~2007,~~uses the ~~Company~~terms ~~owned~~“industrial properties” anor ~~approximate~~“industrial buildings” to describe ~~95.5%~~the ~~general~~various ~~partnership~~types ~~interest~~of industrial properties in its portfolio and uses these terms interchangeably with the ~~Operating~~following: ~~Partnership~~logistics facilities, centers or warehouses; distribution facilities, ~~excluding~~centers ~~preferred~~or ~~units.~~warehouses; ~~The~~High ~~remaining~~Throughput Distribution® (HTD®) facilities; ~~approximate~~or 4any combination of these terms.5% ~~common~~The Operating ~~limited~~Partnership ~~partnership~~uses ~~interests~~the ~~are~~term “owned byand ~~non-affiliated~~managed” to ~~investors~~describe ~~and~~assets ~~certain~~in ~~current~~which ~~and~~it ~~former~~has ~~directors~~at ~~and~~least ~~officers~~a 10% ownership ofinterest, ~~the~~for ~~Company.~~which Asit is the ~~sole~~property ~~general~~or ~~partner~~asset ofmanager ~~the~~and which it currently intends to hold long term. The Operating Partnership, uses the ~~Company~~term ~~has~~“joint ~~full,~~venture” ~~exclusive~~to ~~and complete~~describe ~~responsibility~~all ~~and~~joint ~~discretion~~ventures, inincluding ~~the day~~co-~~to-day~~investment ventures with real ~~management~~estate ~~and~~developers, ~~control~~other ofreal ~~the~~estate ~~Operating~~operators, ~~Partnership.~~or ~~Net~~institutional ~~operating~~investors ~~results~~where of the Operating Partnership ~~are~~may ~~allocated~~or may not have ~~after~~control, ~~preferred~~act ~~unit~~as the manager and/or developer, earn asset management distributions ~~based~~or onfees, ~~the~~or ~~respective~~earn ~~partners’~~incentive ~~ownership~~distributions or promote interests. ~~Certain~~In ~~properties~~certain ~~are owned~~cases, by the Operating Partnership ~~through~~might ~~limited~~provide ~~partnerships~~development, leasing, ~~limited~~property ~~liability~~management and/or accounting ~~companies~~services, ~~and~~for ~~other~~which ~~entities.~~it ~~The~~may ~~ownership~~receive ofcompensation. The ~~such~~Operating ~~properties~~Partnership ~~through~~uses ~~such~~the ~~entities~~term ~~does~~“co-investment venture” ~~not~~to ~~materially~~describe ~~affect~~joint ventures with institutional investors, managed by the Operating Partnership’s, ~~overall~~from ~~ownership~~which ~~interests~~the Operating inPartnership typically receives acquisition fees for ~~the~~acquisitions, ~~properties~~portfolio and asset management distributions or fees, as well as incentive distributions or promote interests.

~~The~~As ~~Operating~~of ~~Partnership~~March 31, ~~enters~~2009, ~~into~~the ~~co-investment~~Company ~~joint~~owned an approximate ~~ventures~~97.7% ~~with~~general ~~institutional~~partnership ~~investors.~~interest ~~These~~in ~~co-investment~~the ~~joint~~Operating Partnership, ~~ventures~~excluding ~~provide~~preferred ~~the~~units. ~~Operating~~The ~~Partnership~~remaining ~~with~~approximate an2.3% ~~additional~~common ~~source~~limited ofpartnership ~~capital~~interests are owned by non-affiliated investors and ~~income~~certain current and former directors and officers of the Company. As ofthe ~~March 31,~~sole ~~2007,~~general partner of the Operating ~~Operating~~ Partnership, ~~had~~the ~~investments~~Company inhas ~~five~~full, ~~consolidated~~exclusive and complete ~~four~~responsibility ~~unconsolidated~~and ~~co-investment~~discretion ~~joint~~in ~~ventures.~~the ~~Effective~~day-to-day management and ~~October 1,~~control ~~2006,~~of the Operating Partnership. ~~deconsolidated~~Net operating results of ~~AMB~~the ~~Institutional~~Operating ~~Alliance~~Partnership ~~Fund III,~~are ~~L.P.,~~allocated anafter ~~open-ended~~preferred unit ~~co-investment~~distributions ~~partnership~~based ~~formed~~on inthe ~~2004~~respective ~~with~~partners’ ~~institutional~~ownership ~~investors,~~interests. onCertain aproperties ~~prospective~~are ~~basis,~~owned ~~due~~by to the ~~re-evaluation of~~Operating ~~the Operating~~ Partnership’s ~~accounting~~through ~~for~~limited ~~its~~partnerships, ~~investment~~limited liability incompanies ~~the~~and ~~fund~~other inentities. ~~light~~The ownership of ~~changes~~such toproperties through ~~the~~such ~~partnership~~entities ~~agreement regarding~~does ~~the~~not ~~general~~materially ~~partner’s~~affect ~~rights~~the ~~effective~~Operating ~~October 1,~~Partnership’s ~~2006~~overall ownership interests in the properties.

~~AMB~~The ~~Capital~~Operating ~~Partners,~~Partnership ~~LLC,~~enters ainto ~~Delaware~~co-investment ~~limited liability company~~ventures ~~(“AMB~~with ~~Capital~~institutional ~~Partners”),~~investors. ~~provides~~These ~~real~~co-investment ~~estate~~ventures ~~investment~~provide ~~services~~the toOperating ~~clients~~Partnership onwith aan ~~fee~~additional ~~basis.~~source ~~Headlands Realty~~of ~~Corporation,~~capital aand ~~Maryland~~income. ~~corporation,~~As ~~conducts~~of aMarch 31, ~~variety~~2009, ofthe Operating ~~businesses~~Partnership ~~that~~had ~~include~~significant ~~development~~investments ~~projects~~in ~~available~~three ~~for sale~~consolidated orand ~~contribution~~five tounconsolidated ~~third~~co-investment ~~parties~~ventures. ~~and~~On ~~incremental income~~July 1, ~~programs.~~2008, ~~IMD~~the ~~Holding~~partners ~~Corporation~~of AMB Partners II, L.P. (previously, a consolidated ~~Delaware~~co-investment ~~corporation,~~venture) contributed their interests ~~conducts~~in aAMB ~~variety~~Partners ofII, ~~businesses~~L.P. ~~that~~to ~~also~~AMB ~~includes~~Institutional ~~development~~Alliance ~~projects~~Fund III, ~~available~~L.P. ~~for~~in ~~sale~~exchange orfor ~~contribution~~interests toin ~~third parties.~~AMB ~~AMB~~Institutional ~~Capital~~Alliance ~~Partners~~Fund III, ~~Headlands~~L.P., ~~Realty~~an ~~Corporation and IMD~~unconsolidated ~~Holding~~co-investment ~~Corporation~~venture. ~~are~~No ~~direct~~gain or ~~indirect~~loss ~~subsidiaries~~was ofrecognized on the ~~Operating Partnership~~contribution.

AsOn ~~of March~~July 3118, ~~2007~~2008, the Operating Partnership ~~owned~~acquired orthe ~~had~~remaining ~~investments~~equity ~~in,~~interest on(approximately a42%) ~~consolidated~~in ~~basis~~G. ~~or through unconsolidated joint ventures~~Accion, ~~properties and development~~S.A. ~~projects~~de ~~expected to total approximately 128~~C.~~2 million rentable~~V. ~~square feet~~ (11“G.~~9 million~~ ~~square meters~~Accion”) ~~and 1~~,~~101 buildings~~ ina 40Mexican ~~markets~~real ~~within~~estate ~~thirteen countries~~company. ~~Additionally,~~ asG. ofAccion ~~March 31,~~is ~~2007,~~now ~~the~~a ~~Operating~~wholly-owned ~~Partnership~~subsidiary ~~managed,~~of the Operating ~~but~~Partnership ~~did~~and ~~not~~has ~~have~~been arenamed ~~significant~~AMB ~~ownership~~Property ~~interest in~~Mexico, ~~industrial~~S.A. de ~~and~~C.V. ~~other~~(“AMB ~~properties,~~Property ~~totaling approximately 1~~Mexico”).~~5 million rentable~~ ~~square~~AMB ~~feet.~~Property ~~The~~Mexico ~~Operating Partnership’s~~owns ~~investment~~and ~~strategy~~develops ~~generally~~real ~~targets~~estate ~~customers~~and ~~whose~~provides ~~businesses are~~real ~~tied~~estate tomanagement ~~global trade,~~and development

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~which~~services ~~according~~in toMexico. ~~the~~Through ~~World~~its ~~Trade~~investment ~~Organization,~~in ~~has~~AMB ~~been~~Property ~~growing~~Mexico, atthe aOperating ~~rate~~Partnership ~~more~~held ~~than~~equity ~~three~~interests ~~times that of world gross~~in ~~domestic~~various ~~product~~other ~~over~~unconsolidated ~~the~~joint ~~past~~ventures ~~30 years. To serve the~~totaling ~~facility~~approximately ~~needs~~$20.2 million ofand ~~these~~$24.6 million ~~customers,~~as ~~the Operating Partnership~~of ~~seeks to invest in major distribution markets~~March 31, ~~transportation hubs~~2009 and ~~gateways that~~December 31, ~~generally~~2008, ~~are tied to global trade, both in the U~~respectively.~~S. and internationally.~~

OfAMB ~~the~~Capital ~~approximately~~Partners, ~~128~~LLC, a Delaware limited liability company (“AMB Capital Partners”), provides real estate investment services to clients on a fee basis.~~2 million~~ ~~rentable~~Headlands ~~square~~Realty Corporation, ~~feet~~a asMaryland corporation, conducts a variety of businesses that include development projects available for sale or contribution to third parties and incremental income programs. IMD Holding Corporation, a Delaware corporation, conducts a variety of ~~March 31~~businesses that also include development projects available for sale or contribution to third parties. AMB Capital Partners, ~~2007:~~Headlands Realty Corporation and IMD Holding Corporation are direct subsidiaries of the Operating Partnership.

• As onof ~~an owned and managed basis~~March 31, ~~which includes investments held on a consolidated basis or through unconsolidated joint ventures~~2009, the Operating Partnership owned or had ~~partially~~investments ~~owned properties~~in, ~~principally warehouse distribution buildings, encompassing approximately 103.2 million rentable square feet that were 95.2% leased; •~~ on ~~an owned and managed basis, which includes investments held on~~ a consolidated basis or through unconsolidated ~~joint~~co-investment ventures, ~~the~~properties ~~Operating Partnership had investments in 44 industrial~~ and development projects ~~which are~~ expected to total approximately 14 159.~~7 million rentable square feet upon completion and one industrial operating property, totaling approximately~~ 0.2 million square feet ~~which is available for sale or contribution; • on a consolidated basis, the Operating Partnership owned eleven development projects, totaling approximately 2~~(14.7 8 million ~~rentable~~ square ~~feet that are available for sale or contribution; and • through other non-managed unconsolidated joint ventures, the Operating Partnership had investments~~ meters) in 4648 ~~industrial~~markets ~~operating~~within ~~properties,~~14 ~~totaling approximately 7~~countries.~~4 million rentable square feet.~~

Of the approximately 159.0 million square feet as of March 31, 2009:


	•	on an owned and managed basis, which includes investments held on a consolidated basis or through unconsolidated joint ventures, the Operating Partnership owned or partially owned approximately 133.1 million square feet (principally, warehouse distribution buildings) that were 92.2% leased; the Operating Partnership had investments in 43 development projects, which are expected to total approximately 11.8 million square feet upon completion; and the Operating Partnership owned 20 development projects, totaling approximately 6.6 million square feet, which are available for sale or contribution;

	•	through non-managed unconsolidated joint ventures, the Operating Partnership had investments in 46 industrial operating properties, totaling approximately 7.4 million square feet; and

	•	the Operating Partnership held approximately 0.1 million square feet through a ground lease, which is the location of the Operating Partnership’s global headquarters.


2.	Interim Financial Statements

The consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Accordingly, certain information and note disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments of a normal, recurring nature, necessary for a fair ~~presentation~~statement of the ~~the~~ Operating Partnership’s consolidated financial position and ~~and~~ results of operations for the interim periods. The interim results for the three months ended March 31, ~~2007~~2009 are not necessarily indicative of future results. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, ~~2006~~2008.

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

~~Investments in Real Estate~~Reclassifications. ~~Investments~~Certain ~~in real~~items ~~estate and leasehold interests are stated at cost unless circumstances indicate that cost cannot be recovered,~~ in ~~which case,~~ the ~~carrying value of the property is reduced to estimated~~ ~~fair~~consolidated value. The Operating Partnership also regularly reviews the impact of above or below-market leases, in-place leases and lease origination costs for all new acquisitions, and records an intangible asset or liability accordingly. Carrying values for financial ~~reporting~~statements ~~purposes are reviewed~~ for ~~impairment~~prior onperiods ~~a property-by-property basis~~have ~~whenever events or changes in circumstances indicate that~~been ~~the~~reclassified ~~carrying~~to ~~value~~conform ofto a property may not be fully recoverable. Impairment is recognized when estimated expected future cash flows (undiscounted and without interest charges) are less than the carrying value of the property. The estimation of expected future net cash flows is inherently uncertain and relies on assumptions regarding current ~~and future economics and market conditions and the availability of capital~~classifications. ~~If impairment~~ ~~analysis assumptions change, then an adjustment to the carrying value of~~

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

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~the Operating Partnership’s long-lived assets could occur in the future period in which the assumptions change. To the extent that a~~ property is ~~impaired,~~made ~~the~~to ~~excess~~reduce ofit ~~the~~to ~~carrying amount of the property over~~ its estimated fair value. ~~is charged~~The toOperating ~~earnings.~~Partnership Asalso aregularly ~~result~~reviews ofthe ~~leasing~~impact ~~activity~~of ~~and the economic~~above ~~environment,~~or ~~the~~below-market ~~Operating~~leases, ~~Partnership re~~in-~~evaluated the~~place ~~carrying~~leases ~~value of its investments~~ and ~~recorded~~lease ~~an impairment~~origination ~~charge~~costs offor ~~$0.3 million~~acquisitions, ~~during~~and ~~the~~records ~~three~~an ~~months~~intangible ~~ended~~asset or ~~March 31,~~liability ~~2007 on one of its investments~~accordingly.

~~Reclassifications~~Real Estate Impairment Losses. ~~Certain~~Carrying ~~items~~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. ~~consolidated~~The ~~financial~~intended ~~statements~~use of an asset, either held for ~~prior~~sale ~~periods~~or ~~have~~held ~~been~~for ~~reclassified~~the long term, can significantly impact how impairment is measured. If an asset is intended to ~~conform~~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 estimated fair value, with the excess of the asset’s carrying value over the estimated fair value recognized as an impairment charge to earnings. If an asset is intended to be sold, impairment is tested based on a one-step test, comparing the carrying value to 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 ~~classifications~~and future economic and market conditions and the availability of capital. The Operating Partnership determines the estimated fair values based on assumptions regarding rental rates, costs to complete, lease-up and holding periods, as well as sales prices or contribution values. The Operating Partnership also utilizes the knowledge of its regional teams and the recent valuations of its two open-ended funds, which contain a large, geographically diversified pool of assets, all of which are subject to third-party appraisals on an annual basis. As a result of leasing activity and the economic environment, the Operating Partnership re-evaluated the carrying value of its investments and recorded real estate impairment losses of $181.9 million during the three months ended March 31, 2009 on certain of its investments. The Operating Partnership recorded no real estate impairment losses during the three months ended March 31, 2008.

~~Comprehensive~~Derivatives ~~Income~~and Hedging Activities. ~~The~~As required ~~Operating~~by Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, the Operating Partnership ~~reports~~records ~~comprehensive~~all derivatives ~~income~~on inthe ~~its~~balance ~~Statement~~sheet at fair value. All of the ~~Partners~~Operating Partnership’s ~~Capital.~~derivatives ~~Comprehensive~~are ~~income~~either ~~was~~designated ~~$28.6 million~~or qualify as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, and ~~$30~~are considered cash flow hedges.~~3 million~~ Hedge accounting generally provides for the ~~three~~matching ~~months~~of the timing of gain or loss ~~ended~~recognition ~~March 31,~~on ~~2007~~the ~~and~~hedging ~~2006,~~instrument ~~respectively~~with the recognition of the earnings effect of the hedged forecasted transactions in a cash flow hedge.

~~International~~Comprehensive ~~Operations~~(Loss) Income. The ~~U.S. dollar is the functional currency for the~~ Operating ~~Partnership’s~~ ~~subsidiaries operating in the United States and Mexico. The functional currency for the Operating~~ Partnership~~’s subsidiaries~~ ~~operating~~reports ~~outside~~comprehensive ~~the~~(loss) ~~United~~income ~~States is generally the local currency of the country~~ in ~~which the entity is~~its ~~located,~~consolidated ~~mitigating~~statement ~~the effect~~ of ~~currency~~partners’ ~~exchange~~capital ~~gains~~ and ~~losses~~noncontrolling interests. ~~The~~Comprehensive ~~Operating~~(loss) ~~Partnership’s~~income ~~subsidiaries whose~~was ~~functional currency is not the U~~$(160.S.3) ~~dollar~~million ~~translate~~and ~~their financial statements into U~~$95.S.2 ~~dollars.~~million ~~Assets~~for ~~and liabilities are translated at~~ the ~~exchange rate in effect as of~~three ~~the~~months ~~financial~~ended ~~statement~~March 31, ~~date.~~2009 ~~The Operating Partnership translates income statement accounts using the average exchange rate for the period~~ and ~~significant~~2008, ~~nonrecurring transactions using the rate on the transaction date~~respectively. ~~These gains (losses) are~~ ~~included in accumulated other comprehensive income (loss) as a separate component of partners’ capital.~~

International Operations. The U.S. dollar is the functional currency for the Operating Partnership’s subsidiaries ~~international~~formed ~~subsidiaries~~in ~~may have~~the ~~transactions~~United ~~denominated~~States, Mexico and certain subsidiaries in ~~currencies~~Europe. ~~other~~Other than ~~their~~Mexico and certain subsidiaries in Europe, the functional currency. Infor ~~these~~the Operating ~~instances~~Partnership’s subsidiaries operating outside the United States is generally the local currency of the country in which the entity or property is located, ~~non-monetary~~mitigating ~~assets~~the effect of currency exchange gains and losses. The Operating ~~liabilities~~Partnership’s ~~are~~subsidiaries ~~reflected~~whose atfunctional currency is not the ~~historical~~U.S. dollar ~~exchange~~translate ~~rate,~~their financial statements into ~~monetary~~U.S. dollars. ~~assets~~Assets and liabilities are ~~remeasured~~translated at the ~~exchange~~ exchange rate in effect atas ~~the end~~ of the ~~period~~financial ~~and~~statement ~~income~~date. ~~statement~~The ~~accounts~~Operating ~~are~~Partnership ~~remeasured~~translates atincome statement accounts using the average exchange rate for the period and significant ~~period~~nonrecurring transactions using the rate on the transaction date. These gains (losses) are included in ~~the~~accumulated ~~Operating~~other ~~Partnership’s~~comprehensive ~~results~~income (loss) as a separate component of partners’ ~~operations~~capital.

The Operating Partnership’s ~~also~~international ~~records~~subsidiaries ~~gains~~may have ortransactions ~~losses~~denominated in ~~the~~currencies other than their ~~income~~functional ~~statement~~currencies. ~~when~~In athese ~~transaction~~instances, ~~with~~non-monetary aassets and ~~third~~liabilities ~~party~~are reflected at the historical exchange rate, ~~denominated~~monetary inassets aand ~~currency~~liabilities ~~other~~are ~~than~~remeasured at the ~~entity’s~~exchange ~~functional~~rate ~~currency,~~in iseffect ~~settled~~at ~~and~~the end of the ~~functional~~period ~~currency~~and ~~cash~~income statement ~~flows~~accounts ~~realized~~ are ~~more~~remeasured orat ~~less~~the ~~than~~average ~~expected~~exchange ~~based~~rate ~~upon~~for the ~~exchange~~period. ~~rate~~The Operating Partnership also records gains or losses in ~~effect~~the income statement when ~~the~~a transaction ~~was~~with ~~initiated.~~a third party, denominated

Goodwill and Intangible Assets. The Operating Partnership has classified as goodwill the cost in excess of fair value of the net assets of companies acquired in purchase transactions. As prescribed in Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, (SFAS 142) goodwill and certain indefinite lived intangible assets, including excess reorganization value and certain trademarks, are no longer amortized, but are subject to at least annual impairment testing. The Operating Partnership tests annually (or more often, if necessary) for impairment under SFAS 142. The Operating Partnership determined that there was no impairment to goodwill and intangible assets during the quarter ended March 31, 2007.

New Accounting Pronouncements. In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109, (FIN 48), which clarifies the accounting and disclosure for uncertainty in tax positions, as defined. FIN 48 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. Adoption of FIN 48 on January 1, 2007 did not have a material effect on the Operating Partnership’s financial statements.

The tax years 2002-2006 remain open to examination by the major taxing jurisdictions to which the Operating Partnership are subject.

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3. in ~~Real~~a ~~Estate~~currency ~~Acquisition~~other than the entity’s functional currency, is settled and ~~Development~~the ~~Activity~~functional currency cash flows realized are more or less than expected based upon the exchange rate in effect when the transaction was initiated. These gains (losses) are included in the consolidated statements of operations.

~~Acquisition~~Goodwill ~~Activity~~and Intangible Assets. ~~During~~The ~~the three months~~Operating ~~ended~~Partnership ~~March 31,~~has ~~2007,~~classified onas angoodwill ~~owned~~the ~~and~~cost ~~managed~~in ~~basis,~~excess ~~the~~of ~~Operating~~fair ~~Partnership~~value ~~acquired~~of ~~eight~~the ~~industrial~~net ~~properties aggregating~~assets ~~approximately~~of ~~1.8 million~~companies ~~square~~acquired ~~feet~~in ~~for a~~purchase ~~total~~transactions. ~~expected~~As ~~investment~~prescribed ofin ~~$141~~SFAS No.8 ~~million (includes~~142, ~~acquisition~~Goodwill ~~costs of $137.0 million~~ and ~~estimated acquisition~~Other ~~capital~~Intangible ~~of $4.8 million). Of the eight industrial properties acquired~~Assets, ~~one~~goodwill ~~approximately~~and ~~0.2 million~~certain ~~square~~indefinite ~~foot~~lived ~~industrial~~intangible ~~property~~assets, ~~for~~are ano ~~total~~longer ~~expected~~amortized, ~~investment~~but ofare ~~$20.2 million~~subject ~~(includes~~to ~~acquisition costs~~at ofleast ~~$20.1 million~~annual ~~and estimated acquisition capital of~~impairment $0testing.~~1 million)~~ ~~was~~The ~~acquired directly by the~~ Operating Partnership ~~and~~tests ~~seven~~annually ~~industrial~~(or ~~properties aggregating~~more ~~approximately~~often, ~~1.6 million~~if ~~square~~necessary) ~~feet~~ for aimpairment ~~total expected~~under ~~investment of $121~~SFAS No.6 ~~million~~142. ~~(includes~~The ~~acquisition~~Operating ~~costs~~Partnership ofdetermined ~~$116.9 million~~that ~~and~~there ~~estimated~~was ~~acquisition~~no ~~capital~~impairment ~~of $4.7 million)~~to ~~were~~goodwill ~~acquired~~and ~~through~~intangible ~~two of its~~assets ~~unconsolidated~~during ~~joint ventures. During~~ the three months ended March 31, ~~2006,~~2009 the Operating Partnership acquired six industrial properties, aggregating approximately 2.1 million square feet, for a total expected investment of $153.4 million (includes acquisition costs of $150.3 million and ~~estimated acquisition capital of $3~~2008.~~1 million).~~

~~Development~~New ~~Starts~~Accounting Pronouncements. ~~During~~In September 2006, the ~~three~~FASB ~~months ended~~issued ~~March~~SFAS 31No. 157, ~~2007~~Fair Value Measurements, ~~the~~which ~~Operating~~defines ~~Partnership~~fair ~~initiated~~value, establishes a ~~five~~framework ~~new~~for ~~industrial~~measuring ~~development~~fair ~~projects~~value inand ~~North~~enhances ~~America~~disclosure requirements ~~and~~for fair value measurements. SFAS No. 157 ~~Asia~~defines ~~with~~fair avalue ~~total~~as ~~expected~~the ~~investment~~exchange ofprice ~~$190.7 million,~~that would be received ~~aggregating~~for ~~approximately~~an ~~1.9 million~~asset ~~square~~or ~~feet.~~paid ~~During~~to transfer a liability (an exit price) in the ~~three~~principal ~~months~~or ~~ended~~most ~~March 31,~~advantageous ~~2006,~~market for the ~~Operating~~asset or ~~Partnership~~liability ~~initiated~~in ~~seven~~an ~~new~~orderly ~~industrial~~transaction ~~development~~between ~~projects~~market participants inon ~~North~~the ~~America~~measurement ~~and~~date. ~~Asia~~SFAS No. 157 ~~with~~also establishes a ~~total~~fair ~~expected~~value ~~investment~~hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable ~~$218.8 million,~~inputs ~~aggregating~~when ~~approximately~~measuring 2fair value.~~9 million~~ The standard describes three ~~square~~levels ~~feet~~of inputs that may be used to measure fair value.

~~Development~~Financial ~~Completions. During~~assets ~~the~~and ~~three months~~liabilities ~~ended~~recorded ~~March 31,~~on ~~2007,~~ the ~~Operating Partnership~~consolidated ~~completed~~balance ~~seven~~sheets ~~industrial~~are ~~projects~~categorized ~~with~~based aon ~~total~~the ~~investment~~inputs of $67.8 million, aggregating approximately 0.9 million square feet. One of these completed projects with a total investment of $10.7 million and approximately 0.2 million square feet was placed in operations, two projects with a total investment of $20.7 million and aggregating approximately 0.1 million square feet were sold to third parties, and four projects with a total investment of $36.4 million, aggregating approximately 0.6 million square feet were available for sale or contribution as of March 31, 2007. During the ~~three months ended~~ ~~March 31,~~valuation ~~2006,~~techniques the Operating Partnership completed seven industrial projects with a total investment of $285.3 million, aggregating 2.1 million square feet. Two of these completed projects with a total investment of $25.0 million and aggregating approximately 0.3 million square feet were placed in operations and five buildings with a total investment of $260.3 million, aggregating approximately 1.8 million square feet, were available for sale or contribution as ~~of March 31, 2006.~~follows:

~~Development Pipeline~~Level 1. AsQuoted ofprices ~~March 31, 2007, the Operating Partnership had 44 industrial projects~~ in ~~its~~ ~~development~~active ~~pipeline, which will total approximately~~markets 14.7 million square feet, and will have an aggregate estimated investment of $1.4 billion upon completion. The Operating Partnership has an additional eleven development projects available for ~~sale~~identical assets or ~~contribution totaling approximately 2~~liabilities.~~7 million~~ ~~square feet, with an aggregate estimated investment of $180.8~~Level ~~million.~~1 ~~Additionally,~~assets ~~one project totaling $13.0 million~~ and ~~approximately~~ ~~0.2 million~~liabilities ~~square~~include ~~feet~~debt ~~is held by an unconsolidated joint venture. As of March 31, 2007, the Operating Partnership~~ and ~~its~~equity ~~joint~~securities ~~venture partners had funded an aggregate of $954.6 million~~ and ~~needed to fund an estimated additional~~derivative ~~$475.7 million~~contracts inthat ~~order~~are totraded complete its development pipeline. The Operating Partnership’s development pipeline currently includes projects expected to be completed through the fourth quarter of 2008. In addition, during the three months ended March 31, 2007, the Operating Partnership acquired 422 acres of land for industrial warehouse development in ~~North~~ ~~America~~an ~~for~~active ~~approximately~~exchange ~~$40~~market.~~8 million.~~

4 Level 2. Observable ~~Gains~~inputs ~~from~~other ~~Dispositions~~than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of ~~Real~~the assets ~~Estate~~or ~~Interests,~~liabilities. ~~Development~~Level 2 ~~Profits~~assets and ~~Discontinued~~liabilities include ~~Operations~~debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes certain corporate debt securities and derivative contracts.

~~Development Sales~~Level 3. ~~During~~Unobservable ~~the~~inputs ~~three~~that ~~months~~are ~~ended~~supported ~~March 31,~~by ~~2007,~~little ~~the~~or ~~Operating~~no ~~Partnership~~market ~~sold~~activity ~~two~~and that are ~~development~~significant ~~projects~~to ~~totaling~~the ~~approximately~~fair 0value of the assets or liabilities.~~1 million~~ ~~square~~Level 3 ~~feet~~assets ~~for~~and anliabilities ~~aggregate~~include ~~sale~~financial instruments ~~price~~whose ofvalue ~~$24.7 million~~is determined using pricing models, ~~resulting~~discounted incash anflow ~~after-tax~~methodologies, ~~gain~~or ofsimilar ~~$3.3 million.~~techniques, ~~During the~~as ~~three~~well ~~months~~as ~~ended~~instruments ~~March 31,~~for ~~2006,~~which the ~~Operating Partnership~~determination ~~sold~~of ~~one~~fair ~~land~~value requires ~~parcel,~~significant ~~for~~management anjudgment ~~aggregate~~or ~~price~~estimation. ofThis ~~$4.7 million,~~category ~~resulting~~generally inincludes ~~an after~~long-~~tax~~term ~~gain~~derivative ofcontracts and $0real estate.~~7 million.~~

Fair Value Measurements on a Recurring or Nonrecurring Basis as of December 31, 2008
(Dollars in thousands)


	Level 1		Level 2		Level 3
	Assets/Liabilities		Assets/Liabilities		Assets/Liabilities
	at Fair Value		at Fair Value		at Fair Value		Total

Assets:
Investments in real estate	$	—	$	—	$	690,667	$	690,667
Deferred compensation plan		16,937		—		—		16,937
Derivative assets		—		1,566		—		1,566
Investment securities		7,812		—		—		7,812
Liabilities:
Derivative liabilities	$	—	$	8,803	$	—	$	8,803
Deferred compensation plan		16,937		—		—		16,937

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~Discontinued Operations. The Operating~~ ~~Partnership reports its property divestitures as discontinued~~Fair ~~operations~~Value ~~separately~~Measurements ason ~~prescribed~~a ~~under~~Recurring ~~the provisions of SFAS No. 144, Accounting for the Impairment~~ or ~~Disposal~~ ofNonrecurring ~~Long-Lived~~Basis ~~Assets.~~as ~~During the three months ended March 31, 2007, the Operating Partnership did not divest itself~~ of ~~any industrial properties. During the three months~~ ~~ended~~ March 31, ~~2006, the Operating Partnership divested~~2009 ~~itself~~(Dollars ofin ~~three industrial buildings, aggregating approximately~~thousands) ~~0.3 million square feet, for an aggregate price of $14.7 million, with a resulting net gain of $7.4 million.~~

Development Contributions. During the three months ended March 31, 2007, the Operating Partnership contributed one 0.3 million square foot completed development project and one 0.2 million square foot completed development project into AMB Institutional Alliance Fund III, L.P. and AMB-SGP Mexico, LLC, respectively, both unconsolidated joint ventures. In addition, two land parcels were contributed into AMB DFS Fund I, LLC. As a result of these contributions, the Operating Partnership recognized an aggregate after-tax gain of $8.9 million, representing the portion of the Operating Partnership’s interest in the contributed properties acquired by the third-party investors for cash. For the three months ended March 31, 2006, no such contributions were completed by the Operating Partnership.


	Level 1		Level 2		Level 3
	Assets/Liabilities		Assets/Liabilities		Assets/Liabilities
	at Fair Value		at Fair Value		at Fair Value		Total

Assets:
Investments in real estate(1)	$	—	$	—	$	1,553,201	$	1,553,201
Deferred compensation plan		15,461		—		—		15,461
Derivative assets		—		196		—		196
Investment securities(2)		584		—		—		584
Liabilities:
Derivative liabilities	$	—	$	8,888	$	—	$	8,888
Deferred compensation plan		15,461		—		—		15,461

Gains from Contributions of Real Estate Interests. During the three months ended March 31, 2007, the Operating Partnership contributed an operating property for approximately $4.6 million, aggregating approximately 0.1 million square feet, into AMB-SGP Mexico, LLC. The Operating Partnership recognized a gain of $0.1 million on the contribution, representing the portion of the Operating Partnership’s interest in the contributed property acquired by the third-party investors for cash. For the three months ended March 31, 2006, no such contributions were completed by the Operating Partnership.


(1)		The fair value at March 31, 2009 reflects a cumulative loss on impairment of real estate assets of $372.4 million on a consolidated basis, of which $181.9 was recognized in the consolidated statements of operations during the three months ended March 31, 2009, measured on a nonrecurring basis.

(2)		The fair value at March 31, 2009 reflects an other-than-temporary loss on impairment of an investment of $3.7 million recognized in the consolidated statements of operations during the three months ended March 31, 2009.

~~Properties~~Effective ~~Held for Contribution. As of March~~January 311, ~~2007~~2008, the Operating Partnership adopted ~~held~~SFAS No. 157 ~~for~~with respect to its financial ~~contribution~~assets toand ~~co-investment~~liabilities, ~~joint~~but ~~ventures~~not ~~ten~~with ~~industrial~~respect to its nonfinancial ~~projects~~assets ~~with~~and anliabilities ~~aggregate~~(such ~~net~~as ~~book~~real estate, which is not subject to annual fair value ofmeasurements) as those provisions ~~$145~~of SFAS No.0 ~~million~~157 were deferred to fiscal years beginning after November 15, ~~which~~2008. In the first quarter of 2009, ~~when~~in ~~contributed~~conjunction towith a ~~joint~~SFAS No. 144 ~~venture~~review for impairment (as discussed in Note 3), selected assets were ~~will~~adjusted ~~reduce~~to fair value and impairment charges were recorded. Additionally, effective January 1, 2009, the Operating Partnership’s ~~current~~adopted ~~ownership~~the provisions of SFAS No. 157 ~~interest~~with ~~from~~respect ~~approximately~~to ~~89%~~its tononfinancial anassets ~~expected~~and ~~range~~liabilities. SFAS No. 157 had no material impact on the Operating Partnership’s financial position, results of operations or ~~15-20%~~cash flows.

~~Properties~~Effective ~~Held~~January 1, ~~for~~2009, ~~Divestiture. As~~the ofOperating Partnership ~~March~~adopted SFAS 31No. 141(R), ~~2007~~Business Combinations, which changes the ~~Operating~~accounting ~~Partnership~~for ~~held~~business ~~for~~combinations including ~~divestiture~~the ~~two~~measurement ~~industrial~~of ~~projects~~acquirer ~~with~~shares anissued ~~aggregate~~in ~~net~~consideration ~~book~~for a ~~value~~business combination, the recognition of ~~$11.2 million.~~contingent consideration, ~~These~~the ~~properties~~accounting ~~either~~for ~~are~~pre-acquisition ~~not~~gain inand loss contingencies, the ~~Operating~~accounting ~~Partnership’s~~for ~~core~~acquisition-related restructuring ~~markets~~cost oraccruals, dothe ~~not~~treatment ~~meet~~of acquisition-related ~~its~~transaction costs and the recognition of ~~current~~changes ~~investment~~in ~~objectives,~~the oracquirer’s ~~are~~income ~~included~~tax asvaluation ~~part~~allowance. With respect to transactions costs, of ~~its~~the three alternatives ~~development-for-sale~~available to transition to the adoption of ~~program~~SFAS No. 141(R), ~~The~~the ~~divestitures~~Operating ofPartnership ~~the~~has ~~properties~~elected to ~~are~~expense ~~subject~~acquisition costs related to business combinations, ~~negotiation~~which ofwere ~~acceptable~~previously ~~terms~~capitalized ~~and~~during ~~other~~the ~~customary~~interim ~~conditions.~~period ~~Properties~~prior ~~held~~to ~~for~~adoption. ~~divestiture~~The ~~are~~Operating ~~stated~~Partnership atwill ~~the~~continue ~~lower~~to capitalize ofasset ~~cost~~acquisition costs. Adoption of orSFAS No. 141(R) ~~estimated~~did ~~fair~~not ~~value~~have ~~less~~a ~~costs~~material toeffect ~~sell~~on the Operating Partnership’s financial statements.

~~The~~Effective ~~following~~January 1, ~~summarizes~~2009, the ~~condensed~~Operating ~~results~~Partnership adopted ofSFAS No. 160, ~~operations~~Noncontrolling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51, which clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated ~~properties~~entity ~~held~~that ~~for~~should ~~divestiture~~be ~~and~~reported ~~sold~~as ~~under~~equity in the consolidated financial statements. As a result of the adoption of SFAS No. ~~144~~160, ~~(dollars~~the inOperating ~~thousands~~Partnership has retroactively renamed the minority interests as noncontrolling interests and has reclassified these balances to the partners’ capital section of the consolidated balance sheets. In addition, on the consolidated statements of operations, the presentation of net (loss): income retroactively includes the portion of income attributable to noncontrolling interests.

	For the Three Months Ended March 31,
	2007			2006
Rental revenues	$	(63	)	$	5,051
Straight-line rents and amortization of lease intangibles		—			154
Property operating expenses		(36	)		(1,456	)
Real estate taxes		(33	)		(627	)
Depreciation and amortization		4			(514	)
Other income and expenses, net		2			4
Interest, including amortization		142			(253	)
Joint venture partners’ share of loss (income)		65			—
Income attributable to discontinued operations	$	81		$	2,359

Effective January 1, 2009, the Operating Partnership adopted SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities — An Amendment of FASB Statement No. 133, which requires entities to

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Asprovide ofenhanced ~~March~~disclosures about (a) 31how and why an entity uses derivative instruments, ~~2007~~(b) how derivative instruments and ~~December~~related hedged items are accounted for under SFAS ~~31,~~No. 133 ~~2006,~~and ~~assets~~its related interpretations, and ~~liabilities~~(c) how ~~attributable~~derivative toinstruments ~~properties~~and ~~held~~related ~~for~~hedged ~~divestiture~~items ~~under~~affect ~~the~~an ~~provisions~~entity’s financial position, financial performance and cash flows. Adoption of SFAS No. ~~144~~161 did ~~consisted~~not ofhave a material effect on the Operating ~~following~~Partnership’s ~~(dollars~~financial ~~in thousands):~~statements.

	March 31,		December 31,
	2007		2006
Other assets	$	87	$	—
Accounts payable and other liabilities	$	401	$	721


3.	Impairment Charges

5 The Operating Partnership conducted a comprehensive review of all real estate asset classes in accordance with SFAS No. 144, ~~Mortgage~~Accounting for the Impairment or Disposal of Long-lived Assets, which indicates that asset values should be analyzed whenever events or changes in circumstances indicate that the carrying value of a property may not be fully recoverable. The process entailed the analysis of each asset class for instances where the book value exceeded the estimated fair value. As a result of changing market conditions, a portion of the Operating Partnership’s real estate assets were written down to estimated fair value and ~~Loan~~a ~~Receivables~~non-cash impairment charge was recognized.

~~Through~~In aorder ~~wholly-owned~~to ~~subsidiary~~comply with disclosure requirements as outlined in SFAS No. 157, the ~~Operating~~designation ~~Partnership~~of the level of inputs ~~holds~~used ain ~~mortgage~~the ~~loan~~fair ~~receivable~~value onmodels ~~AMB~~must ~~Pier~~be ~~One,~~determined. ~~LLC,~~Inputs anused in ~~unconsolidated~~establishing ~~joint~~estimated ~~venture.~~fair ~~The~~value ~~Operating~~for ~~Partnership~~real ~~also~~estate assets ~~holds~~generally afall ~~loan~~within ~~receivable~~level onthree, awhich ~~subsidiary~~are ofcharacterized ~~G.Accion~~as requiring ~~S.A.~~significant dejudgment ~~C.V.~~as little or no current market ~~(G.Accion),~~activity anmay ~~unconsolidated~~be ~~equity~~available ~~investment~~for validation. The ~~Operating~~main indicator ~~Partnership’s~~used ~~mortgage~~to ~~and~~establish ~~loan~~the ~~receivables~~classification atof the inputs was current ~~March 31~~market conditions that, ~~2007~~in ~~and~~many ~~December 31~~instances, ~~2006~~resulted ~~consisted~~in of the use ~~following~~of ~~(dollars~~significant unobservable inputs in ~~thousands):~~establishing estimated fair value measurements.

					March 31,		December 31,
Mortgage and Loan Receivables			Market	Maturity	2007		2006		Rate
	1.	Pier 1	SF Bay Area	May 2026	$	12,650	$	12,686		13.0	%
	2.	G.Accion	Mexico, Various	June 2010		6,061		6,061		10.0	%
		Total Mortgage and Loan Receivables			$	18,711	$	18,747

The Operating Partnership used the market participant pricing approach to estimate fair value of land, assets under development and assets held for sale or contribution, which estimates what a potential buyer would pay today. The key inputs used in the model included the Operating Partnership’s intent to sell, hold or contribute, along with rental rate assumptions, estimated costs to complete and expected lease up and holding periods. When available, current market information, like comparative sales price, was used to determine capitalization and rental growth rates. When market information was not readily available, the inputs were based on the Operating Partnership’s understanding of market conditions and the experience of the management team. Actual results could differ significantly from the Operating Partnership’s estimates.

6 The principal trigger which led to the impairment charges was continued economic deterioration in some markets resulting in a decrease in leasing and rental rates and rising vacancies. ~~Debt~~In addition, the pricing of current transactions in some of our markets, as well as in-process sales agreements on some of our assets targeted for disposition were indicative of an increase in capitalization rates. 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. The real estate impairment losses recognized on these assets represent the difference between the carrying value and the estimated fair value, which, on a consolidated basis, totaled approximately $59.7 million for land, $115.2 million for assets under development and assets available for sale or contribution and $7.0 million for operating properties for the three months ended March 31, 2009. The Operating Partnership did not recognize any real estate impairment losses for the three months ended March 31, 2008.

AsThe ofimpairment ~~March 31,~~charges ~~2007~~disclosed ~~and~~above ~~December 31,~~do ~~2006,~~not ~~debt~~impact the ~~consisted~~Operating Partnership’s liquidity, cost and availability of credit or affect the ~~following~~Operating ~~(dollars~~Partnership’s incontinued compliance ~~thousands):~~with its various financial covenants under its credit facilities and unsecured bonds.

	March 31,			December 31,
	2007			2006
Operating Partnership secured debt, varying interest rates from 1.06% to 10.4%, due October 2007 to October 2016 (weighted average interest rate of 4.9% and 5.6% at March 31, 2007 and December 31, 2006, respectively)	$	492,557		$	368,332
Consolidated joint venture secured debt, varying interest rates from 3.5% to 9.4%, due May 2007 to February 2024 (weighted average interest rates of 6.2% and 6.5% at March 31, 2007 and December 31, 2006, respectively)		1,150,275			1,020,678
Unsecured senior debt securities, varying interest rates from 3.5% to 8.0%, due August 2007 to June 2018 (weighted average interest rates of 6.2% and 6.2% at March 31, 2007 and December 31, 2006, respectively and net of unamortized discounts of $10.3 million and $10.6 million respectively)		1,067,491			1,112,491
Other debt, varying interest rates from 5.1% to 7.5%, due June 2007 to November 2015 (weighted average interest rates of 6.7% and 6.6% at March 31, 2007 and December 31, 2006, respectively)		86,146			88,154
Unsecured credit facilities, variable interest rate, due February 2010 and June 2010 (weighted average interest rates of 2.1% and 3.1% at March 31, 2007 and December 31, 2006, respectively)		474,849			852,033
Total debt before unamortized net (discounts)		3,271,318			3,441,688
Unamortized net (discounts)		(4,801	)		(4,273	)
Total consolidated debt	$	3,266,517		$	3,437,415


4.	Development Activity

As of March 31, 2009, the Operating Partnership had 43 projects in the development pipeline, on an owned and managed basis, which are expected to total approximately 11.8 million square feet and have an aggregate estimated investment of $912.5 million upon completion, net of $71.1 million of real estate impairment losses. Two of these

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~Secured~~projects ~~debt~~totaling ~~generally~~approximately ~~requires~~0.4 million ~~monthly~~square ~~principal~~feet with ~~and~~an ~~interest~~aggregate estimated investment of $37.5 million ~~payments~~were held in an unconsolidated co-investment venture. ~~Some~~On ofa consolidated basis, the ~~loans~~Operating ~~are~~Partnership ~~cross-collateralized~~had byan ~~multiple~~additional ~~properties.~~18 ~~The~~development ~~secured~~projects ~~debt~~available isfor ~~secured~~sale byor ~~deeds~~contribution totaling approximately 5.6 million square feet, with an aggregate estimated investment of ~~trust~~$585.7 million, ornet of ~~mortgages~~$49.7 million onof ~~certain~~cumulative ~~properties~~real estate impairment losses, and isan ~~generally~~aggregate ~~non-recourse~~net book value of $571. 7 million. As of March 31, ~~2007~~2009, ~~and~~on ~~December 31,~~a ~~2006~~consolidated basis, the ~~total~~Operating ~~gross~~Partnership ~~investment~~and ~~book~~its ~~value~~development ofjoint ~~those~~venture ~~properties~~partners ~~securing the~~had ~~debt~~funded ~~was~~an ~~$2.7 billion~~aggregate ~~and~~of $2789.69 ~~billion~~million, ~~respectively~~or 84%, of the total ~~including~~estimated ~~$1.9 billion~~investment before the impact of real estate investment losses and will need to fund an estimated additional $1156.92 ~~billion~~million, ~~respectively~~or 16%, in ~~consolidated~~order ~~joint~~to ~~ventures~~complete the Operating Partnership’s development pipeline. AsThe ofdevelopment pipeline, at March 31, ~~2007~~2009, included projects expected to ~~$1.3 billion~~be ofcompleted through the ~~secured~~fourth ~~debt~~quarter ~~obligations~~of ~~bore~~2010. ~~interest~~In addition to atthe ~~fixed~~Operating ~~rates~~Partnership’s ~~with~~committed adevelopment ~~weighted~~pipeline, it ~~average~~held ~~interest~~a ~~rate~~total of ~~5.5~~2,408 acres of land for future development or sale, on a consolidated basis, approximately 85% ~~while~~of ~~the~~which ~~remaining~~was ~~$307~~located in North America.~~8 million~~ ~~bore~~The ~~interest~~Operating atPartnership ~~variable~~currently ~~rates~~estimates ~~(with~~that athese ~~weighted~~2,408 acres ~~average~~of ~~interest~~land ~~rate~~could support approximately 43.8 million square feet of 5future development.~~3%).~~

~~On December 8, 2006, the Operating Partnership executed a 228.0 million euros facility agreement (approximately $304.~~5 ~~million in U~~.~~S. dollars,~~ ~~using~~Development ~~the exchange rate at March 31~~Profits, ~~2007),~~Gains ~~which~~from ~~provides~~Sale that certain of The Operating Partnership’s affiliates may borrow either acquisition loans, up to a 100.0 million euros sub-limit (approximately $133.5 million in U.S. dollars, using the exchange rate at March 31, 2007), or ~~secured~~Contribution term loans, in connection with properties located in France, Germany, the Netherlands, the United Kingdom, Italy or Spain. On March 21, 2007, the Operating Partnership increased the facility amount limit from 228.0 million euros to 328.0 million euros (approximately $438.0 million in U.S. dollars, using the exchange rate at March 31, 2007). Drawings under the term facility bear interest at a rate of 65Real ~~basis~~Estate ~~points~~Interests ~~over EURIBOR~~ and ~~may~~Discontinued occur until, and mature on, April 30, 2014. Drawings under the acquisition loan facility bear interest at a rate of 75 basis points over EURIBOR and are repayable within six months of the date of advance, unless extended. The acquisition loan facility is available for drawing until December 8, 2007. The Operating Partnership guarantees the acquisition loan facility and is a carve-out indemnifier in respect of the term loans. These responsibilities can be transferred upon the occurrence of certain events, and the Operating Partnership will be fully discharged from all such obligations upon such transfer. As of March 31, 2007, there were approximately 201.3 million euros in term loans outstanding under the facility (approximately $268.8 million in U.S. dollars, using the exchange rate at March 31, 2007) which is included in the Operating Partnership’s secured debt balance. Operations

AsDevelopment ofSales and Contributions. During the three months ended March 31, ~~2007~~2009, the Operating ~~Partnership had~~ ~~outstanding~~Partnership anrecognized ~~aggregate~~development profits of approximately $14.17 ~~billion~~million inas ~~unsecured senior debt securities, which bore~~ a ~~weighted~~result ~~average interest rate~~ of ~~6.2%~~the ~~and~~sale ~~had an average term~~ of ~~4.8 years.~~two ~~These~~development ~~unsecured~~projects, ~~senior~~aggregating ~~debt~~approximately ~~securities include $300.~~0 ~~million in notes issued in June 1998, $205~~.05 million ~~of medium-term~~square ~~notes~~feet, ~~which~~and ~~were issued under the Operating Partnership’s~~one ~~2000 medium~~five-~~term note program, $275.0 million of~~acre ~~medium-term~~land ~~notes,~~parcel. ~~which~~During ~~were issued under~~ the ~~Operating Partnership’s~~three ~~2002~~months ~~medium-term~~ended ~~note program, $175.0~~March ~~million of medium-term notes~~31, ~~which were issued~~2008, ~~under~~ the Operating Partnership’s ~~2006~~recognized ~~medium-term~~development ~~note~~profits of ~~program and~~ approximately $~~112~~1.50 million ~~of 5.094% Notes Due~~as ~~2015,~~a ~~which~~result ~~were issued to Teachers Insurance and Annuity Association~~ of ~~America on July 11, 2005 in a private placement, in exchange for~~ the ~~cancelled $100.0 million~~sale of ~~notes that were issued in June 1998,~~two ~~resulting~~development inprojects, aaggregating ~~discount of~~ approximately ~~$12~~0.51 million~~. The~~ ~~unsecured~~square ~~senior debt securities are subject to various covenants~~feet. ~~Management believes that the Operating Partnership~~ ~~was in compliance with its financial covenants as of March 31, 2007.~~

AsDuring ofthe three months ended March 31, ~~2007~~2009, the Operating Partnership ~~had~~recognized development profits of approximately $8628.16 million, ~~outstanding~~as ~~in other debt which bore~~ a ~~weighted~~ ~~average~~result ~~interest rate~~ of ~~6.7%~~the ~~and~~contribution ~~had~~of ~~an average term~~one ofcompleted ~~5.2 years.~~development ~~Other~~project, ~~debt~~aggregating ~~includes a $65~~approximately 1.0 million ~~non-recourse~~ ~~credit~~square ~~facility~~feet, ~~obtained~~to by AMB ~~Partners~~Japan Fund III, L.P., During athe ~~subsidiary~~three ofmonths ended March 31, 2008, the Operating Partnership, ~~which~~recognized ~~had~~development aprofits of approximately $6516.08 million, ~~balance~~as ~~outstanding~~a asresult of ~~March 31~~the contribution of three completed development properties, aggregating approximately ~~2007~~1.1 million ~~The~~square ~~Operating~~feet, ~~Partnership~~to ~~also~~AMB ~~had~~Europe ~~$21.1~~Fund ~~million~~I, FCP-FIS ~~outstanding~~and inAMB ~~other~~Institutional ~~non-recourse~~Alliance ~~debt~~Fund III, L.P.

OnGains ~~June 1,~~from ~~2006,~~Sale ~~the~~or ~~Operating~~Contribution ~~Partnership~~of ~~entered~~Real ~~into~~Estate aInterests, ~~third~~Net. During ~~amended~~the ~~and~~three ~~restated~~months ~~$550.0 million~~ended ~~(includes Euros~~March 31, ~~Yen~~2009, orthe ~~U.S. Dollar~~Operating ~~denominated~~Partnership ~~borrowings)~~did ~~unsecured revolving~~not ~~credit~~contribute ~~agreement~~any ~~that replaced its then-existing~~operating ~~$500.0 million~~properties ~~credit~~to ~~facility,~~unconsolidated ~~which~~co-investment ~~was~~ventures. toDuring ~~mature on~~the ~~June 1,~~three ~~2007.~~months ~~The~~ended ~~Company~~March 31, is2008, ~~a guarantor of~~ the Operating Partnership’s ~~obligations~~contributed ~~under~~an ~~the~~operating ~~credit~~property ~~facility.~~for ~~The~~approximately ~~line~~$66.2 million, ~~which~~aggregating ~~matures~~approximately ~~on June~~0.8 1,million square ~~2010~~feet, ~~carries~~into aAMB ~~one-year extension~~Institutional ~~option~~Alliance ~~and~~Fund III, ~~can~~L.P. The beOperating ~~increased~~Partnership torecognized upa togain of $~~700~~20.0 million ~~upon~~on ~~certain~~the ~~conditions.~~contribution, ~~The~~representing ~~rate on~~ the portion ~~borrowings~~of isits ~~generally~~interest ~~LIBOR~~in ~~plus~~the acontributed ~~margin,~~property ~~based~~acquired onby the ~~Operating Partnership’s long~~third-~~term~~party ~~debt~~investors ~~rating,~~for ~~which was 42~~cash.~~5 basis~~ ~~points~~These asgains ofare ~~March 31,~~presented ~~2007, with an annual~~in ~~facility~~gains ~~fee~~from ofsale 15or ~~basis~~contribution ~~points.~~of ~~The~~real ~~four-year~~estate ~~credit facility includes a multi-currency component~~interests, ~~under which up to~~net, ~~$550.0 million~~in ~~can~~the beconsolidated ~~drawn~~statements inof Uoperations.~~S. Dollars,~~

Properties Held for Sale or Contribution, Net. As of March 31, 2009, the Operating Partnership held for sale 12 properties with an aggregate net book value of $177.4 million. These properties either are not in the Operating Partnership’s core markets, do not meet its current investment objectives, or are included as part of its development-for-sale or value-added conversion programs. The sales of the properties are subject to negotiation of acceptable terms and other customary conditions. Properties held for sale are stated at the lower of cost or estimated fair value less costs to sell. As of December 31, 2008, the Operating Partnership held for sale two properties with an aggregate net book value of $8.2 million.

As of March 31, 2009, the Operating Partnership held for contribution to co-investment ventures 21 properties with an aggregate net book value of $704.0 million, which, when contributed, will reduce the Operating Partnership’s average ownership interest in these projects from approximately 98% to an expected range of 15-20%. As of March 31, 2009, properties with an aggregate net book value of $82.1 million were reclassified from properties held for contribution to investments in real estate as a result of the change in management’s expectations

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~Euros,~~regarding ~~Yen~~the orlaunch ~~British~~of ~~Pounds~~an ~~Sterling.~~appropriate ~~The~~co-investment ~~Operating Partnership~~venture. ~~uses~~These ~~the~~properties ~~credit~~may ~~facility~~be ~~principally~~reclassified ~~for~~as ~~acquisitions,~~properties ~~funding~~held for ~~development~~contribution ~~activity~~at ~~and~~some ~~general~~future ~~working~~time. ~~capital~~In ~~requirements~~accordance with SFAS No. 144, Accounting for the Impairment or AsDisposal of Long-Lived Assets, as of March 31, ~~2007~~2009, the ~~there~~Operating ~~were~~Partnership norecognized ~~outstanding~~additional ~~borrowings~~depreciation expense and ~~the~~related ~~remaining~~accumulated ~~amount~~depreciation ~~available was~~ of $~~537~~3.52 million, ~~net of~~as ~~outstanding~~well ~~letters~~as ofimpairment ~~credit~~charges of $1255.58 million. ~~The credit~~on ~~agreement~~real ~~contains~~estate ~~affirmative~~assets ~~covenants,~~held ~~including compliance~~for ~~with~~sale ~~financial reporting requirements and maintenance~~or ofcontribution ~~specified~~for ~~financial~~which ~~ratios,~~it ~~and~~was ~~negative~~determined ~~covenants,~~that ~~including~~the carrying value ~~limitations~~was ongreater than the ~~incurrence~~estimated offair ~~liens~~value. ~~and~~As ~~limitations on~~of ~~mergers~~December 31, or2008, ~~consolidations.~~the ~~Management~~Operating ~~believes~~Partnership ~~that~~held ~~the~~for ~~Operating~~contribution ~~Partnership~~to ~~was~~co-investment inventures ~~compliance~~20 properties with ~~its financial~~an ~~covenants~~aggregate ~~under~~net ~~this~~book ~~credit~~value ~~agreement~~of ~~at March~~$600.8 ~~31, 2007~~million.

OnDiscontinued ~~June 23, 2006, AMB Japan Finance Y~~Operations.~~K.,~~ The ~~a subsidiary of~~Operating ~~the Operating~~ Partnership ~~and~~reports asits ~~the~~property ~~initial~~sales ~~borrower,~~as ~~entered~~discontinued ~~into~~operations anseparately ~~amended~~as ~~and~~prescribed ~~restated~~under ~~revolving~~the ~~credit~~provisions ~~agreement for a~~of 45SFAS No.0 ~~billion Yen unsecured revolving credit facility~~144, ~~which,~~ ~~using~~Accounting for the ~~exchange~~Impairment ~~rate in effect on March 31, 2007,~~or ~~equaled~~Disposal ~~approximately~~of ~~$381.9 million~~Long-Lived UAssets.~~S. dollars. This~~ ~~replaced~~During the ~~35.0 billion~~three ~~Yen~~months ~~unsecured revolving~~ended ~~credit facility executed on June 29, 2004, as previously amended, which using the exchange rate in effect on~~ March 31, ~~2007~~2009, ~~equaled approximately $297.0 million U.S. dollars. The Company and~~ the Operating Partnership ~~guarantee~~ ~~the~~sold ~~obligations of AMB Japan Finance Y.K. under the~~seven ~~credit~~industrial ~~facility,~~operating asproperties ~~well~~aggregating ~~as the obligations of any other entity~~approximately in0.7 million ~~which~~square ~~the~~feet ~~Operating~~for ~~Partnership directly or indirectly owns an ownership interest and which is selected from time to time to be~~ a ~~borrower~~sale ~~under~~price ~~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~~$58. ~~Generally~~4 million, ~~borrowers~~ ~~under~~with ~~the credit facility have the option to secure all or~~ a ~~portion~~resulting ofnet ~~the~~gain ~~borrowings under the credit facility~~of ~~with certain real estate assets or equity in entities holding such real estate assets~~$18. ~~The credit facility matures in June 2010 and has a one-year extension option~~9 million. ~~The~~During ~~credit~~the ~~facility can~~three bemonths ~~increased~~ended ~~to up to 55.0~~March ~~billion Yen~~31, ~~which, using~~ 2008, the ~~exchange~~Operating ~~rate~~Partnership inrecognized ~~effect~~a ondeferred ~~March 31,~~gain ~~2007, equaled~~of approximately $~~466~~1.84 million ~~U.S. dollars.~~on ~~The extension option is subject to~~ the ~~satisfaction~~sale of ~~certain~~one industrial ~~conditions~~building, ~~and~~aggregating ~~the~~approximately ~~payment of an extension fee equal to~~ 0.~~15%~~1 million ofsquare ~~the outstanding commitments under the facility at that time. The rate on the borrowings is generally TIBOR plus a margin~~feet, ~~which is~~for ~~based~~an onaggregate ~~the~~price ~~credit rating~~ of ~~the Operating Partnership’s long-term debt and was 42~~$3.5 ~~basis~~million, ~~points~~which was asdisposed of ~~March~~on December 31, 2007. In addition, ~~there~~during ~~is an annual facility fee, payable in quarterly amounts, which is based on~~ the ~~credit rating of the Operating Partnership’s long-term~~ ~~debt,~~three ~~and~~months ~~was~~ended ~~15 basis points of the outstanding commitments under the facility as of~~ March 31, ~~2007. As of March 31~~2008, ~~2007,~~ the ~~outstanding balance on this credit~~Operating ~~facility,~~Partnership ~~using~~recognized ~~the~~approximately ~~exchange rate in effect on March 31, 2007, was~~ $~~342~~0.53 million in ~~U.S. dollars. The credit~~gains ~~agreement~~resulting ~~contains~~primarily ~~affirmative~~from ~~covenants,~~the ~~including~~additional ~~financial reporting~~value ~~requirements~~received ~~and~~from ~~maintenance of specified financial ratios, and negative covenants, including limitations on~~ the ~~incurrence~~disposition of ~~liens~~properties ~~and~~in ~~limitations on mergers or consolidations~~2007. ~~Management~~These ~~believes~~gains ~~that~~are ~~the~~presented ~~Operating~~in ~~Partnership~~gains ~~and~~from ~~AMB~~sale ~~Japan~~of ~~Finance~~real ~~Y.K.~~estate ~~were~~interests, innet ~~compliance~~of ~~with~~taxes, as ~~their~~discontinued ~~financial~~operations ~~covenants~~in ~~under~~the ~~this~~consolidated ~~credit~~statements ~~agreement at~~of ~~March 31, 2007~~operations.

OnThe ~~June 13,~~following ~~2006,~~summarizes the ~~Operating~~condensed ~~Partnership~~results ~~and~~of ~~certain~~operations of ~~its consolidated subsidiaries entered into a fourth amended and restated credit agreement for a $250.0 million unsecured revolving credit facility, which replaced~~ the ~~third~~properties ~~amended~~held ~~and restated credit agreement~~ for asale ~~$250.0 million unsecured credit facility. On February 16, 2006, the third amended~~ and ~~restated~~sold credit agreement replaced the then-existing $100.0 million unsecured revolving credit facility that was to mature in June 2008. The Company and the Operating Partnership guarantee the obligations for such subsidiaries and other entities controlled by the Company or the Operating Partnership that are selected by the Operating Partnership from time to time to be borrowers under and pursuant to the credit facility. The four-year credit facility includes a multi-currency component under which up to $250.0 million can be drawn in U.S. (dollars, ~~Hong Kong dollars, Singapore dollars, Canadian dollars and Euros. The line, which matures~~ in ~~February~~ ~~2010 and carries a one-year extension option, can be~~thousands): increased to up to $350.0 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, based on the credit rating of the Operating Partnership’s senior unsecured long-term debt, which was 60 basis points as of March 31, 2007, with an annual facility fee based on the credit rating of the Operating Partnership’s senior unsecured long-term debt. 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 March 31, 2007, the outstanding balance on this credit facility was approximately


	For the Three Months
	Ended March 31,
	2009			2008

Rental revenues	$	5,962		$	5,319
Straight-line rents and amortization of lease intangibles		233			(114	)
Property operating expenses		(813	)		(607	)
Real estate taxes		(916	)		(738	)
Depreciation and amortization		(1,358	)		(704	)
Real estate impairment losses		(15,874	)		—
General and administrative		(13	)		(27	)
Other income and expenses, net		15			57
Interest, including amortization		95			(981	)

(Loss) income attributable to discontinued operations before noncontrolling interests		(12,669	)		2,205
Gains from sale of real estate interests, net of taxes, before noncontrolling interests		18,946			1,718

Discontinued operations		6,277			3,923
Noncontrolling interests:
Joint venture partners’ share of income attributable to discontinued operations		(143	)		(523	)
Joint venture partners’ share of gains from sale of real estate interests, net of taxes		—			(69	)

Income from discontinued operations, net of controlling interests	$	6,134		$	3,331

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~$132.3 million.~~As ~~The~~of ~~credit agreement contains affirmative covenants~~March 31, ~~including~~2009 ~~financial reporting requirements~~ and ~~maintenance~~ ~~of specified financial ratios by the Operating Partnership~~December 31, ~~and negative covenants~~2008, ~~including~~assets ~~limitations on~~and ~~the~~liabilities ~~incurrence~~attributable ofto ~~liens~~properties ~~and~~held ~~limitations~~for onsale ~~mergers or~~consisted ~~consolidations.~~of ~~Management believes that~~ the ~~Operating Partnership~~following ~~was~~(dollars in ~~compliance with its financial covenants under~~thousands): ~~this credit agreement at March 31, 2007.~~

On February 14, 2007, seven subsidiaries of AMB-SGP, L.P., a Delaware limited partnership, which is a subsidiary of the Operating Partnership, entered into a loan agreement for a $305 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 has a principal of $160 million and an interest rate that is fixed at 5.29%. The second is a $40 million note with an interest rate of 81 basis points above the one-month LIBOR rate, the third note has a principal of $84 million and a fixed interest rate of 5.90%, and the final note has a principal of $21 million and bears interest at a rate of 135 basis points above the one-month LIBOR rate.


	March 31,		December 31,
	2009		2008

Cash and cash equivalents	$	19,059	$	—
Accounts receivable, deferred financing costs and other assets	$	5,265	$	83
Secured debt	$	16,566	$	1,923
Accounts payable and other liabilities	$	3,738	$	(489	)

As6. ~~of March 31, 2007, the scheduled maturities of the Operating Partnership’s total debt, excluding unamortized secured debt premiums and discounts, were as follows (dollars in thousands):~~ Debt

	Operating		Consolidated
	Partnership		Joint Venture		Unsecured
	Secured		Secured		Senior Debt		Credit		Other
	Debt		Debt		Securities		Facilities		Debt		Total
2007	$	12,396	$	45,300	$	55,000	$	—	$	14,215	$	126,911
2008		92,239		73,504		175,000		—		810		341,553
2009		6,234		118,813		100,000		—		873		225,920
2010		72,026		116,182		250,000		474,849		941		913,998
2011		6,335		190,622		75,000		—		1,014		272,971
2012		8,369		449,198		—		—		1,093		458,660
2013		42,682		59,714		175,000		—		65,920		343,316
2014		245,273		4,076		—		—		616		249,965
2015		2,199		18,780		112,491		—		664		134,134
2016		4,804		54,995		—		—		—		59,799
Thereafter		—		19,091		125,000		—		—		144,091
Total	$	492,557	$	1,150,275	$	1,067,491	$	474,849	$	86,146	$	3,271,318

As of March 31, 2009 and December 31, 2008, debt consisted of the following (dollars in thousands):

7. Minority Interests in Consolidated Joint Ventures and Preferred Units


	March 31,			December 31,
	2008			2007

Wholly-owned secured debt, varying interest rates from 0.8% to 9.0%, due July 2009 to November 2015 (weighted average interest rates of 3.8% and 3.7% at March 31, 2009 and December 31, 2008, respectively)	$	596,932		$	715,640
Consolidated joint venture secured debt, varying interest rates from 1.3% to 9.4%, due June 2009 to November 2022 (weighted average interest rates of 5.2% and 4.8% at March 31, 2009 and December 31, 2008, respectively)		809,673			808,119
Unsecured senior debt securities, varying interest rates from 5.1% to 8.0%, due November 2010 to June 2018 (weighted average interest rates of 6.3% and 6.0% at March 31, 2009 and December 31, 2008, respectively)		1,062,491			1,162,491
Other debt, varying interest rates from 3.4% to 7.5%, due November 2009 to November 2015 (weighted average interest rates of 3.9% and 3.9% at March 31, 2009 and December 31, 2008, respectively)		392,613			392,838
Unsecured credit facilities, variable interest rate, due June 2010 and July 2011 (weighted average interest rates of 1.1% and 2.2% at March 31, 2009 and December 31, 2008, respectively)		380,663			920,850

Total debt before unamortized net discounts		3,242,372			3,999,938
Unamortized net discounts		(9,658	)		(9,753	)

Total consolidated debt	$	3,232,714		$	3,990,185

~~Minority interests in the Operating Partnership represent the~~ ~~limited partnership interests in AMB Property II, L.P., a~~Wholly-owned ~~Delaware limited partnership,~~ and ~~interests~~Consolidated ~~held~~Joint byVenture ~~certain third~~Secured ~~parties in several real estate joint ventures, aggregating~~Debt approximately 35.9 million square feet, which are consolidated for financial reporting purposes. Such investments are consolidated because the Operating Partnership exercises significant rights over major operating decisions such as approval of budgets, selection of property managers, asset management, investment activity and changes in financing. These joint venture investments do not meet the variable interest entity criteria under FASB Interpretation No. 46R, Consolidation of Variable Interest Entities.

~~Effective~~Secured ~~October 1,~~debt ~~2006,~~generally requires monthly principal and interest payments. Some of the ~~Operating~~loans ~~Partnership~~are cross-collateralized by multiple ~~deconsolidated~~properties. ~~AMB~~The ~~Institutional~~secured ~~Alliance~~debt ~~Fund~~is collateralized by deeds of trust or mortgages on certain properties and is generally non-recourse. As of March ~~III~~31, ~~L.P.~~2009 and December 31, an2008, ~~open-ended~~the ~~co-~~total gross investment ~~partnership~~book ~~formed~~value inof ~~2004~~those ~~with~~properties ~~institutional~~securing ~~investors~~the debt was $2.0 billion, onincluding $1.4 billion aheld ~~prospective~~in ~~basis,~~consolidated ~~due~~joint toventures ~~the~~for each ~~re-evaluation~~period. As of ~~the~~March 31, ~~Operating~~2009, ~~Partnership’s~~$937.0 million ~~accounting~~of ~~for~~the ~~its~~secured ~~investment~~debt inobligations ~~the~~bore ~~fund~~interest inat ~~light~~fixed rates with a weighted average interest rate of ~~changes~~5.8% towhile the remaining ~~partnership~~$469.6 million ~~agreement~~bore ~~regarding~~interest ~~the~~at ~~general~~variable ~~partner’s~~rates (with a ~~rights~~weighted ~~effective~~average ~~October~~interest rate of 2.2%). As of March 131, 2009, ~~2006~~$654.9 million of the secured debt was held by the Operating Partnership’s co-investment ventures.

~~The~~On September 4, 2008, the Operating Partnership ~~enters~~ entered into ~~co-investment~~a ~~joint~~$230.0 million secured term loan credit agreement ~~ventures~~that ~~with~~matures ~~institutional~~on ~~investors~~September 4, 2010 and had a fixed interest rate of 4.0% at March 31, 2009. The ~~Operating~~Company is a guarantor of the Operating Partnership’s ~~co-investment~~obligations ~~joint~~under ~~ventures~~the ~~are~~term loan ~~engaged~~facility. inThe term loan facility carries a one-year ~~the~~extension ~~acquisition~~option, ~~ownership,~~which ~~operation,~~the ~~management~~Operating ~~and,~~Partnership may exercise at its sole option so long as the Operating

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

inPartnership’s ~~some~~long-term ~~cases,~~debt ~~the~~rating ~~renovation~~is investment grade, among ~~expansion~~other things, and ~~development~~can ofbe increased up to ~~industrial~~$300.0 million ~~buildings~~upon incertain ~~target~~conditions. ~~markets~~If inthe ~~North~~Operating Partnership’s ~~America~~long-term debt ratings fall below current levels, the Operating Partnership’s cost of debt will increase.

~~The Operating Partnership’s consolidated co-investment~~ ~~joint ventures’ total investment and property debt at~~Unsecured ~~March 31,~~Senior ~~2007 and December 31, 2006 (dollars in~~Debt ~~thousands) were:~~

		Operating			Total Investment
		Partnership’s			in Real Estate(1)				Property Debt(2)				Other Debt
		Ownership			March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
Co-investment Joint Venture	Joint Venture Partner	Percentage			2007		2006		2007		2006		2007		2006
AMB/Erie, L.P.	Erie Insurance Company and affiliates		50	%	$	52,643	$	52,942	$	20,459	$	20,605	$	—	$	—
AMB Partners II, L.P.	City and County of San Francisco Employees’ Retirement System		20	%		683,952		679,138		322,094		323,532		65,000		65,000
AMB-SGP, L.P.	Industrial JV Pte Ltd(3)		50	%		445,718		444,990		350,073		235,480		—		—
AMB Institutional Alliance Fund II, L.P.	AMB Institutional Alliance REIT II, Inc.(4)		20	%		521,314		519,534		242,050		243,263		—		—
AMB-AMS, L.P.(5)	PMT, SPW and TNO(6)		39	%		153,990		153,563		84,558		78,904		—		—
Total					$	1,857,617	$	1,850,167	$	1,019,234	$	901,784	$	65,000	$	65,000

As of March 31, 2009, the Operating Partnership had outstanding an aggregate of $1.1 billion in unsecured senior debt securities, which bore a weighted average interest rate of 6.3% and had an average term of 4.3 years. In May 2008, the Operating Partnership sold $325.0 million aggregate principal amount of senior unsecured notes under its Series C medium-term note program. The Company guarantees the Operating Partnership’s obligations with respect to its 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. Management believes that the Operating Partnership was in compliance with its financial covenants at March 31, 2009.

(1)		The Operating Partnership also had other consolidated joint ventures with total investments in real estate of $585.9 million as of March 31, 2007.
(2)		The Operating Partnership also had other consolidated joint ventures with property debt of $135.1 million as of March 31, 2007.
(3)		A subsidiary of GIC Real Estate Pte. Ltd., the real estate investment subsidiary of the Government of Singapore Investment Corporation.
(4)		Comprised of 14 institutional investors as stockholders and one third-party limited partner as of March 31, 2007.
(5)		AMB-AMS, L.P. is a co-investment partnership with three Dutch pension funds.
(6)		PMT is Stichting Pensioenfonds Metaal en Techniek, SPW is Stichting Pensioenfonds voor de Woningcorporaties and TNO is Stichting Pensioenfonds TNO.

Other Debt

~~The~~As ~~following~~of ~~table~~March 31, ~~details~~2009, the ~~minority~~Operating ~~interests~~Partnership ashad $392.6 million outstanding in other debt which bore a weighted average interest rate of 3.9% and had an average term ~~March~~of 1.8 31years. Other debt also includes a $70.0 million credit facility obtained on August 24, 2007 ~~and~~by ~~December~~AMB Institutional Alliance Fund II, L.P., a subsidiary of the Operating Partnership, which had a $50.0 million balance outstanding as of March 31, ~~2006~~2009. ~~(dollars~~Of the remaining $342.6 million outstanding in other debt, ~~thousands):~~$325.0 million is related to the loan facility described below.

	March 31,		December 31,		Redemption/Callable
	2007		2006		Date
Joint Venture Partners	$	506,611	$	555,201		N/A
Held through AMB Property II, L.P.:
Class B Limited Partners		30,435		27,281		N/A
Series D preferred units (liquidation preference of $79,767)		77,678		77,684		February 2012
Series I preferred units (liquidation preference of $25,500)		24,799		24,799		March 2006
Total minority interests	$	639,523	$	684,965

In March 2008, the Operating Partnership obtained a $325.0 million unsecured term loan facility, which had a balance of $325.0 million outstanding as of March 31, 2009, with an interest rate of 3.5%. In February 2008, the Operating Partnership 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, the Operating Partnership 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. The Company guarantees the Operating Partnership’s obligations with respect to its 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. Management believes that the Operating Partnership was in compliance with its financial covenants under this loan facility at March 31, 2009.

Unsecured Credit Facilities

The Operating Partnership has a $550.0 million (includes Euros, Yen, British pounds sterling or U.S. dollar denominated borrowings) unsecured revolving credit facility that matures on June 1, 2010. The Company is a guarantor of the Operating Partnership’s obligations under the credit facility. The line carries a one-year extension option, which the Operating Partnership may exercise at its sole option so long as the Operating Partnership’s long-term debt rating is investment grade, among other things, and the facility can be increased 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 March 31, 2009, based on the Operating Partnership’s long-term debt rating, with an annual facility fee of 15.0 basis points. If the Operating Partnership’s long-term debt ratings fall below current levels, the Operating Partnership’s cost of debt will increase. If the Operating Partnership’s long-term debt ratings fall below investment grade, the Operating Partnership 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. The Operating Partnership uses the credit facility principally for acquisitions, funding development activity and general working capital requirements. As of

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~The~~March 31, ~~following~~2009, ~~table~~there ~~distinguishes~~was no outstanding balance on this credit facility and the ~~minority~~remaining ~~interests’~~amount available was ~~share~~$533.5 million, net of ~~income~~outstanding letters of credit of $16.5 million, ~~including~~using ~~minority~~the ~~interests’~~exchange ~~share~~rate ofin effect on ~~development~~March 31, ~~profits~~2009. The credit agreement contains affirmative covenants, ~~but~~including ~~excluding~~compliance ~~minority~~with ~~interests’~~financial reporting ~~share~~requirements and maintenance of ~~discontinued~~specified ~~operations~~financial ~~for~~ratios, and negative covenants, including limitations on the ~~three~~incurrence ~~months~~of liens ~~ended~~and limitations on mergers or consolidations. Management ~~March 31,~~believes ~~2007~~that ~~and~~the ~~2006~~Operating ~~(dollars~~Partnership was in ~~thousands):~~compliance with its financial covenants under this credit agreement at March 31, 2009.

	For the Three Months
	Ended March 31,
	2007		2006
Joint Venture Partners’ share of income	$	7,193	$	8,539
Joint Venture Partners’ share of development profits		12		—
Held through AMB Property II, L.P.:
Class B common limited partnership units		133		26
Series D preferred units (liquidation preference of $79,767)		1,599		1,545
Series E preferred units (repurchased in June 2006)		—		214
Series F preferred units (repurchased in September 2006)		—		200
Series H preferred units (repurchased in March 2006)		—		815
Series I preferred units (liquidation preference of $25,500)		510		510
Series N preferred units (repurchased in January 2006)		—		127
Total minority interests’ share of income	$	9,447	$	11,976

AMB Japan Finance Y.K., a subsidiary of the Operating Partnership, 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 March 31, 2009, equaled approximately $555.7 million U.S. dollars and bore a weighted average interest rate of 1.03%. The Company and the Operating Partnership guarantee the obligations of AMB Japan Finance Y.K. under the credit facility, as well as the obligations of any other entity in which the Operating Partnership directly or indirectly owns 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 the Operating Partnership may exercise at its sole option so long as the Operating Partnership’s 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 March 31, 2009, based on the credit rating of the Operating Partnership’s long-term debt. If the Operating Partnership’s long-term debt ratings fall below current levels, the Operating Partnership’s cost of debt will increase. In addition, there is an annual facility fee, payable quarterly, which is based on the credit rating of the Operating Partnership’s long-term debt, and was 15.0 basis points of the outstanding commitments under the facility as of March 31, 2009. As of March 31, 2009, the outstanding balance on this credit facility, using the exchange rate in effect on March 31, 2009, was $265.9 million, and the remaining amount available was $289.8 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. Management believes that the Operating Partnership and AMB Japan Finance Y.K. were in compliance with their financial covenants under this credit agreement at March 31, 2009.

~~The~~On ~~Operating~~July 16, ~~Partnership~~2007, ~~has~~certain ~~consolidated~~wholly-owned ~~joint~~subsidiaries ~~ventures~~and ~~that~~the ~~have~~Operating ~~finite~~Partnership, ~~lives~~each ~~under~~acting ~~the~~as ~~terms~~a ofborrower, ~~the~~and ~~partnership agreements.~~the AsCompany ofand ~~March 31,~~the ~~2007~~Operating ~~and December 31~~Partnership, ~~2006~~as guarantors, ~~the~~entered ~~aggregate~~into ~~book~~a ~~value~~fifth ofamended ~~the~~and ~~minority~~restated ~~interests~~revolving incredit ~~the~~agreement for ~~accompanying~~a ~~consolidated~~$500.0 million ~~balance~~unsecured ~~sheets~~revolving ~~was~~credit ~~approximately~~facility that replaced the existing $~~506~~250.60 million ~~and~~unsecured ~~$555~~revolving credit facility.~~2 million,~~ ~~respectively,~~The fifth amended and restated credit facility amends the ~~Operating~~fourth ~~Partnership~~amended ~~believes~~and ~~that~~restated ~~the~~credit ~~aggregate~~facility ~~settlement~~to, among ~~value~~other ofthings, ~~these~~increase ~~interests~~the ~~was~~facility ~~approximately~~amount to $1500.0 ~~billion~~million ~~and~~with an option to further increase the facility to $1750.0 ~~billion~~million, ~~respectively.~~to ~~However,~~extend ~~there~~the ~~can~~maturity bedate noto ~~assurance~~July ~~that~~2011 ~~the~~and ~~aggregate~~to ~~settlement~~allow ~~value~~for ofborrowing ~~the~~in ~~interests~~Indian rupees. The ~~will~~Company beand asthe ~~such.~~Operating ~~The~~Partnership ~~aggregate~~guarantee ~~settlement~~the ~~value~~obligations for issuch ~~based~~subsidiaries onand other entities controlled by the ~~estimated~~Operating ~~liquidation~~Partnership ~~values~~that ofare selected by the ~~assets~~Operating Partnership ~~and~~from ~~liabilities~~time to time to be borrowers under and pursuant ~~the~~to ~~resulting~~their ~~proceeds~~credit ~~that~~facility. ~~the~~Generally, ~~Operating~~borrowers ~~Partnership~~under ~~would~~the credit ~~distribute~~facility have the option to ~~its~~secure ~~joint~~all ~~venture~~or ~~partners~~a ~~upon~~portion ~~dissolution,~~of asthe ~~required~~borrowings under the ~~terms~~credit offacility. ~~the~~The ~~respective~~credit ~~joint~~facility includes ~~venture~~a multi-currency component under which up to ~~agreements~~$500.0 million ~~There~~ can be nodrawn ~~assurance~~in ~~that~~U.S. dollars, ~~the~~Hong ~~estimated~~Kong ~~liquidation~~dollars, ~~values~~Singapore ofdollars, ~~the~~Canadian ~~assets~~dollars, ~~and~~British ~~liabilities~~pounds sterling, and Euros with the ~~resulting~~ ~~proceeds~~ability ~~that~~to ~~the~~add ~~Operating~~Indian ~~Partnership~~rupees. ~~distributes~~The ~~upon~~line, ~~dissolution~~which ~~will~~matures bein ~~the~~July ~~same~~2011, ascarries ~~the~~a ~~actual~~one-year ~~liquidation~~extension ~~values~~option, ofwhich ~~such~~the ~~assets,~~Operating ~~liabilities~~Partnership ~~and~~may ~~proceeds~~exercise ~~distributed~~at ~~upon~~its sole ~~dissolution.~~option ~~Subsequent~~so ~~changes~~long toas the ~~estimated~~Operating ~~fair~~Partnership’s ~~values of~~long-term ~~the~~debt ~~assets~~rating ~~and~~is ~~liabilities~~investment ofgrade, ~~the~~among ~~consolidated~~other ~~joint~~things, ~~ventures~~and can be ~~will~~increased ~~affect~~up to $750.0 million upon certain conditions and the ~~Operating~~payment ~~Partnership’s~~of ~~estimate~~an extension fee equal to 0.15% of the ~~aggregate~~outstanding ~~settlement value~~commitments. The ~~joint~~rate ~~venture~~on ~~agreements~~the doborrowings ~~not~~is generally ~~limit~~LIBOR ~~the~~plus ~~amount~~a tomargin, which ~~the~~was ~~minority~~60.0 basis ~~joint~~points ~~venture~~as ~~partners~~of ~~would~~March 31, be2009, ~~entitled~~based inon the ~~event~~credit ofrating ~~liquidation~~ of the ~~assets~~Operating Partnership’s ~~and~~senior unsecured long-term debt, with an ~~liabilities~~annual ~~and~~facility ~~dissolution~~fee based on the credit rating of the ~~respective~~Operating Partnership’s ~~joint~~senior ~~ventures.~~unsecured long-term

On January 29, 2007, the 7.75% Series D Cumulative Redeemable Preferred 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.

Effective January 27, 2006, Robert Pattillo Properties, Inc. exercised its rights under its Put Agreement, dated September 24, 2004, with the Operating Partnership, and sold all 729,582 of its 5.00% Series N Cumulative Redeemable Preferred Limited Partnership Units in one of the Operating Partnership’s subsidiaries, AMB Property II, L.P., to the Operating Partnership for an aggregate price of $36.6 million, including accrued and unpaid distributions. Also on January 27, 2006, AMB Property II, L.P. repurchased all of the 5.00% Series N Cumulative Redeemable Preferred Limited Partnership Units from the Operating Partnership for an aggregate price of $36.6 million and cancelled all of the outstanding series N preferred units as of such date.

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Ondebt. ~~March 21,~~If ~~2006,~~the ~~AMB~~Operating ~~Property II,~~Partnership’s ~~L.P.,~~long-term ~~repurchased~~debt ratings ~~all~~fall ~~840~~below current levels,~~000~~ the Operating Partnership’s cost of ~~its~~debt ~~outstanding~~will 8increase.~~125%~~ ~~Series H~~If ~~Cumulative~~the Operating Partnership’s ~~Redeemable~~long-term ~~Preferred~~debt ~~Limited~~ratings fall below investment grade, the Operating Partnership ~~Units~~will be unable to request borrowings in any currency other than U.S. dollars. The borrowers intend to use the proceeds from athe ~~single~~facility to fund the acquisition ~~institutional~~and ~~investor~~development ~~for~~of anproperties ~~aggregate~~and ~~price~~general working capital requirements. As of March 31, 2009, the outstanding balance on this credit facility, using the exchange rates in effect at March 31, 2009, was approximately $42114.8 million, ~~including~~with a ~~accrued~~weighted average interest rate of 1.32%, and ~~unpaid~~the ~~distributions~~remaining amount available was $385.2 million. The credit agreement Incontains ~~addition~~affirmative covenants, including financial reporting requirements and maintenance of specified financial ratios by the Operating Partnership, ~~recognized~~and anegative ~~reduction~~covenants, ofincluding ~~income~~limitations ~~available~~on tothe ~~common~~incurrence ~~unitholders~~ of ~~$1.1 million~~liens ~~for~~and limitations on mergers or consolidations. Management believes that the Operating ~~related~~Partnership ~~original~~was ~~issuance~~in ~~costs~~compliance with its financial covenants under this credit agreement at March 31, 2009.

OnAs ~~June 30,~~a ~~2006,~~result ~~AMB~~of ~~Property II,~~the ~~L.P.,~~current ~~repurchased all~~market ~~220~~conditions,~~440~~ ofthe ~~its~~cost ~~outstanding 7.75% Series E Cumulative~~and ~~Redeemable~~availability ~~Preferred~~of ~~Limited~~credit ~~Partnership~~has ~~Units~~been ~~from~~and amay ~~single institutional~~continue ~~investor~~to ~~for~~be ~~an aggregate price of~~adversely ~~$10.9 million,~~affected ~~including~~by ~~accrued~~illiquid credit markets and ~~unpaid~~wider ~~distributions~~credit spreads. As Inof ~~addition~~March 31, 2009, the Operating Partnership’s ~~recognized an increase in~~total ~~income~~consolidated ~~available~~debt tomaturities ~~common~~for ~~unitholders~~2009 ofwere $0238.13 million ~~for the discount on repurchase, net of original issuance costs~~.

OnIf ~~September 21,~~the ~~2006,~~Operating ~~AMB~~Partnership ~~Property II,~~is ~~L.P.~~unable to refinance or extend principal payments due at maturity or pay them with proceeds from other capital transactions, then its cash flow may be ~~repurchased~~insufficient to pay distributions to its unitholders in all years ~~201~~and to repay debt upon maturity. Furthermore,~~139~~ if prevailing interest rates or other factors at the time of refinancing ~~its~~(such ~~outstanding~~as ~~7.95%~~the ~~Series F~~reluctance of lenders to make ~~Cumulative~~commercial ~~Redeemable~~real ~~Preferred~~estate ~~Limited~~loans) ~~Partnership~~result ~~Units~~in ~~from~~higher ainterest rates ~~single~~upon ~~institutional~~refinancing, ~~investor~~then ~~for~~the aninterest ~~aggregate~~expense ~~price~~relating ofto that ~~$10~~refinanced indebtedness would increase.~~0 million~~ This increased interest expense would adversely affect the Operating Partnership’s financial condition, ~~including~~results ~~accrued~~of operations, cash flow and ability ~~unpaid~~to make distributions to its unitholders and payments to its noteholders.

8 As of March 31, 2009, the Operating Partnership had $263.0 million ~~Investments~~in cash and cash equivalents, held in accounts ~~Unconsolidated~~managed ~~Joint~~by ~~Ventures~~third party financial institutions, consisting of invested cash and cash in the Operating Partnership’s operating accounts. In addition, the Operating Partnership had $1.2 billion available for future borrowings under its three multicurrency lines of credit at March 31, 2009. In the event that the Operating Partnership does not have sufficient cash available to it through its operations or under its lines of credit to continue operating its business as usual, the Operating Partnership may need to find alternative ways to increase its liquidity. Such alternatives may include, without limitation, divesting the Operating Partnership of properties; issuing and selling the Operating Partnership’s debt and equity in public or private transactions; entering into leases with the Operating Partnership’s customers at lower rental rates or less than optimal terms; or entering into lease renewals with its existing customers without an increase in rental rates at turnover.

~~The~~If the long-term debt ratings of the Operating Partnership fall below current levels, the borrowing cost of debt under the Operating Partnership’s ~~unconsolidated~~unsecured ~~joint~~credit facilities and ~~ventures’~~certain ~~net~~term ~~equity~~loans ~~investments~~may atincrease. ~~March 31~~In addition, ~~2007~~if ~~and~~the long-term ~~December 31~~debt ratings of the Operating Partnership fall below investment grade, ~~2006~~the (Operating Partnership 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 the Operating Partnership’s ability to fully draw down under the credit facilities or term loans. While the Operating Partnership currently does not expect the Operating Partnership’s long-term debt ratings to fall below investment grade, in ~~thousands~~the event that its ratings do fall below those levels, the Operating Partnership will be unable to exercise its unilateral options to extend the term of its credit facilities or its $230.0 million secured term loan credit agreement (and its borrowing costs may increase), ~~were:~~and the loss of its ability to borrow in currencies other than U.S. dollars or Japanese Yen could affect its ability to optimally hedge its borrowings against foreign currency exchange rate changes.

							Operating
							Partnership’s
	Square		March 31,		December 31,		Ownership
Unconsolidated Joint Ventures	Feet		2007		2006		Percentage
Co-Investment Joint Ventures
AMB-SGP Mexico, LLC(1)		3,050,915	$	8,495	$	7,601		20	%
AMB Japan Fund I, L.P.(2)		3,951,904		32,184		31,811		20	%
AMB Institutional Alliance Fund III, L.P.(3)		15,746,793		135,914		136,971		21	%
AMB DFS Fund I, LLC(4)		—		16,622		11,700		15	%
Other Industrial Operating Joint Ventures		7,684,931		48,569		47,955		53	%
Other Investment — G. Accion(5)		n/a		37,638		38,343		39	%
Total Unconsolidated Joint Ventures		30,434,543	$	279,422	$	274,381

(1)		AMB-SGP Mexico, LLC, is a co-investment partnership 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. Includes $9.3 million of shareholder loans outstanding at March 31, 2007 between the Operating Partnership and the co-investment partnership.
(2)		AMB Japan Fund I, L.P. is a co-investment partnership formed in 2005 with institutional investors.
(3)		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 REIT. Prior to October 1, 2006, the Operating Partnership accounted for AMB Institutional Alliance Fund III, L.P. as a consolidated joint venture.
(4)		AMB DFS Fund I, LLC is a co-investment partnership formed in 2006 with a subsidiary of GE Real Estate to build and sell properties.
(5)		The Operating Partnership has a 39% unconsolidated equity interest in G.Accion, a Mexican real estate company. G.Accion provides management and development services for industrial, retail, residential and office properties in Mexico.

On December 30, 2004, the Operating Partnership formed AMB-SGP Mexico, LLC, a joint 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 the Operating Partnership retained an approximate

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~20%~~As ~~interest.~~of ~~For the three months ended~~ March 31, ~~2007~~2009, ~~the~~ ~~Operating Partnership recognized a gain of approximately $0.1 million from~~ the ~~contribution~~scheduled ofmaturities ~~one approximately~~and ~~0.1 million~~principal ~~square~~payments ~~foot operating property for $4.6 million. This gain is presented in gains from disposition~~ of ~~real estate interests, net, on consolidated statements of operations. In addition,~~ the Operating Partnership ~~recognized~~’s ~~development profits from the contribution of one~~total ~~completed~~debt ~~development~~were ~~project~~as ~~aggregating~~follows ~~approximately 0.2 million~~(dollars ~~square~~in ~~feet with a contribution value of~~thousands): ~~$14.2 million.~~

On June 30, 2005, the Operating Partnership formed AMB Japan Fund I, L.P., a joint venture with 13 institutional investors, in which the Operating Partnership retained an approximate 20% interest. The 13 institutional investors have committed 49.5 billion Yen (approximately $420.1 million in U.S. dollars, using the exchange rate at March 31, 2007) for an approximate 80% equity interest.


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

2009	$	—		$	—	$	12,366	$	129,508		$	96,379		$	—	$	238,253
2010		250,000			265,862		325,941		414,582			120,161			—		1,376,546
2011		75,000			114,801		1,014		15,022			82,499			—		288,336
2012		—			—		1,093		2,670			388,383			50,000		442,146
2013		500,000			—		919		18,474			42,303			—		561,696
2014		—			—		616		405			6,481			—		7,502
2015		112,491			—		664		16,271			17,611			—		147,037
2016		—			—		—		—			16,231			—		16,231
2017		—			—		—		—			1,272			—		1,272
2018		125,000			—		—		—			1,455			—		126,455
Thereafter		—			—		—		—			36,898			—		36,898

Subtotal	$	1,062,491		$	380,663	$	342,613	$	596,932		$	809,673		$	50,000	$	3,242,372
Unamortized net discount		(8,241	)		—		—		(1,315	)		(102	)		—		(9,658	)

Total	$	1,054,250		$	380,663	$	342,613	$	595,617		$	809,571		$	50,000	$	3,232,714

~~Effective October~~ (1,) ~~2006,~~Represents ~~the~~three ~~Operating~~credit ~~Partnership deconsolidated~~facilities ~~AMB~~with ~~Institutional~~total ~~Alliance~~capacity ~~Fund III,~~of Lapproximately $1.P6 billion.~~, an~~ ~~open-ended~~Includes ~~co-investment~~$265.9 ~~partnership formed in 2004 with institutional investors~~million, on$87.3 amillion ~~prospective~~and ~~basis,~~$27.5 ~~due~~million ~~to the re-evaluation of the Operating Partnership’s accounting for its investment~~ in ~~the~~Yen, ~~fund~~Canadian indollar ~~light~~and ofSingapore ~~changes~~dollar-based toborrowings ~~the partnership~~outstanding ~~agreement~~at ~~regarding~~March ~~its rights as the general partner effective October 1~~31, ~~2006. For the three months ended March 31~~2009, ~~2007~~respectively, ~~the~~translated ~~Operating Partnership contributed~~ to ~~such~~U.S. ~~joint~~dollars ~~venture,~~using ~~one~~the ~~completed~~foreign ~~development~~exchange ~~project, aggregating~~rates ~~approximately~~in ~~0.3 million~~effect ~~square~~on ~~feet~~March ~~for approximately~~31, ~~$41~~2009.~~8 million.~~

On October 17, 2006, the Operating Partnership formed AMB DFS Fund I, LLC, a merchant development joint venture with GE Real Estate (“GE”), in which the Operating Partnership retained an approximate 15% interest7. ~~The~~Noncontrolling joint venture is expected to have total investment capacity of approximately $500.0 million to pursue development-for-sale opportunities primarily in U.S. markets other than those the Operating Partnership identifies as its target markets. GE and the Operating Partnership have committed $425.0 million and $75.0 million of equity, respectively. For the three months ended March 31, 2007, the Operating Partnership recognized development profits from the contribution to this fund of approximately 82 acres of land with a contribution value of approximately $30.3 million. Interests

AsNoncontrolling ainterests ~~result~~in ofthe Operating Partnership represent the ~~contribution~~limited ofpartnership ~~two~~interests ~~completed~~in ~~development~~AMB Property II, L.P., a ~~projects~~Delaware limited partnership, and interests held by certain third parties in several real estate joint ventures, aggregating approximately 8221.9 ~~acres~~million square feet, which are consolidated for financial reporting purposes. The Operating Partnership determines consolidation based on standards set forth in FASB Interpretation No. 46(R), Consolidation of Variable ~~land~~Interest toEntities — ~~AMB~~An Interpretation of ARB No. 51 (FIN 46), or EITF Issue No. 04-~~SGP~~5 ~~Mexico~~(EITF 04-5), Determining ~~LLC~~Whether a General Partner, ~~AMB~~or ~~Institutional~~the ~~Alliance~~General Partners ~~Fund III~~as a Group, ~~L.P.~~Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights, and ~~AMB~~SOP 78-9, Accounting ~~DFS~~for ~~Fund~~Investments in Real Estate Ventures. Based on the guidance set forth in EITF I04-5, the ~~LLC~~Operating Partnership consolidates certain joint venture investments because it exercises significant control over major operating decisions, ~~the~~such as approval of budgets, selection of property managers, asset management, investment activity and changes in financing. The Operating Partnership ~~recognized~~is the general ~~development~~partner ~~profits~~(or equivalent of ~~approximately~~a $8general partner in entities not structured as partnerships) in a number of its consolidated joint venture investments.~~9 million~~ In all such cases, the limited ~~representing~~partners ~~the~~in ~~portion~~such investments (or equivalent of ~~the~~limited partners in such investments which are not structured as partnerships) do not have rights described in EITF 04-5, which would preclude consolidation. The Operating Partnership’s ~~interest~~consolidates incertain ~~the~~other ~~contributed~~joint ~~properties~~ventures ~~acquired~~where byit is not the general ~~third~~partner (or equivalent of a general partner in entities ~~party~~not ~~investors~~structured ~~for~~as ~~cash.~~partnerships) because it has control over those entities through majority ownership, retention of the majority of economics, and a combination of substantive kick-out rights and/or

Under the agreements governing the joint ventures, the Operating Partnership and the other parties to the joint ventures may be required to make additional capital contributions and, subject to certain limitations, the joint ventures may incur additional debt.

The Operating Partnership also has a 0.1% unconsolidated equity interest (with an approximate 33% economic interest) in AMB Pier One, LLC, a joint venture related to the 2000 redevelopment of the pier which houses the Operating Partnership’s office space in San Francisco, California. The investment is not consolidated because the Operating Partnership does not exercise control over major operating decisions such as approval of budgets, selection of property managers, investment activity and changes in financing. The Operating Partnership has an option to purchase the remaining equity interest beginning January 1, 2007 and expiring December 31, 2009, based on the fair market value as stipulated in the joint venture agreement. As of March 31, 2007, the Operating Partnership also had an approximate 39.0% unconsolidated equity interest in G.Accion, a Mexican real estate company. G.Accion provides management and development services for industrial, retail, residential and office properties in Mexico. In addition, as of March 31, 2007, a subsidiary of the Operating Partnership also had an approximate 5% interest in IAT Air Cargo Facilities Income Fund (IAT), a Canadian income trust specializing in aviation-related real estate at Canada’s leading international airports. This equity investment of approximately $3.4 million and $2.7 million, respectively, is included in other assets on the consolidated balance sheets as of March 31, 2007 and December 31, 2006.

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

9 substantive participating rights. ~~Partners’~~For ~~Capital~~joint ventures under EITF 04-5 where the Operating Partnership does not exercise significant control over major operating and management decisions, but where it exercises significant influence, the Operating Partnership uses the equity method of accounting and does not consolidate the joint venture for financial reporting purposes. In such unconsolidated joint ventures, either the Operating Partnership is not the general partner (or general partner equivalent) and does not hold sufficient capital or any rights that would require consolidation or, alternatively, the Operating Partnership is the general partner (or the general partner equivalent) and the other partners (or equivalent) hold substantive participating rights that override the presumption of control. These joint venture investments do not meet the variable interest entity criteria under FIN 46.

~~Holders~~The ~~of common limited partnership units of the~~ Operating ~~Partnership~~ and class B common limited partnership units of AMB Property II, L.P. have the right, commencing generally on or after the first anniversary of the holder becoming a limited partner of the Operating Partnership or AMB Property II, L.P., as applicable (or such other date agreed to by the Operating Partnership or AMB Property II, L.P. and the applicable unit holders), to require the Operating Partnership or AMB Property II, L.P., as applicable, to redeem part or all of their common units or class B common limited partnership units, as applicable, for cash (based upon the fair market value, as defined in the applicable partnership agreement, of an equivalent number of shares of common stock of the Company at the time of redemption) or the Operating Partnership or AMB Property II, L.P. may, in its respective sole and absolute discretion (subject to the limits on ownership and transfer of common stock set forth in the Company’s ~~charter),~~ ~~elect~~consolidated ~~to have the Company exchange those common units~~joint ~~or class B common limited partnership units, as applicable, for shares of the Company~~ventures’s ~~common~~total ~~stock~~investment ~~on a one-for-one basis, subject to adjustment in the event of stock splits, stock dividends, issuance of certain rights, certain extraordinary distributions~~ and ~~similar~~property ~~events.~~debt ~~With each redemption or~~at ~~exchange of the Operating Partnership’s common units~~March 31, ~~the Company’s~~2009 ~~percentage ownership in the Operating Partnership will increase. Common limited partners~~ and ~~class~~December ~~B common limited partners may exercise this redemption right from time to time~~31, in2008 ~~whole~~were or(dollars in ~~part, subject to certain limitations.~~ ~~During the three months ended March 31, 2007, the Operating~~thousands): ~~Partnership redeemed 42,983 of its common limited partnership units for an equivalent number of shares of the Company’s common stock.~~

During the three months ended March 31, 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 the Operating Partnership 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 AMB Property Corporation’s stock price at issuance as compared to the book value per share at the time of issuance. The Company intends to use the proceeds from the offering for general corporate purposes and, over the long term, to expand its global development business.


		Operating			Total Investment
		Partnership’s			in Real Estate				Property Debt				Other Debt
	Co-investment	Ownership			March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
Consolidated Joint Ventures	Venture Partner	Percentage			2009		2008		2009		2008		2009		2008

Co-investment Ventures
AMB-SGP, L.P.	Industrial JV Pte. Ltd.(2)		50	%	$	463,167	$	461,981	$	340,581	$	341,855	$	—	$	—
AMB Institutional Alliance Fund II, L.P.	AMB Institutional Alliance REIT II, Inc. (3)		20	%		540,973		538,906		231,396		232,856		50,000		50,000
AMB-AMS, L.P.(1)	PMT, SPW and TNO(4)		39	%		157,039		157,034		82,906		83,337		—		—
Other Industrial Operating Joint Ventures			92	%		212,156		212,472		21,416		21,544		—		—
Other Industrial Development Joint Ventures			65	%		255,851		299,687		133,272		128,501		—		—

Total Consolidated Joint Ventures					$	1,629,186	$	1,670,080	$	809,571	$	808,093	$	50,000	$	50,000

As of March 31, 2007 the Operating Partnership had outstanding 99,089,842 common general partnership units: 3,407,360 common limited partnership units: 800,000 7.95% Series J Cumulative Redeemable Preferred Partnership Units; 800,000 7.95% Series K Cumulative Redeemable Preferred Partnership Units; 2,000,000 6.5% Series L Cumulative Redeemable Preferred Partnership Units, 2,300,000 6.75% 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.


(1)		AMB-AMS, L.P. is a co-investment partnership with three Dutch pension funds.

(2)		A subsidiary of GIC Real Estate Pte. Ltd., the real estate investment subsidiary of the Government of Singapore Investment Corporation.

(3)		Comprised of 14 institutional investors as stockholders and one third-party limited partner as of March 31, 2009.

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

The following table ~~sets~~reconciles ~~forth~~the change in the ~~distributions~~noncontrolling interests ~~paid~~for orthe ~~payable~~three months ended March 31, 2008 ~~per~~(dollars ~~unit~~in thousands):

			For the Three Months Ended March 31,
Balance as of December 31, 2007	$	627,377
Paying Entity	Security		2007		2006
Net income		25,548
Operating Partnership	Common limited partnership units		$	0.500	$	0.460
Contributions		1,065
Operating Partnership	Series J preferred units		$	0.994	$	0.994
Distributions, allocations and reallocation of partnership interest		(21,502	)
Operating Partnership	Series K preferred units		$	0.994	$	0.994
Sale of noncontrolling interests		(10,655	)
AMB Property II, L.P.	Class B common limited partnership units		$	0.500	$	0.460
Balance as of March 31, 2008	$	621,833
AMB Property II, L.P.	Series D preferred units		$	0.943	$	0.969
AMB Property II, L.P.	Series E preferred units(1)			n/a	$	0.969
AMB Property II, L.P.	Series F preferred units(2)			n/a	$	0.994
AMB Property II, L.P.	Series H preferred units(3)			n/a	$	0.970
AMB Property II, L.P.	Series I preferred units		$	1.000	$	1.000
AMB Property II, L.P.	Series N preferred units(4)			n/a	$	0.215

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(1)		In June 2006, AMB Property II, L.P. repurchased all of its outstanding Series E preferred units.
(2)		In September 2006, AMB Property II, L.P. repurchased all of its outstanding Series F preferred units.
(3)		In March 2006, AMB Property II, L.P. repurchased all of its outstanding Series H preferred units.
(4)		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 the Operating Partnership and AMB Property II, L.P. repurchased all of such units from the Operating Partnership.

The following table details the noncontrolling interests as of March 31, 2009 and December 31, 2008 (dollars in thousands):

In December 2005, AMB Property Corporation’s board of directors approved a new two-year common stock repurchase program for the discretionary repurchase of up to $200.0 million of its common stock. The Company did not repurchase or retire any of its shares of common stock during the three months ended March 31, 2007.


	March 31,		December 31,		Redemption/Callable
	2009		2008		Date

Joint venture partners	$	280,033	$	293,367	N/A
Held through AMB Property II, L.P.:
Class B limited partners		22,957		29,338	N/A
Series D preferred units (liquidation preference of $79,767)		77,561		77,561	February 2012

Total noncontrolling interests	$	380,551	$	400,266

The ~~Company~~following ~~and~~table distinguishes the ~~Operating Partnership have stock incentive~~noncontrolling ~~plans~~interests’ ~~that~~share ~~have approximately 2.7 million shares~~ of ~~common stock~~net ~~still~~(loss) ~~available for issuance as either stock options or restricted stock grants~~income, ~~of which 2.0 million are eligible~~including tononcontrolling be used for new grants. The fair value of each option grant was generally estimated at the date of grant using the Black-Scholes option-pricing model. The Operating Partnership uses historical data to estimate option exercise and forfeitures within the valuation model. Expected volatilities are based on historical volatility of the Companyinterests’s ~~stock.~~share ~~The risk-free rate for periods within the expected life~~ of ~~the~~development ~~option~~profits is based on the U.S. Treasury yield curve in effect at the time of the grant. The fair values of grants issued during the quarters ended March 31, 2007 and 2006, were $10.18 and $8.54, respectively. The following assumptions are used for ~~grants~~ ~~during~~ the three months ended March 31, ~~2007~~2009 and ~~2006, respectively:~~2008 ~~dividend~~(dollars ~~yields of 3.4% and 3.5%; expected~~in ~~volatility of 18.9% and 17.9%; risk-free interest rates of 4.6%~~thousands): ~~and 4.6%; and expected lives of six years, respectively.~~

As of March 31, 2007, approximately 6,117,609 options and 686,671 non-vested stock awards were outstanding under the plans. There were 501,058 stock options granted, 1,218,592 options exercised, and 11,882 options forfeited during the three months ended March 31, 2007. There were 255,671 restricted stock awards made during the three months ended March 31, 2007. 179,477 non-vested stock awards vested and 1,072 non-vested stock awards were forfeited during the three months ended March 31, 2007. The related stock option expense was $1.9 million and $2.1 million and the related restricted stock compensation expense was $3.2 million and $2.7 million for the three months ended March 31, 2007 and 2006, respectively. The expense is included in general and administrative expenses in the accompanying consolidated statements of operations.


	For the Three Months
	Ended March 31,
	2009			2008

Joint venture partners’ share of net (loss) income	$	(1,846	)	$	19,263
Joint venture partners’ share of development profits		—			4,213
Held through AMB Property II, L.P.:
Class B common limited partnership units’ share of development profits		406			—
Class B common limited partnership units		(1,948	)		640
Series D preferred units (liquidation preference of $79,767)		1,432			1,432

Total noncontrolling interests’ share of net (loss) income	$	(1,956	)	$	25,548

The Operating Partnership has consolidated joint ventures that have finite lives under the terms of the partnership agreements. As of March 31, 2009 and December 31, 2008, the aggregate book value of the joint venture noncontrolling interests in the accompanying consolidated balance sheets was approximately $280.0 million and $293.4 million, respectively. The Operating Partnership believes that the aggregate settlement value of these interests was approximately $430.3 million at March 31, 2009 and $451.2 million at December 31, 2008. However, there can be no assurance that these amounts will be the aggregate settlement value of the interests. The aggregate settlement value is based on the estimated liquidation values of the assets and liabilities and the resulting proceeds that the Operating Partnership would distribute to its joint venture partners upon dissolution, as required under the terms of the respective joint venture agreements. There can be no assurance that the estimated liquidation values of the assets and liabilities and the resulting proceeds that the Operating Partnership distributes upon dissolution will be the same as the actual liquidation values of such assets, liabilities and proceeds distributed upon dissolution. Subsequent changes to the estimated fair values of the assets and liabilities of the consolidated joint ventures will affect the Operating Partnership’s estimate of the aggregate settlement value. The joint venture agreements do not limit the amount to which the noncontrolling joint venture partners would be entitled in the event of liquidation of the assets and liabilities and dissolution of the respective joint ventures.

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

108. ~~Income~~Investments ~~Per~~in ~~Unit~~Unconsolidated Joint Ventures

When the Company issues common shares upon the exercise of stock options or issues restricted stock, the Operating Partnership issues corresponding general partnership units on a one-for-one basis. The Operating Partnership’s ~~only~~unconsolidated ~~dilutive securities~~joint ~~outstanding~~ventures’ ~~for~~net ~~the~~equity ~~three~~investments ~~months~~at ~~ended~~ March 31, ~~2007~~2009 and ~~2006~~December 31, 2008 were stock options and shares of restricted stock granted under the Company’s stock incentive plans. The effect on income per unit was to increase weighted average units outstanding. Such dilution was computed using the treasury stock method. The computation of basic and diluted income per common unit is presented below (dollars in thousands~~, except unit and per unit amounts~~):

	For the Three Months
	March 31, 2009
	Ended March 31,
	Operating
	2007			2006
	Partnership’s
Numerator
	Ownership			Square			March 31,		December 31,
Income from continuing operations before cumulative effect of change in accounting principle	$	28,103		$	20,451
Unconsolidated Joint Ventures	Percentage			Feet			2009		2008
Preferred unit distributions		(5,542	)		(4,686	)
Co-investment Ventures
Preferred unit redemption discount/issuance costs		—			(1,097	)
AMB Institutional Alliance Fund III, L.P.(1)		19	%		36,995,682		$	184,040	$	185,430
Income from continuing operations before cumulative effect of change in accounting principle (after preferred unit distributions)		22,561			14,668
AMB Europe Fund I, FCP-FIS(2)		21	%		9,236,263			60,750		65,563
Total discontinued operations		125			9,725
AMB Japan Fund I, L.P.(3)		20	%		7,263,090			78,526		65,705
Cumulative effect of change in accounting principle		—			193
AMB-SGP Mexico, LLC(4)		22	%		6,331,990			19,426		19,519
Net income available to common unitholders	$	22,686		$	24,586
AMB DFS Fund I, LLC(5)		15	%		1,248,126			18,966		20,663
Denominator
Other Industrial Operating Joint Ventures(6)		51	%		7,418,749			50,596		49,791
Basic		96,943,042			90,821,246
Total Unconsolidated Joint Ventures					68,493,900		$	412,304	$	406,671
Stock options and restricted stock dilution(1)		2,833,708			3,746,434
Diluted weighted average common units		99,776,750			94,567,680
Basic income per common unit
Income from continuing operations (after preferred unit distributions) before cumulative effect of change in accounting principle	$	0.23		$	0.16
Discontinued operations		—			0.11
Cumulative effect of change in accounting principle		—			—
Net income available to common unitholders	$	0.23		$	0.27
Diluted income per common unit
Income from continuing operations (after preferred unit distributions) before cumulative effect of change in accounting principle	$	0.23		$	0.16
Discontinued operations		—			0.10
Cumulative effect of change in accounting principle		—			—
Net income available to common unitholders	$	0.23		$	0.26

(1) Excludes anti-dilutive stock options of 302,938 and 325,503 for the three months ended March 31, 2007 and 2006, respectively.


(1)		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, and a third-party limited partner.

(2)		AMB Europe Fund I, FCP-FIS, is an open-ended co-investment venture formed in 2007 with institutional investors. The fund is Euro-denominated. U.S. dollar amounts are converted at period-end exchange rates for balance sheet amounts and at the average exchange rates in effect for income statement amounts during the three months ended March 31, 2009 and 2008.

(3)		AMB Japan Fund I, L.P. is a co-investment partnership formed in 2005 with institutional investors. The fund is Yen-denominated. U.S. dollar amounts are converted at period-end exchange rates for balance sheet amounts and at the average exchange rates in effect for income statement amounts during the three months ended March 31, 2009 and 2008.

(4)		AMB-SGP Mexico, LLC, is a co-investment partnership 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.

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

(6)		Other Industrial Operating Joint Ventures includes joint ventures between the Operating Partnership and third parties which generally have been formed to take advantage of a particular market opportunity that can be accessed as a result of the joint venture partner’s experience in the market. The Operating Partnership typically owns 40-90% of these joint ventures.

On June 13, 2008, the Operating Partnership acquired an additional approximate 19% interest in G. Accion, a Mexican real estate company that holds equity method investments, and as a result of its increased ownership, the Operating Partnership began consolidating its interest in G. Accion, effective as of that date. On July 18, 2008, the Operating Partnership acquired the remaining equity interest (approximately 42%) in G. Accion. As of March 31, 2009 and December 31, 2008, the Operating Partnership had a 100% consolidated interest in G. Accion. As a 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 its investment in AMB Property Mexico, the Operating Partnership held equity interests in various other unconsolidated ventures totaling approximately $20.2 million and $24.6 million as of March 31, 2009 and December 31, 2008, respectively.

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~11.~~ The ~~Segment~~following ~~Information~~table presents summarized income statement information for the Operating Partnership’s unconsolidated joint ventures for the three months ended March 31, 2009 and 2008 (dollars in thousands):

The Operating Partnership has two lines of business, real estate operations and Capital Partners. Real estate operations is comprised of various segments while Capital Partners consists of a single segment, on which the Operating Partnership evaluates its performance:


	For the Three Months											For the Three Months
	Ended March 31, 2009											Ended March 31, 2008
						Income											Income
						(Loss)											(Loss)
			Property			from			Net					Property			from			Net
			Operating			Continuing			Income					Operating			Continuing			Income
Unconsolidated Joint Ventures:	Revenues		Expenses			Operations			(Loss)			Revenues		Expenses			Operations			(Loss)

Co-investment Ventures
AMB Institutional Alliance Fund III, L.P.(1)	$	72,135	$	(20,641	)	$	(8,140	)	$	(8,141	)	$	44,082	$	(11,653	)	$	3,653		$	3,653
AMB Europe Fund I, FCP-FIS(2)		22,933		(4,747	)		(10,237	)		(10,237	)		21,862		(4,006	)		(922	)		(922	)
AMB Japan Fund I, L.P.(3)		25,743		(5,374	)		3,760	(6)		3,760	(6)		17,706		(3,383	)		2,121			2,121
AMB-SGP Mexico, LLC(4)		9,461		(1,291	)		696	(7)		696	(7)		7,209		(1,325	)		1,639	(7)		1,639	(7)
AMB DFS Fund I, LLC(5)		50		149			3,303			3,303			34,324		(27,502	)		6,822			6,822

Total Co-investment Ventures		130,322		(31,904	)		(10,618	)		(10,619	)		125,183		(47,869	)		13,313			13,313
Other Industrial Operating Joint Ventures		9,118		(2,113	)		2,660			2,660			9,533		(2,006	)		3,440			3,440

Total Unconsolidated Joint Ventures	$	139,440	$	(34,017	)	$	(7,958	)	$	(7,959	)	$	134,716	$	(49,875	)	$	16,753		$	16,753

	•	Real Estate Operations. The Operating Partnership operates industrial properties and manages its business by geographic markets. Such industrial properties consist primarily of warehouse distribution facilities suitable for single or multiple customers, and are typically comprised of multiple buildings that are leased to customers engaged in various types of businesses. The Operating Partnership’s geographic markets for industrial properties are managed separately because each market requires different operating, pricing and leasing strategies. Each market is considered to be an individual operating segment having similar economic characteristics that are combined within the reported segment based upon geographic location. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Operating Partnership evaluates performance based upon property net operating income of the combined properties in each segment, which are listed below. In addition, the Operating Partnership’s development business is included under real estate operations. It primarily consists of the Operating Partnership’s development of real estate properties that are subsequently contributed to a property fund in which the Operating Partnership has an ownership interest in and acts as manager, or sold to third parties. The Operating Partnership evaluates performance of the development business by reported operating segment based upon gains generated from the disposition and/or contribution of real estate. The assets of the development business generally include properties under development and land held for development. During the period between the completion of development of a property and the date the property is contributed to an unconsolidated joint venture or sold to a third party, the property and its associated rental income and property operating costs are included in the real estate operations segment because the primary activity associated with the property during that period is leasing. Upon contribution or sale, the resulting gain or loss is included as gains from dispositions of real estate interests or development profits, as appropriate.
(1)		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, and a third-party limited partner. 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. The summarized income statement information for the three months ended March 31, 2009 for AMB Institutional Alliance Fund III, L.P. includes the summarized income statement information for AMB Partners II, L.P.
	•	Capital Partners. The Operating Partnership through its private capital group and AMB Capital Partners, LLC, provides real estate investment, portfolio management and reporting services to co-investment joint ventures and clients. The private capital income earned consists of acquisition and development fees, asset management fees and priority distributions, and promoted interests and incentive distributions from the Operating Partnership’s co-investment joint ventures and AMB Capital Partners’ clients. The accounting policies of the segment are the same as those described in the summary of significant accounting policies under Note 2, Interim Financial Statements. The Operating Partnership evaluates performance based upon private capital income.
(2)		AMB Europe Fund I, FCP-FIS, is an open-ended co-investment venture formed in 2007 with institutional investors. The fund is Euro-denominated. U.S. dollar amounts are converted at period-end exchange rates for balance sheet amounts and at the average exchange rates in effect for income statement amounts during the three months ended March 31, 2009 and 2008.
(3)		AMB Japan Fund I, L.P. is a co-investment partnership formed in 2005 with institutional investors. The fund is Yen-denominated. U.S. dollar amounts are converted at period-end exchange rates for balance sheet amounts and at the average exchange rates in effect for income statement amounts during the three months ended March 31, 2009 and 2008.
(4)		AMB-SGP Mexico, LLC, is a co-investment partnership 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.
(5)		AMB DFS Fund I, LLC is a co-investment partnership formed in 2006 with a subsidiary of GE Real Estate to build and sell properties.
(6)		Excludes $5.6 million of priority distributions from AMB Japan Fund I, L.P. to the Company during the three months ended March 31, 2009.
(7)		Excludes $3.8 million and $3.0 million of interest expense on loans from co-investment venture partners for the three months ended March 31, 2009 and 2008, respectively.

~~The~~On ~~segment~~December 30, ~~information~~2004, ~~for~~ the ~~three~~Operating ~~months~~Partnership ~~ended~~formed ~~March 31~~AMB-SGP Mexico, ~~2007~~LLC, ~~and~~a asco-investment ofventure ~~December 31~~with Industrial (Mexico) JV Pte. Ltd., ~~2006~~a subsidiary of GIC Real Estate Pte. Ltd., ~~has~~the ~~been~~real estate investment subsidiary of the Government of ~~reclassified~~Singapore toInvestment ~~conform~~Corporation, toin ~~current~~which ~~presentation.~~the Operating Partnership retained an

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~Summary~~approximate ~~information~~20% ~~for~~interest. ~~the~~This ~~reportable~~interest ~~segments~~increased isto approximately as22% ~~follows~~upon the Operating Partnership’s ~~(dollars~~acquisition of AMB Property Mexico in ~~thousands):~~2008. During the three months ended March 31, 2009 and 2008, the Operating Partnership made no contributions to this co-investment venture.

	Revenues					Property NOI(2)					Development Gains
	For the Three Months					For the Three Months					For the Three Months
	Ended March 31,					Ended March 31,					Ended March 31,
Segments(1)	2007		2006			2007		2006			2007		2006
North America Markets
Southern California	$	26,418	$	27,415		$	20,789	$	21,817		$	9,004	$	—
No. New Jersey/New York		17,545		19,653			11,699		13,347			—		—
San Francisco Bay Area		21,345		21,554			16,839		16,953			—		—
Chicago		13,514		13,629			9,208		9,324			2,668		—
On-Tarmac		13,460		14,055			7,276		7,869			—		—
South Florida		10,716		9,251			7,236		6,295			478		674
Seattle		9,323		9,354			7,194		7,246			—		—
Non-U.S. Markets
Europe		11,741		6,532			9,361		5,233			—		—
Asia		1,418		8,741			673		7,938			—		—
Total markets		125,480		130,184			90,275		96,022			12,150		674
Other Markets		33,824		41,176			24,713		29,112			42		—
Straight-line rents and amortization of lease intangibles		2,715		5,146			2,715		5,146			—		—
Discontinued operations		63		(5,205	)		132		(3,122	)		—		—
Capital Partners
Private capital income		5,925		5,106			—		—			—		—
Total	$	168,007	$	176,407		$	117,835	$	127,158		$	12,192	$	674

On June 30, 2005, the Operating Partnership formed AMB Japan Fund I, L.P., a co-investment venture with 13 institutional investors, in which the Operating Partnership retained an approximate 20% interest. The 13 institutional investors have committed 49.5 billion Yen (approximately $500.1 million in U.S. dollars, using the exchange rate at March 31, 2009) for an approximate 80% equity interest. During the three months ended March 31, 2009, the Operating Partnership contributed to this co-investment venture one completed development project, aggregating approximately 1.0 million square feet for approximately $184.8 million (using the exchange rate on the date of contribution). During the three months ended March 31, 2008, the Operating Partnership made no contributions to this co-investment venture.

(1)		The markets included are a subset of the Operating Partnership’s regions defined as East, Southwest and West Central in North America, Europe and Asia.
(2)		Property net operating income (“NOI”) is defined as rental revenue, including reimbursements, less property operating expenses, which excludes depreciation, amortization, general and administrative expenses and interest expense. For a reconciliation of NOI to net income, see the table below.

On October 17, 2006, the Operating Partnership formed AMB DFS Fund I, LLC, a merchant development co-investment venture with GE Real Estate (“GE”), in which the Operating Partnership 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 the Operating Partnership identifies as its target markets. GE and the Operating Partnership have committed $425.0 million and $75.0 million of equity, respectively. During the three months ended March 31, 2009 and 2008, the Operating Partnership contributed approximately $0.8 million and $1.5 million to this co-investment venture, respectively.

~~The~~Effective ~~Operating~~October 1, ~~Partnership~~2006, ~~considers~~the ~~NOI~~Operating ~~to be an appropriate~~Partnership ~~supplemental~~deconsolidated ~~performance~~AMB ~~measure~~Institutional ~~because~~Alliance ~~NOI~~Fund III, ~~reflects the~~L.P., ~~operating~~an ~~performance~~open-ended ofco-investment ~~the~~partnership ~~Operating~~formed ~~Partnership’s~~in ~~real~~2004 with ~~estate~~institutional ~~portfolio~~investors, on a ~~segment~~prospective basis, ~~and~~due ~~the Operating Partnership uses NOI~~ to ~~make decisions about resource~~the ~~allocations~~re-evaluation ~~and~~of tothe ~~assess~~Operating ~~regional~~Partnership’s ~~property~~accounting ~~level performance.~~for ~~However,~~its ~~NOI~~investment ~~should~~because ~~not~~of bechanges ~~viewed~~to asthe anpartnership ~~alternative measure of~~agreement regarding the ~~Operating~~general ~~Partnership~~partner’s ~~financial~~rights ~~performance since it~~effective ~~does~~October 1, ~~not~~2006. ~~reflect~~During ~~general~~the ~~and~~three ~~administrative~~months ~~expenses, interest~~ended ~~expense~~March 31, ~~depreciation and amortization costs~~2009, ~~capital expenditures~~the ~~and~~Operating ~~leasing~~Partnership ~~costs,~~made ~~or trends in development and~~no ~~construction~~development ~~activities~~project ~~that~~contributions ~~could~~to ~~materially~~this ~~impact~~co-investment ~~the~~venture. ~~Operating~~For ~~Partnership’s~~the ~~results~~three ~~from~~months ~~operations.~~ended ~~Further~~March 31, 2008, the Operating Partnership’s ~~NOI~~contributed ~~may~~to ~~not~~this beco-investment ~~comparable~~venture toone ~~that~~approximately of0.8 million ~~other~~square ~~real~~foot ~~estate~~operating ~~companies,~~property and astwo ~~they~~completed ~~may~~development ~~use~~projects, ~~different~~aggregating ~~methodologies~~approximately ~~for~~1.0 million ~~calculating~~square ~~NOI~~feet for approximately $153.0 million.

On June 12, 2007, the Operating Partnership formed AMB Europe Fund I, FCP-FIS, a Euro-denominated open-ended co-investment venture with institutional investors, in which the Operating Partnership retained an approximate 20% interest upon formation. The institutional investors have committed approximately 263.0 million Euros (approximately $348.5 million in U.S. dollars, using the exchange rate at March 31, 2009) for an approximate 80% equity interest. During the three months ended March 31, 2009, the Operating Partnership made no development project contributions to this co-investment venture. During the three months ended March 31, 2008, the Operating Partnership contributed to this co-investment venture one development project, aggregating approximately 0.1 million square feet, for approximately $25.9 million (using the exchange rate on the date of contribution).

During the three months ended March 31, 2009, the Operating Partnership made no contributions of real estate interests, and no gains were recognized. During the three months ended March 31, 2008, the Operating Partnership recognized gains from the contribution of real estate interests, net, of approximately $20.0 million, representing the portion of the Operating Partnership’s 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 the three months ended March 31, 2009, the Operating Partnership recognized development profits of approximately $28.6 million, as a result of the contribution of one completed development project, aggregating approximately 1.0 million square feet, to AMB Japan Fund I, L.P. During the three months ended March 31, 2008, the Operating Partnership recognized development profits of approximately $16.8 million, as a result of the

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~The~~contribution ~~following~~of ~~table~~three iscompleted adevelopment ~~reconciliation~~projects, aggregating ~~from~~approximately ~~NOI~~1.1 million tosquare ~~reported~~feet, ~~net~~to AMB ~~income~~Europe Fund I, aFCP-FIS, ~~financial~~and ~~measure~~AMB ~~under~~Institutional ~~accounting principles~~Alliance ~~generally~~Fund III, ~~accepted~~L.P. inThese ~~the~~gains ~~U.S.~~are included in development profits, ornet ~~GAAP~~of ~~(dollars~~taxes, in ~~thousands):~~the consolidated statements of operations.

	For the Three Months Ended March 31,
	2007			2006
Property NOI	$	117,835		$	127,158
Development profits, net of taxes		12,192			674
Private capital income		5,925			5,106
Depreciation and amortization		(41,029	)		(42,754	)
Impairment losses		(257	)		—
General and administrative		(29,854	)		(23,048	)
Other expenses		(912	)		(537	)
Fund costs		(241	)		(614	)
Equity in earnings of unconsolidated joint ventures		2,113			2,088
Other income		5,507			3,507
Gains from dispositions of real estate interests		136			—
Interest, including amortization		(33,865	)		(39,153	)
Total minority interests’ share of income		(9,447	)		(11,976	)
Total discontinued operations		125			9,725
Cumulative effect of change in accounting principle		—			193
Net income	$	28,228		$	30,369

Under the agreements governing the co-investment ventures, the Operating Partnership 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.

~~The~~9. ~~Operating Partnership~~Partners’s ~~total assets by reportable segments were (dollars in thousands):~~ Capital

	Total Assets as of
	March 31, 2007		December 31, 2006
North America Markets
Southern California	$	868,016	$	895,610
No. New Jersey/New York		608,718		607,727
San Francisco Bay Area		701,914		703,660
Chicago		437,020		446,662
On-Tarmac		208,089		210,798
South Florida		363,801		371,603
Seattle		390,745		380,459
Non-U.S. Marktes
Europe		756,650		723,326
Asia		537,124		434,706
Total marktes		4,872,077		4,774,551
Other Markets		1,506,530		1,430,308
Investments in unconsolidated joint ventures		279,422		274,381
Non-segment assets		318,954		234,272
Total assets	$	6,976,983	$	6,713,512

Holders of common limited partnership units of the Operating Partnership and class B common limited partnership units of AMB Property II, L.P. have the right, commencing generally on or after the first anniversary of the holder becoming a limited partner of the Operating Partnership or AMB Property II, L.P., as applicable (or such other date agreed to by the Operating Partnership or AMB Property II, L.P. and the applicable unit holders), to require the Operating Partnership or AMB Property II, L.P., as applicable, to redeem part or all of their common limited partnership units or class B common limited partnership units, as applicable, for cash (based upon the fair market value, as defined in the applicable partnership agreement, of an equivalent number of shares of common stock of the Company at the time of redemption) or the Operating Partnership or AMB Property II, L.P. may, in its respective sole and absolute discretion (subject to the limits on ownership and transfer of common stock set forth in the Company’s charter), elect to have the Company exchange those common limited partnership units or class B common limited partnership units, as applicable, for shares of the Company’s common stock on a one-for-one basis, subject to adjustment in the event of stock splits, stock dividends, issuance of certain rights, certain extraordinary distributions and similar events. With each redemption or exchange of the Operating Partnership’s common limited partnership units, the Company’s percentage ownership in the Operating Partnership will increase. Common limited partners and class B common limited partners may exercise this redemption right from time to time, in whole or in part, subject to certain limitations. During the three months ended March 31, 2009, the Operating Partnership did not exchange any of its common limited partnership units for an equivalent number of shares of the Company’s common stock.

As of March 31, 2009, the Operating Partnership had 145,989,790 common general partnership units; 2,176,809 common limited partnership 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.

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~12.~~ The ~~Commitments~~following ~~and~~table ~~Contingencies~~reconciles the change in partners’ capital for the three months ended March 31, 2008 (dollars in thousands):

Commitments


Balance as of December 31, 2007	$	2,833,986
Net income		44,187
Unrealized loss on securities		(35	)
Unrealized loss on derivatives		(3,148	)
Foreign currency translation adjustments		29,354

Total comprehensive income		70,358
Stock-based compensation amortization and issuance of partnership units in connection with the issuance of restricted stock, net		6,529
Issuance of partnership units in connection with the exercise of stock options		484
Conversion of partnership units		515
Repurchases of common units		(87,696	)
Forfeiture of partnership units in connection with the forfeiture of restricted stock		(1,362	)
Reallocation of partnership interest		(6,706	)
Offering costs		(10	)
Distributions		(56,829	)

Balance at March 31, 2008	$	2,759,269

~~Lease Commitments.~~ The ~~Operating~~following ~~Partnership holds~~table ~~operating~~sets ~~ground~~forth ~~leases~~the ondistributions ~~land~~paid ~~parcels~~or ~~at its on-tarmac~~payable ~~facilities,~~per ~~leases on office spaces for corporate use, and a~~unit: leasehold interest that it holds for investment purposes. The remaining lease terms are from one to 55 years. Buildings and improvements subject to ground leases are being amortized ratably over the lesser of the terms of the related leases or 40 years.

Standby Letters of Credit. As of March 31, 2007, the Operating Partnership had provided approximately $22.6 million in letters of credit, of which $12.5 million were provided under its $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.


		For the Three Months
		Ended March 31,
Paying Entity	Security	2009		2008

Operating Partnership	Common limited partnership units	$	0.280	$	0.520
AMB Property II, L.P.	Class B common limited partnership units	$	0.280	$	0.520
AMB Property II, L.P.	Series D preferred units	$	0.898	$	0.898

~~Guarantees. Other~~In ~~than~~December ~~parent~~2007, ~~guarantees associated with~~ the ~~unsecured~~Company’s ~~debt,~~board as of ~~March 31,~~directors ~~2007,~~approved ~~the~~a ~~Operating~~two-year ~~Partnership~~common ~~had~~stock ~~outstanding~~repurchase ~~guarantees~~program infor the ~~aggregate~~ ~~amount~~repurchase of up to $70200.60 million inof ~~connection~~its ~~with certain~~common ~~acquisitions~~stock. AsDuring ofthe three months ended March 31, ~~2007~~2009, the ~~Operating Partnership~~Company ~~guaranteed~~did ~~$33.2 million~~not ~~and $83.2 million~~repurchase onany ~~outstanding~~shares ~~loans on three~~ of its ~~consolidated~~common ~~joint~~stock. ~~ventures and~~The ~~one~~Company ofhas ~~its unconsolidated joint ventures, respectively. In~~the ~~addition,~~authorization asto ofrepurchase ~~March 31,~~up ~~2007,~~to ~~the~~an ~~Operating Partnership~~additional ~~guaranteed~~ $~~117~~112.83 million ~~on outstanding property debt related to one~~ of its ~~unconsolidated~~common ~~joint~~stock ~~ventures~~under this program.

~~Performance~~In ~~and Surety Bonds. As of~~ March ~~31,~~ ~~2007~~2009, the ~~Operating~~Company ~~Partnership~~completed ~~had~~the ~~outstanding performance~~issuance ~~and surety bonds in an aggregate amount~~ of ~~$12~~47.34 million. ~~These~~shares ~~bonds were issued in connection with certain~~ of its ~~development~~common ~~projects~~stock ~~and~~at ~~were~~a ~~posted~~price ~~to guarantee~~of ~~certain~~$12.15 ~~tax~~per ~~obligations~~share ~~and~~for ~~the~~proceeds ~~construction~~ of ~~certain real~~approximately ~~property improvements and infrastructure~~$552.6 million, ~~such~~net asof ~~grading~~discounts, ~~sewers~~ ~~and~~commissions ~~streets. Performance~~ and ~~surety bonds are commonly~~estimated ~~required~~transaction byexpenses ~~public~~of ~~agencies~~approximately ~~from real estate developers~~$23.8 million. The ~~Performance~~proceeds ~~and~~from ~~surety~~the ~~bonds~~offering ~~are~~were ~~renewable~~contributed ~~and~~to ~~expire upon~~ the Operating ~~payment~~Partnership ofin ~~the~~exchange ~~taxes~~for ~~due or~~ the ~~completion~~issuance of ~~the improvements~~47.4 million ~~and~~general ~~infrastructure~~partnership units to the Company.

~~Promoted~~As ~~Interests~~of March 31, 2009, the Company and ~~Other~~the ~~Contractual~~Operating ~~Obligations. Upon~~Partnership ~~the~~have ~~achievement~~stock ofincentive ~~certain return~~plans ~~thresholds~~that ~~and~~have ~~the~~approximately 6.0 million ~~occurrence~~shares of ~~certain~~common ~~events,~~stock ~~the~~available for issuance ~~Operating~~as ~~Partnership~~either ~~may~~stock beoptions ~~obligated~~or torestricted ~~make~~stock ~~payments~~grants. toThe fair ~~certain~~value ~~joint~~of ~~venture~~each ~~partners~~option ~~pursuant~~grant tois generally estimated at the ~~terms~~date ~~and~~of ~~provisions~~grant ofusing ~~their~~the ~~contractual~~Black-Scholes ~~agreements~~option-pricing ~~with~~model. ~~the Operating~~The Operating Partnership. ~~From~~uses ~~time~~historical data to ~~time~~estimate inoption exercise ~~the~~and ~~normal~~forfeitures ~~course~~within of the valuation model. Expected ~~Operating~~volatilities ~~Partnership’s~~are ~~business,~~based ~~the~~on ~~Operating~~historical ~~Partnership~~volatility of the ~~enters~~Company’s ~~into~~stock. ~~various~~The ~~contracts~~risk-free ~~with~~rate ~~third~~for ~~parties~~periods ~~that~~within ~~may~~the ~~obligate~~expected itlife toof ~~make~~the ~~payments,~~option ~~pay~~is ~~promotes~~based oron ~~perform~~the ~~other~~U.S. Treasury ~~obligations~~yield ~~upon~~curve in effect at the ~~occurrence~~time of ~~certain~~the ~~events~~grant.

Contingencies

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

Environmental Matters. The Operating Partnership monitors its properties for the presence of hazardous or toxic substances. The Operating Partnership is not aware of any environmental liability with respect to the properties that would have a material adverse effect on the Operating Partnership’s business, assets or results of operations. However, there can be no assurance that such a material environmental liability does not exist. The existence of any such material environmental liability would have an adverse effect on the Operating Partnership’s results of operations and cash flow. The Operating Partnership carries environmental insurance and believes that the policy terms, conditions, limits and deductibles are adequate and appropriate under the circumstances, given the relative risk of loss, the cost of such coverage and current industry practice.

General Uninsured Losses. The Operating Partnership carries property and rental loss, liability, flood and terrorism insurance. The Operating Partnership believes that the policy terms, conditions, limits and deductibles are adequate and appropriate under the circumstances, given the relative risk of loss, the cost of such coverage and

AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~current~~The ~~industry~~following ~~practice.~~table Inpresents ~~addition, certain of~~ the ~~Operating Partnership’s~~assumptions ~~properties~~and ~~are~~fair ~~located~~values in areas that are subject to earthquake activity; therefore, the Operating Partnership has obtained limited earthquake insurance on those properties. There are, however, certain types of extraordinary losses, such as those due to acts of war, that may be either uninsurable or not economically insurable. Although the Operating Partnership has obtained coverage for ~~certain acts of~~ ~~terrorism,~~grants ~~with~~during ~~policy specifications and insured limits that it believes are commercially reasonable, there can be no assurance that~~ the ~~Operating~~three ~~Partnership~~months ~~will~~ended ~~be able to collect under such policies. Should an uninsured loss occur~~March 31, ~~the Operating~~2009: ~~Partnership could lose its investment in, and anticipated profits and cash flows from, a property.~~

Captive Insurance Company. In December 2001, the Operating Partnership 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 deductible under the Operating Partnership’s third-party policies. The captive insurance company is one element of the Operating Partnership’s overall risk management program. The Operating Partnership capitalized Arcata in accordance with the applicable regulatory requirements. Arcata established annual premiums based on projections derived from the past loss experience at the Operating Partnership’s properties. Annually, the Operating Partnership engages an independent third party to perform an actuarial estimate of future projected claims, related deductibles and projected expenses necessary to fund associated risk management programs. Premiums paid to Arcata may be adjusted based on this estimate. 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, the Operating Partnership believes that it has more comprehensive insurance coverage at an overall lower cost than would otherwise be available in the market.

Dividend Yield

Expected Volatility

Risk-free Interest Rate

Weighted Average

For the Three

Weighted

Expected Life

Grant Date

Months Ended

Range

Average

Range

Average

Range

Average

(Years)

Fair Value

March 31, 2009

6.1% - 7.0%

7.0

40.1% - 42.2%

42.1

1.4% - 2.4%

2.0

6.1

3.19

13 As of March 31, 2009, approximately 8,317,048 options and 920,281 non-vested stock awards were outstanding under the plans. ~~Subsequent~~There ~~Events~~were 2,237,221 stock options granted, no options exercised, and 126,851 options forfeited during the three months ended March 31, 2009. There were 366,056 restricted stock awards made during the three months ended March 31, 2009, 296,171 non-vested stock awards that vested and 8,630 non-vested stock awards that were forfeited during the three months ended March 31, 2009. The grant date fair value of restricted stock awards range as of the grant dates of the awards issued during the quarter ended March 31, 2009 was $15.92-$23.07. The unamortized expense for restricted stock as of March 31, 2009 was $28.6 million. As of March 31, 2009, the Operating Partnership had $9.2 million of total unrecognized compensation cost related to unvested options granted under the stock incentive plans which is expected to be recognized over a weighted average period of 2.5 years.

~~On April 17, 2007, the Operating Partnership redeemed all 800,000 of its outstanding 7~~10.~~95%~~ ~~Series J~~(Loss) ~~Cumulative Redeemable~~Income ~~Preferred~~Per Limited Partnership Units from a single institutional investor and all 800,000 of its outstanding 7.95% Series K Cumulative Redeemable Preferred Limited Partnership Units from another single institutional investor. The Operating Partnership redeemed the Series J Cumulative Redeemable Preferred Limited Partnership Units for $40.0 million, plus accrued and unpaid distributions through April 16, 2007. The Operating Partnership redeemed the Series K Cumulative Redeemable Preferred Limited Partnership Units for $40.0 million, plus accrued and unpaid distributions through April 16, 2007. Unit

OnEffective ~~April~~January 171, ~~2007~~2009, ~~a subsidiary of~~ the Operating Partnership ~~Partnership,~~adopted ~~AMB~~the ~~Property~~provisions ~~II,~~of ~~L.P.,~~FASB aStaff ~~Delaware~~Position ~~limited~~(FSP) ~~partnership~~No. EITF 03-6-1, Determining ~~repurchased~~Whether ~~all~~Instruments ~~510,000~~Granted ofin ~~its~~Share-Based Payment ~~outstanding~~Transactions ~~8.00%~~are Participating Securities, which ~~Series I~~clarifies ~~Cumulative~~that ~~Redeemable~~share-based ~~Preferred~~payment ~~Limited~~awards that entitle their ~~Partnership~~holders ~~Units~~to ~~from~~receive anonforfeitable ~~single~~dividends ~~institutional~~before ~~investor~~vesting should be considered participating securities. ~~AMB~~As participating ~~Property II~~securities, ~~L.P.~~these ~~repurchased~~instruments ~~the~~should ~~units~~be ~~for~~included in the ~~$25.5 million,~~computation ~~plus~~of ~~accrued~~earnings ~~and~~per ~~unpaid~~unit ~~distributions~~using the two-class method ~~through~~under ~~April~~SFAS 16No. 128, ~~2007,~~Earnings ~~less~~per ~~applicable~~Share. ~~withholding,~~The provisions onof ~~the~~FSP ~~Series~~No. IEITF 03-6-1 have ~~Cumulative~~been ~~Redeemable~~applied ~~Preferred~~retrospectively ~~Limited~~to adjust the computation of ~~Partnership~~EPS ~~Units~~for three months ended March 31, 2008.

~~The~~When ~~Operating~~the Company issues shares of common stock upon the exercise of stock options or issues restricted stock, the Operating Partnership ~~wrote-off~~issues ~~approximately~~corresponding common general partnership $3units to the Company on a one-for-one basis.~~0 million~~ inThe ~~deferred~~Operating Partnership ~~issuance~~had ~~costs~~no ~~related~~dilutive tosecurities outstanding for the three ~~redemption~~months ofended March 31, 2009. For the ~~Series~~three months ended March J31, ~~and~~2008, Kthe ~~units~~dilutive securities outstanding were stock options granted under the Company’s and the ~~repurchase~~Operating ofPartnership’s stock incentive plans. The effect on income per unit for the ~~Series~~three months ended March I31, 2008 was to increase weighted average units outstanding. Such dilution was

~~Item~~ AMB PROPERTY, 2L. ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~P.

~~Some of the information included in this Quarterly Report on~~ ~~Form~~NOTES ~~10-Q~~TO ~~contains~~CONSOLIDATED ~~forward-looking statements, which are made pursuant to~~FINANCIAL ~~the safe-harbor provisions of Section~~STATEMENTS ~~21E of the Securities Exchange Act of 1934, as amended, and Section~~— ~~27A of the~~(Continued) 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 forward-looking statements might not occur. You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “pro forma,” “estimates” or “anticipates,” or the negative of these words and phrases, or similar words or phrases. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements 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. There is no assurance that the events or circumstances reflected in forward-looking statements will occur or be achieved. Forward-looking statements are necessarily dependent on assumptions, data or methods that may be incorrect or imprecise and we may not be able to realize them.

~~The~~computed ~~following~~using ~~factors,~~the ~~among~~treasury ~~others,~~stock ~~could~~method. ~~cause~~The ~~actual~~computation of ~~results~~basic and ~~future~~diluted ~~events~~(loss) toincome ~~differ~~per ~~materially~~unit ~~from~~is ~~those~~presented ~~set~~below (in ~~forth~~thousands, orexcept ~~contemplated~~unit inand ~~the~~per ~~forward-looking~~unit ~~statements~~amounts):

• changes in general economic conditions or in the real estate sector; • defaults on or non-renewal of leases by customers or renewal at lower than expected rent; • 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 and renovation (including construction delays, cost overruns, our inability to obtain necessary permits and financing, public opposition to these activities, as well as the risks associated with our expansion of and increased investment in our development business); • risks of doing business internationally, including unfamiliarity with new markets and currency risks; • risks of opening offices globally (including increasing headcount); • a downturn in the California, U.S., or the global economy or real estate conditions; • risks of changing personnel and roles; • losses in excess of our insurance coverage; • our failure to divest of properties on advantageous terms or to timely reinvest proceeds from any such divestitures; • unknown liabilities acquired in connection with acquired properties or otherwise; • risks associated with using debt to fund acquisitions and development, including re-financing risks; • our failure to obtain necessary financing; • our failure to maintain our current credit agency ratings; • risks associated with equity and debt securities financings and issuances (including the risk of dilution); • changes in local, state and federal regulatory requirements; • increases in real property tax rates; • increases in interest rates and operating costs or greater than expected capital expenditures; and • environmental uncertainties.


	For the Three Months
	Ended March 31,
	2009			2008

Numerator
(Loss) income from continuing operations attributable to common unitholders	$	(127,202	)	$	40,856
Preferred unit distributions		(3,952	)		(3,952	)

(Loss) income from continuing operations (after noncontrolling interests’ share of loss (income) from continuing operations and preferred unit distributions)		(131,154	)		36,904
Total discontinued operations attributable to common unitholders		6,134			3,331

Net (loss) income available to common unitholders	$	(125,020	)	$	40,235

Denominator
Basic		101,093,862			101,728,152
Stock options dilution(1)		—			1,917,401

Diluted weighted average common units		101,093,862			103,645,553

Basic (loss) income per common unit
(Loss) income from continuing operations (after noncontrolling interests’ share of loss (income) from continuing operations and preferred unit distributions)	$	(1.30	)	$	0.36
Discontinued operations		0.06			0.03

Net (loss) income available to common unitholders(2)	$	(1.24	)	$	0.39

Diluted (loss) income per common unit
(Loss) income from continuing operations (after noncontrolling interests’ share of loss (income) from continuing operations and preferred unit distributions)	$	(1.30	)	$	0.35
Discontinued operations		0.06			0.03

Net (loss) income available to common unitholders(2)	$	(1.24	)	$	0.38


(1)		Excludes anti-dilutive stock options of 7,383,791 and 1,524,258, for the three months ended March 31, 2009 and 2008, respectively. These weighted average shares relate to anti-dilutive stock options, which are calculated using the two-class method, and could be dilutive in the future.

(2)		In accordance with FSP No. EITF 03-6-1 and SFAS No. 128, the net (loss) income available to common unitholders is adjusted for earnings distributed through declared distributions and allocated to all participating securities (weighted average common units outstanding and unvested restricted stock outstanding) under the two-class method. Under this method, the numerator for the calculation of both basic and diluted loss per unit available to common unitholders for the three months ended March 31, 2009 was $(125,278). For the three months ended March 31, 2008, the numerator for calculation of both basic and diluted income per unit available to common unitholders was $39,769.

~~Our success also depends upon economic trends generally,~~ ~~various market conditions and fluctuations and those other risk~~AMB ~~factors discussed under the heading “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31~~PROPERTY, ~~2006~~L. We caution you not to place undue reliance on forward-looking statements, which reflect our analysis only and speak as of the date of this report or as of the dates indicated in the statementsP. ~~All of~~ ~~our forward-looking statements, including those in this report,~~ ~~are qualified in their entirety by this statement. We assume no obligation to update or supplement forward-looking statements.~~

~~Unless the context otherwise requires, the terms~~ ~~“AMB,” the “Company,” “we,”~~NOTES TO ~~“us”~~CONSOLIDATED ~~and “our” refer to AMB Property, L.P.~~FINANCIAL ~~and our controlled subsidiaries. The following marks are the registered trademarks of AMB Property Corporation, our general partner: AMB®; High Throughput Distribution®~~ STATEMENTS — (~~HTD®~~Continued); ~~and Strategic Alliance Programs®.~~

~~GENERAL~~ 11. Segment Information

WeThe ~~commenced~~Operating Partnership has two lines of business: real estate operations ~~shortly~~and ~~before~~private ~~the~~capital. ~~consummation~~Real ofestate ~~AMB~~operations is ~~Property~~comprised ~~Corporation’s~~of ~~initial~~various ~~public~~segments ~~offering~~while onprivate capital consists of ~~November 26~~a single segment, ~~1997.~~on which the Operating Partnership evaluates its performance:

Management’s Overview


	•	Real Estate Operations. The Operating Partnership operates industrial properties and manages its business by geographic markets. Such industrial properties are typically comprised of multiple distribution warehouse facilities suitable for single or multiple customers who are engaged in various types of businesses. The geographic markets where the Operating Partnership owns industrial properties are managed separately because it believes each market has its own economic characteristics and requires its own operating, pricing and leasing strategies. Each market is considered to be an individual operating segment. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Operating Partnership evaluates performance based upon property net operating income of the combined properties in each segment, which are listed below. In addition, the Operating Partnership’s development business is included under real estate operations. It primarily consists of the Operating Partnership’s development of real estate properties that are subsequently contributed to a co-investment venture fund in which the Operating Partnership has an ownership interest and for which the Operating Partnership acts as manager, or that are sold to third parties. The Operating Partnership evaluates performance of the development business by reported operating segment based upon gains generated from the disposition and/or contribution of real estate. The assets of the development business generally include properties under development and land held for development. During the period between the completion of development of a property and the date the property is contributed to an unconsolidated co-investment venture or sold to a third party, the property and its associated rental income and property operating costs are included in the real estate operations segment because the primary activity associated with the property during that period is leasing. Upon contribution or sale, the resulting gain or loss is included as gains from sale or contribution of real estate interests or development profits, as appropriate.

	•	Private Capital. The Operating Partnership, through its private capital group, AMB Capital Partners, LLC (“AMB Capital Partners”), provides real estate investment, portfolio management and reporting services to co-investment ventures and clients. The private capital income earned consists of acquisition and development fees, asset management fees and priority distributions, and promote interests and incentive distributions from the Operating Partnership’s co-investment ventures and AMB Capital Partners’ clients. With respect to the Operating Partnership’s U.S. and Mexico funds and co-investment ventures, the Operating Partnership typically earns a 90.0 basis points acquisition fee on the acquisition cost of third party acquisitions, asset management priority distributions of 7.5% of net operating income on stabilized properties, 70.0 basis points of total projected costs as asset management fees on renovation or development properties, and incentive distributions of 15% of the return over a 9% internal rate of return and 20% of the return over a 12% internal rate of return to investors on a periodic basis or at the end of a fund’s life. In Japan, the Operating Partnership earns a 90.0 basis points acquisition fee on the acquisition cost of third-party acquisitions, asset management priority distributions of 1.5% of 65% of the committed equity during the investment period and then 1.5% of unreturned equity, and incentive distributions of 20% of the return over a 10% internal rate of return and 25% of the return over a 13% internal rate of return to investors at the end of a fund’s life. In Europe, the Operating Partnership earns a 90.0 basis points acquisition fee on the acquisition cost of third-party acquisitions, asset management fees of 75.0 basis points on the gross asset value of the fund, and incentive distributions of 20% of the return over a 9% internal rate of return and 25% of the return over a 12% internal rate of return to investors on a periodic basis. The accounting policies of the segment are the same as those described in the summary of significant accounting policies under Note 2, Notes to the Consolidated Financial Statements in the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2008. The Operating Partnership evaluates performance based upon private capital income.

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 also produce earnings from our private capital business, which consists of acquisition and development fees, asset management fees and priority distributions, and promoted interests and incentive distributions from our co-investment joint ventures. Additionally, we produce earnings from the disposition of projects in our development-for-sale program and from the contributions of development properties to our co-investment joint ventures. Our long-term growth is driven by our ability to maintain and increase occupancy rates or increase rental rates at our properties, and by our ability to continue to develop and acquire new properties.

National industrial markets continued to improve. According to preliminary data provided by Torto-Wheaton Research, availability dropped 10 basis points in the first quarter of 2007 to 9.3%. This follows a drop of 40 basis points for full-year 2006, according to the same source. We think the strongest industrial markets in the U.S. are the coastal markets tied to global trade, including Los Angeles, our largest market, Miami, the San Francisco Bay Area and Seattle, and to a lesser degree Northern New Jersey/New York (with the exception of the Exit 8A submarket). While we believe that the broader Chicago market is showing signs of stabilization, certain submarkets, like the O’Hare submarket, are relatively strong. Dallas continues to recover, and Atlanta continues to suffer from a large increase in supply. Based on our assessment, the operating environment in our U.S. on-tarmac business remains good with improving cargo volumes and essentially no new supply.

We think investor demand for industrial property has remained strong over the past several years as a result of increasing national sales volumes and declining acquisition capitalization rates. We capitalized on this demand for industrial property by accelerating the repositioning of our portfolio, through the disposition of non-core properties, which was effectively completed in 2006 with our exit from the Charlotte, Columbus and Memphis markets. We plan to continue selling selected assets on an opportunistic basis or that no longer fit our strategic investment objectives, but we have substantially achieved our repositioning goals.

Occupancy levels in our portfolio continue to outperform the national industrial market, as determined by Torto-Wheaton Research. We believe that higher occupancy levels in our portfolio, driven, in part, by strengthening fundamentals in our markets tied to global trade, are contributing to rental rate growth in our portfolio. In our stronger markets, our focus is now on increasing rents as opposed to occupancy. During the prior periods of decreasing or stabilizing rental rates, we focused on occupancy by striving to sign leases with shorter terms to prevent locking in lower rent levels for long periods and to be prepared to sign new, longer-term leases during periods of growing rental rates.

~~The table below summarizes key operating and leasing statistics~~ ~~for our owned and managed operating properties as of and for the~~AMB ~~three months ended March 31~~PROPERTY, ~~2007 and 2006:~~L.P.

	Largest			Other			Total/Weighted
Owned and Managed Property Data(1)	Global Markets(2)			Global Markets(3)			Average
As of and for the three months ended March 31, 2007:
Rentable square feet		69,728,617			33,446,593			103,175,210
Occupancy percentage at period end		95.6	%		94.3	%		95.2	%
Same space square footage leased		3,745,689			1,481,342			5,227,031
Rent increases on renewals and rollovers(4)		2.7	%		3.1	%		2.8	%
As of and for the three months ended March 31, 2006:
Rentable square feet		60,157,807			35,070,136			95,227,943
Occupancy percentage at period end		96.1	%		91.4	%		94.3	%
Same space square footage leased		3,172,782			1,491,741			4,664,523
Rent increases (decreases) on renewals and rollovers		(13.2	)%		(5.5	)%		(11.4	)%

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(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 intend to hold for the long-term.
(2)		Our largest global markets include Southern California, Northern New Jersey/New York City, San Francisco Bay Area, Chicago, U.S. On-Tarmac, South Florida, Seattle, Tokyo and Paris.
(3)		Our other global markets for North America include Atlanta, Austin, Baltimore, Boston, Columbus, Dallas, Guadalajara, Houston, Mexico City, Minneapolis, New Orleans, Orlando and Querétaro. Our European markets include Amsterdam, Frankfurt, Hamburg, and Lyon. Our Asian markets include Osaka, Shanghai, and Singapore.
(4)		On a consolidated basis, rent increases on renewals and rollovers were 2.6%, 3.8% and 2.9%, for our largest global markets, other global markets and total markets, respectively.

Summary information for the reportable segments is as follows (dollars in thousands):

At March 31, 2007, our operating portfolio’s occupancy rate was 95.2%, on an owned and managed basis, a decrease of 90 basis points from the prior quarter and an increase of 90 basis points from March 31, 2006. Rental rates on lease renewals and rollovers in our portfolio increased 2.8% in the first quarter of 2007, which we think reflects the generally positive trends in the U.S. industrial availability. Cash basis same store net operating income with and without the effect of lease termination fees, grew by 6.3% in the first quarter of 2007, on an owned and managed basis. Cash basis same store net operating income consists of rental revenues less property operating expenses and real estate taxes for properties included in the same store pool, which is set annually and excludes properties purchased or developments stabilized after December 31, 2005. See Part I, Item 2: “Management’s Discussion and Analysis of Financial Condition and Results of Operations — 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. We currently expect that cash-basis same store growth in our operating portfolio, excluding lease termination fees, will be approximately 3% to 4% for 2007, on an owned and managed basis. Market rents continue to rebound from their lows and in many of our markets are back to or above their prior peak levels of 2001.


	Revenues						Property NOI(2)						Development Gains
	For the Three Months						For the Three Months						For the Three Months
	Ended March 31,						Ended March 31,						Ended March 31,
Segments(1)	2009			2008			2009			2008			2009		2008

U.S. Markets
Southern California	$	24,769		$	27,472		$	19,731		$	21,784		$	838	$	600
No. New Jersey / New York		16,006			18,884			10,224			13,398			—		—
San Francisco Bay Area		22,766			21,658			16,611			16,126			—		—
Chicago		11,388			15,169			6,844			9,715			—		2,894
On-Tarmac		13,355			13,155			7,026			7,381			—		—
South Florida		10,019			10,239			6,588			7,112			—		825
Seattle		6,213			10,121			4,942			8,158			3,044		7,236
Non — U.S. Markets
Europe		2,749			1,106			739			864			—		6,084
Japan		5,532			5,016			3,040			3,960			28,588		181
Other Markets		43,840			40,988			29,595			28,971			816		—

Total markets		156,637			163,808			105,340			117,469			33,286		17,820
Straight-line rents and amortization of lease intangibles		3,392			3,332			3,392			3,332			—		—
Discontinued operations		(6,195	)		(5,205	)		(4,466	)		(3,860	)		—		—
Private capital income		11,695			9,923			—			—			—		—

Total	$	165,529		$	171,858		$	104,266		$	116,941		$	33,286	$	17,820

We expect development to be a significant driver of our earnings growth as we expand our land and development pipeline, and contribute completed development projects into our co-investment program and recognize development profits. We think development, renovation and expansion of well-located, high-quality industrial properties should generally continue to provide us with attractive investment opportunities at a higher rate of return than we may obtain from the purchase of existing properties. Our development opportunities in Mexico, Japan and China are particularly attractive given the current lack of supply of modern industrial distribution facilities in the major metropolitan markets of these countries. Prior to our global expansion, our development pipeline was $106.8 million at the end of 2002. As a result of our global expansion and increased development capabilities, we have increased our development pipeline to approximately $1.4 billion at March 31, 2007. In addition to our committed development pipeline, we hold a total of 2,088 acres for future development or sale, 95%


(1)		The markets included in U.S. markets are a subset of the Operating Partnership’s regions defined as East, West and Central in the Americas. Japan is a part of the Operating Partnership’s Asia region.

(2)		Property net operating income (“NOI”) is defined as rental revenue, including reimbursements, less property operating expenses, which excludes depreciation, amortization, general and administrative expenses, real estate impairment losses and interest expense. For a reconciliation of NOI to net income, see the table below.

The Operating Partnership considers NOI to be an appropriate and useful supplemental performance measure because NOI reflects the operating performance of the Operating Partnership’s real estate portfolio on a segment basis, and the Operating Partnership uses NOI to make decisions about resource allocations and to assess regional property level performance. However, NOI should not be viewed as an alternative measure of the Operating Partnership’s financial performance since it does not reflect general and administrative expenses, real estate impairment losses, interest expense, depreciation and amortization costs and leasing costs, or trends in development and construction activities that could materially impact the Operating Partnership’s results from operations. Further, the Operating Partnership’s NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating NOI.

~~of which is in North America. We currently estimate that these~~AMB 2PROPERTY,~~088 acres~~ ~~of land could support approximately 35~~L.~~3 million square feet of future development~~P.

~~Going forward, we think our co-investment program with~~ ~~private-capital investors will continue to serve as a~~NOTES TO ~~significant~~CONSOLIDATED ~~source of revenues and capital for new investments.~~FINANCIAL Through these co-investment joint ventures, we typically earn acquisition fees, asset management fees and priority distributions, as well as promoted interests and incentive distributions based on the performance of the co-investment joint ventures; however, we cannot assure you that we will continue to do so. Through contribution of development properties to our co-investment joint ventures, we expect to recognize value creation from our development pipeline. As of MarchSTATEMENTS ~~31, 2007, we owned approximately 66.3~~— ~~million square feet of our properties~~ (~~51.7% of the total operating and development portfolio~~Continued) ~~through our consolidated and~~ ~~unconsolidated co-investment joint ventures. We may make additional investments through these co-investment joint ventures or new joint ventures in the future and presently plan to do so.~~

ByThe ~~the~~following ~~end~~table ofis ~~2010,~~a wereconciliation ~~expect~~from NOI to ~~have~~reported ~~approximately 50% of our~~net ~~owned and managed operating portfolio invested in non-U.S. markets~~ (~~based on owned and managed annualized base rent~~loss). ~~As of March 31~~income, ~~2007,~~a ~~our non-U.S. operating properties~~financial ~~comprised~~measure ~~14.7%~~under ofGAAP ~~our owned and managed operating portfolio~~ (~~based~~dollars ~~on annualized base rent) and 7.8% of our~~in ~~consolidated operating portfolio (based on annualized base rent~~thousands)~~. In addition to the U.S., we include Canada and Mexico as~~: target countries in North America. In Europe, our target countries currently are Belgium, France, Germany, Italy, the Netherlands, Spain and the United Kingdom. In Asia, our target countries currently are China, India, Japan, Singapore and South Korea. We expect to add additional target countries outside the United States in the future.

For our general partner 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. As a result, we cannot rely on retained earnings to fund our on-going operations to the same extent that other corporations whose parent companies are not real estate investment trusts can. We must continue to raise capital in both the debt and equity markets to fund our working capital needs, acquisitions and developments. See “Liquidity and Capital Resources” for a complete discussion of the sources of our capital.


	For the Three Months
	Ended March 31,
	2009			2008

Property NOI	$	104,266		$	116,941
Private capital revenues		11,695			9,923
Depreciation and amortization		(42,101	)		(40,969	)
General and administrative		(31,249	)		(35,126	)
Fund costs		(261	)		(222	)
Real estate impairment losses		(165,979	)		—
Other expenses		662			92
Development profits, net of taxes		33,286			17,820
Gains from sale or contribution of real estate interests, net of taxes		—			19,967
Equity (losses) in earnings of unconsolidated joint ventures, net		(34	)		2,928
Other (expenses) income		(7,065	)		4,415
Interest expense, including amortization		(32,521	)		(29,957	)
Total discontinued operations		6,277			3,923

Net (loss) income	$	(123,024	)	$	69,735

~~Summary~~The Operating Partnership’s total assets by reportable ofsegments ~~Key~~were ~~Transactions~~(dollars in thousands):

During the three months ended March 31, 2007, we completed the following significant capital deployment transactions:


	Total Assets as of
	March 31,		December 31,
	2009		2008

U.S. Markets
Southern California	$	722,670	$	776,819
No. New Jersey / New York		515,493		524,883
San Francisco Bay Area		788,010		783,345
Chicago		309,129		319,043
On-Tarmac		181,772		185,877
South Florida		410,739		411,408
Seattle		172,560		195,822
Non — U.S. Markets
Europe		472,978		484,866
Japan		560,733		860,982
Other Markets		2,047,132		2,050,431

Total markets		6,181,216		6,593,476
Investments in unconsolidated joint ventures		432,503		431,322
Non-segment assets		299,216		276,850

Total assets	$	6,912,935	$	7,301,648

• Acquired, on an owned and managed basis, eight properties in North America and Asia, aggregating approximately 1.8 million square feet, for $141.8 million; • Committed to five development projects in North America and Asia totaling 1.9 million square feet with an estimated total investment of approximately $190.7 million; • Acquired 422 acres of land for development in North America for approximately $40.8 million; • Sold two development projects totaling approximately 0.1 million square feet for an aggregate sale price of $24.7 million; • Contributed two completed development projects, aggregating approximately 0.5 million square feet, for approximately $56.0 million to AMB Institutional Alliance Fund III, L.P. and AMB-SGP Mexico, LLC, both unconsolidated joint ventures; • Contributed two land parcels to AMB DFS Fund I, LLC a co-investment partnership; and • Contributed one 0.1 million square foot operating property to AMB-SGP Mexico, LLC, an unconsolidated joint venture, for approximately $4.6 million.

See Part I, Item 1: Notes 3 and 4 of the “Notes to Consolidated Financial Statements” for a more detailed discussion of our acquisition, development and disposition activity.

~~During the three months ended March 31, 2007, we completed~~AMB ~~the~~PROPERTY, ~~following significant capital markets and other financing~~L.P. ~~transactions:~~

• NOTES TO CONSOLIDATED Raised approximately $472.1 million in net proceeds from the issuance of approximately 8.4 million shares of AMB Property Corporation’s common stock; • Obtained long-term secured debt financings for our co-investment joint ventures of $324.0 million with a weighted average interest rate of 5.7%; • Obtained $122.1 million of debt FINANCIAL STATEMENTS — (~~using exchange rates in effect at quarter end date~~Continued) with a weighted average interest rate of 3.4% for international assets; • Refinanced $305.0 million of secured debt, with a weighted average interest rate of 5.7% for AMB-SGP, L.P., one of our co-investment joint ventures; • Expanded the European revolving credit facility agreement by 100 million Euro to 328.0 million Euro (approximately $438.0 million in U.S. dollars, using the exchange rate at March 31, 2007); and • Refinanced Series D Preferred Units to, among other things, change the rate applicable 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.

~~See~~A ~~Part I,~~summary ~~Item 1:~~of ~~Notes 6,~~the 7Operating ~~and~~Partnership’s 9real ~~of the~~estate ~~“Notes~~impairment tolosses ~~Consolidated~~by ~~Financial~~reportable ~~Statements”~~segment for athe three months ~~more~~ended ~~detailed~~March 31, ~~discussion~~2009 ofis ~~our~~as ~~capital~~follows ~~markets~~(dollars ~~transactions.~~in thousands):

Critical Accounting Policies


	For the Three
	Months Ended
	March 31, 2009

U.S. Markets
Southern California	$	16,809
No. New Jersey / New York		9,056
San Francisco Bay Area		4,275
Chicago		1,330
On-Tarmac		—
South Florida		5,531
Seattle		—
Non — U.S. Markets
Europe		30,393
Japan		13,469
Other Markets		100,990

Total markets	$	181,853

~~In the preparation of financial statements, we utilize certain critical accounting policies~~12. ~~There~~Commitments ~~has~~and been no material changes in our significant accounting policies included in the notes to our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2006. Contingencies

~~THE~~Commitments ~~COMPANY~~

~~AMB~~Lease ~~Property, L~~Commitments.~~P.,~~ The aOperating ~~Delaware limited partnership, acquires,~~Partnership ~~develops~~has ~~and~~entered ~~operates~~into ~~industrial~~operating ~~properties~~ground inleases ~~key~~on ~~distribution~~certain land ~~markets~~parcels, ~~throughout~~primarily ~~North~~on-tarmac ~~America,~~facilities ~~Europe~~ and ~~Asia.~~office Wespace ~~use the~~with ~~terms~~remaining ~~“industrial~~lease ~~properties”~~terms orof ~~“industrial buildings”~~1 to ~~describe~~54 years. ~~various~~Buildings ~~types of industrial~~and ~~properties~~improvements insubject ~~our~~to ~~portfolio~~ground ~~and~~leases ~~use~~are ~~these~~depreciated ~~terms interchangeably~~ratably ~~with~~over the ~~following:~~lesser ~~logistics facilities, centers or warehouses; distribution facilities, centers or warehouses; High Throughput Distribution® (HTD®) facilities; or any combination~~ of ~~these~~the terms. Weof ~~use~~ the ~~term “owned~~related ~~and~~leases ~~managed” to describe assets in which we have at least a 10% ownership interest, for which we are the property~~ or ~~asset manager, and which we intend to hold for the~~ ~~long-term~~40 years.

WeStandby ~~commenced~~Letters ~~operations shortly before the consummation~~ of ~~AMB Property Corporation’s initial public offering on November 26, 1997~~Credit. Our strategy focuses on providing properties for customers who value the efficient movement of goods located mostly in the world’s busiest distribution markets: large, supply-constrained locations with proximity to airports, seaports and major highway systems. As of March 31, ~~2007~~2009, wethe ~~owned,~~Operating orPartnership had ~~investments in, on a~~provided ~~consolidated~~approximately ~~basis~~$22.5 million orin ~~through~~letters ~~unconsolidated~~of ~~joint ventures~~credit, ~~properties~~ ~~and~~of ~~development projects expected to total~~which ~~approximately 128~~$16.25 million ~~square~~was ~~feet~~provided ~~(11~~under its $550.90 million ~~square~~unsecured ~~meters)~~credit ~~and 1,101 buildings in 40 markets within thirteen countries~~facility. ~~Additionally,~~The asletters of ~~March 31,~~credit ~~2007,~~were ~~we managed,~~required ~~but~~to ~~did~~be ~~not~~issued ~~have~~under acertain ~~significant~~ground ~~ownership~~lease ~~interest in~~provisions, ~~industrial~~bank guarantees and other ~~properties totaling approximately 1~~commitments.~~5 million~~ ~~rentable square feet.~~

AsGuarantees ofand ~~March 31,~~Contribution Obligations. Excluding ~~2007,~~parent ~~AMB~~guarantees associated ~~Property~~with ~~Corporation~~debt ~~owned~~or ancontribution obligations as discussed in ~~approximate~~Part I, ~~95.5%~~Item 1: ~~general~~Notes 6 ~~partnership~~and ~~interest~~8 inof ~~us,~~the ~~excluding~~“Notes ~~preferred~~to ~~units.~~Consolidated AsFinancial ~~our~~Statements,” ~~sole~~as ~~general~~of ~~partner~~March 31, ~~AMB Property~~ ~~Corporation~~2009, ~~has~~ the ~~full,~~Operating ~~exclusive~~Partnership ~~and~~had ~~complete~~outstanding ~~responsibility~~guarantees and ~~for~~contribution ~~and~~obligations ~~discretion~~ in ~~our~~the aggregate amount of ~~day-to-day management~~$440.3 million ~~and~~as ~~control~~described below.

~~Our~~As ~~investment~~of ~~strategy~~March 31, ~~generally~~2009, ~~targets~~the ~~customers~~Operating ~~whose~~Partnership had ~~businesses~~outstanding ~~are~~bank ~~tied~~guarantees in the amount of $26.3 million used to ~~global~~secure ~~trade~~contingent obligations, ~~which~~primarily obligations under development and purchase agreements, ~~according~~including $0.7 million toguaranteed ~~the~~under a purchase agreement entered ~~World~~into ~~Trade~~by ~~Organization,~~an ~~has~~unconsolidated ~~grown~~joint ~~more~~venture. ~~than~~As ~~three~~of ~~times~~March 31, 2009, the Operating Partnership also guaranteed ~~world~~$51.0 million ~~gross~~and ~~domestic~~$102.4 million ~~product~~on outstanding loans on six of its consolidated joint ventures and four of its unconsolidated joint ventures, respectively.

Also, the Operating Partnership has entered into contribution agreements with its unconsolidated co-investment ventures. These contribution agreements require the Operating Partnership to make additional capital contributions to the applicable co-investment venture 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 the Operating Partnership’s share of the co-investment venture’s debt obligation or the value of its share of any property securing such debt. The Operating Partnership’s

~~growth rate over the last 30 years. To serve the facility~~ ~~needs of these customers, we seek to invest globally in major~~AMB ~~distribution markets and transportation hubs that~~PROPERTY, ~~generally,~~L.P. ~~are tied to global trade.~~

~~Our strategy is to be a leading provider of industrial~~ ~~properties in supply-constrained submarkets of our targets~~NOTES TO ~~markets.~~CONSOLIDATED ~~These submarkets are generally characterized by large~~FINANCIAL ~~population densities and typically offer substantial consumer~~STATEMENTS — (Continued) concentrations, proximity to large clusters of distribution-facility users and significant labor pools, and are generally located near key international passenger and cargo airports, seaports and major highway systems. When measured by annualized base rent, on an owned and managed basis, the substantial majority of our portfolio of industrial properties is located in our target markets, and much of this is in in-fill submarkets within our target markets. In-fill locations are characterized by supply constraints on the availability of land for competing projects as well as physical, political or economic barriers to new development.

~~Further,~~contribution inobligations ~~many~~under ofthese ~~our~~agreements ~~target~~will ~~markets,~~be ~~we focus on~~reduced ~~HTD® facilities,~~by ~~which~~the ~~are~~amounts ~~buildings~~recovered ~~designed~~by ~~to facilitate~~ the ~~rapid distribution~~lender ofand ~~our~~the ~~customers’~~fair ~~products~~market ~~rather than storage~~value of ~~goods.~~the ~~Our~~property, ~~investment~~if ~~focus~~any, ~~on HTD® assets~~used ~~is based on what we think~~ to besecure athe ~~global~~debt ~~trend toward lower inventory levels~~ and ~~expedited~~obtained ~~supply chains.~~by ~~HTD®facilities generally have a variety of physical characteristics that allow for~~ the ~~rapid~~lender ~~transport~~upon ~~of goods from point-to-point~~default. ~~These~~ ~~physical~~The ~~characteristics~~Operating ~~could include numerous dock~~Partnership’s ~~doors,~~potential ~~shallower~~obligations ~~building~~under ~~depths,~~these ~~fewer~~contribution ~~columns,~~agreements ~~large truck~~total ~~courts and more space for trailer parking~~$260.6 million ~~We think these building characteristics represent an important success factor for time-sensitive customers such~~ as ~~air~~of ~~express~~March 31, logistics and freight forwarding companies, and that these facilities function best when located in convenient proximity to transportation infrastructure, such as major airports and seaports2009.

OfOn May 30, 2008, the Operating Partnership entered into a 142.0 million Euros 364-day multi-currency revolving facility agreement (approximately $198.4 million ~~128~~in U.S. dollars, using the exchange rate at December 31, 2008) and related guarantee as loan guarantor with the Operating Partnership’s affiliate AMB Fund Management S.à.r.l. on behalf of AMB Europe Fund I, FCP-FIS, certain of the Operating Partnership’s European affiliates, ING Real Estate Finance N.V. and certain of its European affiliates as lenders and ING Real Estate Finance N.V. as facility agent. 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 the Operating Partnership. AMB Fund Management S.á.r.l. on behalf of AMB Europe Fund I, FCP-FIS indemnified the Operating Partnership for all of its obligations under the guarantee. On December 29, 2008, the Operating Partnership terminated the facility agreement and related guarantee. Prior to the termination of the facility agreement, four of the Operating Partnership’s 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 the Operating Partnership’s 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, the Operating Partnership’s 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 ~~rentable~~Euros ~~square~~(approximately ~~feet~~$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 Euros credit facility. The Operating Partnership agreed to guarantee the 50.2 million Euros amount borrowed under such existing credit facility only until the security interests were granted, at which time the guarantees would be extinguished. As of March 31, ~~2007:~~2009, the European affiliate borrowers had granted security interests to the lender, as the security agent, under and in accordance with the terms of such facility, and the guarantees of the Operating Partnership had been fully extinguished.

• Performance onand anSurety ~~owned~~Bonds. As ~~and~~of March 31, ~~managed basis~~2009, ~~which~~the ~~include~~Operating ~~investments~~Partnership ~~held~~had onoutstanding performance ~~a consolidated basis or through unconsolidated joint ventures, we owned~~ and ~~managed~~surety ~~properties,~~bonds ~~principally~~in ~~warehouse~~an ~~distribution~~aggregate ~~facilities,~~amount ~~encompassing approximately 103~~of $17.2 8 million. ~~rentable~~These ~~square~~bonds ~~feet that~~ were ~~95.2%~~issued ~~leased;~~in •connection onwith certain anof ~~owned~~its ~~and managed basis, which include investments held on a consolidated basis or through unconsolidated joint ventures, we had investments in 44 industrial~~ development projects ~~which~~and ~~are~~were ~~expected~~posted to ~~total~~guarantee certain ~~approximately~~tax ~~14.7~~obligations ~~million rentable square feet upon completion~~ and ~~one~~the ~~industrial~~construction ~~operating~~of certain real property, ~~totaling~~improvements ~~approximately~~and 0infrastructure.2 ~~million~~The ~~square~~performance ~~feet~~and surety ~~which~~bonds ~~is available for sale or contribution; • on a consolidated basis, we owned eleven development projects, totaling approximately 2.7 million rentable square feet that~~ are ~~available~~renewable ~~for sale or contribution;~~ and •expire ~~through~~upon ~~other~~the ~~non-managed~~payment ~~unconsolidated~~of ~~joint~~the taxes ~~ventures,~~due weor ~~had~~the ~~investments~~completion inof 46the ~~industrial~~improvements ~~operating properties, totaling approximately 7~~and infrastructure.~~4 million rentable square feet.~~

~~During~~Promote ~~the~~Interests ~~quarter~~and ~~ended~~Other ~~March 31, 2007, property~~Contractual ~~acquisitions,~~Obligations. Upon onthe anachievement ~~owned~~of ~~and managed basis, totaled~~certain ~~$141.8 million~~return inthresholds and the ~~U.S.~~occurrence ~~and~~of ~~Asia~~certain events, ~~including acquisitions~~the byOperating ~~AMB~~Partnership ~~Institutional~~may ~~Alliance~~be ~~Fund III~~obligated ~~and~~to ~~AMB~~make ~~Japan~~payments to ~~Fund I,~~certain ~~two~~ of ~~our~~its ~~unconsolidated~~ joint ~~ventures,~~venture ~~totaling $104.3 million~~partners ~~and~~pursuant ~~$17.3 million,~~to ~~respectively. There were no operating property dispositions during~~ the ~~quarter~~terms ~~ended~~and ~~March 31,~~provisions ~~2007.~~of Wetheir ~~contributed~~contractual ~~an operating asset for $4~~agreements.~~6 million~~ ~~and~~From ~~completed~~time ~~development~~to ~~projects~~time ~~for~~in ~~$56.0 million~~the tonormal ~~our~~course ~~private~~of ~~capital~~the ~~joint~~Operating ~~ventures~~Partnership’s ~~as part~~business, ofthe ~~our~~Operating ~~continuing~~Partnership ~~strategy~~enters tointo ~~increase~~various ~~the~~contracts ~~proportion of our~~with ~~assets~~third ~~owned~~parties inthat ~~co-investment~~may ~~joint~~obligate ~~ventures.~~it ~~During~~to ~~the~~make payments, pay ~~quarter,~~promotes weor ~~sold~~perform toother ~~third~~obligations ~~parties~~upon ~~$24.7 million~~the occurrence of ~~development~~certain ~~properties~~events.

~~Our own employees perform our corporate administrative and~~ ~~management functions, rather than our relying on an outside~~Contingencies manager for these services. We manage our portfolio of properties in a flexible operating model which includes both direct property management and a Strategic Alliance Program® in which we have established relationships with third-party real estate management firms, brokers and developers that provide property-level administrative and management services under our direction.

~~Our~~Litigation. In ~~global~~the ~~headquarters~~normal ~~are~~course ~~located~~of ~~at Pier 1~~business, ~~Bay 1,~~ ~~San Francisco,~~from ~~California~~time ~~94111;~~to ~~our~~time, ~~telephone~~the ~~number~~Operating ~~is (415) 394-9000. We~~Partnership ~~maintain~~may ~~other~~be ~~office~~involved ~~locations~~ in ~~Amsterdam, Atlanta,~~ ~~Baltimore,~~legal ~~Beijing,~~actions ~~Boston,~~relating ~~Chicago,~~to ~~Dallas,~~the ~~Frankfurt,~~ownership ~~Los Angeles,~~and ~~Menlo~~operations ~~Park,~~of ~~New Jersey, New York, Nagoya, Narita,~~its ~~Osaka,~~properties. ~~Paris,~~Management ~~Shanghai,~~does ~~Singapore,~~not ~~Tokyo~~expect ~~and~~that ~~Vancouver.~~the Asliabilities, ofif ~~March 31~~any, ~~2007,~~that wemay ~~employed~~ultimately ~~447~~result ~~individuals:~~from ~~177~~such inlegal ~~our~~actions will ~~San Francisco~~have ~~headquarters,~~a 60material inadverse ~~our~~effect ~~Boston~~on ~~office,~~the 43consolidated infinancial ~~our Tokyo office~~position, 36results inof ~~our~~operations ~~Amsterdam~~or ~~office~~cash ~~and~~flows of the ~~remainder~~Operating ~~in our~~Partnership.

~~other offices. Our website address is www.amb.com. Our~~ ~~annual reports on~~AMB ~~Form 10-K~~PROPERTY, ~~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 UL.SP. ~~Securities and~~ ~~Exchange Commission. 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 Web site that contains such reports, proxy and information statements and other information whose Internet address is http://www.sec.gov. Our general partner’s 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 the U.S. Securities and Exchange Commission.

~~Operating~~NOTES TO ~~Strategy~~CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

WeEnvironmental ~~base~~Matters. The ~~our~~Operating Partnership ~~operating~~monitors ~~strategy~~its onproperties afor ~~variety~~the presence of hazardous ~~operational~~or ~~and~~toxic substances. The Operating Partnership is not ~~service~~aware ~~offerings,~~of ~~including~~any ~~in-house~~environmental ~~acquisitions,~~liability ~~development,~~with respect to the ~~redevelopment,~~properties ~~asset~~that ~~management,~~would ~~property~~have ~~management,~~a ~~leasing~~material adverse effect on the Operating Partnership’s business, assets or results of ~~finance~~operations. However, ~~accounting~~there ~~and~~can ~~market~~be ~~research~~no assurance that such a material environmental liability does not exist. ~~Our~~The ~~strategy~~existence of isany tosuch material environmental liability would have an ~~leverage~~adverse ~~our~~effect ~~expertise~~on ~~across~~the aOperating ~~large~~Partnership’s ~~customer~~results ~~base,~~of operations and cash flow. The Operating Partnership carries ~~complement~~environmental ~~our~~insurance ~~internal~~and ~~management~~believes ~~resources~~that ~~with~~the ~~long-standing~~policy terms, ~~relationships~~conditions, ~~with~~limits ~~entrepreneurial~~and ~~real~~deductibles ~~estate~~are ~~management~~adequate and appropriate ~~development~~under ~~firms~~the incircumstances, ~~certain~~given the relative risk of ~~our~~loss, ~~target~~the cost ~~markets~~of such coverage and current industry practice.

WeGeneral ~~believe~~Uninsured ~~that~~Losses. The ~~real~~Operating Partnership ~~estate~~carries isproperty ~~fundamentally~~and arental ~~local~~loss, ~~business~~liability, flood and ~~best~~terrorism ~~operated~~insurance. byThe ~~local~~Operating ~~teams~~Partnership inbelieves ~~each~~that the ~~market~~policy ~~comprised~~terms, ofconditions, ~~AMB~~limits and deductibles are ~~employees,~~adequate ~~local~~and ~~alliance~~appropriate ~~partners~~under orthe ~~both.~~circumstances, Wegiven ~~intend to~~the ~~continue~~relative torisk ~~increase~~of ~~utilization~~loss, the cost of ~~internal~~such ~~management~~coverage and current ~~resources~~industry inpractice. ~~target~~In ~~markets~~addition, toa ~~achieve~~significant ~~both~~number ~~operating~~of the ~~efficiencies~~Operating ~~and~~Partnership’s toproperties ~~expose~~are ~~our~~located ~~customers~~in areas that are subject to earthquake activity. As a result, the Operating ~~broadening~~Partnership ~~array~~has obtained limited earthquake insurance ofon ~~AMB~~those ~~service~~properties. ~~offerings~~There are, ~~including~~however, ~~access~~certain types of extraordinary losses, such as those due to ~~multiple~~acts ~~locations~~of war, that may ~~worldwide~~be ~~and~~either uninsurable or not economically insurable. Although ~~build-to-suit~~the Operating Partnership has obtained coverage for certain acts ~~developments.~~of Weterrorism, ~~actively~~with ~~manage~~policy ~~our~~specifications ~~portfolio,~~and ~~whether~~insured ~~directly~~limits that orit ~~with~~believes anare ~~alliance~~commercially ~~partner~~reasonable, bythere ~~establishing~~can ~~leasing~~be ~~strategies,~~no ~~negotiating~~assurance ~~lease~~that ~~terms~~the Operating Partnership will be able to collect under such policies. Should an uninsured loss occur, ~~pricing~~the Operating Partnership could lose its investment in, and anticipated ~~level~~profits and ~~timing~~cash ~~of property~~flows ~~improvements~~from, a property.

Captive Insurance Company. The Operating ~~Growth~~Partnership has a wholly-owned captive insurance company, Arcata ~~Strategies~~National Insurance Ltd. (Arcata), which provides insurance coverage for all or a portion of losses below the attachment point of the Operating Partnership’s third-party insurance policies. The captive insurance company is one element of the Operating Partnership’s overall risk management program. The Operating Partnership capitalized Arcata in accordance with the applicable regulatory requirements. Arcata establishes annual premiums based on projections derived from the past loss experience at the Operating Partnership’s 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, the Operating Partnership believes that it has more comprehensive insurance coverage at an overall lower cost than would otherwise be available in the market.

~~Growth through~~13. ~~Operations~~ Derivatives and Hedging Activities

~~We seek to generate long-term internal growth through rent~~ ~~increases on existing space and renewals on rollover space by~~Risk ~~working~~Management toObjective ~~maintain a high occupancy rate at our properties and to control expenses by capitalizing on the economies~~ of ~~scale inherent~~Using ~~in owning, operating and growing a large, global~~Derivatives portfolio. During the three months ended March 31, 2007, rent on renewed and released space in our operating portfolio increased 2.8%, on an owned and managed basis. This amount excludes expense reimbursements, rental abatements, percentage rents and straight-line rents. During the three months ended March 31, 2007, cash basis same store net operating income increased by 6.3%, on an owned and managed basis. Since AMB Property Corporation’s initial public offering in November 1997, on a consolidated basis, we have experienced average annual increases in industrial property base rental rates of 4.3% and maintained an average quarter-end occupancy rate of 95.0% in our industrial property operating portfolio. While we think that it is important to view real estate as a long-term investment, past results are not necessarily an indication of future performance. 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 and Part I, Item 1: Note 11 of the “Notes to Consolidated Financial Statements” for detailed segment information, including revenue attributable to each segment, gross investment in each segment and total assets.

The Operating Partnership is exposed to certain risk arising ~~Growth~~from both its business operations and economic conditions. The Operating Partnership principally manages its exposures to a wide variety of business and operational risks through management ~~Development~~of its core business activities. The Operating Partnership manages economic risks, including interest rate, liquidity, and ~~Value-Added~~credit ~~Conversions~~risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Operating Partnership enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Operating Partnership’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Operating Partnership’s known or expected cash receipts and its known or expected cash payments principally related to the Operating Partnership’s borrowings. The Operating Partnership’s derivative financial instruments in effect at March 31, 2009 were three interest rate swaps hedging cash flows of variable rate borrowings based on U.S. LIBOR.

WeCertain ~~think~~of ~~that~~the ~~development,~~Operating ~~redevelopment~~Partnership’s ~~and~~foreign ~~expansion of~~operations ~~well-located,~~expose ~~high-quality~~the ~~industrial~~Operating ~~properties~~Partnership ~~should continue~~ to ~~provide~~fluctuations usof ~~with attractive investment opportunities at a~~foreign ~~higher~~interest ~~rate~~rates ofand ~~return~~exchange ~~than~~rates. weThese fluctuations may ~~obtain from the purchase of~~impact ~~existing properties. We have~~ the ~~in-house expertise to create~~ value ~~both~~of ~~through~~the ~~new~~Operating ~~construction~~Partnership’s ~~and~~cash ~~acquisition~~receipts and ~~management~~payments in terms of ~~value-added~~the ~~properties.~~Operating ~~Value-added~~Partnership’s ~~conversion~~functional ~~projects~~currency. ~~represent~~The ~~the~~Operating ~~development~~Partnership ofenters ~~land~~into ~~or a building site~~derivative ~~for~~financial ainstruments ~~more~~to ~~valuable~~protect ~~use~~the ~~and~~value ~~may~~or ~~include~~fix ~~such~~the ~~activities~~amount asof ~~rezoning,~~certain ~~redesigning,~~obligations ~~reconstructing~~in ~~and~~terms ~~retenanting.~~of ~~Both new~~its ~~development and value-added conversions require~~

~~significant management attention and capital investment to~~ ~~maximize their return. Completed development properties are~~AMB ~~generally~~PROPERTY, ~~contributed to our co-investment joint ventures and held in our owned and managed portfolio or sold to third parties~~L. ~~We think our global market presence and expertise will~~P. ~~enable us to continue to generate and capitalize on a diverse~~ ~~range of development opportunities.~~

~~The multidisciplinary backgrounds of our employees should~~ ~~provide us with the skills and experience to capitalize on~~NOTES TO ~~strategic~~CONSOLIDATED ~~renovation, expansion and development opportunities.~~FINANCIAL ~~Many of our employees have specific experience in real estate~~STATEMENTS — (Continued) development, both with us and with national development firms, and over the past four years, we have significantly expanded our development staff. We pursue development projects directly and in joint ventures, providing us with the flexibility to pursue development projects independently or in partnerships, depending on market conditions, submarkets or building sites.

~~Growth~~functional currency, the U.S. dollar. At March 31, ~~through~~2009, ~~Acquisitions~~the ~~and~~Operating ~~Capital~~Partnership ~~Redeployment~~had four currency forward contracts hedging intercompany loans.

~~Our acquisition experience and our network of property~~ ~~management,~~Cash ~~leasing and acquisition resources should continue to~~Flow ~~provide~~Hedges opportunities for growth. In addition to our internal resources, we have long-term relationships with third-party local property management firms, which may give us access to additional acquisition opportunities, as such managers frequently market properties on behalf of ~~sellers.~~Interest WeRate ~~think AMB~~Risk Property Corporation’s UPREIT structure, which enables us to acquire land and industrial properties in exchange for our or AMB Property II, L.P.’s limited partnership units, enhances our attractiveness to owners and developers seeking to transfer properties on a tax-deferred basis. In addition, we seek to redeploy capital from non-strategic assets into properties that better fit our current investment focus.

WeThe ~~are~~Operating ~~generally~~Partnership’s ~~engaged~~objectives in ~~various~~using ~~stages of negotiations for a~~interest ~~number~~rate ofderivatives ~~acquisitions~~are ~~and~~to ~~dispositions~~add ~~that~~stability ~~may~~to ~~include acquisitions~~interest expense and ~~dispositions of individual properties, large~~to ~~multi-property~~manage ~~portfolios~~its orexposure ~~other~~to ~~real~~interest ~~estate~~rate ~~companies~~movements. WeTo accomplish ~~cannot~~this ~~assure~~objective, ~~you~~the ~~that~~Operating wePartnership ~~will~~primarily ~~consummate~~uses interest ~~any~~rate ofswaps ~~these transactions.~~and ~~Such~~caps ~~transactions,~~as ifpart weof ~~consummate~~its ~~them,~~interest ~~may~~rate berisk ~~material~~management ~~individually~~strategy. orInterest inrate ~~the~~swaps ~~aggregate.~~designated ~~Sources~~as ofcash ~~capital~~flow ~~for~~hedges ~~acquisitions~~involve ~~may~~the ~~include~~receipt ~~retained~~of ~~cash~~variable-rate ~~flow~~amounts from ~~operations,~~a ~~borrowings~~counterparty ~~under~~in ~~our~~exchange ~~unsecured~~for ~~credit~~the ~~facilities,~~Operating ~~other~~Partnership ~~forms of~~making ~~secured~~fixed-rate orpayments ~~unsecured~~over ~~debt~~the ~~financing,~~life ~~issuances~~ of ~~debt~~the oragreements without ~~preferred~~exchange orof ~~common~~the ~~equity~~underlying ~~securities~~notional byamount. usInterest orrate ~~our general~~caps ~~partner,~~designated ~~issuances~~as ofcash ~~limited~~flow ~~partnership~~hedges ~~units~~involve ~~(including issuances~~the ofreceipt ~~limited partnership units in our subsidiaries),~~of ~~proceeds~~variable-rate amounts from ~~divestitures~~a ofcounterparty ~~properties,~~if ~~assumption~~interest ofrates ~~debt~~rise ~~related~~above to the ~~acquired~~strike ~~properties~~rate ~~and~~on ~~private~~the ~~capital~~contract ~~from~~in ~~our~~exchange for an up ~~co-investment~~front ~~partners~~premium.

The effective portion of changes in the fair value of ~~Growth~~derivatives designated and that qualify as cash flow hedges is ~~through~~recorded ~~Global~~in ~~Expansion~~accumulated other comprehensive (loss) income as a separate component of partners’ capital and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three months ended March 31, 2009, such derivatives were used to hedge the variable cash flows associated with existing variable-rate borrowings.

ByAmounts ~~the~~reported ~~end of 2010, we expect to have approximately 50% of our owned and managed operating portfolio invested~~ in ~~non-U.S. markets (based~~ onaccumulated ~~annualized~~other ~~base~~comprehensive ~~rent~~(loss)~~. As of March 31, 2007, our~~ ~~non-U.S. operating properties~~income ~~comprised~~related ~~14.7%~~to ofderivatives ~~our~~will ~~owned~~be ~~and~~reclassified ~~managed~~to ~~operating~~interest ~~portfolio~~expense ~~(based~~as oninterest ~~annualized~~payments ~~base~~are ~~rent)~~made ~~and 7.8% of our consolidated operating portfolio (based~~ on ~~annualized base rent). In addition to~~ the ~~United States, we include Canada and~~Operating ~~Mexico~~Partnership’s asvariable-rate ~~target countries in North America~~borrowings. InFor ~~Europe,~~the ~~target~~twelve ~~countries~~months ~~currently~~from ~~are Belgium~~March 31, ~~France~~2009, ~~Germany,~~the ~~Italy,~~Operating ~~the~~Partnership ~~Netherlands,~~estimates ~~Spain~~that ~~and~~an ~~the~~additional ~~United Kingdom~~$6.1 million Inwill ~~Asia target~~be ~~countries~~reclassified ~~currently~~as ~~are~~an ~~China,~~increase ~~India, Japan, Singapore and South Korea. We expect~~ to ~~add~~interest ~~additional target countries outside the United States in the future~~expense.

~~Expansion~~As ~~into target markets outside the U.S. represents a natural extension~~ of ~~our strategy to invest in industrial property markets with high population densities~~March 31, ~~close proximity to large customer clusters and available labor pools~~2009, ~~and~~the ~~major distribution~~Operating ~~centers~~Partnership ~~serving~~had ~~global trade. Our international expansion strategy mirrors our focus in~~ the ~~United States on~~ ~~supply-constrained~~following ~~submarkets~~outstanding ~~with~~interest ~~political,~~rate ~~economic~~derivatives or physical constraints to new development. Our international investments extend our offering of HTD® facilities for customers who value speed-to-market over storage. Specifically, we are focused on customers whose business is derived from global trade. In addition, our investments target major consumer distribution markets and customers. We think that ~~our established customer relationships,~~were ~~our~~designated ~~contacts~~as incash ~~the~~flow ~~air~~hedges ~~cargo and logistics industries, our underwriting~~ of ~~markets~~interest ~~and~~rate investments and our strategic alliances with knowledgeable developers and managers will assist us in competing internationally. For a discussion of the amount of our revenues attributable to the United States and international markets, please see Part I, Item 1risk: ~~Note 11 of the “Notes to Consolidated Financial Statements.”~~


	Number of		Notional
Related Derivatives	Instruments		Amount
			(in thousands)

Interest rate swaps		3	$	555,000

Non-designated Hedges

Derivatives not designated as hedges are not speculative and are used to manage the Operating Partnership’s exposure to identified risks, such as foreign currency exchange rate fluctuations, but do not meet the strict hedge accounting requirements of SFAS 133. At March 31, 2009, the Operating Partnership had four foreign currency forward contracts hedging intercompany loans which were not designated as hedges. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings which resulted in losses of $3.2 million for the three months ended March 31, 2009.

As of March 31, 2009, the Operating Partnership had the following outstanding derivatives that were non-designated hedges:


	Number of		Notional
Related Derivatives	Instruments		Amount
			(in thousands)

Foreign exchange forward contracts		4	$	595,645

~~Growth~~AMB ~~through~~PROPERTY, ~~Co-Investments~~L.P.

~~We co-invest in properties with private-capital investors~~ ~~through partnerships, limited liability companies or joint~~NOTES TO ~~ventures.~~CONSOLIDATED ~~Our co-investment joint ventures are managed by our~~FINANCIAL private capital group and typically operate under the same investment strategy that we apply to our other operations. Typically, we will own a 15-50% interest in our co-investment joint ventures. We expect our co-investment program will continue to serve as a source of capital for acquisitions and developments; however, we cannot assure you that it will continue to do so. In addition, our co-investment joint ventures typically allow us to earn acquisition and development fees, asset management fees or priority distributions, as well as promoted interests or incentive distributions based on the performance of the co-investment joint ventures. As of MarchSTATEMENTS ~~31, 2007, we owned approximately 66.3~~— ~~million square feet of our properties~~ (~~51.7% of the total operating and development portfolio~~Continued) ~~through our consolidated and unconsolidated joint~~ ~~ventures.~~

The table below presents the fair value of the Operating ~~CONSOLIDATED~~Partnership’s derivative financial instruments as well as ~~RESULTS~~their OFclassification ~~OPERATIONS~~on the consolidated balance sheets as of March 31, 2009 (in thousands):

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 in light of changes to the partnership agreement regarding our rights as the general partner effective October 1, 2006. As a result, our results of operations presented below are not comparable between years presented.

Fair Value of Derivative Instruments at March 31, 2009

Asset Derivatives

Liability Derivatives

Balance Sheet

Fair

Balance Sheet

Fair

Location

Value

Location

Value

Derivatives designated as hedging instruments under SFAS No. 133

Interest rate swaps

Other assets

—

Other assets

6,315

Derivatives not designated as hedging instruments under SFAS No. 133

Foreign exchange forward contracts

Other assets

196

Other assets

2,573

Total derivative instruments

196

8,888

The ~~analysis~~tables below ~~includes~~present ~~changes~~the ~~attributable~~effect toof ~~same~~the ~~store~~Operating ~~growth,~~Partnership’s ~~acquisitions,~~derivative ~~development~~financial ~~activity~~instruments ~~and~~on ~~divestitures.~~the ~~Same~~consolidated ~~store~~statements ~~properties~~of ~~are~~operations ~~those~~for ~~that we owned during both~~ the ~~current~~ ~~and~~three ~~prior~~months ~~year reporting periods, excluding development~~ended ~~properties stabilized after December~~March 31, ~~2005~~2009 (~~generally defined~~in ~~as properties that are 90% leased or properties for which we have held a certificate of occupancy or where building has been substantially complete for at least 12 months~~thousands).:

As of March 31, 2007, same store industrial properties consisted of properties aggregating approximately 77.1 million square feet. The properties acquired during the three months ended March 31, 2007, consisted of one property, aggregating approximately 0.2 million square feet. During the three months ended March 31, 2006, our acquisitions consisted of six properties, aggregating approximately 2.1 million square feet. During the three months ended March 31, 2007, property divestitures and contributions consisted of three properties, aggregating approximately 0.6 million square feet. During the three months ended March 31, 2006, property divestitures consisted of three properties, aggregating approximately 0.3 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.

Amount of Gain (Loss)

Location of Gain (Loss)

Amount of Gain (Loss)

Derivative Instruments in

Recognized in Accumulated

Reclassified from

SFAS No. 133 Cash Flow

Other Comprehensive (Loss)

Accumulated OCI into

Hedging Relationships

Income (OCI) (Effective Portion)

Income (Effective Portion)

Interest rate swaps

305

Interest expense

(1,994

)

For the Three Months ended March 31, 2007 and 2006 (dollars in millions):


Derivative Instruments Not	Location of Gain (Loss)	Amount of
Designated as Hedging	Recognized in Statement	Gain (Loss)
Instruments under SFAS No. 133	of Operations	Recognized

Foreign exchange forward contracts	Other (expenses) income	$	(3,166	)

Revenues	2007		2006		$ Change			% Change
Rental revenues
U.S. industrial:
Same store	$	139.4	$	151.0	$	(11.6	)		(7.7	)%
2006 acquisitions		2.5		0.3		2.2			733.3	%
Development		2.7		0.9		1.8			200.0	%
Other industrial		2.7		2.6		0.1			3.8	%
Non U.S. industrial		14.8		16.5		(1.7	)		(10.3	)%
Total rental revenues		162.1		171.3		(9.2	)		(5.4	)%
Private capital income		5.9		5.1		0.8			15.7	%
Total revenues	$	168.0	$	176.4	$	(8.4	)		(4.8	)%

Credit-risk-related Contingent Features

~~U.S. industrial~~In ~~same~~order ~~store~~to ~~rental~~limit ~~revenues~~the ~~decreased~~financial risks associated with derivative ~~$11.6 million~~applications, ~~from~~ the ~~prior~~Operating ~~year~~Partnership onrequires arigorous ~~quarter-to-date basis~~counterparty ~~due~~selection ~~primarily~~criteria toand ~~the~~agreements ~~deconsolidation~~to ~~of AMB Institutional~~minimize ~~Alliance~~counterparty ~~Fund III,~~risk Lfor over-the-counter derivatives.P ~~Pro~~For ~~forma~~the Operating ~~same~~Partnership’s ~~store~~derivatives, ~~rental~~the ~~revenues~~counterparty is ~~for~~typically the ~~quarter~~same ~~ended~~entity ~~March 31~~as, ~~2006,~~or ~~would~~an ~~have~~affiliate ~~been $135.1 million~~of, ifthe ~~AMB Institutional Alliance~~lender.

The Operating Partnership’s agreements with its derivative counterparties contain default and termination provisions related to the Operating Partnership’s debt. If certain of the Operating Partnership’s indebtedness (excluding its corporate lines of credit and intra-company indebtedness) in an amount in excess of three percent of the Company’s equity, as determined at the end of the last fiscal year, becomes, or becomes capable of being declared, due and payable earlier than it otherwise would have been, then the Operating Partnership could also be declared in default on its derivative obligations. Also, if an event of default occurs under the Operating Partnership’s corporate lines of credit and, as a result, amounts outstanding under such lines are declared or become due and payable in an amount in excess of three percent of the Company’s equity, as determined at the end of the last fiscal year, it shall constitute an additional termination event under the derivative contracts.

As of March 31, 2009, the fair value of derivatives in a liability position related to these agreements was $8.9 million.

~~Fund III, L.P. had been deconsolidated as of~~ ~~January 1, 2006. The properties acquired during the fiscal~~AMB ~~year ended December 31~~PROPERTY, ~~2006 consisted of 27 properties, aggregating approximately 6~~L.~~6 million square feet~~P. ~~The~~ ~~properties acquired during the first quarter of 2007 consisted~~ of one building, aggregating approximately 0.2 million square feet. The increase in rental revenues from development is primarily due to increased occupancy at several of our development projects where development activities have been substantially completed. Other industrial revenues include rental revenues from development projects that have reached certain levels of operation and are not yet part of the same store operating pool of properties. The decrease in revenues from non-U.S. industrial properties is primarily due to the contribution of certain non-U.S. industrial properties to two of our unconsolidated joint ventures during 2006. The increase in private capital income of $0.8 million was primarily due to an increase in asset management fees as a result of an increase in total assets under management.

Costs and Expenses	2007		2006		$ Change			% Change
Property operating costs:
Rental expenses	$	25.3	$	24.3	$	1.0			4.1	%
Real estate taxes		18.9		19.8		(0.9	)		(4.5	)%
Total property operating costs	$	44.2	$	44.1	$	0.1			0.2	%
Property operating costs
U.S. industrial
Same store	$	38.7	$	40.4	$	(1.7	)		(4.2	)%
2006 acquisitions		0.7		0.1		0.6			600.0	%
Development		1.0		0.4		0.6			150.0	%
Other industrial		0.6		0.3		0.3			100.0	%
Non U.S. industrial		3.2		2.9		0.3			10.3	%
Total property operating costs		44.2		44.1		0.1			0.2	%
Depreciation and amortization		41.0		42.8		(1.8	)		(4.2	)%
General and administrative		29.9		23.1		6.8			29.4	%
Impairment losses		0.3		—		0.3			100.0	%
Other expenses		0.9		0.5		0.4			80.0	%
Fund costs		0.2		0.6		(0.4	)		(66.7	)%
Total costs and expenses	$	116.5	$	111.1	$	5.4			4.9	%

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~Same store properties’ operating expenses showed a decrease of $1~~14.~~7 million~~ ~~from~~Subsequent the prior year on a quarter-to-date basis due primarily to the deconsolidation of AMB Institutional Alliance Fund III, L.P. Pro forma same store operating expenses for the quarter ended March 31, 2006, would have been $36.5 million, if AMB Institutional Alliance Fund III, L.P. had been deconsolidated as of January 1, 2006. The 2006 acquisitions consisted of 27 properties, aggregating approximately 6.6 million square feet. The 2007 acquisitions consisted of one property, aggregating approximately 0.2 million square feet. The increase in development operating costs is primarily due to increased operations in certain development projects which have been substantially completed. Other industrial expenses include expenses from development properties that have reached certain levels of operation and are not yet part of the same store operating pool of properties. In 2006 and 2007, we continued to acquire properties in China, France, Germany, Japan, Mexico and the Netherlands, resulting in increased international operating costs. 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 satellite offices both domestically and internationally. The impairment loss during the quarter ended March 31, 2006, was taken on a non-core asset as a result of leasing activities and changes in the economic environment. Other expenses increased approximately $0.4 million from the prior year on a quarter-to-quarter basis due primarily to an increase in certain deal costs. Fund costs represent general and administrative costs paid to third parties associated with our co-investment joint ventures. The decrease of fund costs from the prior year on a quarter-to-date basis is due primarily to the deconsolidation of AMB Institutional Events

On April 28, 2009, the Operating Partnership commenced a cash tender offer to purchase any and all of its outstanding 8.00% medium-term notes due 2010, which had $75.0 million aggregate principal outstanding, and any and all of its outstanding 5.45% medium-term notes due 2010, which had $175.0 million aggregate principal outstanding. The tender offer expired on May 5, 2009, with $28.5 million and $146.5 million in aggregate principal amount of the 8.00% medium-term notes due 2010 and 5.45% medium-term notes due 2010, respectively, validly tendered, not withdrawn and accepted by the Operating Partnership for purchase.

~~Alliance~~Item ~~Fund III, L~~2.~~P.,~~ ~~and~~Management’s ~~greater~~Discussion ~~fund~~and ~~costs~~Analysis inof ~~2006 related~~Financial toCondition ~~the~~and ~~dissolution~~Results of ~~AMB Institutional Alliance Fund I, L.P.~~ Operations

Other Income and (Expenses)	2007			2006			$ Change			% Change
Equity in earnings of unconsolidated joint ventures, net	$	2.1		$	2.1		$	—			—	%
Other income		5.5			3.5			2.0			57.1	%
Gains from dispositions of real estate interests, net		0.1			—			0.1			—	%
Development profits, net of taxes		12.2			0.7			11.5			1,642.9	%
Interest expense, including amortization		(33.8	)		(39.2	)		(5.4	)		(13.8	)%
Total other income and (expenses), net	$	(13.9	)	$	(32.9	)	$	(19.0	)		(57.8	)%

Some of the information included in this quarterly report on Form 10-Q 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 terminology such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “forecasting,” “pro forma,” “estimates” or “anticipates,” or the negative of these words and phrases, or similar words or phrases. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements 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. There is no assurance that the events or circumstances reflected in forward-looking statements will occur or be achieved. Forward-looking statements are necessarily dependent on assumptions, data or methods that may be incorrect or imprecise and we may not be able to realize them.

Other income increased approximately $2.0 million as compared to the three months ended March 31, 2006, due primarily to insurance proceeds related to losses from hurricanes Katrina and Wilma. Development profits represent gains from the sale or contribution of development projects including land. The ~~increase~~following ~~in development profits was primarily due to increased contribution volume during the three months ended March 31~~factors, ~~2007.~~among ~~During the three months ended March 31~~others, ~~2007,~~could wecause ~~sold two development projects, totaling~~actual ~~approximately~~results 0.1 million square feet for $24.7 million, resulting in an after-tax gain of approximately $3.3 million. During the three months ended March 31, 2007, we contributed two completed development projects totaling approximately 0.5 million square feet into AMB Institutional Alliance Fund III, L.P and ~~AMB-SGP Mexico,~~future ~~LLC,~~events ~~two~~to ~~unconsolidated~~differ ~~joint~~materially ~~ventures.~~from Inthose ~~addition, two~~set ~~land~~forth ~~parcels~~or ~~were~~contemplated contributed into AMB DFS Fund I, LLC, a co-investment partnership. As a result of these contributions, we recognized an aggregate after-tax gain of approximately $8.9 million representing the portion of our interest in ~~the~~ ~~contributed properties acquired by~~ the ~~third~~forward-~~party co-investors~~looking ~~for cash. During the three months ended~~statements: March 31, 2006, we sold one land parcel for an aggregate price of $4.7 million, resulting in an after tax gain of approximately $0.7 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., partially offset by refinancing costs associated with the refinanced $305.0 million of secured debt for AMB-SGP, L.P., one of our co-investment joint ventures.

Discontinued Operations	2007		2006		$ Change			% Change
Income attributable to discontinued operations, net of minority interests	$	0.1	$	2.3	$	(2.2	)		(95.7	)%
Gains from dispositions of real estate, net of minority interests		—		7.4		(7.4	)		(100.0	)%
Total discontinued operations	$	0.1	$	9.7	$	(9.6	)		(99.0	)%


	•	changes in general economic conditions, global trade or in the real estate sector (including risks relating to decreasing real estate valuations and impairment charges);

	•	risks associated with using debt to fund our business activities, including re-financing and interest rate risks;

	•	our failure to obtain, renew, or extend necessary 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., or the global economy, world trade 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, 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;

	•	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 conversion (including construction delays, cost overruns, our inability to obtain necessary permits and financing, our inability to lease properties at all or at favorable rents and terms, 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;

During the three months ended March 31, 2007, we did not divest any industrial buildings. During the three months ended March 31, 2006, we divested three industrial buildings, aggregating approximately 0.3 million square feet, for an aggregate price of $14.7 million, with a resulting net gain of $7.4 million.

Preferred Units	2007			2006			$ Change			% Change
Preferred unit distributions	$	(5.5	)	$	(4.7	)	$	0.8			17.0	%
Preferred unit redemption issuance costs		—			(1.1	)		(1.1	)		(100.0	)%
Total preferred units	$	(5.5	)	$	(5.8	)	$	(0.3	)		(5.2	)%

In August 2006, we issued 2,000,000 6.85% Series P Cumulative Redeemable Preferred Units. The increase in preferred unit distributions is due to the then newly-issued units. In addition, during March 2006, AMB Property II, L.P., one of our subsidiaries, redeemed all 840,000 of its outstanding 8.125% Series H Cumulative Redeemable Preferred Partnership Units, and we recognized a reduction of income available to common unitholders of $1.1 million for the original issuance costs.

~~LIQUIDITY AND~~• ~~CAPITAL~~our ~~RESOURCES~~ failure to successfully integrate acquired properties and operations; • changes in local, state and federal regulatory requirements, including changes in real estate and zoning laws; • increases in real property tax rates; • risks associated with our tax structuring; • increases in interest rates and operating costs or greater than expected capital expenditures; and • environmental uncertainties and risks related to natural disaster.

~~Balance~~Our ~~Sheet~~success ~~Strategy. In~~also ~~general,~~depends weupon ~~use~~economic trends generally, ~~unsecured~~various ~~lines~~market ofconditions ~~credit,~~and ~~unsecured~~fluctuations ~~notes,~~and ~~preferred~~those ~~units~~other ~~and~~risk ~~common~~factors ~~units~~discussed ~~(issued~~under bythe usheading “Risk Factors” and ~~and/or~~elsewhere in our Annual Report on ~~subsidiaries)~~Form 10-K for tothe ~~capitalize~~year ~~our~~ended ~~100%-owned~~December 31, ~~assets.~~2008, ~~Over~~and ~~time,~~any weamendments ~~plan~~thereto. We caution you not to ~~retire~~place ~~non~~undue reliance on forward-~~recourse~~looking statements, ~~secured~~which ~~debt~~reflect ~~encumbering~~ our analysis only and ~~100%-owned~~speak ~~assets~~as ~~and~~of ~~replace~~the ~~that~~date ~~debt~~of ~~with~~this ~~unsecured~~report ~~notes.~~or Inas of the dates indicated ~~managing~~in the statements. All of our coforward-~~investment~~looking ~~joint ventures~~statements, including those in ~~general~~this report, weare ~~use~~qualified in their entirety ~~non-recourse,~~by ~~secured~~this ~~debt~~statement. toWe ~~capitalize~~assume ~~our~~no ~~co-investment~~obligation ~~joint~~to update or ~~ventures~~supplement forward-looking statements.

WeUnless ~~currently~~the ~~expect~~context ~~that~~otherwise ~~our~~requires, ~~principal~~the ~~sources~~terms “AMB,” ofthe ~~working~~“Company,” “we,” ~~capital~~“us” and ~~funding~~“our” ~~for~~refer ~~acquisitions,~~to ~~development~~AMB Property, ~~expansion~~ L.P. and its controlled subsidiaries. The following marks are the ~~renovation~~registered trademarks of ~~properties~~AMB ~~will~~Property ~~include~~Corporation, our general partner: AMB®; and High Throughput Distribution® (HTD®).

• Our ~~retained~~website ~~earnings~~address ~~and~~is http://www.amb.com. Our ~~cash~~general ~~flow~~partner’s ~~from~~annual ~~operations;~~reports •on Form 10-K, quarterly ~~private~~reports ~~capital~~on Form 10-Q, current ~~from~~reports coon Form 8-~~investment~~K and ~~partners;~~any •amendments ~~net~~to ~~proceeds~~those ~~from~~reports ~~contribution~~filed or furnished pursuant to Section 13(a) or 15(d) of ~~properties~~the ~~and~~Securities ~~completed~~Exchange ~~development~~Act ~~projects~~of 1934 toare available on our cowebsite 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-~~investment~~800-SEC-0330. The ~~joint~~SEC ~~ventures;~~maintains •a ~~borrowings~~website ~~under~~that ~~our~~contains ~~unsecured~~such ~~credit~~reports, ~~facilities;~~proxy and •information statements and other ~~forms~~information, and the Internet address is http://www.sec.gov. Our general partner’s Corporate Governance Principles and Code of ~~secured~~Business orConduct ~~unsecured~~are ~~financing;~~also •posted ~~proceeds~~on ~~from~~our ~~equity~~website. Information ~~(common~~contained on our website is not and ~~preferred)~~should not be deemed a part of this report or ~~debt~~any ~~securities~~other ~~offerings;~~report •or ~~proceeds~~filing ~~from~~filed with ~~limited~~or furnished to the SEC. The operating partnership ~~unit~~does ~~offerings~~not have ~~(including~~a ~~issuances~~separate internet address and its SEC reports are available free of ~~limited~~charge ~~partnership~~upon ~~units~~request byto the attention of our Investor ~~subsidiaries);~~Relations ~~and~~Department, •C/O ~~net~~AMB ~~proceeds~~Property ~~from~~Corporation, Pier ~~divestitures~~1, ofBay ~~properties~~1, San Francisco, CA 94111.

~~We currently expect that our principal funding requirements will~~THE ~~include:~~COMPANY

• We ~~working~~own, ~~capital;~~acquire, •develop ~~development,~~and ~~expansion~~operate industrial properties in key distribution markets tied to global trade in the Americas, Europe and ~~renovation~~Asia. We use the terms “industrial properties” or “industrial buildings” to describe the various types of industrial properties in our portfolio and use these terms interchangeably with the following: logistics facilities, centers or warehouses; •distribution ~~acquisitions~~facilities, centers ~~including~~or ~~our~~warehouses; ~~global~~High ~~expansion~~Throughput Distribution® (HTD®) facilities; •or ~~debt~~any ~~service;~~combination of these terms. We use the term “owned and •managed” to describe 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. We use the term “joint venture” to describe all joint ventures, which include co-investment ventures, as well as ventures with third parties. We typically earn asset management distributions onor ~~outstanding~~fees, ~~common~~or earn incentive distributions or promote interests from the joint ventures. In certain cases, we might provide development, leasing, property management and/or accounting ~~preferred~~services, ~~limited~~for ~~partnership~~which ~~units~~we may receive compensation. We use the term “co-investment venture” to describe joint ventures with institutional

Cash flows. For the three months ended March 31, 2007, cash provided by operating activities was $56.0 million as compared to $52.1 million for the same period in 2006. This change is primarily due to changes in our assets and liabilities offset by an increase in general and administrative expenses primarily due to additional staffing and expenses for new initiatives, including our international and development expansions and increased occupancy costs. Cash used for investing activities was $162.2 million for the three months ended March 31, 2007, as compared to cash used for investing activities of $309.1 million for the same period in 2006. This change is primarily due to a decrease in funds used for property acquisitions and capital expenditures and an increase in proceeds from divestitures of real estate driven by increased volume. Cash provided by financing activities was $191.0 million for the three months ended March 31, 2007, as compared to cash provided by financing activities of $165.6 million for the same period in 2006. This change is due primarily to an increase in borrowings, net of repayments, the refinancing of $305.0 million of secured debt for one of our co-investment joint ventures, the issuance of common stock upon the exercise of options and the issuance of approximately 8.4 million shares of common units for net proceeds of approximately $472.1 million, which were offset by an increase in payments on secured debt, credit facilities, and senior debt, during the three months ended March 31, 2007.

We believe our sources of working capital, specifically our cash flow from operations, borrowings available under our unsecured credit facilities and our ability to access private and public debt and equity capital, are adequate for us to meet our liquidity requirements for the foreseeable future. The unavailability of capital could adversely affect our financial condition, results of operations, cash flow and ability to make distributions to our unitholders and payments to our noteholders.

investors that are managed by us, from which we receive ~~Capital~~acquisition fees for acquisitions, portfolio and asset ~~Resources~~management distributions or fees, as well as incentive distributions or promote interests.

~~Property~~As ~~Divestitures. During~~of ~~the three months ended~~ March 31, ~~2007~~2009, weAMB ~~did~~Property ~~not~~Corporation ~~divest~~owned ~~of any industrial~~an ~~buildings~~approximate 97.7% ~~During~~general ~~the~~partnership ~~three~~interest ~~months~~in ~~ended March 31~~us, ~~2006, we~~excluding ~~divested~~preferred ofunits. ~~three~~As ~~industrial~~our ~~buildings~~sole ~~aggregating~~general ~~approximately~~partner, AMB Property ~~0.3 million~~Corporation ~~square~~has ~~feet~~the full, ~~for~~exclusive anand ~~aggregate~~complete ~~price of~~responsibility ~~$14.7 million,~~for ~~with~~and adiscretion ~~resulting~~in ~~net~~our ~~gain~~day-to-day ~~of $7~~management and control.~~4 million.~~

~~Gains~~Our ~~from~~own ~~Contributions~~employees ofperform ~~Real~~our ~~Estate Interests. During~~corporate ~~the~~administrative ~~three months ended~~and ~~March 31,~~management ~~2007~~functions, werather ~~contributed~~than ~~into~~our ~~AMB-SGP~~relying ~~Mexico,~~on ~~LLC,~~ an outside ~~operating~~manager ~~property,~~for ~~aggregating~~these ~~approximately 0~~services.~~1 million~~ We manage our portfolio of ~~square~~properties ~~feet,~~generally ~~for~~through ~~approximately~~direct ~~$4.6 million.~~property ~~We recognized~~management aperformed ~~gain~~by ofour $0own employees.~~1 million~~ ~~on the contribution~~Additionally, ~~representing~~within our ~~the~~flexible ~~portion~~operating ofmodel, ~~our~~we ~~interest~~may infrom ~~the~~time ~~contributed~~to ~~property~~time ~~acquired~~establish byrelationships awith third-party ~~investor~~real ~~for~~estate ~~cash.~~management ~~For~~firms, brokers ~~the~~and ~~three~~developers ~~months~~that ~~ended~~provide some property-level ~~March 31,~~administrative ~~2006,~~and nomanagement ~~such~~services ~~contributions~~under ~~were~~our ~~made by us~~direction.

~~Development~~Our ~~Starts. During~~global ~~the~~headquarters ~~three~~are ~~months~~located at Pier 1, Bay 1, ~~ended March~~San 31Francisco, ~~2007,~~California we94111; ~~initiated~~our ~~five~~telephone ~~new~~number ~~industrial~~is ~~development~~(415) 394-9000. Our ~~projects~~other inprincipal ~~North~~office ~~America~~locations ~~and~~are ~~Asia~~in ~~with~~Amsterdam, ~~a total~~Boston, ~~expected~~Chicago, ~~investment~~Los ~~of $190.7 million~~Angeles, ~~aggregating approximately~~Mexico ~~1.9 million~~City, ~~square~~Shanghai, ~~feet.~~Singapore ~~During the three~~and ~~months~~Tokyo. ~~ended~~As of March 31, ~~2006~~2009, we ~~initiated~~employed ~~seven~~597 ~~new~~individuals: ~~industrial~~166 ~~development projects~~ in ~~North~~our ~~America~~San Francisco ~~and~~headquarters, ~~Asia~~45 ~~with~~in aour Boston ~~total~~office, ~~expected~~54 ~~investment~~in ofour ~~$218.8 million~~Tokyo office, ~~aggregating~~56 in our Amsterdam office, 61 ~~approximately~~in ~~2.9 million~~our ~~square~~Mexico ~~feet~~City office and the remainder in our other offices.

~~Development Contributions. During the three~~ ~~months~~Near ~~ended March 31, 2007, we contributed one~~Term ~~0.3 million square foot completed development project and~~Priorities one 0.2 million square foot completed development project into AMB Institutional Alliance Fund III, L.P. and AMB-SGP Mexico LLC, respectively, both unconsolidated joint ventures. In addition, two land parcels were contributed into AMB DFS Fund I, LLC. As a result of these contributions, we recognized an aggregate after-tax gain of $8.9 million, representing the portion of our interest in the contributed properties acquired by the third-party investors for cash.

~~Properties~~The ~~Held~~global ~~for~~financial ~~Contribution. As~~markets ~~of March 31,~~have ~~2007,~~been weundergoing ~~held~~pervasive ~~for contribution to co-investment~~and ~~joint~~fundamental ~~ventures~~disruptions, ~~ten~~which ~~industrial~~began ~~projects~~late ~~with~~in anthe ~~aggregate~~third ~~net~~quarter ~~book value~~ of ~~$145~~2008.~~0 million,~~ ~~which,~~To ~~when~~maintain ~~contributed~~our tocompetitive aadvantage during these ~~joint~~difficult ~~venture~~times, ~~will~~we ~~reduce~~are ~~our~~focused ~~current~~on ~~ownership~~three ~~interest~~important ~~from~~near-term ~~approximately~~priorities ~~89%~~for tothe ~~an expected range of~~company: ~~15-20%.~~

~~Properties~~• ~~Held~~strengthening ~~for Divestiture. As of March 31, 2007, we held for divestiture two industrial projects with an aggregate net book value of $11.2 million. These properties either are not in~~ our ~~core~~balance ~~markets~~sheet orand doliquidity ~~not meet~~position; ~~our~~• ~~current~~reducing ~~investment~~and ~~objectives,~~controlling orexpenses; ~~are~~and ~~included~~• aspositioning ~~part of~~ our ~~development-for-sale program.~~ ~~The~~company ~~divestitures of the properties are subject to negotiation of acceptable terms and other customary conditions. Properties held~~ for ~~divestiture~~growth ~~are~~in ~~stated at~~ the ~~lower~~long ~~of cost or estimated fair value less costs to sell~~term.

~~Co-investment Joint Ventures.~~ We ~~enter~~believe ~~into co~~our near-~~investment~~term ~~joint~~priorities, ~~ventures~~coupled with ~~institutional~~our ~~investors. These~~long-term ~~co-investment~~business ~~joint~~strategies, ~~ventures~~have ~~are~~prepared ~~managed~~us byto ~~our~~weather ~~private~~a ~~capital~~difficult ~~group~~operating environment and ~~provide~~will position us ~~with an additional source of capital~~ to ~~fund~~ ~~certain~~emerge ~~acquisitions,~~from ~~development projects and renovation~~this ~~projects,~~downturn asin ~~well~~an aseven ~~private~~stronger ~~capital~~competitive ~~income~~position. We ~~generally~~can ~~consolidate~~accomplish ~~these~~our ~~joint~~priorities ~~ventures~~only ~~for~~with ~~financial~~the ~~reporting purposes~~right ~~because~~leadership ~~they are not variable interest entities~~ and ~~because~~talent weto ~~are~~drive ~~the~~our ~~sole~~business ~~managing~~forward. ~~general~~To ~~partner~~preserve ~~and~~our ~~control all~~long-term ~~major~~growth ~~operating~~potential, ~~decisions.~~we ~~However,~~have inmade ~~certain~~the ~~cases,~~decision to retain our key ~~co-~~investment ~~joint~~and ~~ventures~~development ~~are~~personnel ~~unconsolidated~~in ~~because~~our wemost doproductive ~~not~~platforms ~~control~~around ~~all~~the ~~major~~globe. ~~operating~~We ~~decisions~~have ~~and~~deployed ~~the~~these ~~general~~team members ~~partners~~in doleasing, ~~not~~operations ~~have~~and ~~significant~~customer ~~rights~~service, ~~under~~as ~~EITF~~we complete the 04build-~~5, Determining~~out ~~Whether~~of aour ~~General~~current ~~Partner,~~development orpipeline. ~~the~~The ~~General~~most crucial ~~Partners~~of asour along-term ~~Group,~~strategies ~~Controls~~is apreserving ~~Limited~~the ~~Partnership~~strength orof ~~Similar~~our ~~Entity~~personnel ~~When~~upon the ~~Limited~~stabilization ~~Partners~~of ~~Have~~the ~~Certain~~global ~~Rights~~financial markets.

~~Third-party equity interests in the joint ventures are reflected~~ ~~as minority interests in the consolidated financial statements.~~Investment ~~As of March 31, 2007, we owned approximately~~Strategy ~~66.3 million square feet of our properties (51.7% of the total operating and development portfolio) through our consolidated and unconsolidated joint ventures. We may~~

Our strategy focuses on providing distribution space to customers whose businesses are tied to global trade and who value the efficient movement of goods through the global supply chain. Our properties are primarily located in the world’s busiest distribution markets: large, supply-constrained infill locations with dense populations and proximity to airports, seaports and major highway systems. When measured by annualized base rent, on an owned and managed basis, a substantial majority of our portfolio of industrial properties is located in our target markets and much of this is in infill submarkets within our target markets. Infill locations are characterized by supply constraints on the availability of land for competing projects as well as physical, political or economic barriers to new development.

In many of our target markets, we focus on HTD^® facilities, which are buildings designed to facilitate the rapid distribution of our customers’ products rather than the long term 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 expedited supply chains. HTD^® facilities generally have a variety of physical characteristics that allow for the rapid transport of goods from point-to-point. These physical characteristics could include numerous dock doors, shallower building depths, fewer columns, large truck courts and more space for trailer parking. We believe that these building characteristics help our customers to reduce their costs and become more efficient in their delivery systems. Our customers include air

~~make~~express, ~~additional~~logistics ~~investments~~and ~~through~~freight ~~these~~forwarding ~~joint~~companies ~~ventures~~that ~~or new~~have ~~joint~~time-sensitive ~~ventures~~needs, ~~in the future~~ and ~~presently~~that ~~plan~~value tofacilities dolocated ~~so. Our~~in ~~consolidated~~convenient ~~co-investment~~proximity ~~joint~~to ~~ventures~~transportation ~~at March 31~~infrastructure, ~~2007~~such as ~~(dollars~~major inairports ~~thousands):~~and seaports.

		Our
		Approximate
		Ownership			Original Planned
Consolidated Co-Investment Joint Venture	Joint Venture Partner	Percentage			Capitalization(1)
AMB/Erie, L.P.	Erie Insurance Company and affiliates		50	%	$	200,000
AMB Partners II, L.P.	City and County of San Francisco Employees’ Retirement System		20	%	$	580,000
AMB-SGP, L.P.	Industrial JV Pte Ltd(2)		50	%	$	420,000
AMB Institutional Alliance Fund II, L.P.	AMB Institutional Alliance REIT II, Inc.(3)		20	%	$	490,000
AMB-AMS, L.P.(4)	PMT, SPW and TNO(5)		39	%	$	228,000

As of March 31, 2009, we owned, or had investments in, on a consolidated basis or through unconsolidated co-investment ventures, properties and development projects expected to total approximately 159.0 million square feet (14.8 million square meters) in 48 markets within 14 countries.

(1)		Planned capitalization includes anticipated debt and both partners’ expected equity contributions.
(2)		A subsidiary of GIC Real Estate Pte. Ltd., the real estate investment subsidiary of the Government of Singapore Investment Corporation.
(3)		Comprised of 14 institutional investors as stockholders and one third-party limited partner as of March 31, 2007.
(4)		AMB-AMS, L.P. is a co-investment partnership 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.

Of the approximately 159.0 million square feet as of March 31, 2009:

~~Our~~• on an owned and managed basis, which includes investments held on a consolidated basis or through unconsolidated joint ventures, atwe ~~March 31,~~owned ~~2007~~ or partially owned approximately 133.1 million square feet (~~dollars~~principally, inwarehouse ~~thousands~~distribution buildings): that were 92.2% leased; we had investments in 43 development projects, which are expected to total approximately 11.8 million square feet upon completion; and we owned 20 development projects, totaling approximately 6.6 million square feet, which are available for sale or contribution; • through non-managed unconsolidated joint ventures, we had investments in 46 industrial operating properties, totaling approximately 7.4 million square feet; and • we held approximately 0.1 million square feet through a ground lease, which is the location of our global headquarters.

		Our
		Approximate
		Ownership			Original Planned
Unconsolidated Co-Investment Joint Venture	Joint Venture Partner	Percentage			Capitalization(1)
AMB-SGP Mexico, LLC	Industrial (Mexico) JV Pte Ltd(2)		20	%	$	715,000
AMB Japan Fund I, L.P.	Institutional investors(3)		20	%	$	2,100,000	(4)
AMB Institutional Alliance Fund III, LP(5)	AMB Institutional Alliance REIT III, Inc.		21	%	$	1,469,000	(6)
AMB DFS Fund I, LLC(7)	Strategic Realty Ventures, LLC		15	%	$	500,000

Operating Strategy

(1)		Planned capitalization includes anticipated debt and both partners’ expected equity contributions.
(2)		A subsidiary of GIC Real Estate Pte. Ltd., the real estate investment subsidiary of the Government of Singapore Investment Corporation.
(3)		Comprised of 13 institutional investors as of March 31, 2007.
(4)		AMB Japan Fund I, L.P. is a yen-denominated fund. U.S. dollar amounts are converted at the March 31, 2007 exchange rate.
(5)		AMB Institutional Alliance Fund III, L.P. is an open-ended co-investment partnership formed in 2004 with institutional investors, which invests through a private real estate investment trust. Prior to October 1, 2006, we accounted for AMB Institutional Alliance Fund III, L.P. as a consolidated joint venture.
(6)		The planned gross capitalization and investment capacity of AMB Institutional Alliance Fund III, L.P. as an open-end fund, is not limited. The planned gross capitalization represents the gross book value of real estate assets as of the most recent quarter end.
(7)		AMB DFS Fund I, LLC is a co-investment partnership formed in 2006 with a subsidiary of GE Real Estate to build and sell properties.

We believe that real estate is fundamentally a local business and is best operated by local teams in each of our markets. As a vertically integrated company, we actively manage our portfolio of properties. In select markets, we may, from time to time, establish relationships with third-party real estate management firms, brokers and developers that provide some property-level administrative and management services under our direction. We offer a broad array of service offerings, including access to multiple locations worldwide and build-to-suit developments.

~~We also have a 0.1% unconsolidated equity interest (with an~~ ~~approximate~~Long ~~33% economic interest) in AMB Pier One, LLC, a joint~~Term ~~venture~~Growth ~~related to the 2000 redevelopment of the pier which~~Strategies houses our office space in the San Francisco Bay Area. The investment is not consolidated because we do not exercise control over major operating decisions such as approval of budgets, selection of property managers, investment activity and changes in

Growth through Operations

We seek to generate long-term internal growth through rent increases on existing space and renewals on rollover space, striving to maintain a high occupancy rate at our properties and to control expenses by capitalizing on the economies of scale inherent in owning, operating and growing a large, global portfolio. We actively manage our portfolio, whether directly or with an alliance partner, by establishing leasing strategies and negotiating lease terms, pricing, and level and timing of property improvements. We believe that our long-standing focus on customer relationships and ability to provide global solutions in 14 countries for a well-diversified customer base in the shipping, air cargo and logistics industries will enable us to capitalize on opportunities as they arise.

We believe that the strategic locations within our portfolio, the experience of our cycle-tested operations team and our ability to respond quickly to the needs of our customers allow us to achieve solid operating results. We believe that our regular maintenance programs, capital expenditure programs, energy management and sustainability programs create cost efficiencies that provide benefit to our customers as well as to AMB.

Growth through Development

We think that the development, redevelopment and expansion of well-located, high-quality industrial properties provide us with attractive investment opportunities at higher rates of return, although with greater risk, than may be obtained from the purchase of existing properties. Through the deployment of our in-house development and redevelopment expertise, we seek to create value both through new construction and the acquisition and management of redevelopment opportunities. Additionally, we believe that our longstanding focus on infill locations creates a unique opportunity to enhance value through the select conversion of industrial properties to higher and better uses, within our value-added conversion business. Value-added conversion projects generally involve a significant enhancement or a change in use of the property from industrial distribution warehouse to a

~~financing.~~higher Weand ~~have~~better anuse, ~~option~~such toas ~~purchase~~office, ~~the~~retail ~~remaining~~or ~~equity~~residential. ~~interest~~New ~~beginning January 1~~developments, ~~2007~~redevelopments and ~~expiring~~value-added conversions ~~December 31,~~require ~~2009,~~significant ~~based~~management onattention, ~~the~~and ~~fair~~development ~~market value as~~and ~~stipulated~~redevelopment inrequire ~~the~~significant ~~joint~~capital ~~venture~~investment, ~~agreement~~to maximize their returns. AsCompleted ofdevelopment ~~March 31,~~and redevelopment ~~2007,~~properties weare ~~also~~generally ~~had~~contributed anto ~~approximate~~our ~~39.0% unconsolidated equity~~co-investment ~~interest~~ventures and held in ~~G.Accion,~~our aowned ~~Mexican~~and ~~real~~managed ~~estate~~portfolio ~~company.~~or ~~G.Accion~~sold to ~~provides~~third ~~management~~parties. ~~and~~Value-added ~~development~~conversion ~~services~~properties ~~for~~are ~~industrial,~~generally ~~retail,~~sold ~~residential~~to ~~and~~third ~~office~~parties ~~properties~~at insome ~~Mexico.~~point Inin the ~~addition~~re-entitlement/conversion process, asthus recognizing the enhanced value of ~~March 31,~~the ~~2007,~~underlying ~~one~~land ofthat supports the property’s repurposed use. We think our ~~subsidiaries~~global market presence and ~~also~~expertise ~~had~~will anenable ~~approximate~~us 5%to ~~interest~~generate and capitalize on a diverse range of development opportunities in ~~IAT~~the ~~Air~~long ~~Cargo~~term. ~~Facilities~~At this ~~Income~~time, ~~Fund~~however, ~~(IAT)~~while development, aredevelopment ~~Canadian~~and ~~income~~value-added conversions ~~trust~~will ~~specializing~~continue into be a fundamental part of our ~~aviation~~long-~~related~~term ~~real~~growth ~~estate~~strategy, atwe ~~Canada’s~~will ~~leading~~limit this activity to ~~international~~situations ~~airports.~~where ~~This~~we ~~equity~~are ~~investment~~fulfilling isprior ~~included~~commitments inor ~~other~~commencing ~~assets~~build-to-suits onfor specific customers until the financial ~~consolidated~~and ~~balance~~real ~~sheets~~estate markets stabilize.

~~Partners’~~Although ~~Capital. As~~we have reduced our development staff in correlation to reduced levels of ~~March 31~~development activity, our core team possesses ~~2007~~multidisciplinary backgrounds, ~~the~~which ~~Operating~~positions ~~Partnership~~us ~~had~~to ~~outstanding 99,089,842~~complete ~~common~~the ~~general~~build ~~partnership~~out ~~units:~~of ~~3,407,360~~our ~~common~~development ~~limited~~pipeline and for future ~~partnership~~development ~~units:~~or ~~800,000~~redevelopment ~~7.95%~~opportunities ~~Series J~~when ~~Cumulative~~stability ~~Redeemable~~returns ~~Preferred~~to ~~Partnership~~the ~~Units;~~financial ~~800,000~~and 7real estate markets.~~95%~~ We believe our ~~Series K~~development ~~Cumulative~~team ~~Redeemable~~has ~~Preferred~~extensive ~~Partnership~~experience ~~Units;~~in real estate 2development,~~000~~ both with us and with local,~~000~~ 6national or international development firms.5% ~~Series L~~We ~~Cumulative~~pursue ~~Redeemable~~development ~~Preferred~~projects ~~Partnership~~directly ~~Units,~~and ~~2,300,000~~in ~~6.75%~~co-investment ~~Series M~~ventures ~~Cumulative~~and development joint ~~Redeemable~~ventures, ~~Preferred~~providing ~~Partnership~~us ~~Units;~~with ~~3,000,000~~the ~~7.00%~~flexibility to pursue ~~Series O~~development ~~Cumulative~~projects ~~Redeemable~~independently ~~Preferred~~or ~~Partnership~~in ~~Units;~~partnerships, depending ~~and~~on 2market conditions,~~000,000~~ ~~6.85%~~submarkets ~~Series P~~or ~~Cumulative~~building ~~Redeemable~~sites and ~~Preferred~~availability ~~Partnership~~of ~~Units~~capital.

~~During the three months ended March 31, 2007, AMB Property~~ ~~Corporation issued approximately 8.4 million shares of its~~Growth ~~common~~through ~~stock~~Acquisitions 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 AMB Property Corporation’s stock price at issuance as compared to our book value per share at the time of issuance. We intend to use the proceeds from the offering for general corporate purposes and, ~~over~~Capital ~~the long term,~~Redeployment ~~to expand our global development business.~~

Our acquisition experience and our network of property management, leasing and acquisition resources should continue to provide opportunities for growth. In ~~December~~addition ~~2005~~to our internal resources, ~~AMB~~we ~~Property~~have ~~Corporation’s~~long-term ~~board~~relationships ofwith leasing and ~~directors~~investment ~~approved~~sales abrokers, ~~new~~as ~~two~~well as third-~~year~~party ~~common~~local ~~stock~~property management ~~repurchase~~firms, which may give us access to additional ~~program~~acquisition ~~for~~opportunities ~~the~~because ~~discretionary~~such ~~repurchase~~managers frequently market properties on behalf of upsellers. In addition, we seek to ~~$200.0 million~~redeploy ofcapital ~~its~~from ~~common~~non-strategic ~~stock~~assets into properties that better fit our current investment focus. ~~AMB~~See ~~Property~~“Summary of ~~Corporation~~Key ~~did~~Transactions.” ~~not~~At ~~repurchase~~this ortime, ~~retire~~while ~~any~~acquisitions ~~shares~~will continue to be a fundamental part of our long-term growth ~~common~~strategy, ~~stock~~we ~~during~~will limit this activity to situations where we are fulfilling prior commitments until the ~~three~~financial ~~months~~and ~~ended~~real ~~March 31,~~estate markets ~~2007~~stabilize.

~~Debt. In~~We ~~order~~are togenerally ~~maintain~~engaged ~~financial flexibility~~in ~~and~~various ~~facilitate~~stages ~~the deployment~~ of ~~capital~~negotiations ~~through market~~for ~~cycles, we presently intend to operate with an our share~~a ofnumber ~~total debt-to-our share~~ of ~~total~~acquisitions ~~market~~and ~~capitalization~~other ~~ratio of approximately 45% or less. As of March 31~~transactions, ~~2007,~~some ~~our share~~ of ~~total debt-to-our share~~which ~~of total market capitalization ratio was 30.5%. (See~~may ~~footnote~~be 1significant, tothat ~~the~~may ~~Capitalization~~include, ~~Ratios~~but ~~table~~are ~~below~~not ~~for~~limited ~~our definitions of “our share of total market capitalization~~to,~~” “market equity” and “our~~ ~~share~~individual ~~of total debt.”) However~~properties, welarge ~~typically~~multi-property ~~finance~~portfolios ~~our~~or ~~co-investment~~property ~~joint~~owning ~~ventures~~or ~~with~~real ~~secured debt at a loan~~estate-~~to-value ratio~~related ~~of 50-65% per our joint venture agreements~~entities. ~~Additionally,~~We ~~we currently intend~~cannot toassure ~~manage~~you ~~our~~that ~~capitalization~~we inwill ~~order~~consummate toany ~~maintain an investment grade rating on our senior unsecured debt. Regardless~~ of these transactions. ~~policies,~~Such ~~however~~transactions, ~~our~~if ~~organizational~~we ~~documents~~consummate dothem, ~~not limit the amount of indebtedness that we~~ may ~~incur.~~be ~~Accordingly, our~~material ~~management~~individually ~~could alter~~ or ~~eliminate~~in ~~these policies without~~ the ~~approval~~ ~~of our noteholders or our unitholders or circumstances could arise that could render us unable to comply with these policies~~aggregate.

~~As of March 31, 2007, the aggregate principal amount of our~~ ~~secured debt was $1.6 billion, excluding unamortized debt~~Growth ~~premiums~~through ofGlobal ~~$5.5 million. Of the $1.6 billion of~~Expansion secured debt, $1.2 billion is secured by properties in our joint ventures. The secured debt is generally non-recourse and bears interest at rates varying from 1.1% to 10.4% per annum (with a weighted average rate of 5.4%) and final maturity dates ranging from May 2007 to February 2024. As of March 31, 2007, $1.3 billion of the secured debt obligations bear interest at fixed rates with a weighted average interest rate of 5.5%, while the remaining $307.8 million bear interest at variable rates (with a weighted average interest rate of 5.3%).

OnExpansion ~~December 8,~~into ~~2006,~~target wemarkets ~~executed~~outside athe ~~228.0 million~~United ~~euros~~States ~~facility~~represents ~~agreement~~a ~~(approximately~~natural ~~$304.5 million~~extension of our strategy to invest in ~~U.S. dollars,~~industrial ~~using~~property ~~the~~markets ~~exchange~~with ~~rate~~high atpopulation ~~March 31~~densities, ~~2007),~~proximity ~~which~~to ~~provides~~large ~~that~~customer ~~certain~~clusters ofand ~~our~~available ~~affiliates~~labor ~~may borrow~~pools, ~~either~~and ~~acquisition~~major ~~loans,~~distribution upcenters toserving aglobal ~~100~~trade.~~0 million~~ ~~euros~~Our ~~sub-limit (approximately~~international ~~$133.5 million~~expansion strategy mirrors our focus in ~~U.S. dollars,~~the ~~using~~United ~~the~~States ~~exchange~~on ~~rate~~supply-constrained atsubmarkets ~~March 31,~~with ~~2007)~~political, economic or ~~secured~~physical ~~term loans,~~constraints into ~~connection~~new ~~with~~development. ~~properties~~Our ~~located~~international investments inextend ~~France,~~our ~~Germany,~~offering of ~~the~~HTD® facilities ~~Netherlands,~~to ~~the~~customers ~~United~~who ~~Kingdom,~~value ~~Italy~~speed-to-market orover ~~Spain~~storage. On ~~March 21,~~We ~~2007~~think that our established customer relationships, weour contacts ~~increased~~in the ~~facility~~air ~~amount~~cargo, ~~limit~~shipping ~~from~~and logistics industries, ~~228.0 million~~our ~~euros~~underwriting toof ~~328.0 million~~markets ~~euros~~and investments, our in-house ~~(approximately~~expertise ~~$438.0 million~~and inour ~~U.S. dollars,~~strategic ~~using~~alliances with knowledgeable ~~the~~developers ~~exchange~~and ~~rate~~managers atwill ~~March 31,~~assist ~~2007)~~us in competing internationally. ~~Drawings~~For ~~under~~a discussion of the amount of our revenues ~~term~~attributable ~~facility~~to ~~bear~~the ~~interest~~United atStates aand ~~rate~~international markets, please see Part I, Item 1: Note 11 of 65the “Notes ~~basis~~to ~~points~~Consolidated ~~over~~Financial Statements.”

Growth through Co-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 model and have more than 25 years of experience in this business.

~~EURIBOR~~We ~~and~~co-invest ~~may~~in ~~occur~~properties ~~until,~~with ~~and~~private ~~mature~~capital ~~on, April 30, 2014.~~investors ~~Drawings~~through ~~under~~partnerships, ~~the~~limited ~~acquisition~~liability ~~loan~~companies ~~facility~~or ~~bear~~other ~~interest at a~~joint ~~rate~~ventures. ofWe 75have ~~basis~~a ~~points~~direct ~~over EURIBOR~~ and ~~are~~long-standing ~~repayable~~relationship ~~within~~with ~~six~~institutional ~~months~~investors. ofApproximately ~~the~~60% ~~date~~ of ~~advance,~~our ~~unless~~owned ~~extended. The~~and ~~acquisition~~managed ~~loan~~operating ~~facility~~portfolio is ~~available~~owned ~~for~~through ~~drawing~~our ~~until~~eight ~~December 8,~~co-investment ~~2007~~ventures. We ~~guarantee~~tailor ~~the~~industrial ~~acquisition~~portfolios ~~loan~~to ~~facility~~investors’ ~~and~~specific ~~are~~needs — ain ~~carve-out~~separate ~~indemnifier~~or commingled inaccounts — ~~respect~~deploying ofcapital ~~the~~in ~~term~~both ~~loans.~~close-ended ~~These~~and ~~responsibilities~~open-ended ~~can~~structures beand ~~transferred~~providing ~~upon the~~complete ~~occurrence~~portfolio ofmanagement ~~certain~~and ~~events,~~financial ~~and~~reporting services. Generally, we will beown ~~fully discharged~~a ~~from~~10-50% interest ~~all~~in ~~such~~our ~~obligations~~co-investment ~~upon such transfer~~ventures. AsOur ofco-investment ~~March 31,~~ventures ~~2007,~~typically ~~there~~allow ~~were~~us ~~approximately~~to ~~201.3 million euros~~earn inacquisition ~~term~~and ~~loans~~development fees, ~~outstanding~~asset ~~under~~management ~~the~~fees ~~facility (approximately~~or ~~$268.8 million~~priority ~~in U.S. dollars~~distributions, ~~using~~as well ~~the~~as ~~exchange~~promote ~~rate~~interests ator ~~March 31,~~incentive ~~2007) which~~distributions isbased ~~included~~on the inperformance ~~our~~of ~~secured~~the ~~debt~~co-investment ~~balance~~ventures.

~~On February 14, 2007, seven subsidiaries of AMB-SGP, L.P.,~~ ~~a Delaware limited partnership, which is one of our~~Management’s ~~subsidiaries, entered into a loan agreement for a~~Overview $305 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 has a principal of $160 million and an interest rate that is fixed at 5.29%. The second is a $40 million note with an interest rate of 81 basis points above the one-month LIBOR rate, the third note has a principal of $84 million and a fixed interest rate of 5.90%, and the final note has a principal of $21 million and bears interest at a rate of 135 basis points above the one-month LIBOR rate.

~~As of March 31, 2007, we had outstanding an aggregate of~~ ~~$1.1 billion in unsecured senior debt securities, which~~Current ~~bore~~Global aMarket ~~weighted average interest rate of 6.2%~~ and ~~had~~Economic ~~a weighted~~Conditions average term of 4.8 years. These unsecured senior debt securities include $300.0 million in notes issued in June 1998, $205.0 million of medium-term notes, which were issued under our 2000 medium-term note program, $275.0 million of medium-term notes, which were issued under our 2002 medium-term note program, $175.0 million of medium-term notes, which were issued under our 2006 medium term-note program and approximately $112.5 million of 5.094% Notes Due 2015, which were issued to Teachers Insurance and Annuity Association of America on July 11, 2005 in a private placement, in exchange for the cancellation of $100.0 million of notes that were issued in June 1998 resulting in a discount of approximately $12.5 million. The unsecured senior debt securities are subject to various covenants.

~~AMB~~Recent ~~Property~~global ~~Corporation~~market ~~guarantees~~and ~~our~~economic ~~obligations~~conditions ~~with~~have ~~respect~~been tounprecedented, ~~our~~challenging ~~senior~~and ~~debt~~unpredictable ~~securities.~~with Ifsignificantly tighter wecredit ~~are~~and ~~unable~~declining toeconomic ~~refinance~~conditions orthrough the ~~extend~~first ~~principal~~quarter ~~payments~~of ~~due~~2009. atContinued ~~maturity~~concerns orabout ~~pay~~the ~~them with~~availability ~~proceeds~~and ~~from~~cost ~~other~~of ~~capital transactions~~credit, ~~then~~declining ~~our~~real ~~cash~~estate ~~flow~~market ~~may~~and begeopolitical ~~insufficient~~issues tohave ~~pay~~contributed ~~distributions~~ to ~~our~~increased ~~unitholders in all~~market ~~years~~volatility and todecreased ~~repay~~expectations ~~debt~~for ~~upon~~the ~~maturity~~global economy. ~~Furthermore, if~~In ~~prevailing~~the ~~interest~~fourth ~~rates~~quarter orof ~~other~~2008, ~~factors~~added atconcerns ~~the~~fueled ~~time~~by ofthe failure ~~refinancing~~of ~~(such~~several aslarge ~~the~~financial ~~reluctance~~institutions ofand ~~lenders to make~~government ~~commercial~~interventions ~~real~~in ~~estate~~the ~~loans)~~U.S. financial ~~result~~system inled ~~higher~~to ~~interest rates~~increased ~~upon~~market ~~refinancing,~~uncertainty ~~then~~and ~~the~~instability ~~interest~~in ~~expense~~the ~~relating~~global tocapital ~~that~~and ~~refinanced~~credit ~~indebtedness~~markets. ~~would~~These ~~increase.~~conditions, ~~This~~combined ~~increased~~with ~~interest~~declining ~~expense~~business ~~would~~activity ~~adversely~~levels ~~affect~~and ~~our~~consumer ~~financial~~confidence ~~condition,~~and ~~results~~increased ~~of operations~~unemployment, ~~cash~~have ~~flow~~contributed ~~and ability~~ to ~~make~~unprecedented ~~distributions~~levels toof ~~our unitholders and payments to our noteholders~~volatility.

~~Credit~~In ~~Facilities. On~~light ~~June 1,~~of ~~2006~~this economic downturn, we ~~entered~~ ~~into~~are aincreasing ~~third~~our ~~amended~~focus on ~~and~~our ~~restated~~operations ~~$550.0 million unsecured~~with ~~revolving~~an ~~credit~~emphasis ~~agreement~~on ~~that~~tenant ~~replaced~~retention ~~our~~and ~~then-existing $500~~occupancy.~~0 million~~ ~~credit~~Until ~~facility,~~the ~~which~~financial ~~was~~and ~~to mature~~real onestate ~~June 1~~markets stabilize, ~~2007.~~we ~~AMB~~are ~~Property~~limiting ~~Corporation~~our isacquisition aand development ~~guarantor~~activities ofto ~~our~~fulfilling ~~obligations~~prior ~~under~~commitments. ~~the~~We ~~credit~~are ~~facility. The~~realigning ~~line,~~and ~~which~~streamlining ~~matures~~internal ~~on June 1~~resources, ~~2010,~~as ~~carries~~well aas ~~one-year~~our overhead ~~extension~~structure, ~~option and can be increased~~ to upmeet ~~to $700.0 million~~the ~~upon~~needs ~~certain~~of ~~conditions.~~the ~~The~~business ~~rate~~and onhave ~~the~~taken ~~borrowings~~further issteps ~~generally~~to ~~LIBOR~~strengthen ~~plus~~our acapital ~~margin,~~and ~~based~~liquidity ~~on our~~position. ~~long~~Our near-term ~~debt~~priorities ~~rating,~~are ~~which~~further ~~was~~strengthening ~~42.5 basis~~the ~~points as of~~balance ~~March 31,~~sheet ~~2007,~~and ~~with~~liquidity anposition, ~~annual~~reducing ~~facility~~and ~~fee~~controlling ofexpenses ~~15 basis~~and ~~points.~~retaining ~~The~~and ~~four-year~~motivating ~~credit~~our ~~facility~~key ~~includes~~people athereby positioning ~~multi-currency~~the ~~component,~~company ~~under~~for ~~which~~long-term ~~up to $550~~growth.~~0 million can~~ beOur ~~drawn~~goal inis ~~U.S. dollars,~~to ~~Euros,~~do ~~Yen~~what ~~or British Pounds~~we ~~Sterling.~~consider Webest ~~use our unsecured credit facility principally~~ for ~~acquisitions,~~ ~~funding~~long-term ~~development~~value ~~activity~~creation and ~~general~~enhancement ~~working~~of ~~capital~~our ~~requirements~~net asset value. As ofwe ~~March 31,~~look ~~2007~~forward, ~~there~~our ~~were~~objective nois to ~~outstanding~~emerge ~~borrowings~~from ~~and~~this ~~the~~downturn ~~remaining~~in ~~amount~~a ~~available~~competitive ~~was~~position to take ~~$537.5 million,~~advantage ~~net~~ of ~~outstanding~~opportunities ~~letters~~as ofthey ~~credit~~arise, ofwith our long-term ~~$12~~earnings capacity enhanced.~~5 million.~~

~~On June 23, 2006, our subsidiary AMB Japan Finance Y.K., as~~ ~~the initial borrower, entered into an amended and restated~~Primary ~~revolving~~Sources credit agreement for a 45.0 billion Yen unsecured revolving credit facility, which, using the exchange rate in effect on March 31, 2007, equaled approximately $381.9 million U.S. dollars. This replaced the 35.0 billion Yen unsecured revolving credit facility executed on June 29, 2004, as previously amended, which using the exchange rate in effect on March 31, 2007, equaled approximately $297.0 million U.S. dollars. We, along with AMB Property Corporation, guarantee the obligations of ~~AMB~~Revenue ~~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~~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 disposition of projects in our development-for-sale and value-added conversion programs, from land sales and from the contributions of development properties to our co-investment ventures. 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 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 co-investment ventures such development properties.

Focus on our Balance Sheet and Cost Structure

Maintaining a strong balance sheet and ample liquidity are our top priorities. As such, our general partner successfully completed the issuance and sale of 47.4 million shares of its common stock at a price of $12.15 per share for proceeds of approximately $552.6 million, net of discounts, commissions and estimated transaction

~~selected~~expenses ~~from~~of ~~time~~approximately ~~to time to be a borrower under and pursuant to the credit agreement~~$23.8 million. ~~The~~We ~~borrowers~~issued ~~intend~~units to ~~use the~~ ~~proceeds~~our ~~from~~general ~~the~~partner ~~facility~~in toexchange ~~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~~proceeds ~~have the option to secure all or a portion~~ of ~~the~~ ~~borrowings under~~ the ~~credit facility with certain real~~offering ~~estate~~which ~~assets~~were orcontributed ~~equity in entities holding such real estate assets. The credit facility matures in June 2010 and has a one-year extension option. The credit facility can be increased~~ to ~~up to 55~~us.~~0 billion~~ ~~Yen, which, using the exchange rate in effect on March 31, 2007, equaled approximately $466.8 million U.S. dollars.~~ The ~~extension~~proceeds ~~option~~from ~~is subject to~~ the ~~satisfaction of certain conditions and the~~offering ~~payment~~were ofused ~~an extension fee equal~~ to ~~0.15%~~repay ofborrowings ~~the outstanding commitments~~ under ~~the~~our ~~facility~~unsecured ~~at that time. The rate on the~~credit ~~borrowings is generally TIBOR plus a margin~~facilities, which isenhanced ~~based on the credit rating of~~ our ~~long-term~~liquidity ~~debt and was 42~~position.5 ~~basis points~~As asa ~~of March 31~~result, ~~2007. In addition, there is an~~ ~~annual~~borrowings ~~facility~~under ~~fee, payable in quarterly amounts, which is based on the credit rating of~~ our ~~long-term~~three ~~debt,~~lines ~~and was 15 basis points~~ of ~~the~~credit ~~outstanding~~were ~~commitments~~reduced ~~under~~by ~~the~~60% ~~facility~~to ~~as of March~~$381 31million, ~~2007.~~and Aswe oflowered ~~March 31,~~our ~~2007, the~~line ~~outstanding~~utilization ~~balance~~to ~~on this credit facility, using the~~25% ~~exchange~~as ~~rate~~of ~~in effect on~~ March 31, ~~2007, was $342~~2009.~~5 million in U.S. dollars.~~

On ~~June~~April 1328, ~~2006~~2009, we ~~and~~commenced ~~certain of our consolidated subsidiaries entered into~~ a ~~fourth~~cash ~~amended~~tender ~~and~~offer ~~restated credit~~to ~~agreement~~purchase ~~for~~any ~~a $250.0 million unsecured revolving credit facility, which replaced the third amended~~ and ~~restated~~all ~~credit agreement~~of ~~for~~our aoutstanding ~~$250~~8.~~0 million~~00% ~~unsecured~~medium-term ~~credit facility.~~notes Ondue ~~February 16~~2010, ~~2006,~~which ~~the~~had ~~third amended and restated credit agreement replaced the then-existing~~ $~~100~~75.0 million ~~unsecured~~ ~~revolving~~aggregate ~~credit facility that was to mature in June~~principal ~~2008. We~~outstanding, ~~along with AMB Property Corporation, guarantee the obligations for such subsidiaries~~ and ~~other~~any ~~entities controlled by us or AMB Property Corporation that are selected by us from time to time to be borrowers under~~ and ~~pursuant~~all toof ~~the~~our ~~credit facility.~~outstanding ~~The four-year credit facility includes a~~5.45% ~~multi~~medium-~~currency~~term ~~component~~notes ~~under~~due 2010, which uphad to $~~250~~175.0 million ~~can~~aggregate beprincipal ~~drawn in U~~outstanding.~~S. dollars,~~ ~~Hong~~The ~~Kong~~tender ~~dollars,~~offer ~~Singapore~~expired on ~~dollars~~May 5, ~~Canadian~~2009, ~~dollars~~with ~~and Euros~~$28.5 million ~~The line, which matures in February 2010~~ and ~~carries a one-year extension option, can be~~ ~~increased to up to~~ $~~350~~146.05 million ~~upon~~in ~~certain~~aggregate ~~conditions and~~principal ~~the~~amount ~~payment~~ of anthe ~~extension fee equal to 0~~8.1500% ~~of the~~ ~~outstanding~~medium-term ~~commitments.~~notes ~~The~~due ~~rate~~2010 onand ~~the~~5.45% ~~borrowings~~medium-term isnotes ~~generally LIBOR~~due ~~plus a margin~~2010, ~~based on the credit rating of our senior~~ ~~unsecured long-term debt~~respectively, ~~which~~validly ~~was 60 basis points as of March 31~~tendered, ~~2007,~~not ~~with~~withdrawn anand ~~annual~~accepted ~~facility~~by ~~fee based on the~~us ~~credit~~for ~~rating of our senior unsecured long-term debt~~purchase. ~~The borrowers~~We ~~intend~~used ~~to use the~~ proceeds from ~~the~~asset ~~facility~~sales tocompleted ~~fund~~during the ~~acquisition~~first ~~and~~quarter ~~development~~ of ~~properties~~2009 ~~and~~to ~~general working~~fund ~~capital requirements. As of March 31, 2007,~~ the ~~outstanding~~ ~~balance~~tender ~~on this facility was approximately $132~~offer.~~3 million.~~ ~~The~~We ~~credit agreement contains affirmative~~believe ~~covenants,~~the ~~including~~early ~~financial~~retirement ~~reporting requirements and maintenance~~ of ~~specified~~this ~~financial~~debt ~~ratios~~will bystrengthen ~~us,~~our ~~and negative~~balance ~~covenants,~~sheet ~~including~~capacity ~~limitations on the incurrence of liens~~ and ~~limitations~~ onenhance ~~mergers~~our orliquidity ~~consolidations~~position.

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 part of this plan, we reduced our total global headcount by approximately 22%. We also reduced our 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.

In addition, our general partner has decreased its 2009 regular quarterly dividend payments to $0.28 per share. Accordingly, we have decreased our 2009 quarterly distributions to our common limited partnership unitholders to $0.28 per unit. We believe this action will improve our cash position by allowing us to retain $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. During the first quarter, we disposed of approximately $304 million of properties. Additionally, on an owned and managed basis, as of March 31, 2009, we have properties available for sale or contribution with an estimated total investment upon completion of $1.1 billion, before the impact of real estate impairment losses. 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 debt maturity schedule is well-laddered. As of March 31, 2009, our total consolidated debt maturities for 2009 were $226.5 million, excluding principal amortization. Our total unconsolidated debt maturities for 2009 were $2.8 million as of March 31, 2009, excluding principal amortization. As of March 31, 2009, we had $1.2 billion available for future borrowings under our three multi-currency lines of credit and had cash and cash equivalents of $263.0 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,

~~The~~we ~~tables~~may ~~below~~be ~~summarize~~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 ~~maturities~~ratings ~~and~~to fall ~~capitalization~~below asinvestment 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 ~~March~~our credit facilities or our $230.0 31million secured term loan credit agreement, ~~2007~~and ~~(dollars~~the loss of our ability to borrow in ~~thousands):~~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.

Debt
	Our			Joint			Unsecured
	Secured			Venture			Senior Debt			Credit			Other			Total
	Debt(1)			Debt			Securities			Facilities(2)			Debt			Debt
2007	$	12,396		$	45,300		$	55,000		$	—		$	14,215		$	126,911
2008		92,239			73,504			175,000			—			810			341,553
2009		6,234			118,813			100,000			—			873			225,920
2010		72,026			116,182			250,000			474,849			941			913,998
2011		6,335			190,622			75,000			—			1,014			272,971
2012		8,369			449,198			—			—			1,093			458,660
2013		42,682			59,714			175,000			—			65,920	(5)		343,316
2014		245,273			4,076			—			—			616			249,965
2015		2,199			18,780			112,491			—			664			134,134
2016		4,804			54,995			—			—			—			59,799
Thereafter		—			19,091			125,000			—			—			144,091
Subtotal		492,557			1,150,275			1,067,491			474,849			86,146			3,271,318
Unamortized premiums (discounts)		1,480			4,024			(10,305	)		—			—			(4,801	)
Total consolidated debt		494,037			1,154,299			1,057,186			474,849			86,146			3,266,517
Our share of unconsolidated joint venture debt(3)		—			349,570			—			—			20,933			370,503
Total debt		494,037			1,503,869			1,057,186			474,849			107,079			3,637,020
Joint venture partners’ share of consolidated joint venture debt		—			(723,605	)		—			—			(52,000	)		(775,605	)
Our share of total debt(4)	$	494,037		$	780,264		$	1,057,186		$	474,849		$	55,079		$	2,861,415
Weighed average interest rate		4.9	%		6.2	%		6.2	%		2.1	%		6.7	%		5.4	%
Weighed average maturity (in years)		5.4			4.8			4.8			3.1			5.2			4.6

Certain of our third-party indebtedness is held by our consolidated or unconsolidated joint ventures. In the event that a 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 lose income and asset value on the property.

(1)		Our secured debt and joint venture debt include debt related to European and Asian assets in the amount of $414.8 million and $47.5 million, respectively, translated to U.S. dollars using the exchange rate in effect on March 31, 2007.
(2)		Includes $342.5 million and $132.3 million in Yen and Canadian dollar-based borrowings, respectively, translated to U.S. dollars using the exchange rates in effect on March 31, 2007.
(3)		The weighted average interest and maturity for the unconsolidated joint venture debt were 4.3% and 5.3 years, respectively.
(4)		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 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 joint ventures. The above table reconciles our share of total debt to total consolidated debt, a GAAP financial measure.

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.

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.

Our primary 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 March 31, 2009, 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 Charges

We recognized charges in the first quarter of 2009 related to the valuation of our share of the development program of approximately $181.4 million (represents the pro rata portion of the total impairment charges based on our percentage of equity interest in each of the consolidated or unconsolidated joint ventures holding the associated

(5 properties) ~~Maturity~~on ~~includes~~an owned and managed basis ($65181.0 9 million on ~~balance~~a ~~outstanding~~consolidated basis). These charges were entirely non-cash. Our share of the impairment charge on athe assets under development and those available for sale or contribution on an owned and managed basis totaled approximately $65118.06 million ($115.2 million ~~non-recourse~~on ~~credit~~a ~~facility~~consolidated basis). ~~obtained~~The bymajority ~~AMB~~of ~~Partners~~the IIimpairment charges related to assets in the Americas, Lwith the remainder primarily in Europe.P Our share of the impairment charge on the land inventory on an owned and managed basis totaled approximately $55.8 million ($59.7 million on a consolidated basis). These losses were primarily related to land inventory in the Americas. Our share of the impairment charges on operating properties on both an owned and managed and consolidated basis totaled approximately $7.0 million, and was exclusively related to assets in the Americas.

Market Capital as of March 31, 2007
	Units
Security	Outstanding		Market Price(1)		Market Value(1)
Common general partnership units		99,089,842	$	58.79	$	5,825,492
Common limited partnership units(2)		4,666,073		58.79		274,318
Total		103,755,915			$	6,099,810

Cumulative impairment charges for the fourth quarter of 2008 and first quarter of 2009 related to the valuation of our development program were approximately $373.4 million of our share on an owned and managed basis ($372.4 million on a consolidated basis). Our share of the cumulative impairment charges on the assets under development and those available for sale or contribution on an owned and managed basis totaled approximately $203.6 million ($199.4 million on a consolidated basis), reflecting a 16% decline from the $1.3 billion cost basis of the assets written down. The cumulative impairment charges on the land inventory of our share on an owned and managed basis totaled approximately $146.3 million ($150.2 million on a consolidated basis), reflecting a 26% decline from the $554.5 million cost basis of the land written down. Our share of the cumulative impairment charges on operating properties on an owned and managed basis totaled approximately $23.5 million ($22.8 million on a consolidated basis), reflecting a 21% decline from the $110.5 million cost basis of the properties written down.

(1)		Assumes that our general 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.
(2)		Includes 1,258,713 class B common limited partnership units issued by AMB Property II, L.P. as of March 31, 2007.

The principal trigger which led to the impairment charges was continued economic deterioration in some markets resulting in a decrease in leasing and rental rates and rising vacancies. In addition, the pricing of current transactions in some of our markets as well as in-process sales agreements on some of our assets targeted for disposition were indicative of an increase in capitalization rates. 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 on an annual basis. See Part 1, Item 1: 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 operation during the first quarter of 2009.

Preferred Units
	Distribution			Liquidation		Redemption/Callable
Security	Rate			Preference		Provisions
Series D preferred units(1)		7.18	%	$	79,767	February 2012
Series I preferred units(2)		8.00	%		25,500	March 2006
Series J preferred units(2)		7.95	%		40,000	September 2006
Series K preferred units(2)		7.95	%		40,000	April 2007
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		7.17	%	$	417,767

Customer Bankruptcies

(1)		On January 29, 2007, all of the outstanding 7.75% Series D Cumulative Redeemable Preferred 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.
(2)		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 and all 800,000 of its outstanding 7.95% Series K Cumulative Redeemable Preferred Limited Partnership Units from another single institutional investor. We redeemed the Series J Cumulative Redeemable Preferred Limited Partnership Units for $40.0 million, plus accrued and unpaid distributions through April 16, 2007. We redeemed the Series K Cumulative Redeemable Preferred Limited Partnership Units for $40.0 million, plus accrued and unpaid distributions through April 16, 2007. On April 17, 2007, another of our subsidiaries, AMB Property II, L.P., a Delaware limited partnership, repurchased all 510,000 of our outstanding 8.00% Series I Cumulative Redeemable Preferred Limited Partnership Units from a single institutional investor. AMB Property II, L.P. repurchased the units for $25.5 million, plus accrued and unpaid distributions through April 16, 2007, less applicable withholding, on the Series I Cumulative Redeemable Preferred Limited Partnership Units. We will write-off approximately $3.0 million in deferred issuance costs related to the redemption of the Series J and K units and the repurchase of the Series I units.

From a customer receivables standpoint, as of March 31, 2009, we believe that account receivables delinquency levels were consistent with our historical norms and we believe that we maintain adequate bad debt reserves. Although the number of bankruptcies of our customers increased during the first quarter of 2009, we believe the impact of such bankruptcies on our business was not significant for the three months ended March 31, 2009. 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. However, we will continue to monitor our accounts receivable delinquencies and the adequacy of our reserves in order to limit our exposure.

Real Estate Operations

Real estate fundamentals in the United States continued to weaken in the first quarter of 2009 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 April 26, 2009, availability in the United States was 12.2% for the quarter ended March 31, 2009, up 80 basis points from the prior quarter and 240 basis points from the first quarter of 2008. Also, according to Torto Wheaton Research, absorption was negative 92.8 million square feet in the first quarter of 2009, and construction completions were 21.5 million square feet, down from 46.7 million square feet in the prior quarter. First quarter absorption was the lowest quarterly total since inception of the data in 1989. While we expect the delivery pipeline to decline substantially, we expect net absorption to be negative in 2009.

Capitalization Ratios as of March 31, 2007
Total debt-to-total market capitalization(1)	35.8	%
Our share of total debt-to-our share of total market capitalization(1)	30.5	%
Total debt plus preferred-to-total market capitalization(1)	39.9	%
Our share of total debt plus preferred-to-our share of total market capitalization(1)	35.0	%
Our share of total debt-to-our share of total book capitalization(1)	49.5	%

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.

~~(1)~~ Our ~~definition~~owned ofand ~~“total~~managed ~~market~~portfolio ~~capitalization”~~occupancy isat ~~total~~March 31, ~~debt~~2009 was ~~plus~~92.2%, ~~preferred~~down ~~equity~~from ~~liquidation preferences plus market equity~~95.1% ~~Our~~at ~~definition~~December 31, of2008 ~~“our~~and ~~share~~94.8% at ofMarch 31, ~~total~~2008, ~~market~~while ~~capitalization”~~average isoccupancy ~~our~~at March 31, ~~share~~2009 ofwas ~~total~~93.1%, ~~debt~~down ~~plus~~from ~~preferred equity liquidation preferences plus market equity~~94.9% ~~Our~~at December 31, ~~definition~~2008 ~~of “market equity” is the total number of outstanding shares of our general partner’s common stock~~ and ~~our~~94.9% ~~common~~at ~~limited~~March 31, ~~partnership~~2008. ~~units multiplied by~~ During the ~~closing~~three ~~price~~months ~~per~~ended ~~share of our general partner’s common stock as of~~ March 31, ~~2007.~~2009, ~~Our~~rent ~~definition~~on ofrenewed ~~“preferred”~~and re-leased isspace ~~preferred~~in ~~equity~~our ~~liquidation~~operating ~~preferences.~~portfolio ~~Our~~was ~~share~~flat ofat ~~total~~(0.3)% ~~book~~on an ~~capitalization~~owned isand ~~defined~~managed asbasis, ~~our~~excluding ~~share~~expense ofreimbursements, rental ~~total~~abatements, ~~debt~~percentage ~~plus~~rents ~~minority interests to preferred unitholders~~ and ~~limited~~straight-line ~~partnership unitholders plus partners’ capital~~rents. Rental ~~Our~~rates ~~share~~on oflease ~~total~~renewals ~~debt~~and isrollovers ~~the~~in ~~pro~~our ~~rata~~portfolio increased ~~portion~~2.2% offor the ~~total~~trailing ~~debt~~four ~~based~~quarters onended March 31, ~~our~~2009. ~~percentage~~During ofthe ~~equity~~quarter, ~~interest~~cash-basis insame ~~each~~store net ofoperating ~~the~~income, ~~consolidated~~with orand ~~unconsolidated~~without ~~ventures holding~~ the ~~debt.~~effect ~~We believe that our share~~ of ~~total~~lease termination ~~debt~~fees, isdeclined aby ~~meaningful~~0.2% ~~supplemental~~and ~~measure~~1.1%, ~~which~~respectively, ~~enables~~on ~~both~~an owned ~~management~~ and ~~investors~~managed tobasis. ~~analyze~~Excluding ~~our~~the ~~leverage~~impact ~~and~~of toforeign currency ~~compare~~exchange ~~our~~rate ~~leverage~~movements toagainst ~~that~~the ~~of other companies~~U. ~~In addition~~S. dollar, cash-basis itsame ~~allows~~store ~~for~~net aoperating ~~more~~income ~~meaningful~~without ~~comparison~~the ofeffect ~~our debt to that~~ of lease ~~other~~termination ~~companies~~fees ~~that~~decreased ~~do not consolidate their joint ventures~~0.5% ~~Our~~during ~~share~~the ofthree ~~total~~months ended ~~debt~~March 31, is2009. ~~not~~See ~~intended~~“Supplemental toEarnings Measures” ~~reflect~~below ~~our~~for ~~actual liability should there be~~ a ~~default~~discussion ~~under any or all~~ of ~~such~~cash-basis ~~loans~~same orstore net aoperating ~~liquidation~~income ofand ~~the joint ventures. For~~ a reconciliation of ~~our~~cash-basis ~~share~~same store ofnet ~~total~~operating ~~debt~~income ~~to total consolidated debt, a GAAP financial measure, please see the table of debt maturities~~ and ~~capitalization~~net ~~above~~income.

~~Liquidity~~Development Business

AsOur ofdevelopment ~~March 31,~~business ~~2007,~~consists weof ~~had~~conventional ~~$259.8 million~~development, build-to-suit indevelopment, ~~cash~~redevelopment, value-added conversions and ~~cash~~land ~~equivalents~~sales. ~~and~~We ~~$694.5 million~~generate ofearnings ~~additional~~from our ~~available~~development ~~borrowings~~business ~~under~~through ~~our~~the ~~credit~~disposition ~~facilities.~~or Ascontribution of ~~March 31,~~projects ~~2007,~~from wethese ~~had $26~~activities.~~3 million in restricted~~ ~~cash.~~

WeDespite ~~announced~~the ~~our~~cyclical ~~intention~~downturn toin ~~pay~~the aU.S. and ~~regular~~global economies, ~~cash~~we ~~distribution~~believe that, over the long term, customer demand for ~~the~~new ~~quarter~~industrial ~~ended~~space ~~March 31,~~in ~~2007~~strategic ofmarkets ~~$0.50 per~~tied to global ~~common~~trade ~~unit.~~will ~~The~~continue ~~distributions~~to ~~were~~outpace ~~payable~~supply, onmost ~~April 16,~~notably in major ~~2007~~gateway tomarkets ~~unitholders~~in ofAsia ~~record~~and onEurope. ~~April 6,~~Given ~~2007.~~the ~~The~~current ~~series L,~~uncertainty Min the global economy, Owe curtailed development activity, and Pas ~~preferred~~a ~~unit~~result, ~~distributions~~development ~~were~~starts for the quarter ~~payable~~decreased on66% ~~April 16,~~from ~~2007~~2008 towith ~~unitholders~~100% of ~~record~~our on2009 development starts ~~April 6,~~outside ~~2007~~the United States. ~~The~~For ~~series J~~2009, ~~and~~our Kdevelopment ~~preferred~~activity will ~~unit~~be limited to fulfilling prior commitments until the ~~quarterly~~financial ~~distributions~~and ~~were~~real ~~payable~~estate onmarkets ~~April 16~~stabilize. In addition to our committed development pipeline, ~~2007.~~we ~~The~~hold a total of ~~series~~2,485 Dacres ~~and~~of Iland ~~preferred~~for ~~unit~~future ~~quarterly~~development ~~distributions~~or ~~were~~sale on an ~~paid~~owned onand ~~March 25~~managed basis, ~~2007.~~approximately ~~The~~86% ~~following~~of ~~table~~which ~~sets~~is ~~forth~~located in the Americas. We currently estimate that these ~~distributions~~2,485 acres ~~paid~~of orland ~~payable~~could ~~per~~support ~~unit~~approximately 45.0 million ~~for~~square ~~the~~feet ~~three~~of ~~months~~future development. Our ~~ended~~long-term ~~March 31,~~capital ~~2007~~allocation goal is to have approximately 50% of our owned and ~~2006:~~managed operating portfolio invested in non-U.S. markets based on annualized base rent.

		For the Three
		Months Ended March 31,
Paying Entity	Security	2007		2006
Operating Partnership	Common limited partnership units	$	0.500	$	0.460
Operating Partnership	Series J preferred units	$	0.994	$	0.994
Operating Partnership	Series K preferred units	$	0.994	$	0.994
AMB Property II, L.P.	Class B common limited partnership units	$	0.500	$	0.460
AMB Property II, L.P.	Series D preferred units	$	0.943	$	0.969
AMB Property II, L.P.	Series E preferred units(1)		n/a	$	0.969
AMB Property II, L.P.	Series F preferred units(2)		n/a	$	0.994
AMB Property II, L.P.	Series H preferred units(3)		n/a	$	0.970
AMB Property II, L.P.	Series I preferred units	$	1.000	$	1.000
AMB Property II, L.P.	Series N preferred units(4)		n/a	$	0.215

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.

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

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

Private Capital Business

~~The~~Since ~~anticipated~~the ~~size~~initial public offering of our ~~distributions,~~general ~~using~~partner ~~only cash from~~in ~~operations~~1997, ~~will~~we ~~not~~have ~~allow~~formed us11 toco-investment ~~retire~~ventures ~~all~~and raised approximately $3.1 billion of ~~our~~private ~~debt~~capital asfrom itthird ~~comes~~parties ~~due.~~as ~~Therefore,~~equity wein ~~intend~~such toco-investment ~~also~~ventures. ~~repay~~Eight ~~maturing~~of ~~debt with~~these ~~net~~co-investment ~~proceeds~~ventures ~~from~~are ~~future~~still ~~debt~~active orin ~~limited~~the ~~partnership~~United ~~offerings~~States, ~~(including~~Mexico, ~~issuances~~Europe ofand ~~limited~~Japan: ~~partnership~~AMB ~~units~~Institutional ~~by our~~Alliance ~~subsidiaries)~~Fund III, ~~as well as property divestitures~~L. ~~However~~P., weAMB ~~may not~~Europe beFund I, ~~able~~FCP-FIS,

Filing Compare · Prologis, L.P.