<PAGE>   1


================================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                ----------------
                                    FORM 10-Q
                                ----------------


(MARK ONE)

   [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001

                                       OR

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

                        COMMISSION FILE NUMBER: 001-14245

                               AMB PROPERTY, L.P.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

               DELAWARE                                  94-3285362
    (STATE OR OTHER JURISDICTION OF                   (I.R.S. EMPLOYER
    INCORPORATION OR ORGANIZATION)                   IDENTIFICATION NO.)

PIER 1, BAY 1, SAN FRANCISCO, CALIFORNIA                    94111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                 (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 [X] No [ ].

================================================================================


<PAGE>   2


                               AMB PROPERTY, L.P.

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                                 PAGE
                                                                                                                 ----
<S>      <C>                                                                                                     <C>
                                           PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements (unaudited)

         Consolidated Balance Sheets as of March 31, 2001, and December 31, 2000.............................      1

         Consolidated Statements of Operations for the three months ended March 31, 2001 and 2000............      2

         Consolidated Statements of Cash Flows for the three months ended March 31, 2001 and 2000............      3

         Consolidated Statement of Partners' Capital for the three months ended March 31, 2001...............      4

         Notes to Consolidated Financial Statements..........................................................      5

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations...............     15

Item 3.  Quantitative and Qualitative Disclosures About Market Risk..........................................     26


                                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings...................................................................................     27

Item 2.  Changes in Securities and Use of Proceeds...........................................................     27

Item 3.  Defaults Upon Senior Securities.....................................................................     27

Item 4.  Submission of Matters to a Vote of Security Holders.................................................     27

Item 5.  Other Information...................................................................................     27

Item 6.  Exhibits and Reports on Form 8-K....................................................................     37
</TABLE>


<PAGE>   3


                                     PART I

ITEM 1. FINANCIAL STATEMENTS

                               AMB PROPERTY, L.P.

                           CONSOLIDATED BALANCE SHEETS
                   AS OF MARCH 31, 2001 AND DECEMBER 31, 2000
             (UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT UNIT AMOUNTS)

<TABLE>
<CAPTION>
                                                            ASSETS                                 MARCH 31,         DECEMBER 31,
                                                                                                     2001                2000
                                                                                                  -----------        ------------
<S>                                                                                               <C>                <C>
Investments in real estate:
  Land and improvements ..................................................................        $   840,691         $   833,325
  Buildings and improvements .............................................................          2,989,110           2,915,537
  Construction in progress ...............................................................            254,998             277,735
                                                                                                  -----------         -----------
          Total investments in properties ................................................          4,084,799           4,026,597
  Accumulated depreciation and amortization ..............................................           (202,188)           (177,467)
                                                                                                  -----------         -----------
       Net investments in properties .....................................................          3,882,611           3,849,130
Investments in unconsolidated joint ventures .............................................             85,317              80,432
Properties held for divestiture, net .....................................................            236,746             197,146
                                                                                                  -----------         -----------
       Net investments in real estate ....................................................          4,204,674           4,126,708
Cash and cash equivalents ................................................................             98,627              20,358
Restricted cash and cash equivalents .....................................................             53,597              22,364
Mortgage receivables .....................................................................            121,297             115,969
Accounts receivable, net .................................................................             67,482              69,874
Investments in affiliated companies ......................................................             47,285              35,731
Investments in other companies, net ......................................................             15,343              15,965
Other assets .............................................................................             29,839              18,657
                                                                                                  -----------         -----------
          Total assets ...................................................................        $ 4,638,144         $ 4,425,626
                                                                                                  ===========         ===========

                                                  LIABILITIES AND PARTNERS' CAPITAL

Debt:
  Secured debt ...........................................................................        $ 1,014,054         $   940,276
  Unsecured senior debt securities .......................................................            755,000             680,000
  Unsecured credit facility ..............................................................             94,000             216,000
                                                                                                  -----------         -----------
          Total debt .....................................................................          1,863,054           1,836,276
Other liabilities ........................................................................            177,915             147,042
                                                                                                  -----------         -----------
          Total liabilities ..............................................................          2,040,969           1,983,318
Commitments and contingencies (note 12)
Minority interests .......................................................................            633,911             496,405
Partners' capital:
  General Partner, 84,749,075 and 83,909,340 units outstanding, respectively,
     and 4,000,000 Series A preferred units with a $100,000 liquidation preference .......          1,796,892           1,767,930
  Limited Partners, 5,229,620 and 5,827,917 units outstanding respectively,
     and 1,300,000 Series B preferred units with a $65,000 liquidation preference ........            166,372             177,973
                                                                                                  -----------         -----------
          Total partners' capital ........................................................          1,963,264           1,945,903
                                                                                                  -----------         -----------
          Total liabilities and partners' capital ........................................        $ 4,638,144         $ 4,425,626
                                                                                                  ===========         ===========
</TABLE>


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


                                       1
<PAGE>   4

                               AMB PROPERTY, L.P.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
       (UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT UNIT AND PER UNIT AMOUNTS)

<TABLE>
<CAPTION>
                                                                                    FOR THE THREE MONTHS ENDED
                                                                                            MARCH 31,
                                                                                ---------------------------------
                                                                                    2001                2000
                                                                                ------------         ------------
<S>                                                                             <C>                  <C>
REVENUES
  Rental revenues ......................................................        $    135,801         $    108,266
  Equity in earnings of unconsolidated joint ventures ..................               1,474                1,242
  Investment management income .........................................               2,420                  396
  Interest and other income ............................................               5,139                  419
                                                                                ------------         ------------
          Total revenues ...............................................             144,834              110,323
OPERATING EXPENSES
  Property operating expenses ..........................................              16,339               11,477
  Real estate taxes ....................................................              16,581               13,496
  Interest, including amortization .....................................              31,552               20,342
  Depreciation and amortization ........................................              26,854               19,192
  General and administrative ...........................................               8,183                5,351
  Loss on investments in other companies ...............................               4,655                   --
                                                                                ------------         ------------
          Total operating expenses .....................................             104,164               69,858
                                                                                ------------         ------------
     Income from operations before minority interests ..................              40,670               40,465
  Minority interests' share of net income ..............................              (9,820)              (6,065)
                                                                                ------------         ------------
     Net income before gain/(loss) from divestiture of real estate .....              30,850               34,400
  Gain/(loss) from divestitures of real estate .........................              16,767                  (11)
                                                                                ------------         ------------
     Net income ........................................................              47,617               34,389
  Series A preferred unit distributions ................................              (2,125)              (2,125)
  Series B preferred unit distributions ................................              (1,402)              (1,402)
                                                                                ------------         ------------
     Net income available to common unitholders ........................        $     44,090         $     30,862
                                                                                ============         ============

Income available to common unitholders attributable to:
  General partner ......................................................              42,315               28,920
  Limited partner ......................................................               1,775                1,942
                                                                                ------------         ------------
     Net income available to common unitholders ........................        $     44,090         $     30,862
                                                                                ============         ============

NET INCOME PER COMMON UNIT
  Basic ................................................................        $       0.49         $       0.34
                                                                                ============         ============
  Diluted ..............................................................        $       0.49         $       0.34
                                                                                ============         ============

WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
  Basic ................................................................          89,669,950           89,693,900
                                                                                ============         ============
  Diluted ..............................................................          90,494,874           89,707,941
                                                                                ============         ============
</TABLE>


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


                                       2
<PAGE>   5

                                AMB PROPERTY, L.P

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                        (UNAUDITED, DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                              FOR THE THREE MONTHS ENDED
                                                                                                       MARCH 31,
                                                                                              --------------------------
                                                                                                2001              2000
                                                                                              ---------         --------
<S>                                                                                           <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income ...........................................................................        $  47,640         $ 34,389
Adjustments to reconcile net income to net cash provided by operating activities:
  Depreciation and amortization ......................................................           26,854           19,192
  Loss on investments in other companies .............................................            4,655               --
  Straight-line rents ................................................................           (1,325)          (3,160)
  Amortization of debt premiums and financing costs ..................................              451           (1,337)
  Minority interests' share of net income ............................................            9,797            6,065
  (Gain)/loss on divestitures of real estate .........................................          (16,767)              11
  Equity in (earnings)/losses of AMB Investment Management ...........................             (149)               5
  Equity in (earnings) of unconsolidated joint ventures ..............................           (1,474)          (1,242)
Changes in assets and liabilities:
  Other assets .......................................................................          (24,005)         (17,487)
  Other liabilities ..................................................................           30,874            8,328
                                                                                              ---------         --------
     Net cash provided by operating activities .......................................           76,551           44,764
CASH FLOWS FROM INVESTING ACTIVITIES
Change in restricted cash and cash equivalents .......................................          (61,528)          41,275
Cash paid for property acquisitions ..................................................          (93,414)         (34,460)
Additions to land, building, development costs and other first generation
  improvements .......................................................................          (22,873)         (65,660)
Additions to second generation building improvements and lease costs .................           (7,426)          (6,991)
Additions to interest in unconsolidated joint ventures ...............................           (4,584)            (847)
Distributions received from unconsolidated joint ventures ............................            1,173            1,032
Net proceeds from divestitures of real estate ........................................           30,295           12,351
                                                                                              ---------         --------
     Net cash used in investing activities ...........................................         (158,357)         (53,300)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common units .............................................................            1,020              269
Borrowings on unsecured credit facility ..............................................          119,000           22,000
Borrowings on secured debt ...........................................................           81,074           60,624
Payments on unsecured credit facility ................................................         (241,000)         (62,000)
Payments on Alliance Fund I credit facility ..........................................               --          (27,000)
Payments on secured debt .............................................................           (6,092)          (2,912)
Payment of financing fees ............................................................             (624)              --
Net proceeds from issuance of unsecured senior debt securities .......................           74,563               --
Net proceeds from issuance of preferred units ........................................           24,863           19,581
Contributions from investors in AMB Partners II ......................................           50,000               --
Contributions from investors in AMB-SGP ..............................................           75,000               --
Contributions from investors in the Alliance Fund I ..................................               --            1,381
Distributions paid to common and preferred unitholders ...............................           (3,527)          (3,527)
Distributions to limited partners' minority interests, including preferred units .....          (14,202)          (6,530)
                                                                                              ---------         --------
     Net cash provided by financing activities .......................................          160,075            1,886
                                                                                              ---------         --------
Net increase (decrease) in cash and cash equivalents .................................           78,269           (6,650)
Cash and cash equivalents at beginning of period .....................................           20,358           33,312
                                                                                              ---------         --------
Cash and cash equivalents at end of period ...........................................        $  98,627         $ 26,662
                                                                                              =========         ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest, net of capitalized interest ..................................        $  35,033         $ 12,850
                                                                                              =========         ========
</TABLE>


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


                                       3
<PAGE>   6

                               AMB PROPERTY, L.P.

                   CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL
                    FOR THE THREE MONTHS ENDED MARCH 31, 2001
                        (UNAUDITED, DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                GENERAL PARTNER
                                             --------------------------------------------------------
                                                 PREFERRED UNITS                 COMMON UNITS
                                             ------------------------     ---------------------------
                                               UNITS           AMOUNT       UNITS            AMOUNT
                                             ---------        -------     ----------       ----------
<S>                                          <C>              <C>         <C>              <C>
BALANCE AT DECEMBER 31, 2000...............  4,000,000        $96,100     83,909,340       $1,671,830
Comprehensive income:
 Net Income................................                     2,125                          42,315
 Realized loss on securities...............                        --                           3,732
  Total comprehensive income...............
Issuance of common limited partnership
  units in connection  with issuance of
  restricted-stock.........................                        --        196,517            4,836
Issuance of common limited partnership
  units in connection with the exercise
  of stock-options.........................                        --         44,921            1,020
Conversion of operating partnership
  units to common stock....................                        --        598,297           14,374
Deferred compensation......................                        --                          (4,834)
Deferred compensation amortization.........                        --                             304
Reallocation of interests and other........                        --                             782
Distributions..............................                    (2,125)                        (33,567)
                                             ---------        -------     ----------       ----------
BALANCE AT MARCH 31, 2001..................  4,000,000        $96,100     84,749,075       $1,700,792
                                             =========        =======     ==========       ==========
</TABLE>


<TABLE>
<CAPTION>
                                                                 LIMITED PARTNERS
                                             ------------------------------------------------------------
                                                  PREFERRED UNITS                    COMMON UNITS
                                             -------------------------        ---------------------------
                                               UNITS           AMOUNT           UNITS             AMOUNT        TOTAL
                                             ---------         -------        ---------          --------      ----------
<S>                                          <C>               <C>            <C>                <C>           <C>
BALANCE AT DECEMBER 31, 2000...............  1,300,000         $62,319        5,827,917          $115,654      $1,945,903
Comprehensive income:
 Net Income................................         --           1,402               --             1,775
 Realized loss on securities...............         --                               --               230
  Total comprehensive income...............                                                                        51,579
Issuance of common limited partnership
  units in connection  with issuance of
  restricted-stock.........................         --                               --                --           4,836
Issuance of common limited partnership
  units in connection with the exercise
  of stock-options.........................         --                               --                --           1,020
Conversion of operating partnership
  units to common stock....................         --                         (598,297)          (10,758)          3,616
Deferred compensation......................         --                               --                --          (4,834)
Deferred compensation amortization.........         --                               --                --             304
Reallocation of interests..................         --                               --              (782)             --
Distributions..............................         --          (1,402)              --            (2,066)        (39,160)
                                             ---------         -------        ---------          --------      ----------
BALANCE AT MARCH 31, 2001..................  1,300,000         $62,319        5,229,620          $104,053      $1,963,264
                                             =========         =======        =========          ========      ==========
</TABLE>



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


                                       4
<PAGE>   7

                               AMB PROPERTY, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001
                                   (UNAUDITED)


1. ORGANIZATION AND BASIS OF PRESENTATION

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

        As of March 31, 2001, the Company owned an approximate 94.2% general
partner interest in the Operating Partnership, excluding preferred units. The
remaining 5.8% limited partner interest is owned by non-affiliated investors and
certain current and former directors and officers of the Company. For local law
purposes, certain properties are owned through limited partnerships and limited
liability companies. The ownership of such properties through such entities does
not materially affect the Operating Partnership's overall ownership of the
interests in the properties. As the sole general partner of the Operating
Partnership, the Company has full, exclusive, and complete responsibility and
discretion in the day-to-day management and control of the Operating
Partnership. Net operating results of the Operating Partnership are allocated
after preferred unit distributions based on the respective partners' ownership
interests.

        The Operating Partnership enters into co-investment joint ventures with
institutional investors. These co-investment joint ventures provide the
Operating Partnership with an additional source of capital to fund certain
acquisitions and development and renovation projects. As of March 31, 2001, the
Operating Partnership had investments in four co-investment joint ventures,
which are consolidated for financial reporting purposes.

        AMB Investment Management, Inc., a Maryland corporation ("AMB Investment
Management"), provides real estate investment services on a fee basis to
clients. The Operating Partnership purchased 100% of AMB Investment Management's
non-voting preferred stock (representing a 95% economic interest therein).
Certain current and former executive officers of the Company and a former
executive officer of AMB Investment Management collectively purchased 100% of
AMB Investment Management's voting common stock (representing a 5% economic
interest therein). The Operating Partnership also owns 100% of the non-voting
preferred stock of Headlands Realty Corporation, a Maryland corporation,
(representing a 95% economic interest therein). Certain current and former
executive officers of the Company and a director of Headlands Realty Corporation
collectively own 100% of the voting common stock of Headlands Realty Corporation
(representing a 5% economic interest therein). Headlands Realty Corporation
conducts a variety of businesses that include incremental income programs, such
as the Company's Customer Assist Program and, to a limited extent, development
projects available for sale to third parties. The Operating Partnership accounts
for its investments in AMB Investment Management and Headlands Realty
Corporation using the equity method of accounting.

        As of March 31, 2001, the Operating Partnership owned 859 industrial
buildings and eight retail centers, located in 27 markets throughout the United
States. The Operating Partnership's strategy is to become a leading provider of
High Throughput Distribution, or HTD, properties located near key passenger and
cargo airports, highway systems and ports in major metropolitan areas, such as
Atlanta, Chicago, Dallas/Fort Worth, Northern New Jersey/New York City, the San
Francisco Bay Area, Southern California, Miami, and Seattle. As of March 31,
2001, the industrial buildings, principally warehouse distribution buildings,
encompassed approximately 77.4 million rentable square feet and were 96.0%
leased to over 2,787 tenants. As of March 31, 2001, the retail centers,
principally grocer-anchored community shopping centers, encompassed
approximately 1.3 million rentable square feet and were 86.5% leased to over 170
tenants.


                                       5
<PAGE>   8

                               AMB PROPERTY, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001
                                   (UNAUDITED)


2. INTERIM FINANCIAL STATEMENTS

        The consolidated financial statements included herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Accordingly, certain information and note disclosures normally included in the
annual financial statements prepared in accordance with accounting principles
generally accepted in the Unites States 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 of the Operating Partnership's consolidated
financial position and results of operations for the interim periods.

        The interim results of the three months ended March 31, 2001 and 2000,
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, 2000.

        Investments in other companies are accounted for on a cost basis and
realized gains and losses are included in current earnings. For its investments
in public companies, the Operating Partnership calculates the fair market value
using the closing price on the balance sheet date and any unrealized gains or
losses due to temporary impairment are included in equity, not in current
earnings. For its investments in private companies, the Operating Partnership
periodically reviews its investments and management determines if the value of
such investments have been permanently impaired. Permanent impairment losses for
investments in public and private companies are included in current earnings.
During the first quarter of 2001, the Operating Partnership recognized a
realized loss on its investment in Webvan Group, Inc. The Operating Partnership
had previously recognized gains and losses on its investment in Webvan Group,
Inc. as a component of other comprehensive income.

        The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and 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.


3. REAL ESTATE ACQUISITION AND DEVELOPMENT ACTIVITY

        During the first quarter of 2001, the Operating Partnership invested
$93.4 million in operating properties, consisting of 14 industrial buildings
aggregating approximately 1.8 million square feet, which included the investment
of $42.5 million in operating properties, consisting of eight industrial
buildings aggregating approximately 0.9 million square feet for two of the
Operating Partnership's joint ventures.

        During the first quarter of 2001, the Operating Partnership also
contributed $427.3 million in operating properties, consisting of 94 industrial
buildings aggregating approximately 8.8 million square feet, to two of its
co-investment joint ventures. The Operating Partnership recognized a gain of
$16.8 million on the contributions.

        The Operating Partnership also initiated one new development project
during the first quarter, which will aggregate approximately 0.1 million square
feet and have a total estimated cost of $4.9 million upon completion. As of
March 31, 2001, the Operating Partnership had 19 industrial projects, which will
total approximately 5.2 million square feet and have an aggregate estimated
investment of $290.8 million upon completion, in its development pipeline. It
also had three retail projects, which will total approximately 0.5 million
square feet and have an aggregate estimated investment of $77.6 million upon
completion, in its development pipeline. As of March 31, 2001, the Operating
Partnership and its Development Alliance Partners have funded an aggregate of
$222.0 million and will need to fund an estimated additional $146.4 million in
order to complete projects currently under construction.

        As of March 31, 2001, the Operating Partnership also had two industrial
projects, which will total approximately 1.1 million square feet upon
completion, in its development pipeline. These two development projects are
recorded under the equity method for financial reporting purposes.


                                       6
<PAGE>   9

4. PROPERTY DIVESTITURES AND PROPERTIES HELD FOR DIVESTITURE

        Property Divestitures. During the quarter, the Operating Partnership
divested itself of six industrial buildings located in Illinois and Maryland,
aggregating approximately 0.6 million square feet, for an aggregate price of
$31.5 million, with a resulting net loss of $0.1 million.

        Properties Held for Divestiture. The Operating Partnership has decided
to divest itself of two retail centers and 27 industrial buildings, which are
not in its core markets or which do not meet its strategic objectives. The
divestitures of the properties are subject to negotiation of acceptable terms
and other customary conditions. As of March 31, 2001, the net carrying value of
the properties held for divestiture was $236.7 million.

        The following summarizes the condensed results of operations of the
properties held for divestiture (dollars in thousands):

                         PROPERTIES HELD FOR DIVESTITURE

<TABLE>
<CAPTION>
       THREE MONTHS ENDED MARCH 31,                       2001      2000
                                                          ----      ----
<S>                                                      <C>       <C>
       Income....................................        $7,133    $6,485
       Property operating expenses...............         1,791     1,503
                                                         ------    ------
         Net operating income....................        $5,342    $4,982
                                                         ======    ======
</TABLE>


5. MORTGAGE RECEIVABLES

        In September 2000, the Operating Partnership sold a retail center
located in Los Angeles, California. The Operating Partnership carries an 8.75%
mortgage note in the principal amount of $79.0 million on the retail center. The
mortgage note matures in September 2001 and has a one-year extension option.

        The Operating Partnership also holds a mortgage loan receivable on AMB
Pier One, LLC, an unconsolidated joint venture. The note bears interest at 11.0%
and matures in November 2001. As of March 31, 2001, the outstanding balance on
the note was $42.3 million.


6. DEBT

        As of March 31, 2001, and December 31, 2000, debt consisted of the
following (dollars in thousands):

<TABLE>
<CAPTION>
                                                                     MARCH 31,  DECEMBER 31,
                                                                       2001         2000
                                                                    ----------  ------------
<S>                                                                 <C>         <C>
Secured debt, varying interest rates from 4.0% to 10.4%
  due November 2001 to June 2023...............................     $1,004,798   $  930,418
Unsecured senior debt securities, weighted average interest
  rate of 7.3% due June 2005 to June 2018......................        755,000      680,000
Unsecured credit facility, variable interest at LIBOR plus
  75 basis points (weighted average interest rate of
  6.0% at March 31, 2001) due May 2003.........................         94,000      216,000
                                                                     ---------   ----------
     Subtotal..................................................      1,853,798    1,826,418
     Unamortized premiums......................................          9,256        9,858
                                                                     ---------   ----------
          Total consolidated debt..............................     $1,863,054   $1,836,276
                                                                    ==========   ==========
</TABLE>

        Secured debt generally requires monthly principal and interest payments.
The secured debt is secured by deeds of trust on certain properties. As of March
31, 2001, the total gross investment book value of those properties secured by
debt was $1.6 billion. All of the secured debt bears interest at fixed rates,
except for two loans with an aggregate principal amount of $30.8 million, which
bear interest at variable rates (with a weighted average interest rate of 6.7%
at March 31, 2001). The secured debt has various financial and


                                       7
<PAGE>   10

                               AMB PROPERTY, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001
                                   (UNAUDITED)


non-financial covenants. Management believes that the Operating Partnership was
in material compliance with these covenants at March 31, 2001. Additionally,
certain secured debt is cross-collateralized.

        Interest on the senior debt securities is payable semiannually. The 2015
notes are putable and callable in June 2005. The senior debt securities are
subject to various financial and non-financial covenants. Management believes
that the Operating Partnership was in material compliance with these covenants
at March 31, 2001.

        In August 2000, the Operating Partnership commenced a medium-term note
program for the possible issuance of up to $400.0 million in principal amount of
medium-term notes, which will be guaranteed by the Company. In January 2001, the
Operating Partnership issued and sold $25.0 million of the notes under this
program to A.G. Edwards & Sons, Inc., as principal. The Company has guaranteed
the notes, which mature on January 30, 2006, and bear interest at 6.90% per
annum. The Operating Partnership used the net proceeds of $24.9 million for
general corporate purposes, to partially repay indebtedness, and for the
acquisition and development of additional properties. In March 2001, the
Operating Partnership issued and sold $50.0 million of the notes under this
program to First Union Securities, Inc., as principal. The Company has
guaranteed the notes, which mature on March 7, 2011, and bear interest at 7.00%
per annum. The Operating Partnership used the net proceeds of $49.7 million for
general corporate purposes, to partially repay indebtedness, and for the
acquisition and development of additional properties.

        In May 2000, the Operating Partnership entered into a $500.0 million
unsecured revolving credit agreement. The Company is a guarantor of the
Operating Partnership's obligations under the credit facility. The credit
facility matures in May 2003, has a one-year extension option, and is subject to
a 15 basis point annual facility fee. The credit facility has various financial
and non-financial covenants. Management believes that the Operating Partnership
was in material compliance with these covenants at March 31, 2001. The Operating
Partnership has the ability to increase available borrowings up to $700.0
million by adding additional banks to the facility or obtaining the agreement of
existing banks to increase their commitments. Monthly debt service payments on
the credit facility are interest only. The total amount available under the
credit facility fluctuates based upon the borrowing base, as defined in the
agreement governing the credit facility. At March 31, 2001, the remaining amount
available under the credit facility was $406.0 million (excluding the additional
$200.0 million of potential additional capacity).

        Capitalized interest related to construction projects for the three
months ended March 31, 2001 and 2000, was $3.6 million and $3.0 million,
respectively.

        The scheduled maturities of the Operating Partnership's total debt,
excluding unamortized debt premiums, as of March 31, 2001, were (dollars in
thousands):

<TABLE>
<CAPTION>
                                                  UNSECURED
                                          JOINT     SENIOR    UNSECURED
                              SECURED    VENTURE    DEBT       CREDIT
                               DEBT       DEBT    SECURITIES  FACILITY     TOTAL
                             --------   --------  ----------  --------- ----------
<S>                          <C>        <C>        <C>        <C>       <C>
2001..................       $  9,451   $ 34,116   $     --   $    --   $   43,567
2002..................         29,148     47,590         --        --       76,738
2003..................         72,638      8,380         --    94,000      175,018
2004..................         71,106     21,925         --        --       93,031
2005..................         64,250     31,698    250,000        --      345,948
2006..................        114,803     35,385     25,000        --      175,188
2007..................         32,181     21,567     55,000        --      108,748
2008..................         33,604    111,013    175,000        --      319,617
2009..................          5,176     28,182         --        --       33,358
2010..................         52,780     67,818     75,000        --      195,598
2011..................          1,311     83,751     50,000        --      135,062
Thereafter............          3,307     23,618    125,000        --      151,925
                             --------   --------   --------    ------   ----------
                             $489,755   $515,043   $755,000   $94,000   $1,853,798
                             ========   ========   ========   ========  ==========
</TABLE>


                                       8
<PAGE>   11

                               AMB PROPERTY, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001
                                   (UNAUDITED)


7. MINORITY INTERESTS IN CONSOLIDATED JOINT VENTURES

        Minority interests in the Operating Partnership represent the limited
partnership interests in a subsidiary of the Operating Partnership and interests
held by certain third parties in several real estate joint ventures, aggregating
approximately 25.3 million square feet, which are consolidated for financial
reporting purposes. Such investments are consolidated because: (1) the Operating
Partnership owns a majority interest; or (2) the Operating Partnership exercises
significant control over major operating decisions such as approval of budgets,
selection of property managers, and changes in financing.

        The Operating Partnership, together with one of its affiliates, owns, as
of March 31, 2001, approximately 21% of the partnership interests in AMB
Institutional Alliance Fund I, L.P. ("Alliance Fund I"). The Alliance Fund I is
a co-investment partnership between the Operating Partnership and AMB
Institutional Alliance REIT I, Inc. ("Alliance REIT I"), which includes 15
institutional investors as stockholders, and is engaged in the acquisition,
ownership, operation, management, renovation, expansion, and development of
primarily industrial buildings in target markets nationwide. As of March 31,
2001, the Alliance Fund I had received equity contributions from third party
investors totaling $169.0 million, which, when combined with anticipated debt
financings and the Operating Partnership's investment, created a total planned
capitalization of $410.0 million.

        On February 14, 2001, the Operating Partnership formed a partnership,
AMB Partners II, L.P. ("Partners II") with the City and County of San Francisco
Employees' Retirement System ("CCSFERS") to acquire, manage, develop, and
redevelop distribution facilities nationwide. As of March 31, 2001, AMB Partners
II had received an equity contribution from CCSFERS of $50.0 million, which,
when combined with anticipated debt financings and the Operating Partnership's
investment, created a total planned capitalization of $250.0 million.

        On March 26, 2001, the Operating Partnership formed a joint venture,
AMB-SGP, L.P. ("AMB-SGP"), with a subsidiary of GIC Real Estate Pte Ltd., the
real estate investment subsidiary of the Government of Singapore Investment
Corporation ("GIC"), to own and operate, through a private real estate
investment trust, distribution facilities nationwide. As of March 31, 2001,
AMB-SGP had received an equity contribution from GIC of $75.0 million, which,
when combined with anticipated debt financings and the Operating Partnership's
investment, created a total planned capitalization of $335.0 million.

        The following table distinguishes the minority interest liability and
the minority interests' share of net income (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                                          MINORITY
                                                                                                        INTEREST SHARE
                                                                                                        OF NET INCOME
                                                                                 MINORITY INTEREST       THREE MONTHS
                                                                                 LIABILITY AS OF             ENDED
                                                                                  MARCH 31, 2001        MARCH 31, 2001
                                                                                 -----------------      ---------------
<S>                                                                              <C>                    <C>
Joint venture partners...................................................            $ 21,965               $  922
Separate account co-investors............................................             158,804                1,440
Alliance REIT I's interest in Alliance Fund I............................             172,550                2,002
Series C preferred units (liquidation preference of $110,000)............             105,844                2,406
Series D preferred units (liquidation preference of $79,767).............              77,686                1,545
Series E preferred units (liquidation preference of $11,022).............              10,790                  214
Series F preferred units (liquidation preference of $19,872).............              19,534                  395
Series G preferred units (liquidation preference of $1,000)..............                 952                   20
Series H preferred units (liquidation preference of $42,000).............              40,923                  853
Series I preferred units (liquidation preference of $25,500).............              24,863                   23
                                                                                     --------               ------
          Total..........................................................            $633,911               $9,820
                                                                                     ========               ======
</TABLE>


                                       9
<PAGE>   12

                               AMB PROPERTY, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001
                                   (UNAUDITED)


8. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

        The Operating Partnership has non-controlling limited partnership
interests in three separate unconsolidated equity investment joint ventures. The
Operating Partnership has a 56.1% interest in a joint venture, which owns an
aggregate of 36 industrial buildings totaling approximately 4.0 million square
feet. The Operating Partnership also has a 50% interest in each of two other
operating and development alliance joint ventures. For the three months ended
March 31, 2001 and 2000, the Operating Partnership's share of net operating
income was $2.3 million and $2.0 million, respectively, and, as of March 31,
2001, the Operating Partnership's share of the unconsolidated joint ventures'
debt was $30.1 million, with a weighted average interest rate of 6.6% and a
weighted average maturity of 4.1 years.


9. PARTNERS' CAPITAL

        On March 21, 2001, AMB Property II, L.P., one of the Operating
Partnership's subsidiaries, issued and sold 510,000 8.00% Series I Cumulative
Redeemable Preferred Limited Partnership Units at a price of $50.00 per unit in
a private placement. Distributions are cumulative from the date of issuance and
payable quarterly in arrears at a rate per unit equal to $4.00 per annum. The
Series I Preferred Units are redeemable by AMB Property II, L.P. on or after
March 21, 2006, subject to certain conditions, for cash at a redemption price
equal to $50.00 per unit, plus accumulated and unpaid distributions thereon, if
any, to the redemption date. The Series I Preferred Units are exchangeable, at
specified times and subject to certain conditions, on a one-for-one basis, for
shares of the Company's Series I Preferred Stock. AMB Property II, L.P. used the
net proceeds of $24.9 million to repay advances from the Operating Partnership
and to make a loan to the Operating Partnership. The Operating Partnership used
the funds to partially repay borrowings under its unsecured credit facility and
for general corporate purposes. The loan bears interest at 8.0% per annum and is
payable on demand.

        During the first quarter of 2001, the Operating Partnership redeemed
598,297 of its limited partnership units for shares of the Company's common
stock.

        The Company's board of directors has approved a stock repurchase program
for the repurchase of up to $100.0 million worth of common stock. During the
quarter ended March 31, 2001, the Company did not repurchase any shares of its
common stock under this program. The Company's stock repurchase program expires
in December 2001.

        The following table sets forth the distributions for the three months
ended March 31, 2001 and 2000:

<TABLE>
<CAPTION>
        SECURITY                           PAYING ENTITY             2001         2000
        --------                           -------------             ----         ----
<S>                                    <C>                          <C>         <C>
Common limited parnership units        Operating Partnership        $0.395      $0.370
Series A preferred units               Operating Partnership        $0.531      $0.531
Series B preferred units               Operating Partnership        $1.078      $1.078
Series C preferred units               AMB Property II, L.P.        $1.094      $1.094
Series D preferred units               AMB Property II, L.P.        $0.969      $0.969
Series E preferred units               AMB Property II, L.P.        $0.969      $0.969
Series F preferred units               AMB Property II, L.P.        $0.994      $0.109
Series G preferred units               AMB Property II, L.P.        $0.994       n/a
Series H preferred units               AMB Property II, L.P.        $1.016       n/a
Series I preferred units               AMB Property II, L.P.        $0.044       n/a
</TABLE>


10. INCOME PER COMMON UNIT

        The Operating Partnership's only dilutive securities outstanding for the
three months ended March 31, 2001 and 2000, were stock options granted under the
Company's stock incentive plan. The effect of the stock options was to increase
weighted average common


                                       10
<PAGE>   13

                               AMB PROPERTY, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001
                                   (UNAUDITED)


limited partnership units outstanding by 824,924 and 14,041 units for the three
months ended March 31, 2001 and 2000, respectively. Such dilution was computed
using the treasury stock method.


                                       11
<PAGE>   14
                               AMB PROPERTY, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001
                                   (UNAUDITED)

11. SEGMENT INFORMATION

        The Operating Partnership operates industrial and retail properties
nationwide and manages its business by market. Industrial properties consist
primarily of warehouse distribution facilities suitable for single or multiple
tenants and are typically comprised of multiple buildings that are leased to
tenants engaged in various types of businesses. As of March 31, 2001, the
Operating Partnership operated in eight hub and gateway markets in addition to
19 other markets nationwide. Retail properties are generally leased to one or
more anchor tenants, such as grocery and drug stores, and various retail
businesses. The accounting policies of the segments are the same as those
described in the Operating Partnership's Annual Report on Form 10-K for the year
ended December 31, 2000. The Operating Partnership evaluates performance based
upon property net operating income of the combined properties in each segment.
The Operating Partnership's properties are managed separately because each
segment requires different operating, pricing, and leasing strategies.

        During the first quarter of 2001, the Operating Partnership split its
industrial market into hub and gateway markets and other markets. Within the hub
and gateway market categorization, the Operating Partnership operates in eight
major U.S. markets. The other industrial market category captures all of the
Operating Partnership's other smaller markets nationwide. The 2000 rental
revenue and net operating income disclosure below has been restated to reflect
these markets. Summary information for the reportable segments is as follows
(dollars in thousands):

<TABLE>
<CAPTION>
                                               Rental Revenues (1)          Property  NOI (1) (2)
                                             -----------------------       ----------------------
                                              For the three months          For the three months            Total Investment (3)
                                                 ended March 31,               ended March 31,         -----------------------------
                                             -----------------------       ----------------------      At March 31,  At December 31,
                                               2001           2000           2001          2000             2001           2000
                                             --------       --------       --------       -------      -----------   ---------------
<S>                                          <C>            <C>            <C>            <C>          <C>           <C>
Industrial Hub & Gateway Markets:
  Atlanta ............................       $  9,008       $  5,195       $  7,634       $ 4,238       $  261,632     $  225,352
  Chicago ............................         11,592         10,897          8,234         7,832          309,040        303,489
  Dallas/Ft. Worth ...................          8,185          6,457          5,513         4,672          243,437        240,933
  No. New Jersey/New York ............         10,965          6,057          7,702         4,927          407,401        382,285
  San Francisco Bay Area .............         24,111         17,731         20,380        14,378          656,191        641,137
  Southern California ................         15,055          8,530         12,247         6,970          574,197        552,055
  Miami ..............................          8,727          4,633          6,636         3,538          282,797        281,710
  Seattle ............................          6,345          5,393          5,023         4,460          210,590        203,786
                                             --------       --------       --------       -------       ----------     ----------
    Total hub & gateway markets ......         93,988         64,893         73,369        51,015        2,945,285      2,830,747
Total other industrial markets .......         33,452         32,990         22,736        23,932          982,952      1,045,455
Total retail markets .................          7,036          7,223          5,451         5,186          156,562        150,395
                                             --------       --------       --------       -------       ----------     ----------
Total properties .....................       $134,476       $105,106       $101,556       $80,133       $4,084,799     $4,026,597
                                             ========       ========       ========       =======       ==========     ==========
</TABLE>

----------

(1) Excludes straight-line rents of $1.3 million and $3.2 million for the three
    months ended March 31, 2001 and 2000, respectively.

(2) Property net operating income is defined as rental revenue, including
    reimbursements and straight-line rents, less property level operating
    expenses, excluding depreciation, amortization, general and administrative
    expenses, and interest expense.

(3) Excludes net properties held for divestiture of $236.7 million, which is
    comprised of $176.4 million in industrial and $60.3 million in retail
    properties, as of March 31, 2001, and $197.1 million, which is comprised of
    $158.7 million in industrial and $38.4 million in retail properties, as of
    December 31, 2000.


                                       12
<PAGE>   15

                               AMB PROPERTY, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001
                                   (UNAUDITED)


        The Operating Partnership uses property net operating income as an
operating performance measure. The following is a reconciliation between total
reportable segment revenue and property net operating income to consolidated
revenues and net income (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                 For the three months
                                                                                   ended March 31,
                                                                                 --------------------
                                                                                   2001        2000
                                                                                 --------    --------
<S>                                                                              <C>         <C>
 REVENUES
 Total rental revenues for reportable segments............................       $134,476    $105,106
 Straight-line rents......................................................          1,325       3,160
 Investment management and other income...................................          9,033       2,057
                                                                                 --------    --------
      Total consolidated revenues.........................................       $144,834    $110,323
                                                                                 ========    ========

 NET INCOME
 Property net operating income for reportable segments....................       $101,556    $ 80,133
 Straight-line rents......................................................          1,325       3,160
 Equity in earnings of unconsolidated joint ventures......................          1,474       1,242
 Investment management and other income...................................          7,559         815
 Less:
   General and administrative.............................................         (8,183)     (5,351)
   Interest expense.......................................................        (31,552)    (20,342)
   Depreciation and amortization..........................................        (26,854)    (19,192)
   Minority interests.....................................................         (9,797)     (6,065)
   Loss on investments in other companies.................................         (4,655)          -
                                                                                 --------    --------
 Net income before gain from divestitures of real estate..................         30,873      34,400
 Gain/(loss) from divestiture of real estate..............................         16,767         (11)
                                                                                 --------    ---------
      Net income..........................................................       $ 47,640    $ 34,389
                                                                                 ========    ========
</TABLE>


12. COMMITMENTS AND CONTINGENCIES

        Litigation. In the normal course of business, from time to time, the
Operating Partnership is involved in legal actions relating to the ownership and
operations of its properties. In management's opinion, the liabilities, if any,
that may ultimately result from such legal actions are not expected to 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.

        General Uninsured Losses. The Operating Partnership carries property and
rental loss, liability, flood, and environmental insurance. The Operating
Partnership believes that the policy terms and conditions, limits, and
deductibles are adequate and appropriate under the circumstances, given the
relative risk of loss, the cost of such coverage, and industry practice. In
addition, certain of the Operating Partnership's properties are located 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 that may be either uninsurable or
not economically insurable. Should an uninsured loss occur, the Operating
Partnership could lose its investment in, and anticipated profits and cash flows
from, a property.

        Minority Interest Put Option. Pursuant to the Operating Partnership's
partnership agreement with one of its separate account co-investors, commencing
March 31, 1999, and each year thereafter, the Operating Partnership is required
to provide this co-investor with a notice that sets forth the valuation of the
partnership as of the date of valuation. The co-investor then has the right to
require the Operating Partnership to purchase all of its partnership interest
based upon the valuation in the form of cash and shares of the


                                       13
<PAGE>   16

                               AMB PROPERTY, L.P.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2001
                                   (UNAUDITED)


Operating Partnership or partnership units in the Operating Partnership. The put
option was not exercised by the co-investor in 1999 nor 2000 and the Operating
Partnership does not anticipate that the put option will be exercised in 2001.


                                       14
<PAGE>   17

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

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

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

- defaults or non-renewal of leases by tenants;

- increased interest rates and operating costs;

- our failure to obtain necessary outside financing;

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

- our failure to successfully integrate acquired properties and operations;

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

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

- environmental uncertainties;

- risks related to natural disasters;

- financial market fluctuations;

- risks arising from the California energy shortage;

- changes in real estate and zoning laws; and

- increases in real property tax rates.

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

        Unless the context otherwise requires, the terms "we," "us," and "our"
refer to AMB Property, L.P. and our controlled subsidiaries. The following marks
are registered trademarks of AMB Property Corporation, our general partner:
AMB(R); Customer Alliance Partners(R); Customer Alliance Program(R); Development
Alliance Partners(R); Development Alliance Program(R); eSpace(R); Institutional
Alliance Partners(R); Institutional Alliance Program(R); Management Alliance
Partners(R); Management Alliance Program(R); UPREIT Alliance Partners(R); and
UPREIT Alliance Program(R). The following marks are unregistered trademarks of
AMB Property Corporation, our general partner: Broker Alliance Partners(TM);
Broker Alliance Program(TM); HTD(TM); High Throughput Distribution(TM);
Strategic Alliance Partners(TM); and Strategic Alliance Programs(TM).


                                       15
<PAGE>   18

                            THE OPERATING PARTNERSHIP

        AMB Property, L.P., a Delaware limited partnership, is one of the
leading owners and operators of industrial real estate nationwide. Our
investment strategy is to become a leading provider of High Throughput
Distribution, or HTD, properties located near key passenger and cargo airports,
highway systems and ports in major metropolitan areas, such as Atlanta, Chicago,
Dallas/Fort Worth, Northern New Jersey/New York City, the San Francisco Bay
Area, Southern California, Miami, and Seattle. Within each of our markets, we
focus our investments in in-fill submarkets. In-fill sub-markets are
characterized by supply constraints on the availability of land for competing
projects. High Throughput Distribution facilities are designed to serve the
high-speed, high-value freight handling needs of today's supply chain, as
opposed to functioning as long-term storage facilities. We believe that the
rapid growth of the airfreight business, the outsourcing of supply chain
management to third party logistics companies and e-commerce are indicative of
the changes that are occurring in the supply chain and the manner in which goods
are distributed. In addition, we believe that inventory levels as a percentage
of final sales are falling and that goods are moving more rapidly through the
supply chain. As a result, we intend to focus our investment activities
primarily on industrial properties that we believe will benefit from these
changes.

        As of March 31, 2001, we owned and operated 859 industrial buildings and
eight retail centers, totaling approximately 77.4 million rentable square feet,
located in 27 markets nationwide. As of March 31, 2001, these properties were
96.0% leased. As of March 31, 2001, through our subsidiary, AMB Investment
Management, we also managed industrial buildings and retail centers, totaling
approximately 4.4 million rentable square feet on behalf of various
institutional investors. In addition, we have invested in industrial buildings,
totaling approximately 4.4 million rentable square feet, through unconsolidated
joint ventures.

        As of March 31, 2001, we had two retail centers and 27 industrial
buildings, which were held for divestiture. In addition, during the quarter, we
disposed of three industrial buildings, aggregating approximately 0.6 million
rentable square feet, for an aggregate price of $31.5 million. Over the next few
years, we intend to dispose of non-strategic assets and redeploy the resulting
capital into High Throughput Distribution properties that better fit our current
investment focus.

        We are engaged in the acquisition, ownership, operation, management,
renovation, expansion, and development of primarily industrial properties in
target markets nationwide. As of March 31, 2001, AMB Property Corporation owned
an approximate 94.2% general partnership interest in us. As our sole general
partner, AMB Property Corporation has the full, exclusive, and complete
responsibility and discretion in our day-to-day management and control.

        We enter into co-investment joint ventures with institutional investors.
These co-investment joint ventures provide us with an additional source of
capital to fund certain acquisitions, development projects, and renovation
projects. As of March 31, 2001, we had investments in four co-investment joint
ventures, which are consolidated for financial reporting purposes.

        We are the managing general partner of AMB Institutional Alliance Fund
I, L.P. and, together with an affiliate, own, as of March 31, 2001,
approximately 21% of the partnership interests in the Alliance Fund I. The
Alliance Fund I is a co-investment partnership between us and AMB Institutional
Alliance REIT I, Inc., a limited partner of the Alliance Fund I, which includes
15 institutional investors as stockholders and is engaged in the acquisition,
ownership, operation, management, renovation, expansion, and development of
primarily industrial buildings in target markets nationwide. As of March 31,
2001, the Alliance Fund I had received equity contributions from third party
investors totaling $169.0 million, which, when combined with anticipated debt
financings and our investment, creates a total planned capitalization of $410.0
million.

        On February 14, 2001, we formed AMB Partners II, L.P. with the City and
County of San Francisco Employees' Retirement System to acquire, develop, and
redevelop distribution facilities nationwide. As of March 31, 2001, AMB Partners
II had received an equity contribution from City and County of $50.0 million,
which, when combined with anticipated debt financings and our investment,
created a total planned capitalization of $250.0 million. We are the managing
general partner of AMB Partners II, L.P. and own, as of March 31, 2001, 50% of
AMB Partners II, L.P.

        On March 26, 2001, we formed a joint venture, AMB-SGP, L.P., with a
subsidiary of GIC Real Estate Pte Ltd., the real estate investment subsidiary of
the Government of Singapore Investment Corporation, to own and operate, through
a private real estate investment trust, distribution facilities nationwide. As
of March 31, 2001, AMB-SGP, L.P. had received an equity contribution from GIC of
$75.0 million, which, when combined with anticipated debt financings and our
investment, created a total planned capitalization of $335.0 million. We are the
managing general partner of AMB-SGP, L.P. and own, as of March 31, 2001, 50.3%
of AMB-SGP, L.P.


                                       16
<PAGE>   19

        AMB Property Corporation is a self-administered and self-managed and
expects that it has qualified and will continue to qualify as a real estate
investment trust for federal income tax purposes beginning with the year ending
December 31, 1997. Because AMB Property Corporation is a self-administered and
self-managed real estate investment trust, our employees perform its
administrative and management functions, rather than it relying on an outside
manager for these services. The principal executive office of AMB Property, L.P.
is located at Pier 1, Bay 1, San Francisco, CA 94111, and our telephone number
is (415) 394-9000. We also maintain a regional office in Boston, Massachusetts.

ACQUISITION AND DEVELOPMENT ACTIVITY

        During the quarter, we invested $93.4 million in operating properties,
consisting of 14 industrial buildings aggregating approximately 1.8 million
square feet, including the investment of $42.5 million in operating properties,
consisting of eight industrial buildings, aggregating approximately 0.9 million
square feet, for two of our joint ventures.

        During the first quarter of 2001, we also contributed $427.3 million in
operating properties, consisting of 94 industrial buildings aggregating
approximately 8.8 million square feet, to two of our co-investment joint
ventures.

        We also initiated one new development project during the first quarter,
which will aggregate approximately 0.1 million square feet and has a total
estimated cost of $4.9 million upon completion. As of March 31, 2001, we had 19
industrial projects, which will total approximately 5.2 million square feet and
have a total estimated investment of $290.8 million upon completion, in our
development pipeline. We also had three retail projects, which will total
approximately 0.5 million square feet and have a total estimated investment of
$77.6 million upon completion, in our development pipeline. As of March 31,
2001, we and our Development Alliance Partners have funded an aggregate of
$222.0 million and will need to fund an estimated additional $146.4 million in
order to complete projects currently under construction.

        As of March 31, 2001, we also had two industrial projects, which will
total approximately 1.1 million square feet upon completion, in our development
pipeline. These two development projects are recorded under the equity method
for financial reporting purposes.

OPERATING STRATEGY

        We are a full-service real estate company with in-house expertise in
acquisitions, development and redevelopment, asset management and leasing,
finance and accounting, and market research. We have long-standing relationships
with many real estate management and development firms across the country, our
Strategic Alliance Partners.

        We believe that real estate is fundamentally a local business and that
the most effective way for us to operate is by forging alliances with service
providers in every market. We believe that these collaborations allow us to: 1)
leverage our national presence with the local market expertise of brokers,
developers, and property managers; 2) improve the operating efficiency and
flexibility of our national portfolio; 3) strengthen customer satisfaction and
retention; and 4) provide a continuous pipeline of growth.

        We believe that our partners give us local market expertise and
flexibility allowing us to focus on our core competencies: developing and
refining our strategic approach to real estate investment and management and
raising private capital to finance growth and enhance returns.

GROWTH STRATEGIES

AMB Investment Management

        AMB Investment Management, Inc. provides real estate investment
management services on a fee basis to clients. We hold all of the non-voting
preferred stock of AMB Investment Management, which represents a 95% economic
interest. All of the common stock of AMB Investment Management, Inc., which
represents a 5% economic interest, is owned by current or former executive
officers of AMB Property Corporation and a former executive officer of AMB
Investment Management, Inc. AMB Investment Management, Inc. conducts its
operations through AMB Investment Management Limited Partnership, a Maryland
limited partnership, of which it is the sole general partner. We intend to
expand this business through our co-investment program.

        We co-invest with clients of AMB Investment Management, Inc., to the
extent such clients newly commit investment capital, through partnerships,
limited liability companies, or joint ventures. We currently use a co-investment
formula with each client


                                       17
<PAGE>   20

whereby we will own at least a 20% interest in all ventures. We currently have
four co-investments. In general, we control all significant operating and
investment decisions of our co-investment entities.

Headlands Realty Corporation

        Headlands Realty Corporation conducts a variety of businesses that
include incremental income programs, such as our Customer Assist Program and, to
a limited extent, development projects available for sale to third parties. We
hold all of the non-voting preferred stock of Headlands Realty Corporation,
which represents a 95% economic interest. All of the common stock of Headlands
Realty Corporation, which represents a 5% economic interest, is owned by some of
the current and former executive officers of AMB Property Corporation and a
director of Headlands Realty Corporation.

Growth Through Operations

        We seek to generate internal growth through rent increases on existing
space and renewal on re-tenanted space, by maintaining a high occupancy rate of
our properties and by controlling expenses by capitalizing on the economies of
owning, operating, and growing a large national portfolio. As of March 31, 2001,
our industrial properties and retail centers were 96.0% leased and 86.5% leased,
respectively. During the three months ended March 31, 2001, we increased average
base rental rates (on a cash basis) by 25.8% from the expiring rent for that
space, on leases entered into or renewed during such period, representing
approximately 2.8 million rentable square feet. This amount excludes expense
reimbursements, rental abatements, and percentage rents.

Growth Through Acquisitions and Capital Redeployment

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

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

Growth Through Development

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

        The multidisciplinary backgrounds of our employees provide us with the
skills and experience to capitalize on strategic renovation, expansion, and
development opportunities. Several of the officers of our general partner have
extensive experience in real estate development, both with us and with national
development firms. We generally pursue development projects in joint ventures
with local developers. This way, we leverage the development skill, access to
opportunities, and capital of such developers, transferring a significant amount
of the development risk to them and eliminating the need and expense of an
in-house development staff. Under a


                                       18
<PAGE>   21

typical joint venture agreement with a Development Alliance Partner, we would
fund 95% of the construction costs and our partner would fund 5%. Upon
completion, we generally would purchase our partner's interest in the joint
venture.


                             RESULTS OF OPERATIONS

        The analysis below includes changes attributable to acquisitions,
development activity and divestitures and the changes resulting from properties
that we owned during both the current and prior year reporting periods,
excluding development properties prior to being stabilized (generally 90%
leased). We refer to these properties as the same store properties. For the
comparison between the three months ended March 31, 2001 and 2000, the same
store properties consisted of properties aggregating approximately 63.1 million
square feet. The properties acquired in 2000 consisted of 145 buildings,
aggregating approximately 10.5 million square feet, and the properties acquired
during the first three months of 2001 consisted of 14 buildings, aggregating 1.8
million square feet. In 2000, property divestitures consisted of one retail
center and 25 industrial buildings, aggregating approximately 2.5 million square
feet, and property divestitures during the first three months of 2001 consisted
of six industrial buildings, aggregating approximately 0.6 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 their
historical rates.

THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
2000 (DOLLARS IN MILLIONS):

<TABLE>
<CAPTION>
RENTAL REVENUES                                           2001        2000       $ CHANGE      % CHANGE
---------------                                        ---------   ---------    ----------   ----------
<S>                                                    <C>         <C>          <C>          <C>
Same store.......................................      $   102.7   $    95.2     $    7.5         7.9%
2000 acquisitions................................           22.7         1.5         21.2     1,413.3%
2001 acquisitions................................            1.6          --          1.6          --
Developments.....................................            4.8         2.2          2.6       118.2%
Divestitures.....................................            2.7         6.2         (3.5)      (56.5)%
Straight-line rents..............................            1.3         3.2         (1.9)      (59.4)%
                                                       ---------   ---------    ----------   ----------
          Total..................................      $   135.8   $   108.3     $   27.5        25.4%
                                                       =========   =========     ========     =======
</TABLE>

        The growth in rental revenues in same store properties resulted
primarily from the incremental effect of cash rental rate increases, fixed rent
increases on existing leases, and reimbursement of expenses. During the three
months ended March 31, 2001, the same store rent increases on renewals and
rollovers (cash basis) was 27.7% on 2.6 million square feet leased.

<TABLE>
<CAPTION>
INVESTMENT MANAGEMENT AND OTHER INCOME                     2001       2000      $ CHANGE      % CHANGE
--------------------------------------                   -------    -------    ----------   ----------
<S>                                                      <C>        <C>        <C>          <C>
Equity in earnings of unconsolidated JVs............      $  1.5     $  1.2      $    0.3        25.0%
Investment management income........................         2.4        0.4           2.0       500.0%
Interest and other income...........................         5.1        0.4           4.7     1,175.0%
                                                          ------     ------     ---------     -------
Total...............................................      $  9.0     $  2.0      $    7.0       350.0%
                                                          ======     ======      ========     =======
</TABLE>

        The $2.0 million increase in investment management income was due
primarily to increased acquisition fees. The $4.7 million increase in interest
and other income was primarily due to interest income from our mortgage note on
the retail center that we sold in 2000 and from our construction loan to one of
our unconsolidated joint ventures. Interest income also increased resulting from
increased cash balances and bridge loans to our joint ventures.

<TABLE>
<CAPTION>
PROPERTY OPERATING EXPENSES AND REAL ESTATE TAXES            2001      2000      $ CHANGE       % CHANGE
-------------------------------------------------          --------  --------   ----------     ----------
<S>                                                        <C>       <C>        <C>            <C>
Rental expenses.....................................       $   16.3  $   11.5     $   4.8          41.7%
Real estate taxes...................................           16.6      13.5         3.1          23.0%
                                                           --------  --------     -------         -----
  Property operating expenses.......................       $   32.9  $   25.0     $   7.9          31.6%
                                                           ========  ========     =======         =====
Same store..........................................       $   24.0  $   22.3     $   1.7           7.6%
2000 acquisitions...................................            7.3       0.7         6.6         942.9%
2001 acquisitions...................................            0.2        --         0.2            --
Developments........................................            1.0       0.4         0.6         150.0%
Divestitures........................................            0.4       1.6        (1.2)        (75.0)%
                                                           --------  --------     -------         -----
          Total.....................................       $   32.9  $   25.0     $   7.9          31.6%
                                                           ========  ========     =======         =====
</TABLE>

        The increase in same store properties' operating expenses primarily
relates to increases in common area maintenance expenses of $1.0 million and
real estate taxes of $0.6 million.


                                       19
<PAGE>   22

<TABLE>
<CAPTION>
OTHER EXPENSES                                              2001       2000      $ CHANGE     % CHANGE
--------------                                            --------   --------   ----------   ----------
<S>                                                       <C>        <C>        <C>          <C>
Interest, including amortization....................      $   31.6   $   20.3     $  11.3        55.7%
Depreciation and amortization.......................          26.9       19.2         7.7        40.1%
General and administrative..........................           8.2        5.4         2.8        51.9%
                                                          --------   --------     -------        ----
          Total.....................................      $   66.7   $   44.9     $  21.8        48.6%
                                                          ========   ========     =======        ====
</TABLE>

        The increase in interest expense was primarily due to the issuance of
additional unsecured senior debt securities and to an increase in secured debt
balances, partially offset by the increase in capitalized interest. The increase
in depreciation expense was due to increases in our investments in real estate.
The increase in general and administrative expenses was primarily due to
increased personnel costs and timing differences.

        The loss on investments in other companies during the quarter related to
our investment in Webvan Group, Inc. The loss reflects a 93% loss in value on
the investment.


                        LIQUIDITY AND CAPITAL RESOURCES

        We currently expect that our principal sources of working capital and
funding for acquisitions, development, expansion, and renovation of properties
will include: 1) cash flow from operations; 2) borrowings under our unsecured
credit facility; 3) other forms of secured or unsecured financing; 4) proceeds
from debt or limited partnership unit offerings (including issuances of limited
partnership units by our subsidiaries); and 5) net proceeds from divestitures of
properties. Additionally, our co-investment program will also continue to serve
as a source of capital for acquisitions and developments. We believe that our
sources of working capital and our ability to access private and public debt and
equity capital are adequate for us to meet our liquidity requirements for the
foreseeable future.

CAPITAL RESOURCES

        Property Divestitures. In the first quarter, we divested ourselves of
six industrial buildings for an aggregate price of $31.5 million. These
divestitures resulted in an aggregate net loss of $0.1 million.

        Properties Held for Divestiture. We have decided to divest ourselves of
27 industrial buildings and two retail centers, which are not in our core
markets or which do not meet our strategic objectives. The divestitures of the
properties are subject to negotiation of acceptable terms and other customary
conditions. As of March 31, 2001, the net carrying value of the properties held
for divestiture was $236.7 million.

        Co-investment Program. During the first quarter of 2001, we contributed
$427.3 million in operating properties, consisting of 94 industrial buildings
aggregating approximately 8.8 million square feet, to two of our co-investment
joint ventures. On February 14, 2001, we formed AMB Partners II, L.P. with the
City and County of San Francisco Employees' Retirement System to acquire,
develop, and redevelop distribution facilities nationwide. As of March 31, 2001,
AMB Partners II had received an equity contribution from City and County of
$50.0 million, which, when combined with anticipated debt financings and our
investment, created a total planned capitalization of $250.0 million. On March
26, 2001, we formed a joint venture, AMB-SGP, L.P., with a subsidiary of GIC
Real Estate Pte Ltd., the real estate investment subsidiary of the Government of
Singapore Investment Corporation, to own and operate, through a private real
estate investment trust, distribution facilities nationwide. As of March 31,
2001, AMB-SGP, L.P. had received an equity contribution from GIC of $75.0
million, which, when combined with anticipated debt financings and our
investment, created a total planned capitalization of $335.0 million.

        Credit Facility. In May 2000, we entered into a $500.0 million unsecured
revolving credit agreement. AMB Property Corporation guarantees our obligations
under the credit facility. The credit facility matures in May 2003, has a
one-year extension option, and is subject to a 15 basis point annual facility
fee. We have the ability to increase available borrowings up to $700.0 million
by adding additional banks to the facility or obtaining the agreement of
existing banks to increase its commitments. We use our unsecured credit facility
principally for acquisitions and for general working capital requirements.
Borrowings under our credit facility currently bear interest at LIBOR plus 75
basis points. As of March 31, 2001, the outstanding balance on our unsecured
credit facility was $94.0 million and it bore interest at a weighted average
rate of 6.0%. Monthly debt service payments on our credit facility are interest
only. The total amount available under our credit facility fluctuates based upon
the borrowing base, as defined in the agreement governing the credit facility.
At March 31, 2001, the remaining amount available under our unsecured credit
facility was $406.0 million (excluding the additional $200.0 million of
potential additional capacity).


                                       20
<PAGE>   23

        Equity. In March 2000, AMB Property II, L.P., one of our subsidiaries,
issued and sold 510,000 8.00% Series I Cumulative Redeemable Preferred Limited
Partnership Units at a price of $50.00 per unit in a private placement.
Distributions are cumulative from the date of issuance and payable quarterly in
arrears at a rate per unit equal to $4.00 per annum. The Series I Preferred
Units are redeemable by AMB Property II, L.P. on or after March 21, 2006,
subject to certain conditions, for cash at a redemption price equal to $50.00
per unit, plus accumulated and unpaid distributions thereon, if any, to the
redemption date. The Series I Preferred Units are exchangeable, at specified
times and subject to certain conditions, on a one-for-one basis, for shares of
AMB Property Corporation's Series I Preferred Stock. AMB Property II, L.P. used
the net proceeds of $24.9 million to repay advances from us and to make a loan
to us. We used the funds to partially repay borrowings under our unsecured
credit facility and for general corporate purposes. The loan bears interest at
8.0% per annum and is payable on demand.

        During the first quarter of 2001, we redeemed 598,297 of our limited
partnership units for shares of AMB Property Corporation's common stock.

        AMB Property Corporation's board of directors has approved a stock
repurchase program for the repurchase of up to $100.0 million worth of its
common stock. During the quarter ended March 31, 2001, AMB Property Corporation
did not repurchase any shares of its common stock under the program. AMB
Property Corporation's stock repurchase program expires in December 2001.

        Debt. As of March 31, 2001, the aggregate principal amount of our
secured debt was $1.0 billion, excluding unamortized debt premiums of $9.3
million. The secured debt bears interest at rates varying from 4.0% to 10.4% per
annum (with a weighted average rate of 7.8%) and final maturity dates ranging
from November 2001 to June 2023. All of the secured debt bears interest at fixed
rates, except for two loans with an aggregate principal amount of $30.8 million
as of March 31, 2001, which bear interest at variable rates (with a weighted
average interest rate of 6.7% at March 31, 2001).

        In August 2000, we commenced a medium-term note program for the possible
issuance of up to $400.0 million in principal amount of medium-term notes, which
will be guaranteed by AMB Property Corporation. As of March 31, 2001, we have
issued $355.0 million of medium-term notes under this program, leaving $45.0
million available for issuance. In January 2001, we issued and sold $25.0
million of the notes under this program to A.G. Edwards & Sons, Inc., as
principal. AMB Property Corporation has guaranteed the notes, which mature on
January 30, 2006, and bear interest at 6.90% per annum. We used the net proceeds
of $24.9 million for general corporate purposes, to partially repay
indebtedness, and for the acquisition and development of additional properties.
In March 2001, we issued and sold $50.0 million of the notes under this program
to First Union Securities, Inc., as principal. AMB Property Corporation has
guaranteed the notes, which mature on March 7, 2011, and bear interest at 7.00%
per annum. We used the net proceeds of $49.7 million for general corporate
purposes, to partially repay indebtedness, and for the acquisition and
development of additional properties.

        Mortgage Receivables. In September 2000, we sold our retail center
located in Los Angeles, California. We carry an 8.75% mortgage note in the
principal amount of $79.0 million on the retail center. The mortgage note
matures in September 2001 and has a one-year extension option. We also hold a
mortgage loan receivable on AMB Pier One, LLC, an unconsolidated joint venture.
The note bears interest at 11.0% and matures in November 2001. As of March 31,
2001, the outstanding balance on the note was $42.3 million.

        In order to maintain financial flexibility and facilitate the rapid
deployment of capital through market cycles, we presently intend to operate with
a debt-to-total market capitalization ratio of approximately 45% or less.
Additionally, we presently manage our capitalization in order to maintain an
investment grade rating on our senior unsecured debt. In spite of these
policies, our organizational documents do not contain any limitation on the
amount of indebtedness that we may incur. Accordingly, our general partner could
alter or eliminate these policies.


                                       21
<PAGE>   24

The tables below summarize our debt maturities and capitalization as of March
31, 2001 (dollars in thousands):


<TABLE>
<CAPTION>
                                                         DEBT
-----------------------------------------------------------------------------------------------------------------------
                                                OUR           JOINT        UNSECURED       UNSECURED
                                              SECURED        VENTURE      SENIOR DEBT       CREDIT            TOTAL
                                                DEBT          DEBT         SECURITIES      FACILITY            DEBT
                                            -----------     ----------     ----------      ---------       ------------
<S>                                         <C>             <C>            <C>             <C>             <C>
 2001....................................   $     9,451     $   34,116     $       --      $      --       $     43,567
 2002....................................        29,148         47,590             --             --             76,738
 2003....................................        72,638          8,380             --         94,000            175,018
 2004....................................        71,106         21,925             --             --             93,031
 2005....................................        64,250         31,698        250,000             --            345,948
 2006....................................       114,803         35,385         25,000             --            175,188
 2007....................................        32,181         21,567         55,000             --            108,748
 2008....................................        33,604        111,013        175,000             --            319,617
 2009....................................         5,176         28,182             --             --             33,358
 2010....................................        52,780         67,818         75,000             --            195,598
 2011....................................         1,311         83,751         50,000             --            135,062
 Thereafter..............................         3,307         23,618        125,000             --            151,925
                                            -----------     ----------     ----------      ---------       ------------
   Subtotal..............................       489,755        515,043        755,000         94,000          1,853,798
   Unamortized premiums..................         9,256             --             --             --              9,256
                                            -----------     ----------     ----------      ---------       ------------
          Total consolidated debt........       499,011        515,043        755,000         94,000          1,863,054
 Our share of unconsolidated joint
   venture debt (1)......................           --          30,081             --             --             30,081
                                             ----------     ----------     ----------      ---------       ------------
          Total debt.....................       499,011        545,124        755,000         94,000          1,893,135
 Joint venture partners' share of
   consolidated joint venture debt.......           --        (261,740)            --             --           (261,740)
                                             ----------     ----------     ----------      ---------       ------------
     Our share of total debt.............   $   499,011     $  283,384     $  755,000      $  94,000       $  1,631,395
                                            ===========     ==========     ==========      =========       ============
 Weighed average interest rate...........           7.8%           7.6%           7.3%           6.0%               7.4%
 Weighed average maturity (in years).....           5.5            7.7            8.3            2.1                7.0
</TABLE>


----------

(1) The weighted average interest and weighted average maturity for the
unconsolidated joint venture debt were 6.6% and 4.1 years, respectively.


<TABLE>
<CAPTION>
                                           MARKET EQUITY
---------------------------------------------------------------------------------------------------
                                                         UNITS
SECURITY                                              OUTSTANDING     MARKET PRICE    MARKET VALUE
--------                                            --------------   --------------  --------------
<S>                                                 <C>              <C>             <C>
Common general partnership units.............           84,978,486      $  24.60       $2,090,471
Common limited partnership units.............            5,229,620         24.60          128,649
                                                    --------------                     ----------
          Total..............................           90,208,106                     $2,219,120
                                                    ==============                     ==========
</TABLE>

<TABLE>
<CAPTION>
                                          PREFERRED UNITS
---------------------------------------------------------------------------------------------------------------
                                                  DIVIDEND                 LIQUIDATION          REDEMPTION
         SECURITY                                   RATE                   PREFERENCE           PROVISIONS
         --------                         -----------------------   -----------------------   -----------------
<S>                                       <C>                       <C>                       <C>
         Series A preferred units                   8.50%                 $    100,000        July 2003
         Series B preferred units                   8.63%                       65,000        November 2003
         Series C preferred units                   8.75%                      110,000        November 2003
         Series D preferred units                   7.75%                       79,767        May 2004
         Series E preferred units                   7.75%                       11,022        August 2004
         Series F preferred units                   7.95%                       19,872        March 2005
         Series G preferred units                   7.95%                        1,000        August 2005
         Series H preferred units                   8.13%                       42,000        September 2005
         Series I preferred units                   8.00%                       25,500        March 2006
                                                   -----                  ------------
           Weighted Average/Total                   8.34%                 $    454,161
                                                   =====                  ============
</TABLE>

<TABLE>
<CAPTION>
                                CAPITALIZATION RATIOS
--------------------------------------------------------------------------------------------
<S>                                                                                    <C>
Total debt-to-total market capitalization.........................................     41.5%
Our share of total debt-to-total market capitalization............................     37.9%
Total debt plus preferred-to-total market capitalization..........................     51.4%
Our share of total debt plus preferred-to-total market capitalization.............     48.4%
Our share of total debt-to-total book capitalization..............................     43.3%
</TABLE>


                                       22
<PAGE>   25

LIQUIDITY

        As of March 31, 2001, we had approximately $152.2 million in cash,
restricted cash, and cash equivalents, and $406.0 million of additional
available borrowings under our credit facility. We intend to use: 1) cash from
operations; 2) borrowings under our credit facility; 3) other forms of secured
and unsecured financing; 4) proceeds from any future debt or limited partnership
unit offerings (including issuances of limited partnership units by our
subsidiaries); 5) proceeds from divestitures of properties; and 6) private
capital to fund acquisitions, development activities, and capital expenditures
and to provide for general working capital requirements.

        The following table sets forth the distributions for the three months
ended March 31, 2001 and 2000:

<TABLE>
<CAPTION>
         SECURITY                                 PAYING ENTITY              2001        2000
         --------                                 -------------              ----        ----
<S>                                           <C>                          <C>         <C>
Common limited partnership units              Operating Partnership        $  0.395    $  0.370
Series A preferred units                      Operating Partnership        $  0.531    $  0.531
Series B preferred units                      Operating Partnership        $  1.078    $  1.078
Series C preferred units                      AMB Property II, L.P.        $  1.094    $  1.094
Series D preferred units                      AMB Property II, L.P.        $  0.969    $  0.969
Series E preferred units                      AMB Property II, L.P.        $  0.969    $  0.969
Series F preferred units                      AMB Property II, L.P.        $  0.994    $  0.109
Series G preferred units                      AMB Property II, L.P.        $  0.994        n/a
Series H preferred units                      AMB Property II, L.P.        $  1.016        n/a
Series I preferred units                      AMB Property II, L.P.        $  0.044        n/a
</TABLE>

        The anticipated size of our distributions, using only cash from
operations, will not allow us to retire all of our debt as it comes due.
Therefore, we intend to also repay maturing debt with net proceeds from future
debt financings or limited partnership unit offerings. However, we may not be
able to obtain future financings on favorable terms or at all.

CAPITAL COMMITMENTS

        In addition to recurring capital expenditures and costs to renew or
re-tenant space, as of March 31, 2001, we are developing 22 projects
representing a total estimated investment of $368.4 million upon completion. Of
this total, $222.0 million had been funded as of March 31, 2001, and
approximately $146.4 million is estimated to be required to complete current and
planned projects. We expect to fund these expenditures with cash from
operations, borrowings under our credit facility, debt or limited partnership
unit issuances, and net proceeds from property divestitures. We have no other
material capital commitments.

        During the period from January 1, 2001, to March 31, 2001, we invested
$93.4 million in 14 operating industrial buildings, aggregating approximately
1.8 million rentable square feet. We funded these acquisitions and initiated
development and renovation projects through borrowings under our credit
facility, cash, debt and limited partnership unit issuances, and net proceeds
from property divestitures.


                                       23
<PAGE>   26

                              FUNDS FROM OPERATIONS

        We believe that funds from operations, or FFO, as defined by the
National Association of Real Estate Investment Trusts, is an appropriate measure
of performance for an equity real estate investment trust, such as AMB Property
Corporation, our general partner. While funds from operations is a relevant and
widely used measure of operating performance of real estate investment trusts,
it does not represent cash flow from operations or net income as defined by U.S.
generally accepted accounting principles and it should not be considered as an
alternative to those indicators in evaluating liquidity or operating
performance. Further, funds from operations as disclosed by other real estate
investment trusts may not be comparable.

        The following table reflects the calculation of funds from operations
for the three months ended March 31, 2001 and 2000 (dollars in thousands, except
share and per share data):

<TABLE>
<CAPTION>
                                                                            FOR THE THREE MONTHS ENDED
                                                                                    MARCH 31,
                                                                         --------------------------------
                                                                             2001                2000
                                                                         ------------        ------------
<S>                                                                      <C>                 <C>
Income from operations ...........................................       $     40,670        $     40,465
Real estate related depreciation and amortization:
  Total depreciation and amortization ............................             26,854              19,192
  FF & E depreciation and ground lease amortization ..............               (481)               (403)
FFO attributable to minority interests (1) (2):
  Separate account co-investors ..................................             (2,503)             (1,264)
  Alliance Fund I ................................................             (4,046)               (756)
  Other joint venture partners ...................................               (638)               (606)
  Series C-I preferred unit distributions ........................             (5,456)             (4,854)
Adjustments to derive FFO in unconsolidated joint venture (3):
  Our share of net income ........................................             (1,474)             (1,242)
  Our share of FFO ...............................................              2,120               1,736
Series A preferred unit distributions ............................             (2,125)             (2,125)
Series B preferred unit distributions ............................             (1,402)             (1,402)
                                                                         ------------        ------------
Funds from operations (1) ........................................       $     51,519        $     49,387
                                                                         ============        ============
Weighted average common units:
  Basic ..........................................................         89,669,950          89,693,900
                                                                         ============        ============
  Diluted ........................................................         90,494,874          89,707,941
                                                                         ============        ============
</TABLE>

----------

(1)  Funds from operations, or FFO, is defined as income from operations before
     minority interest, gains or losses from sale of real estate and
     extraordinary items plus real estate depreciation and adjustment to derive
     our pro rata share of the funds from operations of unconsolidated joint
     ventures, less minority interests' pro rata share of the funds from
     operations of consolidated joint ventures and perpetual preferred stock
     dividends. In accordance with NAREIT White Paper on funds from operations,
     we include the effects of straight-line rents in funds from operations.
     Further, we do not adjust funds from operations to eliminate the effects of
     non-recurring charges.

(2)  Represents FFO attributable to minority interest in consolidated joint
     ventures for the period presented, which has been computed as minority
     interests' share of net income plus minority interests' share of real
     estate-related depreciation and amortization of the consolidated joint
     ventures for such period. These minority interests are not convertible into
     shares of common stock of our general partner. In addition, the amount
     includes minority interests held by the Series C, D, E, F, G, H, and I
     preferred unitholders.

(3)  Represents our pro rata share of FFO in unconsolidated joint ventures for
     the period presented, which has been computed as our share of net income
     plus our share of real estate-related depreciation and amortization of the
     unconsolidated joint ventures for such period.


                                       24
<PAGE>   27

                    OPERATING AND LEASING STATISTICS SUMMARY

        The following summarizes key operating and leasing statistics for the
all of our industrial and retail properties as of and for the period ended March
31, 2001 (dollars in thousands):

<TABLE>
<CAPTION>
                                                            INDUSTRIAL       RETAIL           TOTAL
                                                            ----------     -----------     ----------
<S>                                                         <C>            <C>             <C>
Square feet owned (1).................................      77,407,039       1,275,837     78,682,876
Occupancy percentage..................................            96.0%           86.5%          95.9%
Weighted average lease terms:.........................
  Original............................................       6.3 years      14.9 years      6.5 years
  Remaining...........................................       3.6 years      10.8 years      3.8 years
Tenant retention:
  Quarter (3.3 million sq. ft. expired)...............            62.7%          100.0%          62.8%
Rent increases on lease commencements:................
  Quarter (2.8 million sq. ft. leased)................            24.7%          106.5%          25.8%
Second generation tenant improvements and
  leasing commissions per sq. ft. (2):
  Quarter:
     Renewals.........................................      $     0.66     $        --      $    0.66
     Re-tenanted......................................            2.37                           2.37
                                                            ----------     -----------      ---------
       Weighted average...............................      $     1.53     $        --      $    1.53
                                                            ==========     ===========      =========
Recurring capital expenditures (3)....................
  Quarter.............................................
     Tenant improvements..............................      $    1,916     $        --      $   1,916
     Lease commissions................................           3,324              --          3,324
     Building improvements............................           2,098              88          2,186
                                                            ----------     -----------      ---------
       Sub-total......................................           7,338              88          7,426
     JV Partner's share of capital expenditures.......            (863)             --           (863)
                                                            -----------    ------------     ---------
       Total..........................................      $    6,475     $        88      $   6,563
                                                            ==========     ============     =========
</TABLE>

----------

(1)  In addition to owned square feet as of March 31, 2001, we managed, through
     our subsidiary, AMB Investment Management, approximately 3.7 million, 0.6
     million, and 0.1 million additional square feet of industrial, retail and
     other properties, respectively. We also have an investment in approximately
     4.38 million square feet of industrial properties through our investments
     in the unconsolidated joint ventures.

(2)  Consists of all second generation leases renewing or re-tenanting with
     lease terms greater than one year.

(3)  Includes second generation leasing costs and building improvements.


                                       25
<PAGE>   28

        The following summarizes key same store properties' operating statistics
for our industrial and retail properties as of and for the period ending March
31, 2001:

<TABLE>
<CAPTION>
                                                                    INDUSTRIAL            RETAIL             TOTAL
                                                                    ----------           --------         -----------
<S>                                                                 <C>                  <C>              <C>
Square feet in same store pool (1).......................           62,390,926           696,322          63,087,248
  % of total square feet.................................                 80.6%             54.6%               80.2%
Occupancy percentage at period end
    March 31, 2001.......................................                 96.4%             97.8%               96.4%
    March 31, 2000.......................................                 96.9%             96.2%               96.9%
Tenant retention:
  Quarter (2.8 million SF expired) ......................                 61.9%            100.0%               61.9%
Rent increases on lease commencements:
  Quarter (2.6 million SF leased)                                         26.6%            106.5%               27.7%
Cash basis NOI growth % increase:
  Quarter:
     Revenues............................................                  7.9%              8.3%                7.9%
     Expenses............................................                  7.4%             16.1%                7.6%
     Net operating income................................                  8.1%              5.8%                8.0%
</TABLE>

----------

(1) Consists of industrial buildings and retail centers owned prior to January
    1, 2000, and excludes development properties prior to stabilization.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

                Our exposure to market risk includes: 1) the rising interest
rates in connection with our unsecured credit facility and other variable rate
borrowings; and 2) our ability to incur more debt without unitholder or
noteholder approval, thereby increasing our debt service obligations, which
could adversely affect our cash flows. See "Item 2: Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources -- Capital Resources -- Market Capitalization."


                                       26
<PAGE>   29

                                    PART II

ITEM 1. LEGAL PROCEEDINGS

        As of March 31, 2001, there were no pending legal proceedings to which
we are a party or of which any of our properties is the subject, the adverse
determination of which we anticipate would have a material adverse effect upon
our financial condition and results of operations.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

        On March 21, 2001, AMB Property II, L.P. issued and sold 510,000 8.00%
Series I Cumulative Redeemable Preferred Limited Partnership Units at a price of
$50.00 per unit, for an aggregate offering price of $25.5 million less a sales
commission of $0.6 million, to J.P. Morgan Chase Mosaic Fund V, LLC. The
issuance and sale of the Series I Preferred Units constituted a private
placement of securities that was exempt from the registration requirement of the
Securities Act pursuant to Section 4(2) of the Securities Act and Rule 506 of
Regulation D. The Series I Preferred Units are exchangeable, at specified times
and subject to certain conditions, on a one-for-one basis, for shares of AMB
Property Corporation's Series I Preferred Stock.

        In February and March 2001, we redeemed an aggregate of 598,297 our
limited partnership units for shares of AMB Property Corporation's common stock.
The redemption of limited partnership units for shares of AMB Property
Corporation's common stock was exempt from the registration requirement of the
Securities Act pursuant to Section 4(2) of the Securities Act and Rule 506 of
Regulation D.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        None.

ITEM 5. OTHER INFORMATION

                                 BUSINESS RISKS

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

GENERAL REAL ESTATE RISKS

THERE ARE FACTORS OUTSIDE OF OUR CONTROL THAT AFFECT THE PERFORMANCE AND VALUE
OF OUR PROPERTIES

        Real property investments are subject to varying degrees of risk. The
yields available from equity investments in real estate depend on the amount of
income earned and capital appreciation generated by the related properties as
well as the expenses incurred in connection with the properties. If our
properties do not generate income sufficient to meet operating expenses,
including debt service and capital expenditures, then our ability to make
distributions to our unitholders and payments to our noteholders could be
adversely affected. Income from, and the value of, our properties may be
adversely affected by the general economic climate, local conditions such as
oversupply of industrial space, or a reduction in demand for industrial space,
the attractiveness of our properties to potential customers, competition from
other properties, our ability to provide adequate maintenance and insurance, and
an increase in operating costs. In addition, revenues from properties and real
estate values are also affected by factors such as the cost of compliance with
regulations, the potential for liability under applicable laws (including
changes in tax laws), interest rate levels, and the availability of financing.
Our income would be adversely affected if a significant number of customers were
unable to pay rent or if we were unable to rent our industrial space on
favorable terms. Certain significant expenditures associated with an investment
in real estate (such as mortgage payments, real estate taxes, and maintenance
costs) generally do not decline when circumstances cause a reduction in income
from the property.


                                       27
<PAGE>   30

WE MAY BE UNABLE TO RENEW LEASES OR RELET SPACE AS LEASES EXPIRE

        We are subject to the risks that leases may not be renewed, space may
not be relet, or the terms of renewal or reletting (including the cost of
required renovations) may be less favorable than current lease terms. Leases on
a total of 12.3% of our properties (based on annualized base rent) as of March
31, 2001, will expire on or prior to December 31, 2001. In addition, numerous
properties compete with our properties in attracting customers to lease space,
particularly with respect to retail centers. The number of competitive
commercial properties in a particular area could have a material adverse effect
on our ability to lease space in our properties and on the rents that we are
able to charge. Our financial condition, results of operations, cash flow, and
our ability to make distributions to our unitholders and payments to our
noteholders could be adversely affected if we are unable to promptly relet or
renew the leases for all or a substantial portion of expiring leases, if the
rental rates upon renewal or reletting is significantly lower than expected, or
if our reserves for these purposes prove inadequate.

REAL ESTATE INVESTMENTS ARE ILLIQUID

        Because real estate investments are relatively illiquid, our ability to
vary our portfolio promptly in response to economic or other conditions is
limited. The limitations in the Internal Revenue Code and related regulations on
a real estate investment trust holding property for sale, which limitations are
applicable to us as a subsidiary of AMB Property Corporation, may affect our
ability to sell properties without adversely affecting distributions to our
unitholders and payments to our noteholders. The relative illiquidity of our
holdings and Internal Revenue Code prohibitions and related regulations could
impede our ability to respond to adverse changes in the performance of our
investments and could adversely affect our financial condition, results of
operations, cash flow, and our ability to make distributions to our unitholders
and payments to our noteholders.

A SIGNIFICANT NUMBER OF OUR PROPERTIES ARE LOCATED IN CALIFORNIA

        Our properties located in California as of March 31, 2001, represented
approximately 24.8% of the aggregate square footage of our properties as of
March 31, 2001, and 31.4% of our annualized base rent. Annualized base rent
means the monthly contractual amount under existing leases at March 31, 2001,
multiplied by 12. This amount excludes expense reimbursements and rental
abatements. Our revenue from, and the value of, our properties located in
California may be affected by a number of factors, including local real estate
conditions (such as oversupply of or reduced demand for industrial properties)
and the local economic climate. Business layoffs, downsizing, industry
slowdowns, changing demographics, and other factors may adversely impact the
local economic climate. A downturn in either the California economy or in
California real estate conditions could adversely affect our financial
condition, results of operations, cash flow, and our ability to make
distributions to our unitholders and payments to our noteholders. Certain of our
properties are also subject to possible loss from seismic activity.

RISING ENERGY COSTS AND POWER OUTAGES IN CALIFORNIA MAY HAVE AN ADVERSE EFFECT
ON OUR OPERATIONS AND REVENUE

        Problems associated with deregulation of the electricity industry in
California have resulted in intermittent service interruptions and significantly
higher costs in some areas. Properties located within municipalities that either
do not produce their own power or have not entered into long-term, fixed-price
contracts may be subject to intermittent service interruptions or significant
rate increases from their utility providers. Most of our properties located in
California are subject to leases that require our tenants to pay all utility
costs. The remainder of our California leases provide that tenants will
reimburse us for utility costs in excess of a base year amount. Although we have
not experienced any material losses resulting from electric deregulation, it is
possible that some of our tenants will not fulfill their lease obligations and
reimburse us for their share of any significant rate increases and that we will
not be able to retain or replace our tenants if energy problems in California
continue.

OUR PROPERTIES ARE CURRENTLY CONCENTRATED IN THE INDUSTRIAL SECTOR

        Our properties are currently concentrated predominantly in the
industrial real estate sector. Our concentration in a certain property type may
expose us to the risk of economic downturns in this sector to a greater extent
than if our portfolio also included other property types. As a result of such
concentration, economic downturns in the industrial real estate sector could
adversely affect our financial condition, results of operations, cash flow, and
ability to make distributions to our unitholders and payments to our
noteholders.


                                       28
<PAGE>   31

SOME POTENTIAL LOSSES ARE NOT COVERED BY INSURANCE

        We carry comprehensive liability, fire, extended coverage, and rental
loss insurance covering all of our properties, with policy specifications and
insured limits that we believe are adequate and appropriate under the
circumstances given relative risk of loss, the cost of such coverage, and
industry practice. There are, however, certain losses that are not generally
insured because it is not economically feasible to insure against them,
including losses due to riots or acts of war. Certain losses such as losses due
to floods or seismic activity may be insured subject to certain limitations
including large deductibles or co-payments and policy limits. If an uninsured
loss or a loss in excess of insured limits occurs with respect to one or more of
our properties, then we could lose the capital we invested in the properties, as
well as the anticipated future revenue from the properties and, in the case of
debt, which is with recourse to us, we would remain obligated for any mortgage
debt or other financial obligations related to the properties. Any such
liability could adversely affect our financial condition, results of operations,
cash flow, and ability to make distributions to our unitholders and payments to
our noteholders.

        A number of our properties are located in areas that are known to be
subject to earthquake activity, including California where, as of March 31,
2001, 246 industrial buildings aggregating approximately 19.2 million square
feet (representing 24.8% of our properties based on aggregate square footage and
31.4% based on annualized base rent) are located. We carry replacement cost
earthquake insurance on all of our properties located in areas historically
subject to seismic activity, subject to coverage limitations and deductibles
that we believe are commercially reasonable. This insurance coverage also
applies to the properties managed by AMB Investment Management, with a single
aggregate policy limit and deductible applicable to those properties and our
properties. We own 100% of the non-voting preferred stock of AMB Investment
Management. Through an annual analysis prepared by outside consultants, we
evaluate our earthquake insurance coverage in light of current industry practice
and determine the appropriate amount of earthquake insurance to carry. We may
incur material losses in excess of insurance proceeds and we may not be able to
continue to obtain insurance at commercially reasonable rates.

WE ARE SUBJECT TO RISKS AND LIABILITIES IN CONNECTION WITH PROPERTIES OWNED
THROUGH JOINT VENTURES, LIMITED LIABILITY COMPANIES, AND PARTNERSHIPS

        As of March 31, 2001, we had ownership interests in several joint
ventures, limited liability companies, or partnerships with third parties, as
well as interests in three unconsolidated entities. As of March 31, 2001, we
owned approximately 25.3 million square feet (excluding the three unconsolidated
joint ventures) of our properties through these entities. We may make additional
investments through these ventures in the future and presently plan to do so
with clients of AMB Investment Management and certain Development Alliance
Partners, who share certain approval rights over major decisions. Partnership,
limited liability company, or joint venture investments may involve risks such
as the following:

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

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

        - our partners, co-members, or joint venturers may be in a position to
          take action contrary to our instructions, requests, policies, or
          objectives; and

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

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



                                       29
<PAGE>   32
WE MAY BE UNABLE TO CONSUMMATE ACQUISITIONS ON ADVANTAGEOUS TERMS

        We intend to continue to acquire primarily industrial properties.
Acquisitions of properties entail risks that investments will fail to perform in
accordance with expectations. Estimates of the costs of improvements necessary
for us to bring an acquired property up to market standards may prove
inaccurate. In addition, there are general investment risks associated with any
new real estate investment. Further, we anticipate significant competition for
attractive investment opportunities from other major real estate investors with
significant capital including both publicly traded real estate investment
trusts, such as our general partner, and private institutional investment funds.
We expect that future acquisitions will be financed through a combination of
borrowings under our unsecured credit facility, proceeds from debt or limited
partnership unit offerings (including issuances of limited partnership units by
our subsidiaries), and proceeds from property divestitures, which could have an
adverse effect on our cash flow. We may not be able to acquire additional
properties. Our inability to finance any future acquisitions on favorable terms
or the failure of acquisitions to conform with our expectations or investment
criteria, or our failure to timely reinvest the proceeds from property
divestitures could adversely affect our financial condition, results of
operations, cash flow, and ability to make distributions to our unitholders and
payments to our noteholders.

WE MAY BE UNABLE TO COMPLETE RENOVATION AND DEVELOPMENT ON ADVANTAGEOUS TERMS

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

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

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

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

        - substantial renovation as well as new development activities,
          regardless of whether or not they are ultimately successful, typically
          require a substantial portion of management's time and attention that
          could divert management's time from our day-to-day operations; and

        - activities that we finance through construction loans involve the risk
          that, upon completion of construction, we may not be able to obtain
          permanent financing or we may not be able to obtain permanent
          financing on advantageous terms.

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

WE MAY BE UNABLE TO COMPLETE DIVESTITURES ON ADVANTAGEOUS TERMS

        We intend to dispose of properties from time to time that do not conform
with our current investment strategy or that we have otherwise determined should
be divested, including, as of March 31, 2001, 27 industrial buildings and two
retail centers, which are held for divestiture. Our ability to dispose of
properties on advantageous terms is dependent upon factors beyond our control,
including competition from other owners (including other real estate investment
trusts) that are attempting to dispose of industrial and retail properties and
the availability of financing on attractive terms for potential buyers of our
properties. Our inability to dispose of properties on favorable terms or our
inability to redeploy the proceeds of property divestitures in accordance with
our investment strategy could adversely affect our financial condition, results
of operations, cash flow, and ability to make distributions to our unitholders
and payments to our noteholders.


                                       30
<PAGE>   33

DEBT FINANCING

WE COULD INCUR MORE DEBT

        We operate with a policy of incurring debt, either directly or through
our subsidiaries, only if upon such incurrence our debt-to-total market
capitalization ratio would be approximately 45% or less. The aggregate amount of
indebtedness that we may incur under our policy varies directly with the
valuation of AMB Property Corporation's capital stock and the number of shares
of capital stock outstanding. Accordingly, we would be able to incur additional
indebtedness under our policy as a result of increases in the market price per
share of AMB Property Corporation's common stock or other outstanding classes of
capital stock, and future issuance of shares of AMB Property Corporation's
capital stock. In spite of this policy, our organizational documents do not
contain any limitation on the amount of indebtedness that we may incur.
Accordingly, AMB Property Corporation, as our general partner, could alter or
eliminate this policy. If we change this policy, then we could become more
highly leveraged, resulting in an increase in debt service that could adversely
affect our financial condition, results of operations, cash flow, and ability to
make distributions to our unitholders and payments to our noteholders.

SCHEDULED DEBT PAYMENTS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION

        We are subject to risks normally associated with debt financing,
including the risks that cash flow will be insufficient to make distributions to
our unitholders and payments to our noteholders, that we will be unable to
refinance existing indebtedness on our properties (which in all cases will not
have been fully amortized at maturity) and that the terms of refinancing will
not be as favorable as the terms of existing indebtedness.

        As of March 31, 2001, we had total debt outstanding of approximately
$1.9 billion including:

        - $1,004.8 million of secured indebtedness (excluding unamortized debt
          premiums) with an average maturity of 6.6 years and a weighted average
          interest rate of 7.7%;

        - $755.0 million aggregate principal amount of unsecured senior debt
          securities with maturities between 2005 and 2018 and a weighted
          average interest rate of 7.3%.

        - $94.0 million outstanding under our unsecured $500.0 million credit
          facility with a maturity date of May 2003 and a current interest rate
          of LIBOR plus 75 basis points (with a weighted average interest rate
          of 6.0% as of March 31, 2001); and

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

RISING INTEREST RATES COULD ADVERSELY AFFECT OUR CASH FLOW

        As of March 31, 2001, we had approximately $94.0 million outstanding
under our unsecured credit facility and we had two secured loans with an
aggregate principal amount of $30.8 million, which bear interest at variable
rates (with weighted average interest rate of 6.7% at March 31, 2001). In
addition, we may incur other variable rate indebtedness in the future. Increases
in interest rates on this indebtedness could increase our interest expense,
which would adversely affect our financial condition, results of operations,
cash flow, and ability to make distributions to our unitholders and payments to
our noteholders. Accordingly, we may in the future engage in transactions to
limit our exposure to rising interest rates.



                                       31
<PAGE>   34
WE ARE DEPENDENT ON EXTERNAL SOURCES OF CAPITAL

        In order for AMB Property Corporation to qualify as a real estate
investment trust under the Internal Revenue Code, it is required each year to
distribute to its stockholders at least 90% of its real estate investment trust
taxable income (determined without regard to the dividends-paid deduction and by
excluding any net capital gain) and it is subject to tax on our income to the
extent it is not distributed. Because of this distribution requirement, we may
not be able to fund all future capital needs, including capital needs in
connection with acquisitions, from cash retained from operations. As a result,
to fund capital needs, we rely on third party sources of capital, which we may
not be able to obtain on favorable terms or at all. Our access to third party
sources of capital depends upon a number of factors, including: 1) general
market conditions; 2) the market's perception of our growth potential; 3) our
current and potential future earnings and cash distributions; and 4) the market
price of AMB Property Corporation's capital stock. Additional debt financing may
substantially increase our leverage.

WE COULD DEFAULT ON CROSS-COLLATERALIZED AND CROSS-DEFAULTED DEBT

        As of March 31, 2001, we had 19 non-recourse secured loans, which are
cross-collateralized by 30 properties. As of March 31, 2001, we had $318.8
million (not including unamortized debt premium) outstanding on these loans. If
we default on any of these loans, then we will be required to repay the
aggregate of all indebtedness, together with applicable prepayment charges, to
avoid foreclosure on all the cross-collateralized properties within the
applicable pool. Foreclosure on our properties, or our inability to refinance
our loans on favorable terms, could adversely impact our financial condition,
results of operations, cash flow, and ability to make distributions to our
unitholders and payments to our noteholders. In addition, our credit facility
and our senior debt securities contain certain cross-default provisions, which
are triggered in the event that our other material indebtedness is in default.
These cross-default provisions may require us to repay or restructure the credit
facility and the senior debt securities in addition to any mortgage or other
debt that is in default, which could adversely affect our financial condition,
results of operations, cash flow, and ability to make distributions to our
unitholders and payments to our noteholders.

CONTINGENT OR UNKNOWN LIABILITIES COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION

        Our predecessors have been in existence for varying lengths of time up
to 18 years. At the time of our formation we acquired the assets of these
entities subject to all of their potential existing liabilities. There may be
current liabilities or future liabilities arising from prior activities that we
are not aware of and therefore have not disclosed in this report. AMB Property
Corporation assumed these liabilities as the surviving entity in the various
merger and contribution transactions that occurred at the time of our formation.
Existing liabilities for indebtedness generally were taken into account in
connection with the allocation of our limited partnership units or shares of AMB
Property Corporation's common stock in the formation transactions, but no other
liabilities were taken into account for these purposes. We do not have recourse
against AMB Property Corporation's predecessors or any of their respective
stockholders or partners or against any individual account investors with
respect to any unknown liabilities. Unknown liabilities might include the
following:

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

        - claims of customers, vendors, or other persons dealing with AMB
          Property Corporation's predecessors prior to the formation
          transactions that had not been asserted prior to the formation
          transactions;

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

        - tax liabilities; and

        - claims for indemnification by the officers and directors of AMB
          Property Corporation's predecessors and others indemnified by these
          entities.

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



                                       32
<PAGE>   35
CONFLICTS OF INTEREST

SOME OF AMB PROPERTY CORPORATION'S EXECUTIVE OFFICERS ARE INVOLVED IN OTHER REAL
ESTATE ACTIVITIES AND INVESTMENTS

        Some of AMB Property Corporation's executive officers own interests in
real estate-related businesses and investments. These interests include minority
ownership of Institutional Housing Partners, L.P., a residential housing finance
company, and ownership of AMB Development, Inc. and AMB Development, L.P.,
developers that own property not suitable for ownership by us. AMB Development,
Inc. and AMB Development, L.P. have agreed not to initiate any new development
projects following AMB Property Corporation's initial public offering in
November 1997. These entities have also agreed that they will not make any
further investments in industrial properties other than those currently under
development at the time of AMB Property Corporation's initial public offering.
AMB Development, Inc. and AMB Development, L.P. continue to use the name "AMB"
pursuant to royalty-free license arrangements. The continued involvement in
other real estate-related activities by some of AMB Property Corporation's
executive officers and directors could divert management's attention from our
day-to-day operations. Most of AMB Property Corporation's executive officers
have entered into non-competition agreements with AMB Property Corporation
pursuant to which they have agreed not to engage in any activities, directly or
indirectly, in respect of commercial real estate, and not to make any investment
in respect of industrial real estate, other than through ownership of not more
than 5% of the outstanding shares of a public company engaged in such activities
or through the existing investments referred to in this report. State law may
limit our ability to enforce these agreements.

        We could also, in the future, subject to the unanimous approval of the
disinterested members of AMB Property Corporation's board of directors with
respect to such transaction, acquire property from executive officers, enter
into leases with executive officers, or engage in other related activities in
which the interests pursued by AMB Property Corporation's executive officers may
not be in the best interests of our unitholders.

CERTAIN OF AMB PROPERTY CORPORATION'S EXECUTIVE OFFICERS AND DIRECTORS MAY HAVE
CONFLICTS OF INTEREST WITH US IN CONNECTION WITH OTHER PROPERTIES THAT THEY OWN
OR CONTROL

        As of March 31, 2001, AMB Development, L.P. owns interests in five
retail development projects in the U.S., three of which are single free-standing
Walgreens drugstores and two of which are Walgreens drugstores plus shop
buildings, which are less than 10,000 feet. In addition, Messrs. Abbey,
Moghadam, and Burke, each a founder and director of AMB Property Corporation,
own less than 1% interests in two partnerships that own office buildings in
various markets; these interests have negligible value. Luis A. Belmonte, an
executive officer of AMB Property Corporation, owns less than a 10% interest,
representing an estimated value of $150,000, in a limited partnership, which
owns an office building located in Oakland, California.

        In addition, several of AMB Property Corporation's executive officers
individually own:

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

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

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

        Thomas W. Tusher, a member of AMB Property Corporation's board of
directors, is a limited partner in a partnership in which Messrs. Abbey,
Moghadam, and Burke are general partners and which owns a 75% interest in an
office building. Mr. Tusher owns a 20% interest in the partnership, valued at
approximately $1.2 million. Messrs. Abbey, Moghadam, and Burke each have a 26.7%
interest in the partnership, each valued at approximately $1.6 million.

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



                                       33
<PAGE>   36
AMB PROPERTY CORPORATION'S DIRECTORS, EXECUTIVE OFFICERS, AND SIGNIFICANT
STOCKHOLDERS COULD ACT IN A MANNER THAT IS NOT IN THE BEST INTEREST OF OUR
LIMITED PARTNERS OR NOTEHOLDERS

        As of April 23, 2001, AMB Property Corporation's two largest
stockholders, Cohen & Steers Capital Management, Inc. (with respect to various
client accounts for which Cohen & Steers Capital Management, Inc. serves as
investment advisor) and European Investors Inc. (with respect to various client
accounts for which European Investors Inc. serves as investment advisor)
beneficially owned approximately 12.9% of its outstanding common stock. In
addition, AMB Property Corporation's executive officers and directors
beneficially owned approximately 5.2% of AMB Property Corporation's outstanding
common stock as of April 23, 2001, and will have influence on AMB Property
Corporation's and our management and operation and, as stockholders of AMB
Property Corporation, will have influence on the outcome of any matters
submitted to a vote of AMB Property Corporation's stockholders. This influence
might be exercised in a manner that is inconsistent with the interests of our
limited partners and noteholders. Although there is no understanding or
arrangement for these directors, officers, and stockholders and their affiliates
to act in concert, these parties would be in a position to exercise significant
influence over AMB Property Corporation's and our affairs if they choose to do
so.

WE HAVE INVESTED IN REAL ESTATE MORTGAGES

        We have invested in mortgages, and may do so in the future. In general,
investments in mortgages include the risks that borrowers may not be able to
make debt service payments or pay principal when due, that the value of the
mortgaged property may be less than the principal amount of the mortgage note
secured by the property and that interest rates payable on the mortgages may be
lower than our cost of funds. In any of these events, our funds from operations
and our ability to make distributions to our unitholders and payments to our
noteholders could be adversely affected.

GOVERNMENT REGULATIONS

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

COSTS OF COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT

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

WE COULD ENCOUNTER ENVIRONMENTAL PROBLEMS

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

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

        Some of our properties are leased or have been leased, in part, to
owners and operators of businesses that use, store, or otherwise handle
petroleum products or other hazardous or toxic substances. These operations
create a potential for the release of petroleum


                                       34
<PAGE>   37

products or other hazardous or toxic substances. Some of our properties are
adjacent to or near other properties that have contained or currently contain
petroleum products or other hazardous or toxic substances. In addition, certain
of our properties are on, are adjacent to, or are near other properties upon
which others, including former owners or tenants of the properties, have engaged
or may in the future engage in activities that may release petroleum products or
other hazardous or toxic substances. From time to time, we may acquire
properties, or interests in properties, with known adverse environmental
conditions where we believe that the environmental liabilities associated with
these conditions are quantifiable and the acquisition will yield a superior
risk-adjusted return. Environmental issues for each property are evaluated and
quantified prior to acquisition. The costs of environmental investigation,
clean-up, and monitoring are underwritten into the cost of the acquisition and
appropriate environmental insurance is obtained for the property. In connection
with certain divested properties, we have agreed to remain responsible for, and
to bear the cost of, remediating or monitoring certain environmental conditions
on the properties.

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

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

OUR FINANCIAL CONDITION COULD BE ADVERSELY AFFECTED IF WE FAIL TO COMPLY WITH
OTHER REGULATIONS

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

FEDERAL INCOME TAX RISKS


CERTAIN PROPERTY TRANSFERS MAY GENERATE PROHIBITED TRANSACTION INCOME

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




                                       35
<PAGE>   38
WE ARE DEPENDENT ON OUR GENERAL PARTNER'S KEY PERSONNEL

        We depend on the efforts of the executive officers of our general
partner. While we believe that AMB Property Corporation could find suitable
replacements for these key personnel, the loss of their services or the
limitation of their availability could adversely affect our financial condition,
results of operations, cash flow, and ability to make distributions to our
unitholders and payments to our noteholders. AMB Property Corporation does not
have employment agreements with any of its executive officers.

WE MAY BE UNABLE TO MANAGE OUR GROWTH

        Our business has grown rapidly and continues to grow through property
acquisitions and developments. If we fail to effectively manage our growth, then
our financial condition, results of operations, cash flow, and ability to make
distributions to our unitholders and payments to our noteholders could be
adversely affected.

WE MAY INVEST IN HIGHLY SPECULATIVE EARLY-STAGE COMPANIES IN WHICH WE MAY LOSE
OUR ENTIRE INVESTMENT

        From time to time, we may invest in highly speculative early-stage
companies that we believe will enhance our understanding of changes occurring in
the movement of goods, which may, in turn, sharpen our real estate investment
focus, create real estate provider relationships with growth companies, and
provide the potential for significant returns on invested capital. We believe
that the amounts of our investments in early-stage companies are immaterial,
both individually and in the aggregate. However, these investments are highly
speculative and it is possible that we may lose our entire investment in an
early-stage company.

AMB INVESTMENT MANAGEMENT, INC. AND HEADLANDS REALTY CORPORATION

WE DO NOT CONTROL THE ACTIVITIES OF AMB INVESTMENT MANAGEMENT, INC. AND
HEADLANDS REALTY CORPORATION

        We own 100% of the non-voting preferred stock of AMB Investment
Management, Inc. and Headlands Realty Corporation (representing approximately
95% of the economic interest in each entity). Some of AMB Property Corporation's
current and former executive officers and a former executive officer of AMB
Investment Management, Inc. own all of the outstanding voting common stock of
AMB Investment Management, Inc. (representing approximately 5% of the economic
interest in AMB Investment Management, Inc.). Some of AMB Property Corporation's
current and former executive officers and a director of Headlands Realty
Corporation own all of the outstanding voting common stock of Headlands Realty
Corporation (representing approximately 5% of the economic interest in Headlands
Realty Corporation). The ownership structure of AMB Investment Management, Inc.
and Headlands Realty Corporation permits us to share in the income of those
corporations while allowing AMB Property Corporation to maintain its status as a
real estate investment trust. We receive substantially all of the economic
benefit of the businesses carried on by AMB Investment Management and Headlands
Realty Corporation through our right to receive dividends. However, we are not
able to elect the directors or officers of AMB Investment Management, Inc. and
Headlands Realty Corporation and, as a result, we do not have the ability to
influence their operation or to require that their boards of directors declare
and pay cash dividends on the non-voting stock of AMB Investment Management,
Inc. and Headlands Realty Corporation held by us. The boards of directors and
management of AMB Investment Management, Inc. and Headlands Realty Corporation
might implement business policies or decisions that would not have been
implemented by persons controlled by us and that may be adverse to the interests
of our unitholders and noteholders or that may adversely impact our financial
condition, results of operations, cash flow, and ability to make distributions
to our unitholders and payments to our noteholders. In addition, AMB Investment
Management, Inc. and Headlands Realty Corporation, as taxable real estate
investment trust subsidiaries, are subject to tax on their income, reducing
their cash available for distribution to us.

AMB INVESTMENT MANAGEMENT, INC. MAY NOT BE ABLE TO GENERATE SUFFICIENT FEES

        Fees earned by AMB Investment Management, Inc. depend on various factors
affecting the ability to attract and retain investment management clients and
the overall returns achieved on managed assets. These factors are beyond our
control. AMB Investment Management, Inc.'s failure to attract investment
management clients or achieve sufficient overall returns on managed assets could
reduce its ability to pay dividends on the stock owned by us and could also
limit co-investment opportunities to us. This would limit our ability to
generate rental revenues from such co-investments and use the co-investment
program as a source to finance property acquisitions and leverage acquisition
opportunities.


                                       36
<PAGE>   39

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                                  DESCRIPTION
-------                                  -----------
<S>         <C>
  3.1       Ninth Amended and Restated Agreement of Limited Partnership of AMB
            Property II, L.P., dated March 21, 2001 (incorporated by reference
            to Exhibit 10.1 of the Registrant's Current Report on Form 8-K filed
            on March 23, 2001)

  4.1       $25,000,000 6.90% Fixed Rate Note No. 8 dated January 9, 2001,
            attaching the Parent Guarantee dated January 9, 2001 (incorporated
            be reference to Exhibit 4.1 of the Registrant's Current Report on
            Form 8-K filed on January 31, 2001).

  4.2       $50,000,000 7.00% Fixed Rate Note No. 9 dated March 7, 2001,
            attaching the Parent Guarantee dated March 7, 2001 (incorporated be
            reference to Exhibit 4.1 of the Registrant's Current Report on Form
            8-K filed on March 16, 2001).

 10.1       Terms Agreement dated as of December 14, 2000, by and between Morgan
            Stanley & Co. Incorporated, J.P. Morgan Securities Inc., and AMB
            Property, L.P. (incorporated by reference to Exhibit 1.1 of the
            Registrant's Current Report on Form 8-K filed on January 8, 2001)

 10.2       Terms Agreement dated as of January 4, 2001, by and between A.G.
            Edwards & Sons, Inc. and AMB Property, L.P. (incorporated by
            reference to Exhibit 1.1 of the Registrant's Current Report on Form
            8-K filed on January 31, 2001)

 10.3       Terms Agreement by and between First Union Securities, Inc. and AMB
            Property, L.P. and Registrant (incorporated by reference to Exhibit
            1.1 of the Registrant's Current Report on Form 8-K filed on March
            16, 2001)
</TABLE>


(b) Reports on Form 8-K:

- The Registrant filed a Current Report on Form 8-K on January 8, 2001, in
  connection with the issuance of $150.0 million of senior unsecured notes by
  Registrant under its medium-term note program.

- The Registrant filed a Current Report on Form 8-K on January 31, 2001, in
  connection with the issuance of $25.0 million of senior unsecured notes by
  Registrant under its medium-term note program.

- The Registrant filed a Current Report on Form 8-K on March 16, 2001, in
  connection with the issuance of $50.0 million of senior unsecured notes by
  Registrant under its medium-term note program.

- The Registrant filed a Current Report on Form 8-K on March 23, 2001, in
  connection with the issuance and sale by AMB Property II, L.P. of 510,000
  8.00% Series I Cumulative Redeemable Preferred Limited Partnership Units.

- The Registrant filed a Current Report on Form 8-K on April 5, 2001, in
  connection with the formation of joint ventures with the City and County of
  San Francisco Employees' Retirement System and with a subsidiary of GIC Real
  Estate Pte Ltd., the real estate investment subsidiary of the Government of
  Singapore Investment Corporation.


                                       37
<PAGE>   40

                                   SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                               AMB PROPERTY, L.P.                     Registrant
                               By: AMB Property Corporation,
                                   Its General Partner


Date: May 15, 2001             By:             /s/ MICHAEL A. COKE
                                  ----------------------------------------------
                                                  Michael A. Coke
                                            Chief Financial Officer and
                                             Executive Vice President
                                      (Duly Authorized Officer and Principal
                                         Financial and Accounting Officer)




                                       38