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SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549




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Form 10-Q



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|           |  |                                                                                          
|---------- |  | -----------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                          
|þ          |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR
	15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the quarterly period ended March 31,
	2002                                           
|          
|or        
|          
|          
|o          |  | REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934           

Commission File Number: 001-13545



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AMB PROPERTY, L.P.

(Exact Name of Registrant as Specified in Its
Charter)


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

(415) 394-9000

(Registrants Telephone Number, Including
Area Code)


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



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TABLE OF CONTENTS



|                                                      |                                                                                               |  |  |  |  |  |  | 
|----------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                               
|                                                      | Item 1. Financial Statements                                                                 
|CONDENSED CONSOLIDATED BALANCE SHEETS                
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS      
|CONDENSED CONSOLIDATED STATEMENT OF PARTNERS CAPITAL
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS           
|                                                      | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                      | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|PART II                                              
|                                                      | Item 1. Legal Proceedings                                                                    
|                                                      | Item 2. Changes in Securities and Use of Proceeds                                            
|                                                      | Item 3. Defaults Upon Senior Securities                                                      
|                                                      | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                                                      | Item 5. Other Information                                                                    
|                                                      | Item 6. Exhibits and Reports on Form 8-K                                                     
|Calculation of Ratio of Earnings to Fixed Charges    



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##### Table of Contents



AMB PROPERTY, L.P.

INDEX

|                                |  |                                                                                                     |  |      |    | 
|------------------------------- |  | --------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                |  |                                                                                                     |  | Page
|                                |  |                                                                                                     |  |     
|PART I.  FINANCIAL
	INFORMATION
|Item 1.                         |  | Financial Statements (unaudited)                                                                    |  |      |    | 
|                                |  | Condensed Consolidated Balance Sheets as of March
	31, 2002, and December 31, 2001                  |  |      | 1  | 
|                                |  | Condensed Consolidated Statements of Operations
	for the three months ended March 31, 2002 and 2001 |  |      | 2  | 
|                                |  | Condensed Consolidated Statements of Cash Flows
	for the three months ended March 31, 2002 and 2001 |  |      | 3  | 
|                                |  | Condensed Consolidated Statement of
	Partners Capital for the three months ended March 31, 2002    |  |      | 4  | 
|                                |  | Notes to Condensed Consolidated Financial
	Statements                                               |  |      | 5  | 
|Item 2.                         |  | Managements Discussion and Analysis of
	Financial Condition and Results of Operations              |  |      | 18 | 
|Item 3.                         |  | Quantitative and Qualitative Disclosures About
	Market Risk                                         |  |      | 32 | 
|PART II.  OTHER
	INFORMATION   
|Item 1.                         |  | Legal Proceedings                                                                                   |  |      | 33 | 
|Item 2.                         |  | Changes in Securities and Use of Proceeds                                                           |  |      | 33 | 
|Item 3.                         |  | Defaults Upon Senior Securities                                                                     |  |      | 33 | 
|Item 4.                         |  | Submission of Matters to a Vote of Security
	Holders                                                |  |      | 33 | 
|Item 5.                         |  | Other Information                                                                                   |  |      | 33 | 
|Item 6.                         |  | Exhibits and Reports on Form 8-K                                                                    |  |      | 43 | 

i



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##### Table of Contents






PART I




Item 1.     Financial
Statements

AMB PROPERTY, L.P.






CONDENSED CONSOLIDATED BALANCE
SHEETS


As of March 31, 2002 and
December 31, 2001


|                                            |                                                                                                                                                                                                                        |                                         |         |              |           |  |         |           |           | 
|------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------- | ------- | ------------ | --------- |  | ------- | --------- | --------- | 
|                                            |                                                                                                                                                                                                                        | March 31,                               |         | December 31,
|                                            |                                                                                                                                                                                                                        | 2002                                    |         | 2001        
|                                            |                                                                                                                                                                                                                        |                                         |         |             
|                                            |                                                                                                                                                                                                                        |                                        
|                                            |                                                                                                                                                                                                                        | (unaudited, dollars in                 
|                                            |                                                                                                                                                                                                                        | thousands)                             
|ASSETS                                     
|Investments in real estate:                 |                                                                                                                                                                                                                        |                                         |         |              |           |  |         |          
|                                            | Land                                                                                                                                                                                                                   |                                         | $       | 1,076,791    |           |  | $       | 1,064,422 |          
|                                            | Buildings and improvements                                                                                                                                                                                             |                                         |         | 3,333,018    |           |  |         | 3,285,110 |          
|                                            | Construction in progress                                                                                                                                                                                               |                                         |         | 157,142      |           |  |         | 181,179   |          
|                                            |                                                                                                                                                                                                                        |                                         |         |              |           |  |         |          
|                                            |                                                                                                                                                                                                                        | Total investments in properties         |         |              | 4,566,951 |  |         |           | 4,530,711 | 
|                                            | Accumulated depreciation and amortization                                                                                                                                                                              |                                         |         | (289,701     | )         |  |         | (265,653  | )        
|                                            |                                                                                                                                                                                                                        |                                         |         |              |           |  |         |          
|                                            |                                                                                                                                                                                                                        | Net investments in properties           |         |              | 4,277,250 |  |         |           | 4,265,058 | 
|Investment in unconsolidated joint ventures |                                                                                                                                                                                                                        |                                         | 71,137  |              |           |  | 71,097  |          
|Properties held for divestiture, net        |                                                                                                                                                                                                                        |                                         | 139,370 |              |           |  | 157,174 |          
|                                            |                                                                                                                                                                                                                        |                                         |         |              |           |  |         |          
|                                            |                                                                                                                                                                                                                        | Net investments in real estate          |         |              | 4,487,757 |  |         |           | 4,493,329 | 
|Cash and cash equivalents                   |                                                                                                                                                                                                                        |                                         | 86,829  |              |           |  | 73,071  |          
|Restricted cash                             |                                                                                                                                                                                                                        |                                         | 12,663  |              |           |  | 8,661   |          
|Mortgages receivable                        |                                                                                                                                                                                                                        |                                         | 87,214  |              |           |  | 87,214  |          
|Accounts receivable                         |                                                                                                                                                                                                                        |                                         | 75,399  |              |           |  | 70,794  |          
|Other assets                                |                                                                                                                                                                                                                        |                                         | 31,261  |              |           |  | 27,824  |          
|                                            |                                                                                                                                                                                                                        |                                         |         |              |           |  |         |          
|                                            |                                                                                                                                                                                                                        | Total assets                            |         | $            | 4,781,123 |  |         | $         | 4,760,893 | 
|                                            |                                                                                                                                                                                                                        |                                         |         |              |           |  |         |          
|LIABILITIES AND PARTNERS
	CAPITAL         
|Debt:                                       |                                                                                                                                                                                                                        |                                         |         |              |           |  |         |          
|                                            | Secured debt                                                                                                                                                                                                           |                                         | $       | 1,229,433    |           |  | $       | 1,220,164 |          
|                                            | Unsecured senior debt securities                                                                                                                                                                                       |                                         |         | 800,000      |           |  |         | 780,000   |          
|                                            | Alliance Fund II credit facility                                                                                                                                                                                       |                                         |         | 116,000      |           |  |         | 123,500   |          
|                                            | Unsecured credit facility                                                                                                                                                                                              |                                         |         |             |           |  |         | 12,000    |          
|                                            |                                                                                                                                                                                                                        |                                         |         |              |           |  |         |          
|                                            |                                                                                                                                                                                                                        | Total debt                              |         |              | 2,145,433 |  |         |           | 2,135,664 | 
|Dividends payable                           |                                                                                                                                                                                                                        |                                         | 41,429  |              |           |  | 4,960   |          
|Other liabilities                           |                                                                                                                                                                                                                        |                                         | 114,139 |              |           |  | 133,641 |          
|                                            |                                                                                                                                                                                                                        |                                         |         |              |           |  |         |          
|                                            |                                                                                                                                                                                                                        | Total liabilities                       |         |              | 2,301,001 |  |         |           | 2,274,265 | 
|Commitments and contingencies (Note 12)     |                                                                                                                                                                                                                        |                                         |         |              |           |  |         |          
|Minority interests                          |                                                                                                                                                                                                                        |                                         | 532,329 |              |           |  | 534,276 |          
|Partners Capital:                          |                                                                                                                                                                                                                        |                                         |         |              |           |  |         |          
|                                            | General Partner, 83,834,960 and 83,592,418 units,
	respectively and 4,000,000 Series A preferred units with a
	$100,000 liquidation preference                                                                         |                                         |         | 1,748,707    |           |  |         | 1,752,342 |          
|                                            | Limited Partners, 4,932,916 and 4,969,027 units,
	respectively, 1,300,000 Series B preferred units with a
	$65,000 liquidation preference, and 800,000 Series J
	preferred units with a $40,000 liquidation preference |                                         |         | 199,086      |           |  |         | 200,010   |          
|                                            |                                                                                                                                                                                                                        |                                         |         |              |           |  |         |          
|                                            |                                                                                                                                                                                                                        | Total partners capital                 |         |              | 1,947,793 |  |         |           | 1,952,352 | 
|                                            |                                                                                                                                                                                                                        |                                         |         |              |           |  |         |          
|                                            |                                                                                                                                                                                                                        | Total liabilities and partners capital |         | $            | 4,781,123 |  |         | $         | 4,760,893 | 
|                                            |                                                                                                                                                                                                                        |                                         |         |              |           |  |         |          

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

1



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##### Table of Contents



AMB PROPERTY, L.P.






CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS


For the Three Months Ended March 31, 2002
and 2001


|                                                         |                                                                             |                                                                             |   |            |         |  |   |            |         | 
|-------------------------------------------------------- | --------------------------------------------------------------------------- | --------------------------------------------------------------------------- | - | ---------- | ------- |  | - | ---------- | ------- | 
|                                                         |                                                                             |                                                                            
|                                                         |                                                                             | For the Three Months Ended                                                 
|                                                         |                                                                             | March 31,                                                                  
|                                                         |                                                                             |                                                                            
|                                                         |                                                                             | 2002                                                                        |   | 2001      
|                                                         |                                                                             |                                                                             |   |           
|                                                         |                                                                             |                                                                            
|                                                         |                                                                             | (unaudited, dollars in thousands,                                          
|                                                         |                                                                             | except unit and per unit                                                   
|                                                         |                                                                             | amounts)                                                                   
|Revenues                                                 |                                                                             |                                                                             |   |            |         |  |   |           
|                                                         | Rental revenues                                                             |                                                                             | $ | 152,241    |         |  | $ | 135,801    |        
|                                                         | Equity in earnings of unconsolidated joint
	ventures                        |                                                                             |   | 1,483      |         |  |   | 1,474      |        
|                                                         | Investment management income                                                |                                                                             |   | 2,588      |         |  |   | 2,420      |        
|                                                         | Interest and other income                                                   |                                                                             |   | 2,850      |         |  |   | 5,139      |        
|                                                         |                                                                             |                                                                             |   |            |         |  |   |           
|                                                         |                                                                             | Total revenues                                                              |   |            | 159,162 |  |   |            | 144,834 | 
|Expenses                                                 |                                                                             |                                                                             |   |            |         |  |   |           
|                                                         | Property operating expenses                                                 |                                                                             |   | 18,480     |         |  |   | 16,339     |        
|                                                         | Real estate taxes                                                           |                                                                             |   | 18,589     |         |  |   | 16,581     |        
|                                                         | Interest, including amortization                                            |                                                                             |   | 35,851     |         |  |   | 31,552     |        
|                                                         | Depreciation and amortization                                               |                                                                             |   | 29,675     |         |  |   | 26,854     |        
|                                                         | General and administrative                                                  |                                                                             |   | 9,945      |         |  |   | 8,183      |        
|                                                         | Loss on investments in other companies                                      |                                                                             |   |           |         |  |   | 4,655      |        
|                                                         |                                                                             |                                                                             |   |            |         |  |   |           
|                                                         |                                                                             | Total expenses                                                              |   |            | 112,540 |  |   |            | 104,164 | 
|                                                         |                                                                             |                                                                             |   |            |         |  |   |           
|                                                         |                                                                             | Income before minority interests and gains from
	disposition of real estate |   |            | 46,622  |  |   |            | 40,670  | 
|                                                         | Minority interests share of income                                         |                                                                             |   | (11,503    | )       |  |   | (9,820     | )      
|                                                         | Gains/(losses) from dispositions of real estate,
	net of minority interests |                                                                             |   | (288       | )       |  |   | 16,767     |        
|                                                         |                                                                             |                                                                             |   |            |         |  |   |           
|                                                         |                                                                             | Net income before extraordinary items                                       |   |            | 34,831  |  |   |            | 47,617  | 
|                                                         | Extraordinary items (early debt extinguishments)                            |                                                                             |   | (216       | )       |  |   |           |        
|                                                         |                                                                             |                                                                             |   |            |         |  |   |           
|                                                         |                                                                             | Net income                                                                  |   |            | 34,615  |  |   |            | 47,617  | 
|                                                         | Series A preferred unit distributions                                       |                                                                             |   | (2,125     | )       |  |   | (2,125     | )      
|                                                         | Series B preferred unit distributions                                       |                                                                             |   | (1,402     | )       |  |   | (1,402     | )      
|                                                         | Series J preferred unit distributions                                       |                                                                             |   | (918       | )       |  |   |           |        
|                                                         |                                                                             |                                                                             |   |            |         |  |   |           
|                                                         |                                                                             | Net income available to common unitholders                                  |   | $          | 30,170  |  |   | $          | 44,090  | 
|                                                         |                                                                             |                                                                             |   |            |         |  |   |           
|Income available to common unitholders
	attributable to: |                                                                             |                                                                             |   |            |         |  |   |           
|                                                         | General Partner                                                             |                                                                             | $ | 28,370     |         |  | $ | 42,315     |        
|                                                         | Limited Partner                                                             |                                                                             |   | 1,800      |         |  |   | 1,775      |        
|                                                         |                                                                             |                                                                             |   |            |         |  |   |           
|                                                         |                                                                             | Net income available to common unitholders                                  |   | $          | 30,170  |  |   | $          | 44,090  | 
|                                                         |                                                                             |                                                                             |   |            |         |  |   |           
|Basic Income Per Common Unit                             |                                                                             |                                                                             |   |            |         |  |   |           
|                                                         | Before extraordinary items                                                  |                                                                             | $ | 0.34       |         |  | $ | 0.49       |        
|                                                         | Extraordinary items                                                         |                                                                             |   |           |         |  |   |           |        
|                                                         |                                                                             |                                                                             |   |            |         |  |   |           
|                                                         |                                                                             | Net income available to common unitholders                                  |   | $          | 0.34    |  |   | $          | 0.49    | 
|                                                         |                                                                             |                                                                             |   |            |         |  |   |           
|Diluted Income Per Common Unit                           |                                                                             |                                                                             |   |            |         |  |   |           
|                                                         | Before extraordinary items                                                  |                                                                             | $ | 0.34       |         |  | $ | 0.49       |        
|                                                         | Extraordinary items                                                         |                                                                             |   |           |         |  |   |           |        
|                                                         |                                                                             |                                                                             |   |            |         |  |   |           
|                                                         |                                                                             | Net income available to common unitholders                                  |   | $          | 0.34    |  |   | $          | 0.49    | 
|                                                         |                                                                             |                                                                             |   |            |         |  |   |           
|Weighted Average Common Units
	Outstanding               |                                                                             |                                                                             |   |            |         |  |   |           
|                                                         | Basic                                                                       |                                                                             |   | 88,262,128 |         |  |   | 89,669,950 |        
|                                                         |                                                                             |                                                                             |   |            |         |  |   |           
|                                                         | Diluted                                                                     |                                                                             |   | 89,724,953 |         |  |   | 90,494,874 |        
|                                                         |                                                                             |                                                                             |   |            |         |  |   |           

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

2



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##### Table of Contents



AMB PROPERTY, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS

For the Three Months Ended March 31, 2002
and 2001


|                                                                                    |                                                      |                                        |                                                      |               |         |         |          |         |         |          |        | 
|----------------------------------------------------------------------------------- | ---------------------------------------------------- | -------------------------------------- | ---------------------------------------------------- | ------------- | ------- | ------- | -------- | ------- | ------- | -------- | ------ | 
|                                                                                    |                                                      | 2002                                   |                                                      | 2001         
|                                                                                    |                                                      |                                        |                                                      |              
|                                                                                    |                                                      |                                       
|                                                                                    |                                                      | (unaudited, dollars in thousands)     
|Cash Flows from Operating Activities                                                |                                                      |                                        |                                                      |               |         |         |          |        
|Net income                                                                          |                                                      | $                                      | 34,615                                               |               |         | $       | 47,617   |        
|Adjustments to reconcile net income to net cash
	provided by operating activities:  |                                                      |                                        |                                                      |               |         |         |          |        
|                                                                                    | Depreciation and amortization                        |                                        |                                                      | 29,675        |         |         |          | 26,854  |        
|                                                                                    | Loss on investments in other companies               |                                        |                                                      |              |         |         |          | 4,655   |        
|                                                                                    | Straight-line rents                                  |                                        |                                                      | (3,961        | )       |         |          | (1,325  | )      
|                                                                                    | Amortization of debt premiums and financing costs    |                                        |                                                      | (152          | )       |         |          | 451     |        
|                                                                                    | Deferred compensation amortization                   |                                        |                                                      | 667           |         |         |          | 304     |        
|                                                                                    | Minority interests                                   |                                        |                                                      | 11,503        |         |         |          | 9,820   |        
|                                                                                    | (Gains)/losses from dispositions of real estate      |                                        |                                                      | 288           |         |         |          | (16,767 | )      
|                                                                                    | Non-cash portion of extraordinary items              |                                        |                                                      | (330          | )       |         |          |        |        
|                                                                                    | Equity in loss of AMB Investment Management          |                                        |                                                      |              |         |         |          | (149    | )      
|                                                                                    | Equity in earnings of unconsolidated joint
	ventures |                                        |                                                      | (1,483        | )       |         |          | (1,474  | )      
|                                                                                    | Changes in assets and liabilities:                   |                                        |                                                      |               |         |         |          |         |        
|                                                                                    |                                                      | Accounts receivable and other assets   |                                                      |               | (3,076  | )       |          |         | (24,005 | )       
|                                                                                    |                                                      | Accounts payable and other liabilities |                                                      |               | (19,502 | )       |          |         | 30,570  |         
|                                                                                    |                                                      |                                        |                                                      |               |         |         |          |        
|                                                                                    |                                                      |                                        | Net cash provided by operating activities            |               |         | 48,244  |          |         |         | 76,551   |       
|Cash Flows from Investing Activities                                                |                                                      |                                        |                                                      |               |         |         |          |        
|Change in restricted cash and cash equivalents                                      |                                                      |                                        | (4,002                                               | )             |         |         | (61,528  | )      
|Cash paid for property acquisitions                                                 |                                                      |                                        | (30,486                                              | )             |         |         | (90,320  | )      
|Additions to buildings, development costs, and
	other first generation improvements |                                                      |                                        | (13,991                                              | )             |         |         | (25,967  | )      
|Additions to second generation building
	improvements and lease costs               |                                                      |                                        | (11,223                                              | )             |         |         | (7,426   | )      
|Additions to interests in unconsolidated joint
	ventures                            |                                                      |                                        |                                                     |               |         |         | (4,584   | )      
|Distributions received from unconsolidated joint
	ventures                          |                                                      |                                        | 1,433                                                |               |         |         | 1,173    |        
|Net proceeds from divestiture of real estate                                        |                                                      |                                        | 36,923                                               |               |         |         | 30,295   |        
|                                                                                    |                                                      |                                        |                                                      |               |         |         |          |        
|                                                                                    |                                                      |                                        | Net cash used in investing activities                |               |         | (21,346 | )        |         |         | (158,357 | )     
|Cash Flows from Financing Activities                                                |                                                      |                                        |                                                      |               |         |         |          |        
|Issuance of common stock                                                            |                                                      |                                        | 868                                                  |               |         |         | 1,020    |        
|Borrowings on secured debt                                                          |                                                      |                                        | 41,166                                               |               |         |         | 81,074   |        
|Payments on secured debt                                                            |                                                      |                                        | (33,979                                              | )             |         |         | (6,092   | )      
|Borrowings on unsecured credit facility                                             |                                                      |                                        |                                                     |               |         |         | 119,000  |        
|Payments on unsecured credit facility                                               |                                                      |                                        | (12,000                                              | )             |         |         | (241,000 | )      
|Borrowings on Alliance Fund II credit facility                                      |                                                      |                                        | 23,500                                               |               |         |         |         |        
|Payments on Alliance Fund II credit facility                                        |                                                      |                                        | (31,000                                              | )             |         |         |         |        
|Payment of financing fees                                                           |                                                      |                                        | (1,662                                               | )             |         |         | (624     | )      
|Net proceeds from issuances of senior debt
	securities                              |                                                      |                                        | 19,883                                               |               |         |         | 74,563   |        
|Net proceeds from issuances of preferred units                                      |                                                      |                                        |                                                     |               |         |         | 24,863   |        
|Contributions from co-investment partners                                           |                                                      |                                        |                                                     |               |         |         | 125,000  |        
|Distributions paid to general partner and
	preferred unitholders                    |                                                      |                                        | (4,445                                               | )             |         |         | (3,527   | )      
|Distributions to minority interests, including
	preferred units                     |                                                      |                                        | (15,471                                              | )             |         |         | (14,202  | )      
|                                                                                    |                                                      |                                        |                                                      |               |         |         |          |        
|                                                                                    |                                                      |                                        | Net cash provided by/(used in) financing
	activities |               |         | (13,140 | )        |         |         | 160,075  |       
|                                                                                    |                                                      |                                        |                                                      |               |         |         |          |        
|Net increase in cash and cash equivalents                                           |                                                      |                                        | 13,758                                               |               |         |         | 78,269   |        
|Cash and cash equivalents at beginning of period                                    |                                                      |                                        | 73,071                                               |               |         |         | 20,358   |        
|                                                                                    |                                                      |                                        |                                                      |               |         |         |          |        
|Cash and cash equivalents at end of period                                          |                                                      | $                                      | 86,829                                               |               |         | $       | 98,627   |        
|                                                                                    |                                                      |                                        |                                                      |               |         |         |          |        
|Supplemental Disclosures of Cash Flow
	Information                                  |                                                      |                                        |                                                      |               |         |         |          |        
|Cash paid for interest, net of amounts capitalized                                  |                                                      | $                                      | 20,328                                               |               |         | $       | 35,033   |        
|Non-cash transactions:                                                              |                                                      |                                        |                                                      |               |         |         |          |        
|                                                                                    |                                                      |                                        | Acquisition of properties                            |               | $       | 34,063  |          |         | $       | 90,320   |       
|                                                                                    |                                                      |                                        | Assumption of debt                                   |               |         | (3,577  | )        |         |         |         |       
|                                                                                    |                                                      |                                        |                                                      |               |         |         |          |        
|                                                                                    |                                                      |                                        |                                                      | Net cash paid |         | $       | 30,486   |         |         | $        | 90,320 | 
|                                                                                    |                                                      |                                        |                                                      |               |         |         |          |        

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

3



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##### Table of Contents



AMB PROPERTY, L.P.






CONDENSED CONSOLIDATED STATEMENT OF
PARTNERS CAPITAL


For the Three Months Ended March 31,
2002


|                                                                                               |                            |                                   |           |                  |  |                 |        |              |  |       |            |        |  |       |           |        |  |       |           |   |  |   |         |       |  |  |           |   |  |   |        |       |  |   |           |        | 
|---------------------------------------------------------------------------------------------- | -------------------------- | --------------------------------- | --------- | ---------------- |  | --------------- | ------ | ------------ |  | ----- | ---------- | ------ |  | ----- | --------- | ------ |  | ----- | --------- | - |  | - | ------- | ----- |  |  | --------- | - |  | - | ------ | ----- |  | - | --------- | ------ | 
|                                                                                               |                            |                                   |           |                  |  |                
|                                                                                               |                            | General Partner                   |           | Limited Partners |  |                
|                                                                                               |                            |                                   |           |                  |  |                
|                                                                                               |                            |                                   |           |                  |  |                 |        |              |  |      
|                                                                                               |                            | Preferred Units                   |           | Common Units     |  | Preferred Units |        | Common Units |  |      
|                                                                                               |                            |                                   |           |                  |  |                 |        |              |  |      
|                                                                                               |                            | Units                             |           | Amount           |  | Units           |        | Amount       |  | Units |            | Amount |  | Units |           | Amount |  | Total
|                                                                                               |                            |                                   |           |                  |  |                 |        |              |  |       |            |        |  |       |           |        |  |      
|                                                                                               |                            |                                   |           |                 
|                                                                                               |                            | (unaudited, dollars in thousands) |           |                 
|Balance at December 31, 2001                                                                   |                            |                                   | 4,000,000 |                  |  | $               | 96,100 |              |  |       | 83,592,418 |        |  | $     | 1,656,242 |        |  |       | 2,100,000 |   |  | $ | 101,225 |       |  |  | 4,969,027 |   |  | $ | 98,785 |       |  | $ | 1,952,352 |       
|Comprehensive income:                                                                          |                            |                                   |           |                  |  |                 |        |              |  |       |            |        |  |       |           |        |  |       |           |   |  |   |         |       |  |  |           |   |  |   |        |       |  |   |           |       
|                                                                                               | Net income                 |                                   |           |                 |  |                 |        | 2,125        |  |       |            |       |  |       |           | 28,370 |  |       |           |  |  |   |         | 2,320 |  |  |           |  |  |   |        | 1,800 |  |   |           |        | 
|                                                                                               | Total comprehensive income |                                   |           |                  |  |                 |        |              |  |       |            |        |  |       |           |        |  |       |           |   |  |   |         |       |  |  |           |   |  |   |        |       |  |   |           | 34,615 | 
|Issuance of common limited partnership units in
	connection with issuance of restricted stock  |                            |                                   |          |                  |  |                 |       |              |  |       | 165,640    |        |  |       | 4,475     |        |  |       |          |   |  |   |        |       |  |  |          |   |  |   |       |       |  |   | 4,475     |       
|Issuance of common limited partnership units in
	connection with the exercise of stock options |                            |                                   |          |                  |  |                 |       |              |  |       | 40,791     |        |  |       | 868       |        |  |       |          |   |  |   |        |       |  |  |          |   |  |   |       |       |  |   | 868       |       
|Conversion of common limited partnership units to
	common stock                                |                            |                                   |          |                  |  |                 |       |              |  |       | 36,111     |        |  |       | 926       |        |  |       |          |   |  |   |        |       |  |  | (36,111   | ) |  |   | (702   | )     |  |   | 224       |       
|Deferred compensation                                                                          |                            |                                   |          |                  |  |                 |       |              |  |       |           |        |  |       | (4,475    | )      |  |       |          |   |  |   |        |       |  |  |          |   |  |   |       |       |  |   | (4,475    | )     
|Deferred compensation amortization                                                             |                            |                                   |          |                  |  |                 |       |              |  |       |           |        |  |       | 667       |        |  |       |          |   |  |   |        |       |  |  |          |   |  |   |       |       |  |   | 667       |       
|Reallocation of interests                                                                      |                            |                                   |          |                  |  |                 |       |              |  |       |           |        |  |       |          |        |  |       |          |   |  |   |        |       |  |  |          |   |  |   |       |       |  |   |          |       
|Distributions                                                                                  |                            |                                   |          |                  |  |                 | (2,125 | )            |  |       |           |        |  |       | (34,466   | )      |  |       |          |   |  |   | (2,320  | )     |  |  |          |   |  |   | (2,022 | )     |  |   | (40,933   | )     
|                                                                                               |                            |                                   |           |                  |  |                 |        |              |  |       |            |        |  |       |           |        |  |       |           |   |  |   |         |       |  |  |           |   |  |   |        |       |  |   |           |       
|Balance at March 31, 2002                                                                      |                            |                                   | 4,000,000 |                  |  | $               | 96,100 |              |  |       | 83,834,960 |        |  | $     | 1,652,607 |        |  |       | 2,100,000 |   |  | $ | 101,225 |       |  |  | 4,932,916 |   |  | $ | 97,861 |       |  | $ | 1,947,793 |       
|                                                                                               |                            |                                   |           |                  |  |                 |        |              |  |       |            |        |  |       |           |        |  |       |           |   |  |   |         |       |  |  |           |   |  |   |        |       |  |   |           |       

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

4



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##### Table of Contents



AMB PROPERTY, L.P.






NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS


March 31, 2002


(unaudited)




|   |                                                         
|-- | --------------------------------------------------------
|1. | Organization and Formation of the Operating
	Partnership

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

As of March 31, 2002, the Company owned an
approximate 94.4% general partner interest in the Operating
Partnership, excluding preferred units. The remaining 5.6%
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 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, 2002, the Operating Partnership had investments
in five co-investment joint ventures, which are consolidated for
financial reporting purposes.

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

As of March 31, 2002, the Operating
Partnership owned 914 industrial buildings and seven retail
centers, located in 26 markets throughout the United States. The
Operating Partnerships strategy is to become a leading
provider of High Throughput Distribution, or HTD, properties in
supply-constrained, in fill submarkets located near key
international passenger and cargo airports, highway systems, and
sea ports in major metropolitan areas, such as Atlanta, Chicago,
Dallas/ Fort Worth, Northern New Jersey/ New York City, the

5



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##### Table of Contents



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

San Francisco Bay Area, Southern California,
Miami, and Seattle. As of March 31, 2002, the industrial
buildings, principally warehouse distribution buildings,
encompassed approximately 82.3 million rentable square feet
and were 94.4% leased to over 2,900 customers. As of
March 31, 2002, the retail centers, principally
grocer-anchored community shopping centers, encompassed
approximately 1.1 million rentable square feet and were
87.2% leased to more than 120 customers.

As of March 31, 2002, through AMB Capital
Partners, the Operating Partnership also managed industrial
buildings and retail centers, totaling approximately
2.6 million rentable square feet on behalf of various
clients. In addition, the Operating Partnership has invested in
industrial buildings, totaling approximately 4.9 million
rentable square feet, through unconsolidated joint ventures.



|   |                             
|-- | ----------------------------
|2. | Interim Financial Statements

The condensed 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 condensed 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 for the three months ended
March 31, 2002 and 2001, 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, 2001.

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.

Investments in other companies were accounted for
on a cost basis and realized gains and losses were included in
current earnings. During the three months ended March 31,
2001, the Operating Partnership recognized a loss on its
investment in Webvan Group, Inc. totaling $4.7 million. The
Operating Partnership had previously recognized gains and losses
on its investment in Webvan Group, Inc. as a component of other
comprehensive income.

In June and August 2001, the Financial Accounting
Standards Board issued Statement of Financial Accounting
Standards Nos. 143, Accounting for Asset Retirement
Obligations, and 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. Under FASB Statement
No. 143, the fair value of a liability for an asset
retirement obligation must be recognized in the period in which
it is incurred if a reasonable estimate of fair value can be
made. The associated asset retirement costs are capitalized as
part of the carrying amount of the long-lived asset. FASB
Statement No. 144 retains FASB Statement
No. 121s, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of, fundamental provisions for the: (1) recognition and
measurement of impairment of long-lived assets to be held and
used; and (2) measurement of long-lived assets to be
disposed of by sale. The Operating Partnership does not believe
that either FASB Statement No. 143 or No. 144 will
have a material impact on its financial position or results of
operations. FASB Statement No. 143 is effective for fiscal years
beginning after June 15, 2002, and FASB Statement
No. 144 was effective for fiscal years beginning after
December 15, 2001.

6



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##### Table of Contents



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



|   |                                                  
|-- | -------------------------------------------------
|3. | Real Estate Acquisition and Development
	Activity

During the quarter ended March 31, 2002, the
Operating Partnership invested $35.0 million in eight
industrial buildings aggregating approximately 0.7 million
square feet, all of which was through two of the Operating
Partnerships co-investment joint ventures.

During the quarter ended March 31, 2002, the
Operating Partnership completed industrial developments valued
at $11.4 million, aggregating approximately
0.2 million square feet. The Operating Partnership also
initiated a new industrial development project valued at
$6.0 million aggregating approximately 0.2 million
square feet.

During the quarter ended March 31, 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 quarter ended March 31, 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.

As of March 31, 2002, the Operating
Partnership had in its development pipeline: (1) 12
industrial projects, which will total approximately 3.1 million
square feet and have an aggregate estimated investment by the
Operating Partnership and, in certain instances, the Operating
Partnerships co-investors of $147.6 million upon
completion and (2) two development projects available for
sale, which will total approximately 0.6 million square
feet and have an aggregate estimated investment of
$49.6 million upon completion. As of March 31, 2002, the
Operating Partnership and its Development Alliance Partners have
funded an aggregate of $130.8 million and will need to fund
an estimated additional $66.4 million in order to complete
current and planned projects.

4.     Property
Divestitures and Properties Held for Divestiture

Property Divestitures.During the quarter ended
March 31, 2002, the Operating Partnership divested itself
of one industrial and one retail building, aggregating
approximately 0.3 million square feet, for an aggregate
price of $38.5 million, with a resulting net loss of
$0.3 million, which is net of minority interests
share. Both of the buildings disposed were classified as held
for sale as of December 31, 2001.

Properties Held for Divestiture.As of March 31, 2002, the
Operating Partnership had decided to divest itself of six retail
centers and four industrial properties, 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. Properties held
for divestiture are stated at the lower of cost or estimated
fair value less costs to sell.

7



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##### Table of Contents



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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

Properties Held for Divestiture at
March 31, 2002

|                             |            |      |       |       |  |   |       |       | 
|---------------------------- | ---------- | ---- | ----- | ----- |  | - | ----- | ----- | 
|Three months ended March 31, |            | 2002 |       | 2001 
|                             |            |      |       |      
|Income                       |            | $    | 5,098 |       |  | $ | 4,429 |      
|Property operating expenses  |            |      | 1,772 |       |  |   | 1,585 |      
|Interest expense             |            |      | 914   |       |  |   | 986   |      
|                             |            |      |       |       |  |   |       |      
|                             | Net income |      | $     | 2,412 |  |   | $     | 1,858 | 
|                             |            |      |       |       |  |   |       |      



|   |                     
|-- | --------------------
|5. | Mortgages Receivable

In September 2000, the Operating Partnership sold
a retail center located in Los Angeles, California. As of
March 31, 2002, the Operating Partnership carried a 9.5%
mortgage note in the principal amount of $74.0 million on
the retail center. The maturity date of the mortgage note was
extended to September 30, 2002. During 2001, the Operating
Partnership renegotiated this mortgage and received a
$5.0 million pay-down on the principal balance and
increased the interest rate to 9.5% from 8.75%. The Operating
Partnership has a first lien against the retail center as
collateral for the mortgage note and believes that the
underlying estimated fair value of the retail center is equal to
or greater than the carrying value of the mortgage note.

Through a wholly-owned subsidiary, the Operating
Partnership also holds a mortgage loan receivable on AMB Pier
One, LLC, an unconsolidated joint venture. The note bears
interest at 13.0% and matures in May 2026. As of March 31,
2002, the outstanding balance on the note was $13.2 million.

6.     Debt

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

|                                                                                                                                                                            |                       |                         |         |              |           |   |         |           |           | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | ----------------------- | ------- | ------------ | --------- | - | ------- | --------- | --------- | 
|                                                                                                                                                                            |                       | March 31,               |         | December 31,
|                                                                                                                                                                            |                       | 2002                    |         | 2001        
|                                                                                                                                                                            |                       |                         |         |             
|Operating Partnership secured debt, varying
	interest rates from 3.7% to 10.4%, due October 2002 to April
	2014 (weighted average interest rate of 8.0% at March 31,
	2002) |                       | $                       | 436,959 |              |           | $ | 453,954 |          
|Joint venture secured debt, varying interest
	rates from 3.5% to 10.4%, due July 2002 to June 2023 (weighted
	average interest rate of 7.1% at March 31, 2002)              |                       |                         | 787,133 |              |           |   | 759,374 |          
|Unsecured senior debt securities, varying
	interest rates from 5.9% to 8.0%, (weighted average interest
	rate of 7.2%), due June 2005 to June 2018.                         |                       |                         | 800,000 |              |           |   | 780,000 |          
|Unsecured credit facility, variable interest at
	LIBOR plus 75 basis points, due May 2003.                                                                                  |                       |                         |        |              |           |   | 12,000  |          
|Alliance Fund II credit facility, variable
	interest at LIBOR plus 87.5 basis points (weighted average
	interest rate of 2.8% at March 31, 2002), due August 2003.          |                       |                         | 116,000 |              |           |   | 123,500 |          
|                                                                                                                                                                            |                       |                         |         |              |           |   |         |          
|                                                                                                                                                                            | Total before premiums |                         |         | 2,140,092    |           |   |         | 2,128,828 |          
|                                                                                                                                                                            | Unamortized premiums  |                         |         | 5,341        |           |   |         | 6,836     |          
|                                                                                                                                                                            |                       |                         |         |              |           |   |         |          
|                                                                                                                                                                            |                       | Total consolidated debt |         | $            | 2,145,433 |   |         | $         | 2,135,664 | 
|                                                                                                                                                                            |                       |                         |         |              |           |   |         |          

8



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##### Table of Contents



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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, 2002, and
December 31, 2001, the total gross investment book value of
those properties securing the debt was $2.5 billion and
$2.3 billion, respectively, including $1.3 billion and
$1.2 billion, respectively, in consolidated joint ventures.
All of the secured debt bears interest at fixed rates, except
for seven loans with an aggregate principal amount of
$71.2 million as of March 31, 2002, which bear
interest at variable rates (weighted average interest rate of
3.7% as of March 31, 2002). The secured debt has various
financial and non-financial covenants. Management believes that
the Operating Partnership was in material compliance with these
covenants as of March 31, 2002. As of March 31, 2002,
the Operating Partnership had 23 non-recourse secured loans,
which are cross collateralized by 50 properties. As of
March 31, 2002, the Operating Partnership had
$572.1 million (not including unamortized debt premiums)
outstanding on these loans.

Interest on the senior debt securities is payable
semi-annually. 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, 2002.

In August 2000, the Operating Partnership
commenced a medium-term note program for the issuance of up to
$400.0 million in principal amount of medium-term notes,
which are guaranteed by the Company. As of March 31, 2002,
the Operating Partnership had issued $400.0 million of
medium-term notes under this program. On January 14, 2002,
the Operating Partnership issued and sold the remaining
$20.0 million of the notes under this program to Lehman
Brothers, Inc., as principal. The Company has guaranteed the
notes, which mature on January 17, 2007, and bear interest
at 5.90% per annum. The Operating Partnership used the net
proceeds of $19.9 million for general corporate purposes,
to partially repay indebtedness, and to acquire and develop
additional properties.

In May 2000, the Operating Partnership entered
into a $500.0 million unsecured revolving credit agreement.
The Company guarantees 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 based on the
Operating Partnerships credit rating. 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, 2002. The
Operating Partnership has the ability to increase available
borrowings to $700.0 million by adding additional banks to
the facility or obtaining the agreement of existing banks to
increase their commitments. 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.
As of March 31, 2002, there was no outstanding balance on
the credit facility and the amount available under the credit
facility was $500.0 million (excluding the additional
$200.0 million of potential additional capacity).

In July 2001, AMB Institutional Alliance
Fund II, L.P. (Alliance Fund II) obtained
a $150.0 million credit facility from Bank of America, N.A.
Borrowings currently bear interest at LIBOR plus 87.5 basis
points. The credit facility is secured by the unfunded capital
commitments of the third party investors in AMB Institutional
Alliance REIT II, Inc. (Alliance REIT II)
and the Alliance Fund II. As of March 31, 2002, the
outstanding balance was $116.0 million and the remaining
amount available was $34.0 million. The credit facility has
various financial and non-financial covenants. Management
believes that the Alliance Fund II and the Alliance
REIT II were in material compliance with these covenants at
March 31, 2002.

During the quarter ended March 31, 2002, the
Operating Partnership retired $28.8 million of secured
debt. The Operating Partnership recognized a net extraordinary
loss of $0.2 million related to the early debt retirement.

9



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##### Table of Contents



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

As of March 31, 2002, the scheduled
maturities of the Operating Partnerships total debt,
excluding unamortized debt premiums, were as follows (dollars in
thousands):

|           |  |             |         |         |  |            |         |            |  |       |         |  |  |   |         |  |  |   |           | 
|---------- |  | ----------- | ------- | ------- |  | ---------- | ------- | ---------- |  | ----- | ------- |  |  | - | ------- |  |  | - | --------- | 
|           |  | Operating   |         |         |  | Unsecured  |         |            |  |      
|           |  | Partnership |         | Joint   |  | Senior     |         |            |  |      
|           |  | Secured     |         | Venture |  | Debt       |         | Credit     |  |      
|           |  | Debt        |         | Debt    |  | Securities |         | Facilities |  | Total
|           |  |             |         |         |  |            |         |            |  |      
|2002       |  | $           | 17,767  |         |  | $          | 28,621  |            |  | $     |        |  |  | $ |        |  |  | $ | 46,388    | 
|2003       |  |             | 76,151  |         |  |            | 37,528  |            |  |       |        |  |  |   | 116,000 |  |  |   | 229,679   | 
|2004       |  |             | 72,426  |         |  |            | 52,030  |            |  |       |        |  |  |   |        |  |  |   | 124,456   | 
|2005       |  |             | 62,338  |         |  |            | 38,449  |            |  |       | 250,000 |  |  |   |        |  |  |   | 350,787   | 
|2006       |  |             | 86,466  |         |  |            | 74,888  |            |  |       | 25,000  |  |  |   |        |  |  |   | 186,354   | 
|2007       |  |             | 25,618  |         |  |            | 32,395  |            |  |       | 75,000  |  |  |   |        |  |  |   | 133,013   | 
|2008       |  |             | 33,619  |         |  |            | 148,119 |            |  |       | 175,000 |  |  |   |        |  |  |   | 356,738   | 
|2009       |  |             | 5,176   |         |  |            | 32,958  |            |  |       |        |  |  |   |        |  |  |   | 38,134    | 
|2010       |  |             | 52,780  |         |  |            | 93,595  |            |  |       | 75,000  |  |  |   |        |  |  |   | 221,375   | 
|2011       |  |             | 1,311   |         |  |            | 167,878 |            |  |       | 75,000  |  |  |   |        |  |  |   | 244,189   | 
|Thereafter |  |             | 3,307   |         |  |            | 80,672  |            |  |       | 125,000 |  |  |   |        |  |  |   | 208,979   | 
|           |  |             |         |         |  |            |         |            |  |       |         |  |  |   |         |  |  |   |           | 
|           |  | $           | 436,959 |         |  | $          | 787,133 |            |  | $     | 800,000 |  |  | $ | 116,000 |  |  | $ | 2,140,092 | 
|           |  |             |         |         |  |            |         |            |  |       |         |  |  |   |         |  |  |   |           | 

7.     Minority
Interests

Minority interests in the Operating Partnership
represent interests held by certain third parties in several
real estate joint ventures, aggregating approximately
29.0 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 enters into
co-investment joint ventures with institutional investors. As of
March 31, 2002, the Operating Partnership had investments
in five co-investment joint ventures with a gross book value of
$1.3 billion, which are consolidated for financial
reporting purposes and which are discussed below.

The Operating Partnership, together with one of
its other affiliates, owned, as of March 31, 2002,
approximately 50% of AMB/ Erie. L.P., (Erie).
Erie is a co-investment partnership between the Operating
Partnership and various entities related to Erie Insurance
Company, and is engaged in the acquisition, ownership,
operation, management, renovation, expansion, and development of
industrial buildings in target markets nationwide. As of
March 31, 2002, Erie had a total capitalization of
$199.0 million.

The Operating Partnership, together with one of
the its other affiliates, owned, as of March 31, 2002,
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
industrial buildings in target markets nationwide. As of
March 31, 2002, the Alliance Fund I had a total
capitalization of $378.0 million. The Operating Partnership
is the managing general partner of the Alliance Fund I.

10



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##### Table of Contents



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The Operating Partnership, together with one of
its other affiliates, formed AMB Partners II, L.P.
(Partners II) to acquire, manage, develop, and
redevelop distribution facilities nationwide. On
February 14, 2001, Partners II received an equity
contribution from City and County of San Francisco
Employees Retirement System (CCSFERS) of
$50.0 million. As of March 31, 2002, Partners II had a
total capitalization of $206.0 million. The Operating
Partnership is the managing general partner of Partners II
and owned, as of March 31, 2002, approximately 50% of
Partners II.

The Operating Partnership, together with one of
its , formed 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. On March 23, 2001, AMB-SGP received an equity
contribution from GIC of $75.0 million. As of
March 31, 2002, AMB-SGP had a total capitalization of
$320.0 million. The Operating Partnership is the managing
general partner of AMB-SGP and owned, as of March 31, 2002,
approximately 50.3% of AMB-SGP.

The Operating Partnership, together with one of
its other affiliates, formed the AMB Institutional Alliance
Fund II, L.P. (Alliance Fund II), in which
AMB Institutional Alliance REIT II, Inc. (Alliance
REIT II) became a partner on June 28, 2001. The
Operating Partnership owned, as of March 31, 2002, 20% of
the partnership interests in the Alliance Fund II. The
Alliance Fund II is a co-investment partnership between the
Operating Partnership, the Alliance REIT II, and a third
party limited partner. The Alliance REIT II included 14
institutional investors as stockholders as of March 31,
2002. The Alliance Fund II is engaged in the acquisition,
ownership, operation, management, renovation, expansion, and
development of industrial buildings in target markets
nationwide. As of March 31, 2002, the Alliance Fund II
had a total capitalization of $244.0 million. The Operating
Partnership is the managing general partner of the Alliance
Fund II.

11



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##### Table of Contents



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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

|                                    |                                                                |                 |         |                     |         |      |       |       |        |   |       |       |       | 
|----------------------------------- | -------------------------------------------------------------- | --------------- | ------- | ------------------- | ------- | ---- | ----- | ----- | ------ | - | ----- | ----- | ----- | 
|                                    |                                                                |                 |         |                    
|                                    |                                                                |                 |         | Share of Net Income
|                                    |                                                                |                 |         |                    
|                                    |                                                                |                 |         |                    
|                                    |                                                                |                 |         | For the Three      
|                                    |                                                                |                 |         | Months Ended       
|                                    |                                                                |                 |         | March 31,          
|                                    |                                                                | Liability as of |         |                    
|                                    |                                                                | March 31, 2002  |         | 2002                |         | 2001
|                                    |                                                                |                 |         |                     |         |     
|Joint Venture Partners              |                                                                | $               | 357,567 |                     |         | $    | 7,966 |       |        | $ | 4,364 |      
|Held through AMB Property II, L.P.: |                                                                |                 |         |                     |         |      |       |       |        |   |       |      
|                                    | Series C Preferred Units (liquidation
	preference of $110,000) |                 |         |                    |         |      |       |      |        |   |       | 2,406 |      
|                                    | Series D Preferred Units (liquidation
	preference of $79,767)  |                 |         | 77,687              |         |      |       | 1,545 |        |   |       | 1,545 |      
|                                    | Series E Preferred Units (liquidation
	preference of $11,022)  |                 |         | 10,788              |         |      |       | 214   |        |   |       | 214   |      
|                                    | Series F Preferred Units (liquidation
	preference of $19,872)  |                 |         | 19,597              |         |      |       | 395   |        |   |       | 395   |      
|                                    | Series G Preferred Units (liquidation
	preference of $1,000)   |                 |         | 954                 |         |      |       | 20    |        |   |       | 20    |      
|                                    | Series H Preferred Units (liquidation
	preference of $42,000)  |                 |         | 40,915              |         |      |       | 853   |        |   |       | 853   |      
|                                    | Series I Preferred Units (liquidation
	preference of $25,500)  |                 |         | 24,821              |         |      |       | 510   |        |   |       | 23    |      
|                                    |                                                                |                 |         |                     |         |      |       |       |        |   |       |      
|                                    |                                                                | Total           |         | $                   | 532,329 |      |       | $     | 11,503 |   |       | $     | 9,820 | 
|                                    |                                                                |                 |         |                     |         |      |       |       |        |   |       |      

8.     Investments in
Unconsolidated Joint Ventures

The Operating Partnership has non-controlling
limited partnership interests in three separate unconsolidated
joint ventures. The Operating Partnership accounts for the joint
ventures using the equity method of accounting. Under the
agreements governing the joint ventures, the Operating
Partnership and the other party to the joint venture may be
required to make additional capital contributions, and subject
to certain limitations, the joint ventures may incur additional
debt. 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. The
Operating Partnerships net equity investment in these
joint ventures is shown as Investment in unconsolidated joint
ventures on the accompanying consolidated balance sheets. For
the three months ended March 31, 2002 and 2001, the
Operating Partnerships share of net operating income from
these joint ventures was $2.6 million and
$2.8 million, respectively.

9.     Partners
Capital

During the quarter ended March 31, 2002, the
Operating Partnership redeemed 36,111 of its common limited
partnership units for shares of the Companys common stock.
Holders of common limited partnership units of the Operating
Partnership have the right, commencing generally on or after the
first anniversary of the holder becoming a limited partner of
the Operating Partnership (or such other date agreed to by the
Operating Partnership and the applicable unit holders), to
require the Operating Partnership to redeem part or all of their
common units for cash (based upon the fair market value of an
equivalent number of shares of common stock at the time of
redemption) or the Operating Partnership may, in its sole and
absolute discretion (subject to the limits on ownership and
transfer of common stock set forth in the Companys
charter) elect to have the

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AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Company exchange those common units for shares of
the Companys common stock on a one-for-one basis, subject
to adjustment in the event of stock splits, stock dividends,
issuance of certain rights, certain extraordinary distributions
and similar events. The Operating Partnership presently
anticipates that it will generally elect to have the Company
issue shares of the Companys common stock in exchange for
common units in connection with a redemption request; however,
the Operating Partnership has paid cash, and may in the future
pay cash, for a redemption of common units. With each redemption
or exchange, the Companys percentage ownership in the
Operating Partnership will increase. Common limited partners may
exercise this redemption right from time to time, in whole or in
part, subject to the limitations that limited partners may not
exercise this right if such exercise would result in any person
actually or constructively owning shares of common stock in
excess of the ownership limit or any other amount specified by
the board of directors, assuming common stock was issued in the
exchange.

In December 2001, the Companys board of
directors approved a new stock repurchase program for the
repurchase of up to $100.0 million worth of common stock.
The new stock repurchase program expires in December 2003 and no
repurchases have been made under the new program as of
March 31, 2002.

The following table sets forth the distribution
declarations per unit for the three months ended March 31:

|                                 |  |                       |  |               |  |       
|-------------------------------- |  | --------------------- |  | ------------- |  | ------
|                                 |  |                       |  |              
|                                 |  |                       |  | For the Three
|                                 |  |                       |  | Months Ended 
|                                 |  |                       |  | March 31,    
|                                 |  |                       |  |              
|Security                         |  | Paying Entity         |  | 2002          |  | 2001  
|                                 |  |                       |  |               |  |       
|Common limited partnership units |  | Operating Partnership |  | $0.410        |  | $0.395
|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. |  | n/a           |  | $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        |  | $0.994
|Series G preferred units         |  | AMB Property II, L.P. |  | $0.994        |  | $0.994
|Series H preferred units         |  | AMB Property II, L.P. |  | $1.016        |  | $1.016
|Series I preferred units         |  | AMB Property II, L.P. |  | $1.000        |  | $0.044
|Series J preferred units         |  | Operating Partnership |  | $0.994        |  | n/a   

10.     Income Per
Unit

The Operating Partnerships only dilutive
securities outstanding for the three months ended March 31,
2002 and 2001 were stock options and restricted stock granted by
the Company under its stock incentive plans. The effect on
diluted income per unit was to increase weighted average units
outstanding. Such dilution was computed using the treasury stock
method.

|                              |                                    |                            |  |            |  |  |  |            | 
|----------------------------- | ---------------------------------- | -------------------------- |  | ---------- |  |  |  | ---------- | 
|                              |                                    |                           
|                              |                                    | For the Three Months Ended
|                              |                                    | March 31,                 
|                              |                                    |                           
|                              |                                    | 2002                       |  | 2001      
|                              |                                    |                            |  |           
|Weighted Average Common Units |                                    |                            |  |            |  |  |  |           
|                              | Basic                              |                            |  | 88,262,128 |  |  |  | 89,669,950 | 
|                              | Stock options and restricted stock |                            |  | 1,462,825  |  |  |  | 824,924    | 
|                              |                                    |                            |  |            |  |  |  |           
|                              | Diluted                            |                            |  | 89,724,953 |  |  |  | 90,494,874 | 
|                              |                                    |                            |  |            |  |  |  |           

13



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AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

11.     Segment
Information

The Operating Partnership operates industrial and
retail properties nationwide and manages its business both by
property type and by market. Industrial properties consist
primarily of warehouse distribution facilities suitable for
single or multiple customers and are typically comprised of
multiple buildings that are leased to customers engaged in
various types of businesses. As of March 31, 2002, the
Operating Partnership operated industrial properties in eight
hub and gateway markets in addition to 18 other markets
nationwide. As of March 31, 2002, the Operating Partnership
operated retail properties in Miami, Atlanta, Chicago, the San
Francisco Bay Area, Boston, and Baltimore. The Operating
Partnership does not separately manage its retail operations by
market. Retail properties are generally leased to one or more
anchor customers, such as grocery and drug stores, and various
retail businesses. The accounting policies of the segments are
the same as those described in the summary of significant
accounting policies. The Operating Partnership evaluates
performance based upon property net operating income of the
combined properties in each segment. The Operating
Partnerships geographic markets for industrial properties
are managed separately because each market requires different
operating, pricing, and leasing strategies.

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

|                                  |                          |                             |                  |        |        |         |        |        |        |         | 
|--------------------------------- | ------------------------ | --------------------------- | ---------------- | ------ | ------ | ------- | ------ | ------ | ------ | ------- | 
|                                  |                          |                            
|                                  |                          | Rental Revenues(1)         
|                                  |                          |                            
|                                  |                          |                            
|                                  |                          | For the Three Months Ended 
|                                  |                          | March 31,                  
|                                  |                          |                            
|                                  |                          | 2002                        |                  | 2001  
|                                  |                          |                             |                  |       
|Industrial Hub & Gateway Markets: |                          |                             |                  |        |        |         |        |       
|                                  | Atlanta                  |                             | $                | 7,314  |        |         | $      | 9,088  |       
|                                  | Chicago                  |                             |                  | 11,886 |        |         |        | 11,592 |       
|                                  | Dallas/ Ft. Worth        |                             |                  | 6,621  |        |         |        | 8,185  |       
|                                  | No. New Jersey/ New York |                             |                  | 10,832 |        |         |        | 10,965 |       
|                                  | San Francisco Bay Area   |                             |                  | 30,002 |        |         |        | 24,111 |       
|                                  | Southern California      |                             |                  | 18,650 |        |         |        | 15,055 |       
|                                  | Miami                    |                             |                  | 8,296  |        |         |        | 8,727  |       
|                                  | Seattle                  |                             |                  | 5,492  |        |         |        | 6,345  |       
|                                  |                          |                             |                  |        |        |         |        |       
|                                  |                          | Total hub & gateway markets |                  |        | 99,093 |         |        |        | 93,988 |        
|Total other industrial markets    |                          |                             | 43,752           |        |        |         | 33,452 |       
|Total retail markets              |                          |                             | 5,435            |        |        |         | 7,036  |       
|                                  |                          |                             |                  |        |        |         |        |       
|                                  |                          |                             | Total properties |        | $      | 148,280 |        |        | $      | 134,476 | 
|                                  |                          |                             |                  |        |        |         |        |       



---



|    |                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------
|(1) | Excludes straight-line rents of $4.0 million
	and $1.3 million for the three months ended March 31,
	2002 and 2001, respectively.

14



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##### Table of Contents



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

|                                  |                               |                             |                  |                           |         |              |        |        |        |         |           |         |           |           |           |         |           |           | 
|--------------------------------- | ----------------------------- | --------------------------- | ---------------- | ------------------------- | ------- | ------------ | ------ | ------ | ------ | ------- | --------- | ------- | --------- | --------- | --------- | ------- | --------- | --------- | 
|                                  |                               |                             |                  |                           |         |             
|                                  |                               | Property NOI(1)(2)          |                  |                           |         |             
|                                  |                               |                             |                  |                           |         |             
|                                  |                               |                             |                  |                          
|                                  |                               | For the Three Months        |                  | Total Gross Investment(3)
|                                  |                               | Ended March 31,             |                  |                          
|                                  |                               |                             |                  | March 31,                 |         | December 31,
|                                  |                               | 2002                        |                  | 2001                      |         | 2002         |        | 2001  
|                                  |                               |                             |                  |                           |         |              |        |       
|Industrial Hub & Gateway Markets: |                               |                             |                  |                           |         |              |        |        |        |         |           |         |           |           |           |        
|                                  | Atlanta                       |                             | $                | 5,880                     |         |              | $      | 5,814  |        |         | $         | 277,090 |           |           | $         | 271,663 |          
|                                  | Chicago                       |                             |                  | 8,332                     |         |              |        | 6,756  |        |         |           | 343,494 |           |           |           | 330,127 |          
|                                  | Dallas/ Fort Worth            |                             |                  | 4,839                     |         |              |        | 4,607  |        |         |           | 191,204 |           |           |           | 171,263 |          
|                                  | Northern New Jersey/ New York |                             |                  | 7,263                     |         |              |        | 7,580  |        |         |           | 403,160 |           |           |           | 406,077 |          
|                                  | San Francisco Bay Area        |                             |                  | 25,293                    |         |              |        | 20,230 |        |         |           | 808,354 |           |           |           | 806,528 |          
|                                  | Southern California           |                             |                  | 14,713                    |         |              |        | 11,750 |        |         |           | 707,675 |           |           |           | 694,602 |          
|                                  | Miami                         |                             |                  | 6,232                     |         |              |        | 6,634  |        |         |           | 290,304 |           |           |           | 288,046 |          
|                                  | Seattle                       |                             |                  | 4,376                     |         |              |        | 4,544  |        |         |           | 196,966 |           |           |           | 193,154 |          
|                                  |                               |                             |                  |                           |         |              |        |        |        |         |           |         |           |           |           |        
|                                  |                               | Total hub & gateway markets |                  |                           | 76,928  |              |        |        | 67,915 |         |           |         | 3,218,247 |           |           |         | 3,161,460 |          
|Total other industrial markets    |                               |                             | 30,731           |                           |         |              | 29,154 |        |        |         | 1,316,439 |         |           |           | 1,321,959 |        
|                                  |                               |                             |                  |                           |         |              |        |        |        |         |           |         |           |           |           |        
|                                  |                               | Total industrial markets    |                  |                           | 107,659 |              |        |        | 97,069 |         |           |         | 4,534,686 |           |           |         | 4,483,419 |          
|Total retail markets              |                               |                             | 3,552            |                           |         |              | 4,487  |        |        |         | 32,265    |         |           |           | 47,292    |        
|                                  |                               |                             |                  |                           |         |              |        |        |        |         |           |         |           |           |           |        
|                                  |                               |                             | Total properties |                           | $       | 111,211      |        |        | $      | 101,556 |           |         | $         | 4,566,951 |           |         | $         | 4,530,711 | 
|                                  |                               |                             |                  |                           |         |              |        |        |        |         |           |         |           |           |           |        



---



|    |                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Excludes straight-line rents of $4.0 million
	and $1.3 million for the three months ended March 31,
	2002 and 2001, respectively.                                                                                                                                   
|   
|(2) | Property net operating income is defined as
	rental revenue, including reimbursements and excluding
	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
	$139.4 million as of March 31, 2002, and
	$157.2 million as of December 31, 2001.                                                                                                                                  

15



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##### Table of Contents



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The Operating Partnership uses property net
operating income as an operating performance measure. The
following table reconciles total reportable segment revenue and
property net operating income to rental revenues and income from
operations (dollars in thousands):

|                                                                                 |                                        |                                                      |         |         |         |   |         |         |         | 
|-------------------------------------------------------------------------------- | -------------------------------------- | ---------------------------------------------------- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                                                 |                                        |                                                     
|                                                                                 |                                        | For the Three Months Ended                          
|                                                                                 |                                        | March 31,                                           
|                                                                                 |                                        |                                                     
|                                                                                 |                                        | 2002                                                 |         | 2001   
|                                                                                 |                                        |                                                      |         |        
|Rental revenues                                                                  |                                        |                                                      |         |         |         |   |         |        
|Total rental revenues for reportable segments                                    |                                        | $                                                    | 148,280 |         |         | $ | 134,476 |        
|Straight-line rents                                                              |                                        |                                                      | 3,961   |         |         |   | 1,325   |        
|                                                                                 |                                        |                                                      |         |         |         |   |         |        
|                                                                                 |                                        | Total rental revenues                                |         | $       | 152,241 |   |         | $       | 135,801 | 
|                                                                                 |                                        |                                                      |         |         |         |   |         |        
|Income before minority interests and net gains
	from dispositions of real estate |                                        |                                                      |         |         |         |   |         |        
|Property net operating income for reportable
	segments                           |                                        | $                                                    | 111,211 |         |         | $ | 101,556 |        
|Straight-line rents                                                              |                                        |                                                      | 3,961   |         |         |   | 1,325   |        
|Equity in earnings of unconsolidated joint
	ventures                             |                                        |                                                      | 1,483   |         |         |   | 1,474   |        
|Investment management income                                                     |                                        |                                                      | 2,588   |         |         |   | 2,420   |        
|Other income                                                                     |                                        |                                                      | 2,850   |         |         |   | 5,139   |        
|Less:                                                                            |                                        |                                                      |         |         |         |   |         |        
|                                                                                 | Interest, including amortization       |                                                      |         | (35,851 | )       |   |         | (31,552 | )      
|                                                                                 | Depreciation and amortization          |                                                      |         | (29,675 | )       |   |         | (26,854 | )      
|                                                                                 | General, administrative, and other     |                                                      |         | (9,945  | )       |   |         | (8,183  | )      
|                                                                                 | Loss on investments in other companies |                                                      |         |        |         |   |         | (4,655  | )      
|                                                                                 |                                        |                                                      |         |         |         |   |         |        
|                                                                                 |                                        | Income before minority interests and gains
	(losses) |         | $       | 46,622  |   |         | $       | 40,670  | 
|                                                                                 |                                        |                                                      |         |         |         |   |         |        

12.     Commitments
and Contingencies

Litigation.In the
normal course of business, from time to time, the Operating
Partnership may be involved in legal actions relating to the
ownership and operations of its properties. 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, such as those due to acts
of terrorism, that may be either uninsurable or not economically
insurable. Should an

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##### Table of Contents



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

uninsured loss occur, the Operating Partnership
could lose its investment in, and anticipated profits and cash
flows from, a property.

Captive Insurance Company.The Operating Partnership has
responded to recent trends towards increasing costs and
decreasing coverage availability in the insurance markets by
obtaining higher-deductible property insurance from third party
insurers and by forming a wholly-owned captive insurance
company, Arcata National Insurance Ltd. (Arcata) in
December 2001. Arcata provides insurance coverage for all or a
portion of losses below the increased deductible under the third
party policies. The Operating Partnership capitalized Arcata in
accordance with regulatory requirements. Arcata established
annual premiums based on projections derived from the past loss
experience at the Operating Partnerships properties.
Annually, the Operating Partnership intends to engage an
independent third party to perform an actuarial estimate of
future projected claims.

Premiums paid to Arcata have a retrospective
component, so that if expenses, including losses, are less than
premiums collected, the excess will be returned to the property
owners (and, in turn, as appropriate, to the customers) and
conversely, subject to certain limitations, if expenses,
including losses, are greater than premiums collected, an
additional premium will be charged. As with all recoverable
expenses, differences between estimated and actual insurance
premiums will be recognized in the subsequent year. Through this
structure, the Operating Partnership believes that it will be
able to obtain insurance for its portfolio with more
comprehensive coverage at a projected overall lower cost than
would otherwise be available in the market.

17



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

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



| |   |                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | defaults or non-renewal of leases by
	customers;                                                                                                                                                                
|
| |  | increased interest rates and operating
	costs;                                                                                                                                                                  
|
| |  | our failure to obtain necessary outside
	financing;                                                                                                                                                             
|
| |  | difficulties in identifying properties to
	acquire and in effecting acquisitions;                                                                                                                               
|
| |  | our failure to successfully integrate acquired
	properties and operations;                                                                                                                                      
|
| |  | our failure to divest of properties that we
	have contracted to sell or to timely reinvest proceeds from any
	such divestitures;                                                                                
|
| |  | risks and uncertainties affecting property
	development and construction (including construction delays,
	cost overruns, our inability to obtain necessary permits, and
	public opposition to these activities);
|
| |  | environmental uncertainties;                                                                                                                                                                                    
|
| |  | risks related to natural disasters;                                                                                                                                                                             
|
| |  | financial market fluctuations;                                                                                                                                                                                  
|
| |  | possible impairments in timely financial
	reporting or access to capital markets if Arthur Andersen LLP is
	unable to perform audit-related services;                                                           
|
| |  | changes in real estate and zoning
	laws;                                                                                                                                                                        
|
| |  | increases in real property tax rates;
	and                                                                                                                                                                      
|
| |  | risks of doing business
	internationally.                                                                                                                                                                       

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

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 the registered trademarks of AMB Property Corporation,
our general partner: AMB®; Customer Alliance
Partners®; Customer Alliance Program®; Development
Alliance Partners®; Development Alliance Program®;
eSpace®; Institutional Alliance Partners®;
Institutional Alliance Program®; Management Alliance
Partners®; Management Alliance Program®; UPREIT
Alliance Partners®; UPREIT Alliance Program®,
HTD®; and High Throughput Distribution®. The following
marks

18



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are the unregistered trademarks of AMB Property
Corporation, our general partner: Broker Alliance
Partners; Broker Alliance Program; Strategic
Alliance Partners; and Strategic Alliance Programs.


GENERAL

We commenced operations in 1997, shortly before
the consummation of AMB Property Corporations initial
public offering.

We generate revenue primarily from rent received
from customers under long-term operating leases at our
properties, including reimbursements from customers for certain
operating costs. In addition, our growth is, in part, dependent
on our ability to increase occupancy rates or increase rental
rates at our properties and our ability to continue the
acquisition and development of additional properties. Our income
would be adversely affected if a significant number of customers
were unable to pay rent or if we were unable to rent our
industrial space on favorable terms. Certain significant
expenditures associated with an investment in real estate (such
as mortgage payments, real estate taxes, and maintenance costs)
generally do not decline when circumstances cause a reduction in
income from the property. Moreover, as the general partner of
the co-investment joint ventures, we generally will be liable
for all of the joint ventures unsatisfied obligations
other than non-recourse obligations. Any such liabilities could
adversely affect our financial condition, results of operations,
cash flow, and ability to make distributions to our unitholders
and payments to our noteholders.

Critical Accounting Policies

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

Investments in Real Estate.Investments in real estate are stated
at cost unless circumstances indicate that cost cannot be
recovered, in which case, the carrying value of the property is
reduced to estimated fair value. Carrying values for financial
reporting purposes are reviewed for impairment on a
property-by-property basis whenever events or changes in
circumstances indicate that the carrying value of a property may
not be recoverable. Impairment is recognized when estimated
expected future cash flows (undiscounted and without interest
charges) are less than the carrying amount of the property. The
estimation of expected future net cash flows is inherently
uncertain and relies on assumptions regarding current and future
market conditions and the availability of capital. If impairment
analysis assumptions change, then an adjustment to the carrying
amount of our long-lived assets could occur in the future period
in which the assumptions change. To the extent that a property
is impaired, the excess of the carrying amount of the property
over its estimated fair value is charged to income. We believe
that there are no additional impairments of the carrying values
of our investments in real estate at March 31, 2002.

Investment in Unconsolidated Joint Ventures.We have non-controlling limited
partnership interests in three separate unconsolidated joint
ventures. We account for the joint ventures using the equity
method of accounting. We have a 56.1% interest in a joint
venture, which owns an aggregate of 36 industrial buildings
totaling approximately 4.0 million square feet. We also
have a 50% interest in each of two other operating and
development alliance joint ventures. Our net equity investment
in these joint ventures is shown as investment in unconsolidated
joint ventures on our consolidated balance sheets.

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Rental Revenues.We
record rental revenue from long-term operating leases on a
straight-line basis over the term of the leases and maintain an
allowance for estimated losses that may result from the
inability of our customers to make required payments. If
customers fail to make contractual lease payments that are
greater than our bad-debt reserves, then we may have to
recognize additional bad debt charges in future periods.

THE COMPANY

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 as well as by having physical, political,
or economic barriers to new development. 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 growth of the airfreight and ocean-going
container business and the outsourcing of supply chain
management to third party logistics companies 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, 2002, we owned and operated
914 industrial buildings and seven retail centers, totaling
approximately 83.4 million rentable square feet, located in
26 markets nationwide. As of March 31, 2002, our
industrial and retail properties were 94.4% and 87.2% leased,
respectively. As of March 31, 2002, through our subsidiary,
AMB Capital Partners, LLC, we also managed industrial buildings
and retail centers, totaling approximately 2.6 million
rentable square feet on behalf of various clients. In addition,
we have invested in 40 industrial buildings, totaling
approximately 4.9 million rentable square feet, through
unconsolidated joint ventures.

As of March 31, 2002, we had six retail
centers and four industrial properties, which were held for
divestiture. During the quarter, we disposed of one industrial
building and one retail building, aggregating approximately
0.3 million rentable square feet, for an aggregate price of
$38.5 million. Over the next few years, we intend to
dispose of non-strategic assets and redeploy the resulting
capital into industrial properties in supply-constrained markets
in the U.S. and internationally that better fit our current
investment focus.

We are engaged in the acquisition, ownership,
operation, management, renovation, expansion, and development of
primarily industrial properties in target markets nationwide. As
of March 31, 2002, AMB Property Corporation owned an
approximate 94.4% general partnership interest in us, excluding
preferred units. 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.

AMB Property Corporation is self-administered and
self-managed and we expect 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. Our principal executive office 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.

Co-investment Joint Ventures

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

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renovation projects. As of March 31, 2002,
we had investments in five co-investment joint ventures with a
gross book value of $1.3 billion, which are consolidated
for financial reporting purposes and which are discussed below.
We believe that our co-investment program will also continue to
serve as a source of capital for acquisitions and developments;
however, there can be no assurance that it will continue to do
so.


Acquisition and Development Activity

During the quarter, we invested
$35.0 million in operating properties, consisting of eight
industrial buildings aggregating approximately 0.7 million
square feet, all of which was through two of our co-investment
joint ventures.

During the quarter, we completed industrial
developments valued at $11.4 million, aggregating
approximately 0.2 million square feet. We also initiated a
new industrial development project valued at $6.0 million
aggregating approximately 0.2 million square feet.

As of March 31, 2002, we had in our
development pipeline: (1) 12 industrial projects,
which will total approximately 3.1 million square feet and
have an aggregate estimated investment by us and, in certain
instances, our co-investors of $147.6 million upon
completion and (2) two development projects available for
sale, which will total approximately 0.6 million square
feet and have an aggregate estimated investment of
$49.6 million upon completion. As of March 31, 2002,
we and our Development Alliance Partners have funded an
aggregate of $130.8 million and will need to fund an
estimated additional $66.4 million in order to complete current
and planned projects.

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

Growth
Through Operations

We seek to generate internal growth through rent
increases on existing space and renewals on re-tenanted space.
We do this by seeking to maintain a high occupancy rate at our
properties and by seeking to control expenses by capitalizing on
the economies of owning, operating, and growing a large national
portfolio. As of March 31, 2002, our industrial properties
and retail centers were 94.4% leased and 87.2% leased,
respectively. During the quarter, we increased average
industrial base rental rates (on a cash basis) by 3.0% from the
expiring rent for that space, on leases entered into or renewed
during the period. This amount excludes expense reimbursements,
rental abatements, and percentage rents. During the quarter, we
also increased same-store net operating income by 2.0% on our
industrial properties.

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.

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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 transactions.
Such transactions, if we consummate them, may be material
individually or in the aggregate. Sources of capital for
acquisitions may include undistributed cash flow from
operations, borrowings under our unsecured credit facility,
other forms of secured or unsecured debt financing, issuances of
debt or 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
properties and development of well-located, high-quality
industrial properties should continue to provide us with
attractive opportunities for increased cash flow and a higher
rate of return than we may obtain from the purchase of fully
leased, renovated properties. Value-added properties are
typically characterized as properties with available space or
near-term leasing exposure, undeveloped land acquired in
connection with another property that provides an opportunity
for development, or properties that are well located but require
redevelopment or renovation. Value-added properties require
significant management attention or capital investment to
maximize their return. We believe that we have developed the
in-house expertise to create value through acquiring and
managing value-added properties and believe that our 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 should 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, and we eliminate
the need and expense of an in-house development staff. Under a
typical joint venture agreement with a Development Alliance
Partner, we would fund 95% of the construction costs and our
partner would fund 5%. Upon completion, we generally would
purchase our partners interest in the joint venture.

Growth
Through Co-Investments

We co-invest with third party partners (some of
whom may be clients of AMB Capital Partners, LLC, to the extent
such clients commit new investment capital), through
partnerships, limited liability companies, or joint ventures. We
currently use a co-investment formula with each third party
whereby we will own at least a 20% interest in all ventures. In
general, we control all significant operating and investment
decisions of our co-investment entities. We believe that our
co-investment program will continue to serve as a source of
capital for acquisitions and developments; however, there can be
no assurance that it will continue to do so.

Growth
Through Developments for Sale

Through a wholly-owned subsidiary, Headlands
Realty Corporation, we conduct a variety of businesses that
include incremental income programs, such as our development
projects available for sale to third parties. Such development
properties include value-added conversion projects and
build-to-sell projects. During 2001, we completed and sold two
value-added conversion projects for a net gain of
$13.2 million. As of March 31, 2002, we were
developing two projects for sale to third parties.

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AMB Capital
Partners

AMB Capital Partners, LLC provides real estate
investment management services on a fee basis to third-party
clients. On December 31, 2001, AMB Investment Management,
Inc. was reorganized through a series of related transactions
into AMB Capital Partners. On May 31, 2001, we began
consolidating our investment in AMB Investment Management by
acquiring 100% of its common stock for $0.3 million. Prior
to May 31, 2001, we owned 100% of AMB Investment
Managements non-voting preferred stock (representing a 95%
economic interest therein) and reflected our investment using
the equity method.

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 defined as 90%
leased or 12 months after we receive a certificate of
occupancy for the building). We refer to these properties as the
same store properties. For the comparison between the years
ended March 31, 2002 and 2001, the same store industrial
properties consisted of properties aggregating approximately
72.5 million square feet. The properties acquired during the
first three months of 2002 consisted of eight buildings,
aggregating approximately 0.7 million square feet. The
properties acquired during 2001 consisted of 65 buildings,
aggregating approximately 6.8 million square feet. In the
first three month of 2002, the property divestitures consisted
of one industrial building and one retail center, aggregating
approximately 0.3 million square feet. In 2001, property
divestitures consisted of 24 industrial and two retail
buildings, aggregating approximately 3.2 million square
feet. Our future financial condition and results of operations,
including rental revenues, may be impacted by the acquisition of
additional properties and dispositions. Our future revenues and
expenses may vary materially from historical rates.



| |                                                    
| | ---------------------------------------------------
| | For the Three Months Ended March 31,
	2002 and 2001

|                    |       |                       |       |       |  |          |       |          |  |   |      |      |  |  |       |      |  
|------------------- | ----- | --------------------- | ----- | ----- |  | -------- | ----- | -------- |  | - | ---- | ---- |  |  | ----- | ---- | -
|Rental Revenues     |       | 2002                  |       | 2001  |  | $ Change |       | % Change
|                    |       |                       |       |       |  |          |       |         
|                    |       |                      
|                    |       | (dollars in millions)
|Same store          |       | $                     | 127.7 |       |  | $        | 126.0 |          |  | $ | 1.7  |      |  |  | 1.3   | %   
|2001 acquisitions   |       |                       | 16.0  |       |  |          | 0.9   |          |  |   | 15.1 |      |  |  | n/a   |     
|2002 acquisitions   |       |                       | 0.7   |       |  |          |      |          |  |   | 0.7  |      |  |  |      |     
|Developments        |       |                       | 2.2   |       |  |          | 1.1   |          |  |   | 1.1  |      |  |  | 100.0 | %   
|Divestitures        |       |                       | 1.6   |       |  |          | 6.5   |          |  |   | (4.9 | )    |  |  | (75.4 | )%  
|Straight-line rents |       |                       | 4.0   |       |  |          | 1.3   |          |  |   | 2.7  |      |  |  | 207.7 | %   
|                    |       |                       |       |       |  |          |       |          |  |   |      |      |  |  |       |     
|                    | Total |                       | $     | 152.2 |  |          | $     | 135.8    |  |   | $    | 16.4 |  |  |       | 12.1 | %
|                    |       |                       |       |       |  |          |       |          |  |   |      |      |  |  |       |     

The growth in rental revenues in same store
properties resulted primarily from the incremental effect of
cash rental rate increases on renewals and rollovers, fixed rent
increases on existing leases, and reimbursement of expenses,
partially offset by lower average occupancies. Occupancy was
94.3% at March 31, 2002, and 95.9% at March 31, 2001.
During the quarter, the same store rent increases on industrial
renewals and rollovers (cash basis) was 2.9% on 4.3 million
square feet leased.

|                                                     |       |      |     |      |  |          |     |          |  |   |      |      |   |  |       |       |   
|---------------------------------------------------- | ----- | ---- | --- | ---- |  | -------- | --- | -------- |  | - | ---- | ---- | - |  | ----- | ----- | --
|Investment Management and Other Income               |       | 2002 |     | 2001 |  | $ Change |     | % Change
|                                                     |       |      |     |      |  |          |     |         
|Equity in earnings of unconsolidated joint
	ventures |       | $    | 1.5 |      |  | $        | 1.5 |          |  | $ | 0.0  |      |   |  | 0.0   | %    
|Investment management income                         |       |      | 2.6 |      |  |          | 2.4 |          |  |   | 0.2  |      |   |  | 8.3   | %    
|Interest and other income                            |       |      | 2.8 |      |  |          | 5.1 |          |  |   | (2.3 | )    |   |  | (45.1 | )%   
|                                                     |       |      |     |      |  |          |     |          |  |   |      |      |   |  |       |      
|                                                     | Total |      | $   | 6.9  |  |          | $   | 9.0      |  |   | $    | (2.1 | ) |  |       | (23.3 | )%
|                                                     |       |      |     |      |  |          |     |          |  |   |      |      |   |  |       |      

The $0.2 million increase in investment
management income was due primarily to increased asset
management fees and priority distributions from our
co-investment joint ventures. The $2.3 million decrease

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in interest and other income was primarily due to
our having no construction loans to our unconsolidated joint
ventures and no bridge loans to our joint ventures in 2002.


|                                                  |                             |       |      |      |      |          |      |          |      |   |      |     |     |  |       |      |      |  
|------------------------------------------------- | --------------------------- | ----- | ---- | ---- | ---- | -------- | ---- | -------- | ---- | - | ---- | --- | --- |  | ----- | ---- | ---- | -
|Property Operating Expenses and Real Estate Taxes |                             |       |      |      |      |          |      |         
|(Exclusive of depreciation and amortization)      |                             | 2002  |      | 2001 |      | $ Change |      | % Change
|                                                  |                             |       |      |      |      |          |      |         
|Rental expenses                                   |                             | $     | 18.5 |      |      | $        | 16.3 |          |      | $ | 2.2  |     |     |  | 13.5  | %   
|Real estate taxes                                 |                             |       | 18.6 |      |      |          | 16.6 |          |      |   | 2.0  |     |     |  | 12.0  | %   
|                                                  |                             |       |      |      |      |          |      |          |      |   |      |     |     |  |       |     
|                                                  | Property operating expenses |       | $    | 37.1 |      |          | $    | 32.9     |      |   | $    | 4.2 |     |  |       | 12.8 | %   
|                                                  |                             |       |      |      |      |          |      |          |      |   |      |     |     |  |       |     
|Same store                                        |                             | $     | 30.8 |      |      | $        | 30.6 |          |      | $ | 0.2  |     |     |  | 0.7   | %   
|2001 acquisitions                                 |                             |       | 4.4  |      |      |          | 0.2  |          |      |   | 4.2  |     |     |  |      |     
|2002 acquisitions                                 |                             |       | 0.6  |      |      |          |     |          |      |   | 0.6  |     |     |  |      |     
|Developments                                      |                             |       | 0.9  |      |      |          | 0.1  |          |      |   | 0.8  |     |     |  |      |     
|Divestitures                                      |                             |       | 0.4  |      |      |          | 2.0  |          |      |   | (1.6 | )   |     |  | (80.0 | )%  
|                                                  |                             |       |      |      |      |          |      |          |      |   |      |     |     |  |       |     
|                                                  |                             | Total |      | $    | 37.1 |          |      | $        | 32.9 |   |      | $   | 4.2 |  |       |      | 12.8 | %
|                                                  |                             |       |      |      |      |          |      |          |      |   |      |     |     |  |       |     

The increase in same store properties
operating expenses primarily relates to increases in real estate
taxes and insurance expenses, partially offset by decreases in
common area maintenance expenses.

|                                 |       |      |      |      |  |          |      |          |  |   |     |     |  |  |      |      |  
|-------------------------------- | ----- | ---- | ---- | ---- |  | -------- | ---- | -------- |  | - | --- | --- |  |  | ---- | ---- | -
|Other Expenses                   |       | 2002 |      | 2001 |  | $ Change |      | % Change
|                                 |       |      |      |      |  |          |      |         
|Interest, including amortization |       | $    | 35.9 |      |  | $        | 31.5 |          |  | $ | 4.4 |     |  |  | 14.0 | %   
|Depreciation and amortization    |       |      | 29.7 |      |  |          | 26.9 |          |  |   | 2.8 |     |  |  | 10.4 | %   
|General and administrative       |       |      | 9.9  |      |  |          | 8.2  |          |  |   | 1.7 |     |  |  | 20.7 | %   
|                                 |       |      |      |      |  |          |      |          |  |   |     |     |  |  |      |     
|                                 | Total |      | $    | 75.5 |  |          | $    | 66.6     |  |   | $   | 8.9 |  |  |      | 13.4 | %
|                                 |       |      |      |      |  |          |      |          |  |   |     |     |  |  |      |     

The increase in interest expense was primarily
due to the issuance of additional unsecured senior debt
securities, an increase in secured debt balances, and our
secured credit facility, partially offset by decreased
borrowings on our unsecured credit facility. The secured debt
issuances were primarily for our co-investment joint
ventures properties. The increase in depreciation expense
was due to the increase in our net investment in real estate.
The increase in general and administrative expenses was
primarily due to increased personnel and occupancy costs. In
addition, the consolidation of AMB Investment Management, Inc.
(predecessor-in-interest to AMB Capital Partners, LLC) and
Headlands Realty Corporation on May 31, 2001, contributed
to the increase in general and administrative expenses.

During 2001, we recognized $4.7 million of
losses on investments in other companies, related to our
investment in Webvan Group, Inc.

During 2002, we retired $28.8 million of
secured debt primarily in connection with property divestitures
and prepayments. We recognized a net extraordinary loss of
$0.2 million related to the early retirement of debt,
resulting from prepayment penalties, partially offset by the
write-off of debt premiums.

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

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| |                  
| | -----------------
| | Capital Resources

Property Divestitures.During the quarter, we divested
ourselves of one industrial and one retail buildings for an
aggregate price of $38.5 million, with a resulting net loss
of $0.3 million, net of minority interest partners
share. Both of these buildings were classified as held for sale
as of December 31, 2001.

Properties Held for Divestiture.We have decided to divest ourselves of
four industrial properties and six 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, 2002, the net carrying value of the
properties held for divestiture was $139.4 million.

Co-investment Joint Ventures.We consolidate the financial position,
results of operations, and cash flows of our five co-investment
joint ventures. We consolidate these joint ventures for
financial reporting purposes because we are the sole managing
general partner and, as a result, control all of the major
operating decisions. Third-party equity interests in the joint
ventures are reflected as minority interests in the consolidated
financial statements. As of March 31, 2002, we owned
approximately 29.0 million square feet of our properties
through these entities. We may make additional investments
through these joint ventures or new joint ventures in the future
and presently plan to do so. The inability to obtain new joint
venture partners could adversely affect our financial condition,
results of operations, cash flow, and ability to make
distributions to our unitholders and payments to our noteholders.

During the quarter ended March 31, 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. We recognized a gain of $16.8 million related to
these contributions, representing the portion of the contributed
properties acquired by the third party co-investors.

We owned, as of March 31, 2002,
approximately 21% of the partnership interests in AMB
Institutional Alliance Fund I, L.P. The Alliance
Fund I is a co-investment partnership between us and AMB
Institutional Alliance REIT I, Inc., which includes 15
institutional investors as stockholders, and is engaged in the
acquisition, ownership, operation, management, renovation,
expansion, and development of industrial buildings in target
markets nationwide. As of March 31, 2002, the Alliance Fund
I had received equity contributions from third party investors
totaling $169.0 million, which, when combined with debt
financings and our investment, creates a total planned
capitalization of $420.0 million.

We formed AMB Partners II, L.P. to acquire,
manage, develop, and redevelop distribution facilities
nationwide. On February 14, 2001, Partners II received
an equity contribution from with the City and County of San
Francisco Employees Retirement System of
$50.0 million, which, when combined with anticipated debt
financings and our investment, creates a total planned
capitalization of $250.0 million. We are the managing
general partner of Partners II and owned, as of
March 31, 2002, approximately 50% of Partners II.

We formed 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. On March 23, 2001,
AMB-SGP received an equity contribution from GIC of
$75.0 million, which, when combined with anticipated debt
financings and our investment, creates a total planned
capitalization of $425.0 million. We are the managing
general partner of AMB-SGP and owned, as of March 31, 2002,
approximately 50.3% of AMB-SGP.

We formed the AMB Institutional Alliance
Fund II, L.P., in which AMB Institutional Alliance
REIT II, Inc. became a partner on June 28, 2001. We
owned, as of March 31, 2002, 20% of the partnership
interests in the Alliance Fund II. The Alliance
Fund II is a co-investment partnership between us, the
Alliance REIT II, and a third party limited partner. The
Alliance REIT II included 14 institutional investors as
stockholders as of March 31, 2002. The Alliance
Fund II is engaged in the acquisition, ownership,
operation, management, renovation, expansion, and development of
industrial buildings in target markets nationwide. As of
March 31, 2002, the Alliance Fund II had received
total equity commitments from third party investors of
$195.4 million, which, when combined with anticipated debt
financings and our investment, creates a total planned
capitalization of $489.0 million. We are the managing
general partner of the Alliance Fund II.

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Credit Facilities.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, which is based on our credit rating. We
have the ability to increase available borrowings to
$700.0 million by adding additional banks to the facility
or obtaining the agreement of existing banks to increase 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, which is based on our credit rating.
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, in the future, we may engage in
transactions to limit our exposure to rising interest rates. As
of March 31, 2002, there was no outstanding balance on our
unsecured credit facility. 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, 2002, the remaining amount available under our
unsecured credit facility was $500.0 million (excluding the
$200.0 million of potential additional capacity).

In July 2001, the Alliance Fund II obtained
a $150.0 million credit facility from Bank of America N.A.
Borrowings currently bear interest at LIBOR plus 87.5 basis
points. As of March 31, 2002, the outstanding balance was
$116.0 million and the remaining amount available was
$34.0 million. The credit facility is secured by the
unfunded capital commitments of the third party investors in the
Alliance REIT II and the Alliance Fund II.

Partners Capital.During the quarter ended
March 31, 2002, we redeemed 36,111 common limited
partnership units for shares of AMB Property Corporations
common stock.

In December 2001, AMB Property Corporations
board of directors approved a new stock repurchase program for
the repurchase of up to $100.0 million worth of its common
stock. The new stock repurchase program expires in December 2003
and no repurchases have been made under the new program through
March 31, 2002.

Debt.As of
March 31, 2002, the aggregate principal amount of our
secured debt was $1.2 billion, excluding unamortized debt
premiums of $5.3 million. The secured debt bears interest
at rates varying from 3.5% to 10.4% per annum (with a weighted
average rate of 7.4%) and final maturity dates ranging from July
2002 to June 2023. All of the secured debt bears interest at
fixed rates, except for seven loans with an aggregate principal
amount of $71.2 million as of March 31, 2002, which
bear interest at variable rates (with a weighted average
interest rate of 3.7% at March 31, 2002).

In August 2000, we commenced a medium-term note
program for the issuance of up to $400.0 million in
principal amount of medium-term notes, which are guaranteed by
AMB Property Corporation. As of March 31, 2002, we had
issued $400.0 million of medium-term notes under this
program. On January 14, 2002, we issued and sold the
remaining $20.0 million of the notes under this program to
Lehman Brothers, Inc., as principal. AMB Property Corporation
has guaranteed the notes, which mature on January 17, 2007,
and bear interest at 5.90% per annum. We used the net proceeds
of $19.9 million for general corporate purposes, to
partially repay indebtedness, and to acquire and develop
additional properties.

If we are unable to refinance or extend principal
payments on our senior debt securities due at maturity or pay
them with proceeds of other capital transactions, then we expect
that our cash flow will not be sufficient in all years to pay
distributions to our unitholders, make 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

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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.


Mortgage Receivables.In September 2000, we sold a retail
center located in Los Angeles, California. As of March 31,
2002, we carried a 9.5% mortgage note in the principal amount of
$74.0 million on the retail center. During 2001, we
renegotiated this mortgage, extended the maturity date to
September 20, 2002, received a $5.0 million pay-down
on the principal balance, and increased the interest rate to
9.5% from 8.75%. We have a first lien against the retail center
as collateral for the mortgage note and believes that the
underlying estimated fair value of the retail center is equal to
or greater than the carrying value of the mortgage note. Through
a wholly-owned subsidiary, we also hold a mortgage loan
receivable on AMB Pier One, LLC, an unconsolidated joint
venture. The note bears interest at 13.0% and matures in May
2026. As of March 31, 2002, the outstanding balance on the
note was $13.2 million.

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In order to maintain financial flexibility and
facilitate the deployment of capital through market cycles, we
presently intend to operate with a debt-to-total market
capitalization ratio of approximately 45% or less. At
March 31, 2002, our total debt-to-total market
capitalization ratio was 43.6%. Additionally, we currently
intend to manage our capitalization in order to maintain an
investment grade rating on our senior unsecured debt. In spite
of these policies, our organizational documents do not contain
any limitation on the amount of indebtedness that we may incur.
Accordingly, our general partners board of directors could
alter or eliminate these policies without unitholder or
noteholder approval or circumstances could arise that could
render us unable to comply with these policies.

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

Debt

|                                                                  |                      |                         |                         |         |         |             |          |               |         |         |         |         |         |         |         |         |        |         |          |           |           |           | 
|----------------------------------------------------------------- | -------------------- | ----------------------- | ----------------------- | ------- | ------- | ----------- | -------- | ------------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------ | ------- | -------- | --------- | --------- | --------- | 
|                                                                  |                      | Our                     |                         | Joint   |         | Unsecured   |          |               |         |        
|                                                                  |                      | Secured                 |                         | Venture |         | Senior Debt |          | Credit        |         | Total  
|                                                                  |                      | Debt(1)                 |                         | Debt    |         | Securities  |          | Facilities(2) |         | Debt   
|                                                                  |                      |                         |                         |         |         |             |          |               |         |        
|2002                                                              |                      | $                       | 17,767                  |         |         | $           | 28,621   |               |         | $       |        |         |         | $       |        |         |        | $       | 46,388   |          
|2003                                                              |                      |                         | 76,151                  |         |         |             | 37,528   |               |         |         |        |         |         |         | 116,000 |         |        |         | 229,679  |          
|2004                                                              |                      |                         | 72,426                  |         |         |             | 52,030   |               |         |         |        |         |         |         |        |         |        |         | 124,456  |          
|2005                                                              |                      |                         | 62,338                  |         |         |             | 38,449   |               |         |         | 250,000 |         |         |         |        |         |        |         | 350,787  |          
|2006                                                              |                      |                         | 86,466                  |         |         |             | 74,888   |               |         |         | 25,000  |         |         |         |        |         |        |         | 186,354  |          
|2007                                                              |                      |                         | 25,618                  |         |         |             | 32,395   |               |         |         | 75,000  |         |         |         |        |         |        |         | 133,013  |          
|2008                                                              |                      |                         | 33,619                  |         |         |             | 148,119  |               |         |         | 175,000 |         |         |         |        |         |        |         | 356,738  |          
|2009                                                              |                      |                         | 5,176                   |         |         |             | 32,958   |               |         |         |        |         |         |         |        |         |        |         | 38,134   |          
|2010                                                              |                      |                         | 52,780                  |         |         |             | 93,595   |               |         |         | 75,000  |         |         |         |        |         |        |         | 221,375  |          
|2011                                                              |                      |                         | 1,311                   |         |         |             | 167,878  |               |         |         | 75,000  |         |         |         |        |         |        |         | 244,189  |          
|Thereafter                                                        |                      |                         | 3,307                   |         |         |             | 80,672   |               |         |         | 125,000 |         |         |         |        |         |        |         | 208,979  |          
|                                                                  |                      |                         |                         |         |         |             |          |               |         |         |         |         |         |         |         |         |        |         |          |          
|                                                                  | Subtotal             |                         |                         | 436,959 |         |             |          | 787,133       |         |         |         | 800,000 |         |         |         | 116,000 |        |         |          | 2,140,092 |          
|                                                                  | Unamortized premiums |                         |                         | 3,677   |         |             |          | 1,664         |         |         |         |        |         |         |         |        |        |         |          | 5,341     |          
|                                                                  |                      |                         |                         |         |         |             |          |               |         |         |         |         |         |         |         |         |        |         |          |          
|                                                                  |                      |                         | Total consolidated debt |         |         | 440,636     |          |               |         | 788,797 |         |         |         | 800,000 |         |         |        | 116,000 |          |           |           | 2,145,433 | 
|Our share of unconsolidated joint venture debt(3)                 |                      |                         |                        |         |         |             | 39,430   |               |         |         |        |         |         |         |        |         |        |         | 39,430   |          
|                                                                  |                      |                         |                         |         |         |             |          |               |         |         |         |         |         |         |         |         |        |         |          |          
|                                                                  |                      |                         | Total debt              |         |         | 440,636     |          |               |         | 828,227 |         |         |         | 800,000 |         |         |        | 116,000 |          |           |           | 2,184,863 | 
|Joint venture partners share of
	consolidated joint venture debt |                      |                         |                        |         |         |             | (444,798 | )             |         |         |        |         |         |         | (92,800 | )       |        |         | (537,598 | )        
|                                                                  |                      |                         |                         |         |         |             |          |               |         |         |         |         |         |         |         |         |        |         |          |          
|                                                                  |                      | Our share of total debt |                         | $       | 440,636 |             |          | $             | 383,426 |         |         | $       | 800,000 |         |         | $       | 23,200 |         |          | $         | 1,647,265 |          
|                                                                  |                      |                         |                         |         |         |             |          |               |         |         |         |         |         |         |         |         |        |         |          |          
|Weighed average interest rate                                     |                      |                         | 8.0                     | %       |         |             | 7.1      | %             |         |         | 7.2     | %       |         |         | 2.8     | %       |        |         | 7.1      | %        
|Weighed average maturity (in years)                               |                      |                         | 4.5                     |         |         |             | 7.2      |               |         |         | 7.3     |         |         |         | 1.4     |         |        |         | 6.4      |          



---



|    |                                                                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | All of the secured debt bears interest at fixed
	rates, except for seven loans with an aggregate principal amount
	of $71.2 million as of March 31, 2002, which bear
	interest at variable rates (with a weighted average interest
	rate of 3.7% at March 31, 2002).                                              
|   
|(2) | The 2003 maturity represents a secured credit
	facility obtained by the Alliance Fund II, which will repay the
	facility with capital contributions and secured debt proceeds.
	We also have a $500.0 million unsecured credit facility,
	which matures in 2003 and had no outstanding balance at March
	31, 2002.

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|    |                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------
|(3) | The weighted average interest and weighted
	average maturity for the unconsolidated joint venture debt were
	6.3% and 6.5 years, respectively.

Market Capital

|                                 |       |             |            |              |  |              |       |  |  |   |           |           | 
|-------------------------------- | ----- | ----------- | ---------- | ------------ |  | ------------ | ----- |  |  | - | --------- | --------- | 
|                                 |       | Units       |            |              |  |             
|Security                         |       | Outstanding |            | Market Price |  | Market Value
|                                 |       |             |            |              |  |             
|Common general partnership units |       |             | 84,064,371 |              |  | $            | 27.50 |  |  | $ | 2,311,770 |          
|Common limited partnership units |       |             | 4,932,916  |              |  |              | 27.50 |  |  |   | 135,655   |          
|                                 |       |             |            |              |  |              |       |  |  |   |           |          
|                                 | Total |             |            | 88,997,287   |  |              |       |  |  |   | $         | 2,447,425 | 
|                                 |       |             |            |              |  |              |       |  |  |   |           |          

Preferred Units

|                         |  |          |      |             |  |            |         |  |  |               
|------------------------ |  | -------- | ---- | ----------- |  | ---------- | ------- |  |  | --------------
|                         |  | Dividend |      | Liquidation |  | Redemption
|Security                 |  | Rate     |      | Preference  |  | Provisions
|                         |  |          |      |             |  |           
|Series A preferred units |  |          | 8.50 | %           |  | $          | 100,000 |  |  | July 2003     
|Series B preferred units |  |          | 8.63 | %           |  |            | 65,000  |  |  | November 2003 
|Series D preferred units |  |          | 7.75 | %           |  |            | 79,767  |  |  | May 2004      
|Series E preferred units |  |          | 7.75 | %           |  |            | 11,022  |  |  | August 2004   
|Series F preferred units |  |          | 7.95 | %           |  |            | 19,872  |  |  | March 2005    
|Series G preferred units |  |          | 7.95 | %           |  |            | 1,000   |  |  | August 2005   
|Series H preferred units |  |          | 8.13 | %           |  |            | 42,000  |  |  | September 2005
|Series I preferred units |  |          | 8.00 | %           |  |            | 25,500  |  |  | March 2006    
|Series J preferred units |  |          | 7.95 | %           |  |            | 40,000  |  |  | September 2006
|                         |  |          |      |             |  |            |         |  |  |               
|Weighted Average/Total   |  |          | 8.18 | %           |  | $          | 384,161 |  |  |               
|                         |  |          |      |             |  |            |         |  |  |               

Capitalization Ratios

|                                                                       |  |  |      |  
|---------------------------------------------------------------------- |  |  | ---- | -
|Total debt-to-total market capitalization                              |  |  | 43.6 | %
|Our share of total debt-to-total market
	capitalization                |  |  | 36.8 | %
|Total debt plus preferred-to-total market
	capitalization              |  |  | 51.2 | %
|Our share of total debt plus preferred-to-total
	market capitalization |  |  | 45.4 | %
|Our share of total debt-to-total book
	capitalization                  |  |  | 44.9 | %

Liquidity

As of March 31, 2002, we had approximately
$99.5 million in cash, restricted cash, and cash
equivalents, and $500.0 million of additional available
borrowings under our credit facility. We also had
$34.0 million of additional available borrowing under our
Alliance Fund II credit facility. To fund acquisitions,
development activities, and capital expenditures and to provide
for general working capital requirements, 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. The
unavailability of capital would adversely affect our financial
condition, results of operations, cash flow, and ability to make
distributions to our unitholders and payments to our noteholders.

We declared a regular cash distribution for the
quarter ending March 31, 2002, of $0.41 per common unit.
The distributions were payable on April 15, 2002, to common
unitholders of record on April 4, 2002. The Series A,
B, E, F, G, and J preferred unit distributions were also payable
on April 15, 2002, to unitholders of

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record on April 4, 2002. The Series D,
H, and I preferred unit distributions were payable on
March 25, 2002, to unitholders of record on March 11, 2002.
The following table sets forth the distribution declarations for
the three months ended March 31, 2002 and 2001:


|                         |  |                       |  |               |       |      |  |   |       | 
|------------------------ |  | --------------------- |  | ------------- | ----- | ---- |  | - | ----- | 
|                         |  |                       |  |              
|                         |  |                       |  | For the Three
|                         |  |                       |  | Months Ended 
|                         |  |                       |  | March 31,    
|                         |  |                       |  |              
|Security                 |  | Paying Entity         |  | 2002          |       | 2001
|                         |  |                       |  |               |       |     
|Common partnership units |  | AMB Property, L.P.    |  | $             | 0.410 |      |  | $ | 0.395 | 
|Series A preferred units |  | AMB Property, L.P.    |  | $             | 0.531 |      |  | $ | 0.531 | 
|Series B preferred units |  | AMB Property, L.P.    |  | $             | 1.078 |      |  | $ | 1.078 | 
|Series C preferred units |  | AMB Property II, L.P. |  |               | n/a   |      |  | $ | 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 |      |  | $ | 0.994 | 
|Series G preferred units |  | AMB Property II, L.P. |  | $             | 0.994 |      |  | $ | 0.994 | 
|Series H preferred units |  | AMB Property II, L.P. |  | $             | 1.016 |      |  | $ | 1.016 | 
|Series I preferred units |  | AMB Property II, L.P. |  | $             | 1.000 |      |  | $ | 0.044 | 
|Series J preferred units |  | AMB Property, L.P.    |  | $             | 0.994 |      |  |   | n/a   | 

The anticipated size of our distributions, using
only cash from operations, will not allow us to retire all of
our debt as it comes due. Therefore, we intend to also repay
maturing debt with net proceeds from future debt or limited
partnership unit offerings. However, we may not be able to
obtain future financings on favorable terms or at all. Our
inability to obtain future financings on favorable terms or at
all would adversely affect our financial condition, results of
operations, cash flow, and ability to make distributions to our
unitholders and payments to our noteholders.

Capital
Commitments

Developments.In
addition to recurring capital expenditures, which consist of
building improvements and leasing costs incurred to renew or
re-tenant space, as of March 31, 2002, we are developing 12
projects representing a total estimated investment of
$147.6 million upon completion and two development projects
available for sale representing a total estimated investment of
$49.6 million upon completion. Of this total,
$130.8 million had been funded as of March 31, 2002,
and an estimated $66.4 million is required to complete
current and planned projects. We expect to fund these
expenditures with cash from operations, borrowings under our
credit facility, debt or limited partnership unit issuances, and
net proceeds from property divestitures, which could have an
adverse effect on our cash flow. 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. This 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 have no other material capital commitments.

Acquisitions.During
the quarter, we invested $35.0 million in eight operating
industrial buildings, aggregating approximately 0.7 million
rentable square feet. We funded these acquisitions and initiated
development and renovation projects through private capital
contributions, borrowings under our credit facility, cash, debt
and limited partnership unit issuances, and net proceeds from
property divestitures.

Captive Insurance Company.We have responded to recent trends
towards increasing costs and decreasing coverage availability in
the insurance markets by obtaining higher-deductible property
insurance from third party insurers and by forming a
wholly-owned captive insurance company, Arcata National
Insurance Ltd. in December 2001. Arcata provides insurance
coverage for all or a portion of losses below the increased
deductible under the third party policies. We capitalized Arcata
in accordance with regulatory requirements. Arcata established
annual premiums based on projections derived from the past loss

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experience of our properties. Annually, we intend
to engage an independent third party to perform an actuarial
estimate of future projected claims.


Premiums paid to Arcata have a retrospective
component, so that if expenses, including losses, are less than
premiums collected, the excess will be returned to the property
owners (and, in turn, as appropriate, to the customers) and
conversely, subject to certain limitations, if expenses,
including losses, are greater than premiums collected, an
additional premium will be charged. As with all recoverable
expenses, differences between estimated and actual insurance
premiums will be recognized in the subsequent year. Through this
structure, we believe that we have been able to obtain insurance
for our portfolio with more comprehensive coverage at a
projected overall lower cost than would otherwise be available
in the market.

Potential Unknown Liabilities.Unknown liabilities may include the
following: (1) liabilities for clean-up or remediation of
undisclosed environmental conditions; (2) claims of
customers, vendors, or other persons dealing with our
predecessors prior to our formation transactions that had not
been asserted prior to our formation transactions;
(3) accrued but unpaid liabilities incurred in the ordinary
course of business; (4) tax liabilities; and
(5) claims for indemnification by the officers and
directors of our general partners predecessors and others
indemnified by these entities.

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 a 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 generally accepted
accounting principles in the United States 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.

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 FFO of unconsolidated joint
ventures, less minority interests pro rata share of FFO of
consolidated joint ventures and perpetual preferred unit
distributions. In accordance with the NAREIT White Paper on
funds from operations, we include the effects of straight-line
rents in funds from operations. Further, we do not adjust FFO to
eliminate the effects of non-recurring charges.

The following table reflects the calculation of
funds from operations (dollars in thousands):

|                                                                |                                                     |                            |        |         |   |   |        |        |  
|--------------------------------------------------------------- | --------------------------------------------------- | -------------------------- | ------ | ------- | - | - | ------ | ------ | -
|                                                                |                                                     |                           
|                                                                |                                                     | For the Three Months Ended
|                                                                |                                                     | March 31,                 
|                                                                |                                                     |                           
|                                                                |                                                     | 2002                       |        | 2001   
|                                                                |                                                     |                            |        |        
|Income before minority interests and
	gains/(losses)            |                                                     | $                          | 46,622 |         |   | $ | 40,670 |       
|Real estate related depreciation and amortization:              |                                                     |                            |        |         |   |   |        |       
|                                                                | Total depreciation and amortization                 |                            |        | 29,675  |   |   |        | 26,854 |  
|                                                                | FF&E depreciation and ground lease
	amortization(1) |                            |        | (674    | ) |   |        | (481   | )
|FFO attributable to minority interests:                         |                                                     |                            |        |         |   |   |        |       
|                                                                | Joint venture partners(2)                           |                            |        | (12,844 | ) |   |        | (7,187 | )
|                                                                | Series C-I preferred unit distributions             |                            |        | (3,537  | ) |   |        | (5,456 | )
|Adjustments to derive FFO in unconsolidated joint
	ventures(3): |                                                     |                            |        |         |   |   |        |       
|                                                                | Our share of net income                             |                            |        | (1,483  | ) |   |        | (1,474 | )
|                                                                | Our share of FFO                                    |                            |        | 2,129   |   |   |        | 2,120  |  
|Preferred unit distributions                                    |                                                     |                            | (4,445 | )       |   |   | (3,527 | )     
|                                                                |                                                     |                            |        |         |   |   |        |       
|                                                                | Funds from operations                               |                            | $      | 55,443  |   |   | $      | 51,519 |  
|                                                                |                                                     |                            |        |         |   |   |        |       

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---



|    |                                                                                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | FF&E depreciation represents depreciation on
	furniture, fixtures, and equipment that is not real estate
	related. Ground lease amortization represents the amortization
	of our investments in ground lease properties, for which we do
	not have a purchase option.                                                                
|   
|(2) | Represents FFO attributable to minority interests
	in consolidated joint ventures whose interests are not
	exchangeable into common stock of AMB Property Corporation. The
	minority interests share of net operating income for the
	three months ended March 31, 2002 and 2001, was $19.7
	million and $9.9 million, respectively.
|   
|(3) | Our share of net operating income for the
	quarters ended March 31, 2002 and 2001, was
	$2.6 million and $2.8 million, respectively.                                                                                                                                                                                                 

Operating and Leasing Statistics
Summary

The following table summarizes key operating and
leasing statistics for all of our industrial properties as of
and for the three month period ended March 31, 2002
(dollars in thousands):

|                                                                               |                                         |                    |            |           |        | 
|------------------------------------------------------------------------------ | --------------------------------------- | ------------------ | ---------- | --------- | ------ | 
|                                                                               |                                         | Three Months Ended
|                                                                               |                                         | March 31, 2002    
|                                                                               |                                         |                   
|Square feet owned(1)(2)                                                        |                                         |                    | 82,289,218 |          
|Occupancy percentage(1)                                                        |                                         |                    | 94.4       | %        
|Weighted average lease terms:                                                  |                                         |                    |            |          
|                                                                               | Original                                |                    |            | 6.2 years |       
|                                                                               | Remaining                               |                    |            | 3.2 years |       
|Tenant retention                                                               |                                         |                    | 74.4       | %        
|Rent increases on renewals and rollovers                                       |                                         |                    | 3.0        | %        
|                                                                               | Square feet leased                      |                    |            | 4,421,637 |       
|Second generation tenant improvements and leasing
	commissions per sq. ft.(3): |                                         |                    |            |          
|                                                                               | Renewals                                |                    | $          | 0.88      |       
|                                                                               | Re-tenanted                             |                    |            | 2.53      |       
|                                                                               |                                         |                    |            |          
|                                                                               |                                         | Weighted average   |            | $         | 1.73   | 
|                                                                               |                                         |                    |            |          
|Recurring capital expenditures(4)                                              |                                         |                    |            |          
|                                                                               | Tenant improvements                     |                    | $          | 3,919     |       
|                                                                               | Lease commissions and other lease costs |                    |            | 4,963     |       
|                                                                               | Building improvements                   |                    |            | 2,341     |       
|                                                                               |                                         |                    |            |          
|                                                                               |                                         | Sub-total          |            |           | 11,223 | 
|                                                                               | Partners share of capital expenditures |                    |            | (2,842    | )     
|                                                                               |                                         |                    |            |          
|                                                                               |                                         | Total              |            | $         | 8,381  | 
|                                                                               |                                         |                    |            |          



---



|    |                                                                                                                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes all industrial consolidated operating
	properties and excludes development and renovation projects.
	Excludes retail and other properties square feet of
	1,085,891, occupancy of 87.2%, and annualized base rent of
	$12.7 million.                                                                                                                               
|   
|(2) | In addition to owned square feet as of
	March 31, 2002, we managed, through our subsidiary, AMB
	Capital Partners, approximately 2.6 million additional square
	feet of industrial, retail, and other properties. We also have
	investments in approximately 4.9 million square feet of
	industrial properties through our investments in the
	unconsolidated joint ventures.
|   
|(3) | Consists of all second-generation leases renewing
	or re-tenanting with lease terms greater than one year.                                                                                                                                                                                                                                                                   
|   
|(4) | Includes second generation leasing costs and
	building improvements.                                                                                                                                                                                                                                                                                                         

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The following summarizes key same store
properties operating statistics for our industrial
properties as of and for the three month period ended March 31,
2002:

|                                                   |                        |                    |            |           |  
|-------------------------------------------------- | ---------------------- | ------------------ | ---------- | --------- | -
|                                                   |                        | Three Months Ended
|                                                   |                        | March 31, 2002    
|                                                   |                        |                   
|Square feet in same store pool(1)                  |                        |                    | 72,525,762 |          
|                                                   | % of total square feet |                    |            | 88.1      | %
|Occupancy percentage at period end                 |                        |                    |            |          
|                                                   | March 31, 2002.        |                    |            | 95.1      | %
|                                                   | March 31, 2001.        |                    |            | 96.1      | %
|Tenant retention                                   |                        |                    | 76.6       | %        
|Rent increases on lease commencements              |                        |                    | 2.9        | %        
|                                                   | Square feet leased     |                    |            | 4,294,936 |  
|Cash basis net operating income growth % increase: |                        |                    |            |          
|                                                   | Revenues               |                    |            | 1.6       | %
|                                                   | Expenses               |                    |            | 0.5       | %
|                                                   | Net operating income   |                    |            | 2.0       | %



---



|    |                                                                                   
|--- | ----------------------------------------------------------------------------------
|(1) | Excludes properties purchased or developments
	stabilized after December 31, 2000.




Item 3.     Quantitative
and Qualitative Disclosures About Market Risk

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

The table below summarizes the market risks
associated with our fixed and variable rated debt outstanding
before unamortized debt premiums of $5.3 million as of
March 31, 2002:

|                      |  |                        |        |      |  |      |         |      |  |      |        |            |  |            |         |   |  |   |         |   |  |   |           |   |  |   |           |  
|--------------------- |  | ---------------------- | ------ | ---- |  | ---- | ------- | ---- |  | ---- | ------ | ---------- |  | ---------- | ------- | - |  | - | ------- | - |  | - | --------- | - |  | - | --------- | -
|                      |  |                        |        |     
|                      |  | Expected Maturity Date |        |     
|                      |  |                        |        |     
|                      |  | 2002                   |        | 2003 |  | 2004 |         | 2005 |  | 2006 |        | Thereafter |  | Total Debt
|                      |  |                        |        |      |  |      |         |      |  |      |        |            |  |           
|Fixed rate debt(1)    |  | $                      | 45,518 |      |  | $    | 88,982  |      |  | $    | 95,545 |            |  | $          | 348,131 |   |  | $ | 178,449 |   |  | $ | 1,196,245 |   |  | $ | 1,952,870 |  
|Average interest rate |  |                        | 7.9    | %    |  |      | 7.8     | %    |  |      | 8.0    | %          |  |            | 7.4     | % |  |   | 7.3     | % |  |   | 7.4       | % |  |   | 7.4       | %
|Variable rate debt(2) |  | $                      | 870    |      |  | $    | 140,697 |      |  | $    | 28,911 |            |  | $          | 2,656   |   |  | $ | 7,905   |   |  | $ | 6,183     |   |  | $ | 187,222   |  
|Average interest rate |  |                        | 3.7    | %    |  |      | 2.9     | %    |  |      | 4.0    | %          |  |            | 3.9     | % |  |   | 3.5     | % |  |   | 3.5       | % |  |   | 3.1       | %



---



|    |                                          
|--- | -----------------------------------------
|(1) | Represents 91.3% of all outstanding debt.
|   
|(2) | Represents 8.7% of all outstanding debt. 

If market rates of interest on our variable rate
debt increased by 10% (or approximately 31 basis points), then
the increase in interest expense on the variable rate debt would
be approximately $0.6 million annually.

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PART II




Item 1.     Legal
Proceedings

As of March 31, 2002, 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 January 11, 2002, we redeemed 10,227
common limited partnership units for 10,227 shares of AMB
Property Corporations common stock from two individuals.
On February 1, 2002, we redeemed 25,884 common limited
partnership units for 25,884 shares of AMB Property
Corporations common stock from an individual. The issuance
of the 36,111 shares of our common stock in exchange for the
common limited partnership units 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. Periods of economic slowdown or
recession in the United States and in other countries, rising
interest rates, or declining demand for real estate, or public
perception that any of these events may occur would result in a
general decrease in rents or an increased occurrence of defaults
under existing leases, which would adversely affect our
financial condition and results of operations.

Future terrorist attacks in the United States may
result in declining economic activity, which could harm the
demand for and the value of our properties. To the extent that
our customers are impacted by future attacks, their businesses
similarly could be adversely affected, including their ability
to continue to honor their existing leases. Our properties are
currently concentrated predominantly in the industrial real
estate sector. Our concentration in a certain property type
exposes us to the risk of economic downturns in this sector to a
greater extent than if our portfolio also included other
property types. As a result of such concentration, economic
downturns in the industrial real estate sector could adversely
affect our financial condition, results of operations, cash
flow, and ability to make distributions to our unitholders and
payments to our noteholders. In

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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.


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
11.9% of our industrial properties (based on annualized base
rent) as of March 31, 2002, will expire on or prior to
December 31, 2002. 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 industrial properties located in California
as of March 31, 2002, represented approximately 28.4% of
the aggregate square footage of our industrial operating
properties as of March 31, 2002, and 36.0% of our
industrial annualized base rent. Annualized base rent means the
monthly contractual amount under existing leases as of
March 31, 2002, multiplied by 12. This amount excludes
expense reimbursements and rental abatements. Our revenue from,
and the value of, our properties located in California may be
affected by a number of factors, including local real estate
conditions (such as oversupply of or reduced demand for
industrial properties) and the local economic climate. Business
layoffs, downsizing, industry slowdowns, changing demographics,
and other factors may adversely impact the local economic
climate. A downturn in either Californias economy or 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.

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

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uninsured loss or a loss in excess of insured
limits occurs with respect to one or more of our properties,
then we could lose the capital we invested in the properties, as
well as the anticipated future revenue from the properties and,
in the case of debt, which is with recourse to us, we would
remain obligated for any mortgage debt or other financial
obligations related to the properties. Moreover, as the general
partner of the joint ventures, we generally will be liable for
all of the joint ventures unsatisfied obligations other
than non-recourse obligations. Any such liabilities 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, 2002, 291 industrial
buildings aggregating approximately 23.4 million square
feet (representing 28.4% of our industrial operating properties
based on aggregate square footage and 36.0% based on industrial
annualized base rent) are located. We carry replacement cost
earthquake insurance on all of our properties located in areas
historically subject to seismic activity, subject to coverage
limitations and deductibles that we believe are commercially
reasonable. This insurance coverage also applies to the
properties managed by AMB Capital Partners, LLC, with a single
aggregate policy limit and deductible applicable to those
properties and our properties. Through an annual analysis
prepared by outside consultants, we evaluate our earthquake
insurance coverage in light of current industry practice and
determine the appropriate amount of earthquake insurance to
carry. 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, 2002, we had ownership
interests in several joint ventures, limited liability
companies, or partnerships with third parties, as well as
interests in three unconsolidated entities. As of March 31,
2002, we owned approximately 29.0 million square feet
(excluding three unconsolidated joint ventures) of our
properties through these entities. We may make additional
investments through these ventures in the future and presently
plan to do so. Such partners may share certain approval rights
over major decisions. Partnership, limited liability company, or
joint venture investments may involve risks such as the
following: (1) 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); (2) 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; (3) our partners,
co-members, or joint venturers may be in a position to take
action contrary to our instructions, requests, policies, or
objectives; and (4) 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.

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 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 and private institutional investment funds. We
expect that future acquisitions will be financed through a
combination of borrowings under our unsecured

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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:
(1) 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; (2) 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;
(3) new or renovated properties may perform below
anticipated levels, producing cash flow below budgeted amounts;
(4) 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
(5) 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 have decided to divest ourselves of six retail
centers and four industrial properties, 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. 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.

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 and limited
partnership units 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. However, 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 without unitholder or noteholder consent. 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.

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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, 2002, we had total debt
outstanding of approximately $2.1 billion.

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, 2002, we had
$116.0 million outstanding under our Alliance Fund II
secured credit facility, no outstanding balance on our unsecured
credit facility, and we had seven secured loans with an
aggregate principal amount of $71.2 million, which bear
interest at variable rates (with weighted average interest rate
of 3.7% as of March 31, 2002). In addition, we may incur
other variable rate indebtedness in the future. Increases in
interest rates on this indebtedness could increase our interest
expense, which would adversely affect our financial condition,
results of operations, cash flow, and ability to make
distributions to our unitholders and payments to our
noteholders. Accordingly, in the future, we may engage in
transactions to limit our exposure to rising interest rates.

We Are Dependent on External Sources of
Capital

In order for our general partner, AMB Property
Corporation, to qualify as a real estate investment trust under
the Internal Revenue Code, we are required each year to make
distributions to enable our general partner 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 its 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 debt-to-total capitalization ratio.

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

As of March 31, 2002, we had 23 non-recourse
secured loans, which are cross collateralized by 50 properties.
As of March 31, 2002, we had $572.1 million (not including
unamortized debt premium) outstanding on these loans. If we
default on any of these loans, then we could be required to
repay the aggregate of all indebtedness, together with
applicable prepayment charges, to avoid foreclosure on all the
cross-collateralized properties within the applicable pool.
Foreclosure on our properties, or our inability to refinance our
loans on favorable terms, could adversely impact our financial
condition, results of operations,

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cash flow, and ability to make distributions to
our unitholders and payments to our noteholders. In addition,
our credit facilities and the senior debt securities of the
operating partnership 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 our credit facilities and the
senior debt securities in addition to any mortgage or other debt
that is in default, which could adversely affect our financial
condition, results of operations, cash flow, and ability to make
distributions to our unitholders and 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: (1) liabilities
for clean-up or remediation of undisclosed environmental
conditions; (2) 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;
(3) accrued but unpaid liabilities incurred in the ordinary
course of business; (4) tax liabilities; and
(5) 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.

Our Access to Timely Financial Reporting
and to Capital Markets May be Impaired if Arthur Andersen LLP in
Unable to Perform Required Audit-Related Services

On March 14, 2002, our independent public
accountant, Arthur Andersen, LLP, was indicted on federal
obstruction of justice charges arising from the U.S.
governments investigation of Enron Corporation. Arthur
Andersen LLP has indicated that it intends to contest vigorously
the indictment. The Securities and Exchange Commission has said
that it will continue accepting financial statements audited by
Arthur Andersen LLP, and interim financial statements reviewed
by it, so long as Arthur Andersen LLP is able to make certain
representations to its clients. Our access to the capital
markets and our ability to make timely filings with the
Securities and Exchange Commission could be impaired if the
Securities and Exchange Commission ceases accepting financial
statements audited by Arthur Andersen LLP, if Arthur Andersen
LLP becomes unable to make the required representations to us,
or if for any other reason Arthur Andersen LLP is unable to
perform required audit-related services for us. However, we
believe that our sources of working capital, specifically our
cash flow from operations and borrowings available under our
unsecured credit facility, are adequate for us to meet our
liquidity requirements for the foreseeable future.

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Conflicts of
Interest

Some of AMB Property Corporations
Directors and 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 Aspire Development, Inc. and
Aspire Development, L.P., developers that own property not
suitable for ownership by us. Aspire Development, Inc. and
Aspire Development, L.P. have agreed not to initiate any new
development projects not contemplated at 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. 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.

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, 2002, Aspire Development,
L.P. owns interests in three retail development projects in the
U.S., one of which is a single freestanding Walgreens drugstore
and two of which are Walgreens drugstores plus shop buildings,
which are less than 10,000 feet. In addition,
Messrs. 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:
(1) less than 1% interests in the stocks of certain
publicly-traded real estate investment trusts; (2) certain
interests in and rights to developed and undeveloped real
property located outside the United States; and (3) 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. 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 $2.2 million. Messrs. Moghadam and
Burke each have a 26.7% interest in the partnership, each valued
at approximately $3.0 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 by 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.

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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 24, 2002, we believe that 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 ABP Investments U.S.
(with respect to various client accounts for which ABP
Investments U.S. serves as investment advisor) beneficially
owned 13.9% of AMB Property Corporations outstanding
common stock. In addition, AMB Property Corporations
executive officers and directors beneficially owned 4.3% of AMB
Property Corporations outstanding common stock as of
April 24, 2002, and will have influence on AMB Property
Corporations management and operation and, as
stockholders, 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 affairs if they choose to do so.

Government
Regulations

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

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.

We Could Encounter Environmental
Problems

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

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

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

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

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

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 due to our general partners
election to be treated as a real estate investment trust. Our
general partner 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

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be a prohibited transaction with any resulting
gain allocable to us being subject to a 100% penalty tax.
However, whether property is held for investment purposes is a
question of fact that depends on all the facts and circumstances
surrounding the particular transaction. The Internal Revenue
Service may contend that certain transfers or disposals of
properties by us are prohibited transactions. While we believe
that the Internal Revenue Service would not prevail in any such
dispute, if the IRS were to successfully argue that a transfer
or disposition of property constituted a prohibited transaction,
then our general partner would be required to pay a 100% penalty
tax on any gain allocable to us from the prohibited transaction.


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 our 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 Be
Unable to Effectively Manage Our International
Growth

We may acquire properties in foreign countries.
Local markets affect our operations and, therefore, we would be
subject to economic fluctuations in foreign locations. Our
international operations also would be subject to the usual
risks of doing business abroad such as the revaluation of
currencies, revisions in tax treaties or other laws governing
the taxation of revenues, restrictions on the transfer of funds,
and, in certain parts of the world, political instability. We
cannot predict the likelihood that any such developments may
occur. Further, we may enter into agreements with non-U.S.
entities that are governed by the laws of, and are subject to
dispute resolution in, the courts of another country or region.
We cannot accurately predict whether such a forum would provide
us with an effective and efficient means of resolving disputes
that may arise. Even if we are able to obtain a satisfactory
decision through arbitration or a court proceeding, we could
have difficulty enforcing any award or judgment on a timely
basis. Our business has grown rapidly and continues to grow
through property acquisitions and developments. If we fail to
effectively manage our international growth, then our financial
condition, results of operations, cash flow, and ability to make
distributions to our unitholders and payments to our noteholders
could be adversely affected.

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Item 6.     Exhibits
and Reports on Form 8-K

(a) Exhibits:

|        |      |             |  |                                                                                                                                                                                                                                                              
|------- | ---- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |            
|Number  |      | Description
|        |      |            
|        | 3.1  |             |  | Sixth Amended and Restated Agreement of Limited
	Partnership of AMB Property, L.P., dated April 17, 2002
	(incorporated by reference to Exhibit 10.1 of AMB Property,
	L.P.s Current Report on Form 8-K filed on
	April 23, 2002).                          
|        | 4.1  |             |  | $20,000,000 5.90% Fixed Rate Note No. 11
	dated January 14, 2002, attaching the Parent Guarantee
	dated January 17, 2002 (incorporated by reference to
	Exhibit 4.1 of AMB Property, L.P.s Current Report on
	Form 8-K filed on January 23, 2002).          
|        | 10.1 |             |  | Terms Agreement dated as of August 15, 2000,
	by and among Morgan Stanley & Co., AMB Property, L.P.,
	and AMB Property Corporation (incorporated by reference to
	Exhibit 1.1 of AMB Property, L.P.s Current Report on
	Form 8-K filed on January 23, 2002).
|        | 12.1 |             |  | Calculation of Ratio of Earnings to Fixed Charges
	for AMB Property, L.P.                                                                                                                                                                                    

(b) Reports on Form 8-K:



| |   |                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | AMB Property, L.P. filed a Current Report on
	Form 8-K on January 23, 2002, in connection with the
	issuance of $20.0 million in senior unsecured notes by AMB
	Property, L.P. under its medium-term note program.              
|
| |  | AMB Property, L.P. filed a Current Report on
	Form 8-K on April 23, 2002, in connection with the
	issuance and sale by AMB Property, L.P. of 800,000 7.95%
	Series K Cumulative Redeemable Preferred Limited
	Partnership Units.

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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



| |     |                    
| | --- | -------------------
| | By: | /s/ MICHAEL A. COKE

| |                                        
| | ---------------------------------------
| |                                        
| | Michael A. Coke                        
| | Chief Financial Officer and            
| | Executive Vice President               
| | (Duly Authorized Officer and
	Principal
| | Financial and Accounting Officer)      

Date: April 29, 2002

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