##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, DC 20549
      Form 10-Q
        þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    September 30, 2006ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934   Commission file number:
    001-14245
     AMB Property, L.P.
 (Exact Name of Registrant as
    Specified in Its Charter)
  Delaware(State or Other
    Jurisdiction of
    Incorporation or Organization)

94-3285362(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)
  þ o
  Rule 12b-2
 o o þ
  Rule 12b-2 o þ




---



##### 



AMB
    PROPERTY, L.P.
  INDEX
   
 PagePART I.
    FINANCIAL INFORMATIONItem 1.

Financial
    Statements (unaudited)Consolidated
    Balance Sheets as of September 30, 2006 and
    December 31, 2005

1Consolidated
    Statements of Operations for the three and nine months ended
    September 30, 2006 and 2005

2Consolidated
    Statement of Partners Capital for the nine months ended
    September 30, 2006

3Consolidated
    Statements of Cash Flows for the nine months ended
    September 30, 2006 and 2005

4Notes to
    Consolidated Financial Statements

5Item 2.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations

30Item 3.

Quantitative and
    Qualitative Disclosures About Market Risk

60Item 4.

Controls and
    Procedures

62PART II. OTHER
    INFORMATIONItem 1.

Legal
    Proceedings

63Item 1A.

Risk
    Factors

63Item 2.

Unregistered Sales
    of Equity Securities and Use of Proceeds

63Item 3.

Defaults Upon
    Senior Securities

63Item 4.

Submission of
    Matters to a Vote of Security Holders

63Item 5.

Other
    Information

63Item 6.

Exhibits

63EXHIBIT 31.1EXHIBIT 32.1




---



##### Table of Contents



PART I   Item 1.
    Financial
    Statements  AMB
    PROPERTY, L.P.
 CONSOLIDATED
    BALANCE SHEETS
    As of September 30, 2006 and December 31,
    2005  September 30,


December 31,2006


2005(Unaudited, dollars in thousands)ASSETSInvestments in real estate:Land

$
1,710,769


$
1,527,072Buildings and improvements


4,756,065



4,273,716Construction in progress


1,086,197



997,506Total investments in properties


7,553,031



6,798,294Accumulated depreciation and
    amortization


(821,545
)


(697,388
)Net investments in properties


6,731,486



6,100,906Investments in unconsolidated joint
    ventures


116,856



118,653Properties held for contribution,
    net


184,365



32,755Properties held for divestiture, net


63,402



17,936Net investments in real estate


7,096,109



6,270,250Cash and cash equivalents


154,337



232,881Restricted cash


29,893



34,352Mortgage and loan receivables


18,782



21,621Accounts receivable, net of
    allowance for doubtful accounts


143,594



178,682Deferred financing costs, net


25,682



25,026Other assets


109,964



39,927Total assets

$
7,578,361


$
6,802,739LIABILITIES AND PARTNERS
    CAPITALDebt:Secured debt

$
1,874,887


$
1,912,526Unsecured senior debt


1,226,561



975,000Unsecured credit facilities


801,656



490,072Other debt


79,894



23,963Total debt


3,982,998



3,401,561Security deposits


43,687



47,055Distributions payable


47,471



46,382Accounts payable and other
    liabilities


206,200



170,307Total liabilities


4,280,356



3,665,305Commitments and contingencies
    (Note 12)Minority interests:Joint venture partners


977,452



853,643Preferred unitholders


105,116



203,513Total minority interests


1,082,568



1,057,156Partners capital:General partner, 89,000,686 and
    85,585,494 units outstanding, respectively; 2,000,000
    Series L preferred units issued and outstanding with a
    $50,000 liquidation preference, 2,300,000 Series M
    preferred units issued and outstanding with a $57,500
    liquidation preference, 3,000,000 Series O preferred units
    issued and outstanding with a $75,000 liquidation preference and
    2,000,000 Series P preferred units issued and outstanding
    with a $50,000 liquidation preference


2,060,522



1,916,299Limited partners, 3,745,072 and
    4,250,977 units, respectively; 800,000 Series J
    preferred units with a $40,000 liquidation preference, 800,000
    Series K preferred units with a $40,000 liquidation
    preference


154,915



163,979Total partners capital


2,215,437



2,080,278Total liabilities and
    partners capital

$
7,578,361


$
6,802,739    1




---



##### Table of Contents



AMB
    PROPERTY, L.P.
 CONSOLIDATED
    STATEMENTS OF OPERATIONS
    For the Three and Nine Months Ended September 30, 2006 and
    2005  For the Three Months


For the Nine MonthsEnded September 30,


Ended September 30,2006


2005


2006


2005(Unaudited, dollars in thousands,except unit and per unit amounts)REVENUESRental revenues

$
180,205


$
154,312


$
531,439


$
461,516Private capital income


7,490



5,764



17,539



12,520Total revenues


187,695



160,076



548,978



474,036COSTS AND
    EXPENSESProperty operating expenses


(25,663
)


(20,982
)


(74,848
)


(63,915
)Real estate taxes


(20,329
)


(18,860
)


(61,040
)


(55,429
)Depreciation and amortization


(48,761
)


(40,494
)


(136,160
)


(121,279
)Impairment losses










(5,394
)


General and administrative


(25,851
)


(16,815
)


(74,043
)


(54,876
)Other expenses


(893
)


(2,925
)


(1,134
)


(3,663
)Fund costs


(495
)


(329
)


(1,588
)


(1,073
)Total costs and expenses


(121,992
)


(100,405
)


(354,207
)


(300,235
)OTHER INCOME AND
    EXPENSESEquity in earnings of
    unconsolidated joint ventures, net


2,239



1,529



12,605



9,959Other income


2,643



2,964



7,641



4,769Gains from dispositions of real
    estate interests














18,923Development profits, net of taxes


23,517



398



69,889



20,322Interest expense, including
    amortization


(44,535
)


(37,305
)


(129,627
)


(111,320
)Total other income and expenses, net


(16,136
)


(32,414
)


(39,492
)


(57,347
)Income before minority interests,
    discontinued operations and cumulative effect of change in
    accounting principle


49,567



27,257



155,279



116,454Minority interests share of
    income:Joint venture partners share
    of income before minority interests and discontinued operations


(12,317
)


(8,806
)


(30,145
)


(27,039
)Joint venture partners share
    of development (profits) losses


(64
)






525



(9,568
)Preferred unitholders


(2,203
)


(3,831
)


(8,090
)


(11,431
)Total minority interests
    share of income


(14,584
)


(12,637
)


(37,710
)


(48,038
)Income from continuing operations
    before cumulative effect of change in accounting principle


34,983



14,620



117,569



68,416Discontinued operations:Income attributable to discontinued
    operations, net of minority interests


1,020



2,328



3,854



7,691Gains from dispositions of real
    estate, net of minority interests


223



15,129



25,517



51,385Total discontinued operations


1,243



17,457



29,371



59,076Net income before cumulative effect
    of change in accounting principle


36,226



32,077



146,940



127,492Cumulative effect of change in
    accounting principle










193



Net income


36,226



32,077



147,133



127,492Series L, M, O and P preferred
    unit distributions


(3,440
)


(1,783
)


(9,631
)


(5,349
)Series J and K preferred unit
    distributions


(1,590
)


(1,590
)


(4,770
)


(4,770
)Preferred unit redemption
    discount/(issuance costs)


16







(1,004
)


Net income available to common
    unitholders

$
31,212


$
28,704


$
131,728


$
117,373Income available to common
    unitholders attributable to:General partner

$
29,963


$
27,285


$
125,682


$
111,275Limited partners


1,249



1,419



6,046



6,098Net income available to common
    unitholders

$
31,212


$
28,704


$
131,728


$
117,373Basic income per common
    unitIncome from continuing operations
    (after preferred unit distributions) before cumulative effect of
    change in accounting principle

$
0.33


$
0.12


$
1.12


$
0.66Discontinued operations


0.01



0.20



0.32



0.67Cumulative effect of change in
    accounting principle














Net income available to common
    unitholders

$
0.34


$
0.32


$
1.44


$
1.33Diluted income per common
    unitIncome from continuing operations
    (after preferred unit distributions) before cumulative effect of
    change in accounting principle

$
0.32


$
0.12


$
1.08


$
0.63Discontinued operations


0.01



0.19



0.31



0.64Cumulative effect of change in
    accounting principle














Net income available to common
    unitholders

$
0.33


$
0.31


$
1.39


$
1.27WEIGHTED AVERAGE COMMON UNITS
    OUTSTANDINGBasic


92,088,600



89,098,104



91,569,011



88,407,261Diluted


95,117,597



93,034,016



94,734,736



92,121,224    2




---



##### Table of Contents



AMB
    PROPERTY, L.P.
 CONSOLIDATED
    STATEMENT OF PARTNERS CAPITAL
    For the Nine Months Ended September 30, 2006  General Partner


Limited PartnersPreferred Units


Common Units


Preferred Units


Common UnitsUnits


Amount


Units


Amount


Units


Amount


Units


Amount


Total(Unaudited, dollars in thousands, except unit amounts)Balance as of December 31, 2005


7,300,000


$
175,548



85,585,494


$
1,740,751



1,600,000


$
77,815



4,250,977


$
86,164


$
2,080,278Comprehensive income:Net income






9,631







125,682







4,770







6,046Unrealized gain on securities and
    derivatives














752















Currency translation adjustment














(491
)














Total comprehensive income


































146,390Stock-based compensation
    amortization and issuance of common limited partnership units in
    connection with the issuance of restricted stock and options










401,394



14,386



















14,386Issuance of preferred units


2,000,000



48,263



























48,263Issuance of common limited
    partnership units in connection with the exercise of stock
    options










2,490,223



49,580



















49,580Conversion of operating partnership
    units to common stock










523,575



28,081











(505,905
)


(10,021
)


18,060Forfeiture of common limited
    partnership units in connection with the forfeiture of
    restricted stock














(1,275
)


















(1,275
)Cumulative effect of change in
    accounting principle














(193
)


















(193
)Offering costs






(217
)


























(217
)Reallocation of interests














1,672















733



2,405Distributions






(9,631
)






(122,017
)






(4,770
)






(5,822
)


(142,240
)Balance as of September 30,
    2006


9,300,000


$
223,594



89,000,686


$
1,836,928



1,600,000


$
77,815



3,745,072


$
77,100


$
2,215,437    3




---



##### Table of Contents



AMB
    PROPERTY, L.P.
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS
    For the Nine Months Ended September 30, 2006 and
    2005  2006


2005(Unaudited, dollarsin thousands)CASH FLOWS FROM OPERATING
    ACTIVITIESNet income

$
147,133


$
127,492Adjustments to net income:Straight-line rents and
    amortization of lease intangibles


(16,190
)


(15,250
)Depreciation and amortization


136,160



121,279Impairment losses


5,394



Stock-based compensation
    amortization


14,386



9,623Equity in earnings of
    unconsolidated joint ventures


(12,605
)


(9,959
)Operating distributions received
    from unconsolidated joint ventures


1,882



1,560Gains from dispositions of real
    estate interest






(18,923
)Development profits, net of taxes


(69,889
)


(20,322
)Debt premiums, discounts and
    finance cost amortization, net


6,799



2,489Total minority interests
    share of net income


37,710



48,038Discontinued operations:Depreciation and amortization


270



12,483Joint venture partners share
    of net income


(457
)


6,440Gains from dispositions of real
    estate, net of minority interests


(25,517
)


(51,385
)Cumulative effect of change in
    accounting principle


(193
)


Changes in assets and liabilities:Accounts receivable and other assets


(19,000
)


(26,702
)Accounts payable and other
    liabilities


15,201



7,425Net cash provided by operating
    activities


221,084



194,288CASH FLOWS FROM INVESTING
    ACTIVITIESChange in restricted cash


4,723



5,673Cash paid for property acquisitions


(407,778
)


(273,844
)Additions to land, buildings,
    development costs, building improvements and lease costs


(764,946
)


(430,796
)Net proceeds from divestiture of
    real estate


217,330



313,628Additions to interests in
    unconsolidated joint ventures


(2,389
)


(67,213
)Capital distributions received from
    unconsolidated joint ventures


25,377



10,024Repayment and (issuance) of
    mortgage and loan receivables


2,839



(7,914
)Net cash used in investing
    activities


(924,844
)


(450,442
)CASH FLOWS FROM FINANCING
    ACTIVITIESIssuance of common units


49,580



39,937Borrowings on secured debt


309,367



277,613Payments on secured debt


(223,343
)


(85,230
)Borrowings on other debt


72,032



Payments on other debt


(16,101
)


(481
)Borrowings on unsecured credit
    facilities


912,967



649,996Payments on unsecured credit
    facilities


(615,309
)


(499,831
)Payment of financing fees


(8,552
)


(4,976
)Net proceeds from issuances of
    senior debt


272,677



Payments on senior debt securities


(25,000
)


Net proceeds from issuances of
    preferred units


48,263



Issuance costs on preferred units


(217
)


Repurchase of preferred units


(98,080
)


Contributions from co-investment
    partners


183,153



128,115Distributions paid to partners


(135,329
)


(119,500
)Distributions to minority
    interests, including preferred units


(104,054
)


(101,320
)Net cash provided by financing
    activities


622,054



284,323Net effect of exchange rate changes
    on cash


3,162



(5,686
)Net increase (decrease) in cash and
    cash equivalents


(78,544
)


22,483Cash and cash equivalents at
    beginning of period


232,881



109,392Cash and cash equivalents at end of
    period

$
154,337


$
131,875Supplemental Disclosures of Cash
    Flow InformationCash paid for interest, net of
    capitalized interest

$
114,698


$
119,903Non-cash transactions:Acquisition of properties

$
514,603


$
354,154Assumption of secured debt


(77,862
)


(66,673
)Assumption of other assets and
    liabilities


(18,180
)


(2,013
)Acquisition capital


(10,783
)


(11,624
)Net cash paid for property
    acquisitions

$
407,778


$
273,844Preferred unit redemption issuance
    costs

$
1,004


$
Contribution of properties to
    unconsolidated joint ventures, net

$
133,032


$
27,282    4




---



##### Table of Contents



AMB
    PROPERTY, L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    September 30, 2006
    (unaudited)
  AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  1.
    Organization
    and Formation of the Operating Partnership  ® ®
  day-to-day
       5




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    
    on a consolidated basis, the Operating Partnership owned or
    partially owned 939 industrial buildings, principally warehouse
    distribution buildings, encompassing approximately
    93.6 million rentable square feet that were 95.9% leased;
    on a consolidated basis, the Operating Partnership had
    investments in 45 industrial development projects which are
    expected to total approximately 13.4 million rentable
    square feet upon completion;
    on a consolidated basis, the Operating Partnership owned eight
    development projects totaling approximately 2.8 million
    rentable square feet that are available for sale or
    contribution; and
    through unconsolidated joint ventures, the Operating Partnership
    had investments in 90 industrial operating properties, totaling
    approximately 14.8 million rentable square feet, and one
    industrial operating property, totaling approximately
    0.2 million square feet which is available for sale or
    contribution.  2.
    Interim
    Financial Statements    Form 8-K
    Investments in Real Estate. property-by-property
 6




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Reclassifications.
  Comprehensive Income.
  International Operations.
      Goodwill and Intangible Assets.
  New Accounting Pronouncements.
   7




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    EITF 04-5, Determining Whether a General Partner, or the General
    Partners as a Group, Controls a Limited Partnership or Similar
    Entity When the Limited Partners Have Certain
    Rights. Investors
    Accounting for an Investee When the Investor has a Majority of
    the Voting Interest but the Minority Shareholder or Shareholders
    Have Certain Approval or Veto Rights.
  3.
    Real
    Estate Acquisition and Development Activity  Acquisition Activity.
  Development Starts.
  Development Completions.
 8




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Development Pipeline.
  4.
    Gains
    from Dispositions of Real Estate Interests, Development Profits
    and Discontinued Operations  Development Sales.
  Discontinued Operations. Accounting for the Impairment or
    Disposal of Long-Lived Assets.
 9




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Development Contributions.
  Gains from Contributions of Real Estate
    Interests.
  Properties Held for Contribution.
  Properties Held for Divestiture. development-for-sale
 10




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Three Months


For the Nine MonthsEnded September 30,


Ended September 30,2006


2005


2006


2005Rental revenues

$
289


$
15,356


$
1,382


$
52,305Straight-line rents and
    amortization of lease intangibles


105



1,107



420



1,362Property operating expenses


(178
)


(2,413
)


(1,253
)


(8,987
)Real estate taxes


9



(1,975
)


(169
)


(6,571
)Depreciation and amortization


37



(4,216
)


(270
)


(12,483
)Other income and (expenses), net


33



(24
)


215



(58
)Interest, including amortization


660



(3,405
)


3,072



(11,437
)Joint venture partners share
    of loss (income)


65



(2,102
)


457



(6,440
)Income attributable to
    discontinued operations

$
1,020


$
2,328


$
3,854


$
7,691     September 30,


December 31,2006


2005Accounts receivable, net

$
1,767


$
604Other assets

$
443


$
57Accounts payable and other
    liabilities

$
2,050


$
1,316   5.
    Mortgage
    and Loan Receivables    September 30,


December 31,Mortgage and Loan Receivables

Market

Maturity

2006


2005


Rate1.


Pier 1

SF Bay Area

May 2026

$
12,721


$
12,821



13.0
%2.


G.Accion

Various

March 2010


6,061



8,800



10.0
%Total Mortgage and Loan Receivables





$
18,782


$
21,621  11




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  6.
    Debt    September 30,


December 31,2006


2005Operating Partnership secured
    debt, varying interest rates from 1.0% to 10.4%, due November
    2006 to December 2020 (weighted average interest rate of 5.0%
    and 4.1% at September 30, 2006 and December 31, 2005,
    respectively)

$
359,871


$
522,459Consolidated joint venture secured
    debt, varying interest rates from 2.9% to 9.4%, due December
    2006 to January 2025 (weighted average interest rates of 6.3%
    and 6.3% at September 30, 2006 and December 31, 2005,
    respectively)


1,505,970



1,378,083Unsecured senior debt securities,
    varying interest rates from 3.5% to 8.0%, due November 2006 to
    June 2018 (weighted average interest rates of 6.2% and 6.2% at
    September 30, 2006 and December 31, 2005, respectively)


1,237,491



987,491Other debt, varying interest rates
    from 5.1% to 7.5%, due March 2007 to November 2015 (weighted
    average interest rates of 6.8% and 8.2% at September 30,
    2006 and December 31, 2005, respectively)


79,894



23,963Unsecured credit facilities,
    variable interest rate, due February 2010 and June 2010
    (weighted average interest rates of 3.2% and 2.2% at
    September 30, 2006 and December 31, 2005, respectively)


801,656



490,072Total debt before unamortized net
    (discounts)


3,984,882



3,402,068Unamortized net (discounts)


(1,884
)


(507
)Total consolidated debt

$
3,982,998


$
3,401,561      12




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       13




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Operating


ConsolidatedPartnership


Joint Venture


UnsecuredSecured


Secured


Senior


Credit


OtherDebt


Debt


Debt


Facilities


Debt


Total2006

$
43,411


$
40,269


$
150,000
(1)

$



$
179


$
233,8592007


13,353



79,221



75,000







7,784



175,3582008


41,955



180,562



175,000







810



398,3272009


4,012



133,380



100,000







873



238,2652010


69,833



132,078



250,000



801,656



941



1,254,5082011


21,486



376,561



75,000







1,014



474,0612012


95,884



178,260











1,093



275,2372013


37,209



206,755



175,000







65,920



484,8842014


16,024



6,110











616



22,7502015


2,087



110,384



112,491







664



225,626Thereafter


14,617



62,390



125,000











202,007Total

$
359,871


$
1,505,970


$
1,237,491


$
801,656


$
79,894


$
3,984,882     (1)
    
    Includes $50.0 million in notes which the Operating
    Partnership currently intends to pay off at maturity in November
    2006 and a $100.0 million term loan that matures in
    December 2006, which the Operating Partnership currently intends
    to re-finance. 14




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  7.
    Minority
    Interests in Consolidated Joint Ventures and Preferred
    Units  Consolidation of Variable Interest Entities.
      Operating


Total InvestmentPartnerships


in Real Estate(6)


Secured Debt(7)Ownership


September 30,


December 31,


September 30,


December 31,Co-investment Joint Venture

Joint Venture Partner

Percentage


2006


2005


2006


2005AMB/Erie, L.P.

Erie Insurance Company and
    affiliates


50
%

$
100,812


$
99,722


$
40,170


$
40,710AMB Partners II, L.P.

City and County of
    San Francisco Employees Retirement System


20
%


662,370



592,115



316,936



291,684AMB-SGP, L.P.

Industrial JV Pte Ltd(1)


50
%


442,237



436,713



236,388



239,944AMB Institutional Alliance
    Fund II, L.P.

AMB Institutional Alliance
    REIT II, Inc.(2)


20
%


515,345



507,493



244,460



245,056AMB-AMS,
    L.P.(3)

PMT, SPW and TNO(4)


39
%


151,372



146,007



61,851



63,143AMB Institutional Alliance
    Fund III, L.P.

AMB Institutional Alliance
    REIT III, Inc.(5)


20
%


1,025,478



749,634



494,416



421,290Total







$
2,897,614


$
2,531,684


$
1,394,221


$
1,301,827     (1)
    
    A subsidiary of the real estate investment subsidiary of the
    Government of Singapore Investment Corporation.(2)
    
    Comprised of 14 institutional investors as stockholders and one
    third-party limited partner as of September 30, 2006.(3)
    
    AMB-AMS,
    L.P. is a co-investment partnership with three Dutch pension
    funds advised by Mn Services NV.(4)
    
    PMT is Stichting Pensioenfonds Metaal en Techniek, SPW is
    Stichting Pensioenfonds voor de Woningcorporaties and TNO is
    Stichting Pensioenfonds TNO.(5)
    
    AMB Institutional Alliance Fund III, L.P. is an open-ended
    co-investment partnership formed in 2004 with institutional
    investors.(6)
    
    The Operating Partnership also had other consolidated joint
    ventures with total investments in real estate of
    $489.8 million and $378.7 million at
    September 30, 2006 and December 31, 2005, respectively.(7)
    
    The Operating Partnership also had other consolidated joint
    ventures with secured debt of $118.9 million and
    $85.7 million at September 30, 2006 and
    December 31, 2005, respectively. 15




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    September 30,


December 31,


Redemption/Callable2006


2005


DateJoint Venture Partners

$
977,452


$
853,643



N/AHeld through AMB Property II,
    L.P.:Class B Limited Partners


2,633



2,950



N/ASeries D preferred units
    (liquidation preference of $79,767)


77,684



77,684



May 2004Series E preferred units
    (repurchased in June 2006)






10,788



N/ASeries F preferred units
    (repurchased in September 2006)






9,900



March 2005Series H preferred units
    (repurchased in March 2006)






40,912



N/ASeries I preferred units
    (liquidation preference of $25,500)


24,799



24,800



March 2006Series N preferred units
    (repurchased in January 2006)






36,479



N/ATotal minority interests

$
1,082,568


$
1,057,156     For the Three Months


For the Nine MonthsEnded September 30,


Ended September 30,2006


2005


2006


2005Joint Venture Partners share
    of income

$
12,317


$
8,806


$
30,145


$
27,039Joint Venture Partners share
    of development profits (losses)


64







(525
)


9,568Held through AMB Property II,
    L.P.:Class B common limited
    partnership units


2



53



44



97Series D preferred units
    (liquidation preference of $79,767)


1,545



1,545



4,636



4,636Series E preferred units
    (repurchased in June 2006)






214



392



641Series F preferred units
    (repurchased in September 2006)


146



200



546



600Series H preferred units
    (repurchased in March 2006)






853



815



2,559Series I preferred units
    (liquidation preference of $25,500)


510



510



1,530



1,530Series N preferred units
    (repurchased in January 2006)






456



127



1,368Total minority interests
    share of income

$
14,584


$
12,637


$
37,710


$
48,038  16




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
           17




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    Investments
    in Unconsolidated Joint Ventures    Square


September 30,


December 31,


OwnershipUnconsolidated Joint Ventures

Market

Feet


2006


2005


PercentageCo-Investment Joint
    VenturesAMB-SGP Mexico, LLC

Various, Mexico


2,474,745


$
6,593


$
16,218



20
%AMB Japan Fund I, L.P.

Various, Japan


2,628,458



22,492



10,112



20
%Other Industrial Operating
    Joint Ventures




9,971,416



49,340



41,520



52
%Other Industrial Development
    Joint Ventures












6,176



n/aOther Investment  G.
    Accion

Various


n/a



38,431



44,627



39
%Total Unconsolidated Joint
    Ventures




15,074,619


$
116,856


$
118,653        18




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    9.
    Partners
    Capital  one-for-one
   19




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Three Months


For the Nine MonthsEnded September 30,


Ended September 30,Paying Entity

Security

2006


2005


2006


2005Operating Partnership

Common limited partnership units

$
0.460


$
0.440


$
1.380


$
1.320Operating Partnership

Series J preferred units

$
0.994


$
0.994


$
2.981


$
2.981Operating Partnership

Series K preferred units

$
0.994


$
0.994


$
2.981


$
2.981AMB Property II, L.P.

Class B common limited
    partnership units

$
0.460


$
0.440


$
1.380


$
1.320AMB Property II, L.P.

Series D preferred units

$
0.969


$
0.969


$
2.906


$
2.906AMB Property II, L.P.

Series E preferred units (1)


n/a


$
0.969


$
1.776


$
2.906AMB Property II, L.P.

Series F preferred units (2)

$
0.729


$
0.994


$
2.716


$
2.981AMB Property II, L.P.

Series H preferred units (3)


n/a


$
1.016


$
0.970


$
3.047AMB Property II, L.P.

Series I preferred units

$
1.000


$
1.000


$
3.000


$
3.000AMB Property II, L.P.

Series N preferred units (4)


n/a


$
0.625


$
0.215


$
1.875     (1)
    
    In June 2006, AMB Property II, L.P. repurchased all of its
    outstanding Series E preferred units.(2)
    
    In September 2006, AMB Property II, L.P. repurchased all of
    its outstanding Series F preferred units.(3)
    
    In March 2006, AMB Property II, L.P. repurchased all of its
    outstanding Series H preferred units.(4)
    
    The holder of the series N preferred units exercised its
    put option in January 2006 and sold all of its series N
    preferred units to the Operating Partnership and AMB
    Property II, L.P. repurchased all of such units from the
    Operating Partnership.    10.
    Income
    Per Unit  one-for-one
  20




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  For the Three Months


For the Nine MonthsEnded September 30,


Ended September 30,2006


2005


2006


2005NumeratorIncome from continuing operations
    before cumulative effect of change in accounting principle

$
34,983


$
14,620


$
117,569


$
68,416Preferred unit distributions


(5,030
)


(3,373
)


(14,401
)


(10,119
)Preferred unit redemption
    discount/(issuance costs)


16







(1,004
)


Income from continuing operations
    before cumulative effect of change in accounting principle
    (after preferred unit distributions)


29,969



11,247



102,164



58,297Total discontinued operations


1,243



17,457



29,371



59,076Cumulative effect of change in
    accounting principle










193



Net income available to common
    unitholders

$
31,212


$
28,704


$
131,728


$
117,373DenominatorBasic


92,088,600



89,098,104



91,569,011



88,407,261Stock options and restricted stock
    dilution(1)


3,028,997



3,935,912



3,165,725



3,713,963Diluted weighted average common
    units


95,117,597



93,034,016



94,734,736



92,121,224Basic income per common
    unitIncome from continuing operations
    (after preferred unit distributions) before cumulative effect of
    change in accounting principle

$
0.33


$
0.12


$
1.12


$
0.66Discontinued operations


0.01



0.20



0.32



0.67Cumulative effect of change in
    accounting principle














Net income available to common
    unitholders

$
0.34


$
0.32


$
1.44


$
1.33Diluted income per common
    unitIncome from continuing operations
    (after preferred unit distributions) before cumulative effect of
    change in accounting principle

$
0.32


$
0.12


$
1.08


$
0.63Discontinued operations


0.01



0.19



0.31



0.64Cumulative effect of change in
    accounting principle














Net income available to common
    unitholders

$
0.33


$
0.31


$
1.39


$
1.27     (1)
    
    Excludes anti-dilutive stock options of 60,157 and 45,059 for
    the three and nine months ended September 30, 2006,
    respectively. 21




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  11.
    Segment
    Information        Rental Revenues


Property NOI(1)For the Three Months


For the Three MonthsEnded September 30,


Ended September 30,Segments

2006


2005


2006


2005Industrial U.S. hub and
    gateway markets:Atlanta

$
5,699


$
5,516


$
4,325


$
4,300Chicago


15,188



14,296



10,489



9,646Dallas/Fort Worth


4,176



4,187



2,702



2,756Los Angeles


28,578



27,615



22,494



21,765Northern New Jersey/New York


21,761



20,375



15,656



14,394San Francisco Bay Area


22,255



21,014



17,958



16,497Miami


10,459



8,770



7,168



5,950Seattle


10,313



11,139



8,205



8,437On-Tarmac


14,126



14,418



8,208



8,544Total industrial U.S. hub
    markets


132,555



127,330



97,205



92,289Other U.S. target markets


23,110



24,955



17,271



18,173Other U.S. non-target markets


6,621



7,019



4,770



5,151International target markets


13,394



5,321



10,213



4,852Straight-line rents and
    amortization of lease intangibles


4,890



5,889



4,890



5,889Total other markets


29



261



89



191Discontinued operations


(394
)


(16,463
)


(225
)


(12,075
)Total

$
180,205


$
154,312


$
134,213


$
114,470   22




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Rental Revenues


Property NOI(1)For the Nine Months


For the Nine MonthsEnded September 30,


Ended September 30,Segments

2006


2005


2006


2005Industrial U.S. hub and
    gateway markets:Atlanta

$
16,906


$
15,996


$
12,949


$
12,439Chicago


42,460



40,689



29,561



27,664Dallas/Fort Worth


11,963



12,452



7,948



8,546Los Angeles


83,832



79,943



66,274



63,022Northern New Jersey/New York


61,814



60,207



43,907



42,585San Francisco Bay Area


64,790



63,936



51,350



51,025Miami


30,041



26,385



20,284



17,919Seattle


29,435



32,814



23,134



25,406On-Tarmac


42,030



42,281



24,010



24,697Total industrial U.S. hub
    markets


383,271



374,703



279,417



273,303Other U.S. target markets


70,147



78,350



50,866



55,574Other U.S. non-target markets


20,939



25,649



15,713



18,042International target markets


42,655



20,970



33,646



16,862Straight-line rents and
    amortization of lease intangibles


16,190



15,250



16,190



15,250Total other markets


39



261



99



1,250Discontinued operations


(1,802
)


(53,667
)


(380
)


(38,109
)Total

$
531,439


$
461,516


$
395,551


$
342,172     (1)
    
    Property net operating income (NOI) is defined as
    rental revenue, including reimbursements, less property
    operating expenses, which excludes depreciation, amortization,
    general and administrative expenses and interest expense. For a
    reconciliation of NOI to net income, see the table below.   23




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Three Months


For the Nine MonthsEnded September 30,


Ended September 30,2006


2005


2006


2005Property NOI

$
134,213


$
114,470


$
395,551


$
342,172Private capital income


7,490



5,764



17,539



12,520Depreciation and amortization


(48,761
)


(40,494
)


(136,160
)


(121,279
)Impairment losses










(5,394
)


General and administrative


(25,851
)


(16,815
)


(74,043
)


(54,876
)Other expenses


(893
)


(2,925
)


(1,134
)


(3,663
)Fund costs


(495
)


(329
)


(1,588
)


(1,073
)Equity in earnings of
    unconsolidated joint ventures


2,239



1,529



12,605



9,959Other income


2,643



2,964



7,641



4,769Gains from dispositions of real
    estate














18,923Development profits, net of taxes


23,517



398



69,889



20,322Interest, including amortization


(44,535
)


(37,305
)


(129,627
)


(111,320
)Total minority interests
    share of income


(14,584
)


(12,637
)


(37,710
)


(48,038
)Total discontinued operations


1,243



17,457



29,371



59,076Cumulative effect of change in
    accounting principle










193



Net income

$
36,226


$
32,077


$
147,133


$
127,492     Total Assets as ofSeptember 30, 2006


December 31, 2005Industrial U.S. hub and
    gateway markets:Atlanta

$
235,596


$
208,751Chicago


613,930



504,581Dallas/Fort Worth


137,321



137,112Los Angeles


1,136,692



930,917Northern New Jersey/New York


855,127



756,719San Francisco Bay Area


774,759



789,129Miami


400,822



372,728Seattle


420,488



371,029On-Tarmac


236,935



245,046Total industrial U.S. hub
    markets


4,811,670



4,316,012Other U.S. target markets


705,970



693,287Other non-target markets


259,017



264,954International target markets


1,327,908



975,960Total other markets






10,277Investments in unconsolidated
    joint ventures


116,856



118,653Non-segment assets


356,940



423,596Total assets

$
7,578,361


$
6,802,739  24




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  12.
    Commitments
    and Contingencies  Commitments
  Lease Commitments.
  Standby Letters of Credit.
  Guarantees.
  Performance and Surety Bonds.
  Promoted Interests and Other Contractual
    Obligations.
  Contingencies
  Litigation.
  Environmental Matters.
  General Uninsured Losses.
 25




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Captive Insurance Company.
  13.
    Stock
    Incentive Plans  Stock Incentive Plans. one-for-one
  Share Based Payment Accounting
    for Stock-Based Compensation
 26




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Shares


Weighted


OptionsUnder


Average


ExercisableOption


Exercise Price


at Period EndOutstanding as of
    December 31, 2005


9,148


$
27.14



7,237Granted


857



51.78Exercised


(2,874
)


23.84Forfeited


(92
)


41.88Outstanding as of
    September 30, 2006


7,039


$
31.29



5,538Remaining average contractual life


6.22 yearsFair value of options granted
    during the period

$
8.54  27




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    WeightedAverage


Currently ExercisableWeighted


Remaining





WeightedRange of

Number


Average


Contractual


Number


AverageExercise Price

of Options


Exercise Price


Life in Years


of Options


Exercise Price$20.00  $24.69


2,016


$
22.49



3.6



2,015


$
22.49$25.06  $27.12


2,049



26.80



6.0



2,041



26.80$27.14  $38.56


2,011



35.58



7.6



1,229



34.47$39.09  $56.55


963



50.35



9.3



253



48.597,039











5,538     WeightedNumber


AverageUnvested Options

of Options


Exercise PriceUnvested at December 31, 2005


1,912


$
27.14Granted


857



51.78Vested


(1,176
)


36.19Forfeited


(92
)


41.88Unvested at September 30, 2006


1,501


$
43.72      28




---



##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted AverageGrant DateUnvested Shares

Shares


Fair ValueUnvested at December 31, 2005


548


$
34.41Granted


448



51.88Vested


(268
)


34.73Forfeited


(18
)


42.60Unvested at September 30, 2006


710


$
45.09     14.
    Subsequent
    Events  development-for-sale
   29




---



##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Some of the information included in this Quarterly Report on
    Form 10-Q
    contains forward-looking statements, which are made pursuant to
    the safe-harbor provisions of Section 21E of the Securities
    Exchange Act of 1934, as amended, and Section 27A of the
    Securities Act of 1933, as amended. Because these
    forward-looking statements involve risks and uncertainties,
    there are important factors that could cause our actual results
    to differ materially from those in the forward-looking
    statements, and you should not rely on the forward-looking
    statements as predictions of future events. The events or
    circumstances reflected in forward-looking statements might not
    occur. You can identify forward-looking statements by the use of
    forward-looking terminology such as believes,
    expects, may, will,
    should, seeks,
    approximately, intends,
    plans, pro forma, estimates
    or anticipates, or the negative of these words and
    phrases, or similar words or phrases. You can also identify
    forward-looking statements by discussions of strategy, plans or
    intentions. Forward-looking statements should not be read as
    guarantees of future performance or results, and will not
    necessarily be accurate indicators of whether, or the time at
    which, such performance or results will be achieved. There is no
    assurance that the events or circumstances reflected in
    forward-looking statements will occur or be achieved.
    Forward-looking statements are necessarily dependent on
    assumptions, data or methods that may be incorrect or imprecise
    and we may not be able to realize them.
  The 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:
  
    changes in general economic conditions or in the real estate
    sector;
    defaults on or non-renewal of leases by customers or renewal
    at lower than expected rent;
    difficulties in identifying properties to acquire and in
    effecting acquisitions on advantageous terms and the failure of
    acquisitions to perform as we expect;
    risks and uncertainties affecting property development and
    renovation (including construction delays, cost overruns, our
    inability to obtain necessary permits and financing and public
    opposition to these activities);
    risks of doing business internationally, including
    unfamiliarity with new markets and currency risks;
    a downturn in the U.S., California or the global economy or
    real estate conditions;
    losses in excess of our insurance coverage;
    our failure to divest of properties on advantageous terms or
    to timely reinvest proceeds from any such divestitures;
    unknown liabilities acquired in connection with acquired
    properties or otherwise;
    risks associated with using debt to fund acquisitions and
    development, including re-financing risks;
    our failure to obtain necessary financing;
    changes in local, state and federal regulatory
    requirements;
    increases in real property tax rates;
    increases in interest rates and operating costs or greater
    than expected capital expenditures; and
    environmental uncertainties.  Our success also depends upon economic trends generally,
    various market conditions and fluctuations and those other risk
    factors discussed under the heading Risk Factors and
    elsewhere in our Annual Report on
    Form 10-K
    for the year ended December 31, 2005 and our Quarterly
    Report on
    Form 10-Q
    for the quarter ended June 30, 2006.
  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. All of our forward-looking
 30




---



##### Table of Contents



statements, including those set up in this report, are
    qualified in their entirety by this statement. We assume no
    obligation to update or supplement forward-looking
    statements.
  ® ® ®
  GENERAL
    Managements
    Overview
  development-for-sale
     31




---



##### Table of Contents



U.S. Hub and


Total Other


Total/WeightedProperty Data

Gateway Markets(1)


Markets


AverageAs of and for the three months
    ended September 30, 2006:% of total rentable square feet


75.0
%


25.0
%


100.0
%Occupancy percentage at period end


96.1
%


95.2
%


95.9
%Same space square footage leased


2,538,422



1,027,603



3,566,025Rent increases on renewals and
    rollovers


10.9
%


6.0
%


9.9
%As of and for the three months
    ended September 30, 2005:% of total rentable square feet


75.7
%


24.3
%


100.0
%Occupancy percentage at period end


94.8
%


94.1
%


94.6
%Same space square footage leased


2,768,995



667,855



3,436,850Rent increases (decreases) on
    renewals and rollovers


(10.1
)%


4.0
%


(7.6
)%As of and for the nine months
    ended September 30, 2006:% of total rentable square feet


75.0
%


25.0
%


100.0
%Occupancy percentage at period end


96.1
%


95.2
%


95.9
%Same space square footage leased


10,122,788



2,822,737



12,945,525Rent (decreases) on renewals and
    rollovers


(1.8
)%


(1.0
)%


(1.7
)%As of and for the nine months
    ended September 30, 2005:% of total rentable square feet


75.7
%


24.3
%


100.0
%Occupancy percentage at period end


94.8
%


94.1
%


94.6
%Same space square footage leased


8,487,892



1,906,438



10,394,330Rent (decreases) on renewals and
    rollovers


(12.0
)%


(2.8
)%


(10.5
)%     (1)
    
    Our U.S. hub and gateway markets include on-tarmac and
    Atlanta, Chicago, Dallas/Fort Worth, Los Angeles, Northern
    New Jersey/New York City, the San Francisco Bay Area, Miami
    and Seattle.       32




---



##### Table of Contents



Summary
    of Key Transactions
    
    Acquired ten buildings in North America, aggregating
    approximately 1.3 million square feet, for
    $115.6 million;
    Committed to eight development projects in North America, Asia
    and Europe totaling 2.8 million square feet with an
    estimated total investment of approximately $251.2 million;
    Acquired 272 acres of land for development in North America
    and Asia for approximately $65.5 million; 33




---



##### Table of Contents




    Sold three development projects totaling approximately
    0.8 million square feet for an aggregate sale price of
    $38.4 million;
    Divested ourselves of one industrial building aggregating
    approximately 0.1 million square feet, for an aggregate
    price of approximately $5.2 million;
    Contributed one completed development project for
    $95.6 million to AMB Japan Fund I, L.P., an
    unconsolidated co-investment joint venture. As a result of this
    contribution, we recognized an aggregate after-tax gain of
    $16.5 million, representing the portion of our interest in
    the contributed properties acquired by the third-party
    co-investors for cash; and
    Acquired the 50% interest in AMB BlackPine that we did not
    previously own.    
    Acquired 69 buildings in North America and Europe, aggregating
    approximately 5.9 million square feet, for
    $515.7 million;
    Committed to nineteen development projects in North America,
    Asia and Europe totaling 7.7 million square feet with an
    estimated total investment of approximately $604.6 million;
    Acquired 612 acres of land for development in North America
    and Asia for approximately $231.1 million;
    Sold one land parcel and four development projects totaling
    approximately 0.8 million square feet for an aggregate sale
    price of $46.0 million;
    Divested ourselves of thirteen industrial buildings aggregating
    approximately 0.9 million square feet, for an aggregate
    price of approximately $59.1 million, including one
    industrial building that was sold by one of our unconsolidated
    joint ventures;
    Contributed two completed development projects for
    $338.6 million to AMB Japan Fund I, L.P., and one
    completed development project for $38.4 million to AMB-SGP
    Mexico, LLC, both unconsolidated co-investment joint ventures.
    As a result of these contributions, we recognized an aggregate
    after-tax gain of $63.1 million, representing the portion
    of our interest in the contributed properties acquired by the
    third-party co-investors for cash; and
    Acquired the 50% interest in AMB BlackPine that we did not
    previously own.      
    Obtained long-term secured debt financings for our co-investment
    joint ventures of $33.4 million with a weighted average
    interest rate of 6.1%;
    Assumed $16.8 million of debt for our co-investment joint
    ventures at a weighted average interest rate of 6.5%;
    Obtained $7.0 million of debt (using exchange rates in
    effect at applicable quarter end dates) with a weighted average
    interest rate of 5.1% for international acquisitions;
    Repurchased all of AMB Property II, L.P.s outstanding
    7.95% Series F Cumulative Redeemable Preferred Limited
    Partnership Units for an aggregate cost of $10.0 million,
    including accrued and unpaid distributions;
    Raised $48.3 million in net proceeds from the issuance of
    $50.0 million of AMB Property Corporations 6.85%
    Series P Cumulative Redeemable Preferred Stock; and 34




---



##### Table of Contents




    On August 15, 2006, we issued $175.0 million aggregate
    principal amount of fixed rate senior unsecured notes under the
    2006 medium-term note program which mature on August 15,
    2013 and bear an interest at a rate of 5.90% per annum.    
    Obtained long-term secured debt financings for our co-investment
    joint ventures of $82.0 million with a weighted average
    interest rate of 6.0%;
    Assumed $29.9 million of debt for our co-investment joint
    ventures at a weighted average interest rate of 6.0%;
    Obtained $45.3 million of debt (using exchange rates in
    effect at applicable quarter end dates) with a weighted average
    interest rate of 4.2% for international acquisitions;
    Obtained a $65.0 million floating rate unsecured revolving
    credit facility for one of our co-investment joint ventures;
    Entered into a third amended and restated credit agreement for a
    $250.0 million unsecured multi-currency revolving credit
    facility which replaced an existing $100.0 million
    unsecured multi-currency revolving credit facility;
    Repurchased AMB Property II, L.P.s 7.75%
    Series E Cumulative Redeemable Preferred Limited
    Partnership Units for an aggregate cost of $10.9 million,
    including accrued and unpaid distributions;
    Repurchased AMB Property II, L.P.s 8.125%
    Series H Cumulative Redeemable Preferred Limited
    Partnership Units for an aggregate cost of $42.8 million,
    including accrued and unpaid distributions;
    Repurchased AMB Property II, L.P.s 5.0% Series N
    Cumulative Redeemable Preferred Limited Partnership Units for an
    aggregate cost of $36.6 million, including accrued and
    unpaid distributions;
    Completed the early renewal and increase of our senior unsecured
    revolving line of credit in the amount of $550.0 million,
    an increase of $50.0 million;
    Entered into an amended and restated revolving credit agreement
    for a 45.0 billion Yen (approximately $380.3 million
    U.S. Dollars, using the exchange rate at September 30,
    2006) unsecured revolving credit facility that replaced an
    existing 35.0 billion Yen (approximately
    $296.2 million U.S. Dollars, using the exchange rate
    at September 30, 2006) unsecured revolving credit
    facility;
    Repurchased all of AMB Property II, L.P.s outstanding
    7.95% Series F Cumulative Redeemable Preferred Limited
    Partnership Units for an aggregate cost of $10.0 million,
    including accrued and unpaid distributions;
    Raised $48.3 million in net proceeds from the issuance of
    $50.0 million of AMB Property Corporations 6.85%
    Series P Cumulative Redeemable Preferred Stock; and
    On August 15, 2006, we issued $175.0 million aggregate
    principal amount of fixed rate senior unsecured notes under the
    2006 medium-term note program which mature on August 15,
    2013 and bear an interest at a rate of 5.90% per annum.    Critical
    Accounting Policies
  Form 10-K
 35




---



##### Table of Contents



Stock-based Compensation Expense. Share Based Payment Accounting for Stock-Based
    Compensation
  Goodwill and Intangible Assets.
  THE
    COMPANY
  ® ®
      
    on a consolidated basis, we owned or partially owned 939
    industrial buildings, principally warehouse distribution
    facilities, encompassing approximately 93.6 million
    rentable square feet that were 95.9% leased;
    on a consolidated basis, we had investments in 45 industrial
    development projects which are expected to total approximately
    13.4 million rentable square feet upon completion; 36




---



##### Table of Contents




    on a consolidated basis, we owned eight development projects,
    totaling approximately 2.8 million rentable square feet
    that are available for sale or contribution; and
    through unconsolidated joint ventures, we had investments in 90
    industrial operating properties, totaling approximately
    14.8 million rentable square feet, and one industrial
    operating property, totaling approximately 0.2 million
    square feet which is available for sale or contribution.  day-to-day
      ® ® ® point-to-point.
    (415) 394-9000. Form 10-K, Form 10-Q, Form 8-K
  Operating
    Strategy
   37




---



##### Table of Contents



build-to-suit
  Growth
    Strategies
  Growth
    Through Operations
    Growth
    Through Development
      Growth
    Through Acquisitions and Capital Redeployment
   38




---



##### Table of Contents



Growth
    Through Global Expansion
    ® speed-to-market
  Growth
    Through Co-Investments
   39




---



##### Table of Contents



RESULTS
    OF OPERATIONS
        For the
    Three Months ended September 30, 2006 and 2005 (dollars in
    millions):
  Revenues

2006


2005


$ Change


% ChangeRental revenuesU.S. industrial:Same store

$
146.1


$
140.2


$
5.9



4.2
%2006 acquisitions


5.9







5.9




%2005 acquisitions


8.7



5.5



3.2



58.2
%Development


1.6



1.2



0.4



33.3
%Other industrial


4.1



2.7



1.4



51.9
%International industrial


13.8



4.7



9.1



193.6
%Total rental revenues


180.2



154.3



25.9



16.8
%Private capital income


7.5



5.8



1.7



29.3
%Total revenues

$
187.7


$
160.1


$
27.6



17.2
%   quarter-to-date
  40




---



##### Table of Contents



Costs and Expenses

2006


2005


$ Change


% ChangeProperty operating costs:Rental expenses

$
25.7


$
21.0


$
4.7



22.4
%Real estate taxes


20.3



18.9



1.4



7.4
%Total property operating costs

$
46.0


$
39.9


$
6.1



15.3
%Property operating costsU.S. industrial:Same store

$
37.8


$
37.2


$
0.6



1.6
%2006 acquisitions


1.5







1.5




%2005 acquisitions


2.0



1.3



0.7



53.8
%Development


0.8



0.7



0.1



14.3
%Other industrial


0.8



0.4



0.4



100.0
%International industrial


3.1



0.3



2.8



933.3
%Total property operating costs


46.0



39.9



6.1



15.3
%Depreciation and amortization


48.8



40.5



8.3



20.5
%General and administrative


25.8



16.8



9.0



53.6
%Other expenses


0.9



2.9



(2.0
)


(69.0
)%Fund costs


0.5



0.3



0.2



66.7
%Total costs and expenses

$
122.0


$
100.4


$
21.6



21.5
%   quarter-to-date quarter-to-quarter
  Other Income and (Expenses)

2006


2005


$ Change


% ChangeEquity in earnings of
    unconsolidated joint ventures, net

$
2.2


$
1.5


$
0.7



46.7
%Other income


2.6



3.0



(0.4
)


(13.3
)%Development profits, net of taxes


23.5



0.4



23.1



5,775.0
%Interest expense, including
    amortization


(44.5
)


(37.3
)


7.2



19.3
%Total other income and (expenses),
    net

$
(16.2
)

$
(32.4
)

$
(16.2
)


(50.0
)%    41




---



##### Table of Contents



Discontinued Operations

2006


2005


$ Change


% ChangeIncome attributable to
    discontinued operations, net of minority interests

$
1.0


$
2.3


$
(1.3
)


56.5
%Gains from dispositions of real
    estate, net of minority interests


0.2



15.1



(14.9
)


(98.7
)%Total discontinued operations

$
1.2


$
17.4


$
(16.2
)


(93.1
)%     Preferred Units

2006

2005

$ Change

% ChangePreferred unit distributions

$
(5.0
)

$
(3.4
)

$
1.6



47.1
%Total preferred units

$
(5.0
)

$
(3.4
)

$
1.6



47.1
%     For the
    Nine Months ended September 30, 2006 and 2005 (dollars in
    millions):
  Revenues

2006


2005


$ Change


% ChangeRental revenuesU.S. industrial:Same store

$
434.1


$
420.6


$
13.5



3.2
%2006 acquisitions


8.2







8.2




%2005 acquisitions


26.0



8.4



17.6



209.5
%Development


4.0



3.7



0.3



8.1
%Other industrial


12.9



5.2



7.7



148.1
%International industrial


46.2



23.6



22.6



95.8
%Total rental revenues


531.4



461.5



69.9



15.1
%Private capital income


17.5



12.5



5.0



40.0
%Total revenues

$
548.9


$
474.0


$
74.9



15.8
%   year-to-date
 42




---



##### Table of Contents



Costs and Expenses

2006


2005


$ Change


% ChangeProperty operating costs:Rental expenses

$
74.9


$
63.9


$
11.0



17.2
%Real estate taxes


61.0



55.4



5.6



10.1
%Total property operating costs

$
135.9


$
119.3


$
16.6



13.9
%Property operating costsU.S. industrial:Same store

$
114.9


$
111.1


$
3.8



3.4
%2006 acquisitions


2.0







2.0




%2005 acquisitions


6.3



1.8



4.5



250.0
%Development


2.0



1.8



0.2



11.1
%Other industrial


2.1



0.8



1.3



162.5
%International industrial


8.6



3.8



4.8



126.3
%Total property operating costs


135.9



119.3



16.6



13.9
%Depreciation and amortization


136.2



121.3



14.9



12.3
%Impairment losses


5.4







5.4




%General and administrative


74.0



54.9



19.1



34.8
%Other expenses


1.1



3.7



(2.6
)


(70.3
)%Fund costs


1.6



1.0



0.6



60.0
%Total costs and expenses

$
354.2


$
300.2


$
54.0



18.0
%   year-to-date year-to-year
  43




---



##### Table of Contents



Other Income and (Expenses)

2006


2005


$ Change


% ChangeEquity in earnings of
    unconsolidated joint ventures, net

$
12.6


$
10.0


$
2.6



26.0
%Other income


7.6



4.8



2.8



58.3
%Gains from disposition of real
    estate interests






18.9



(18.9
)


(100.0
)%Development profits, net of taxes


69.9



20.3



49.6



244.3
%Interest expense, including
    amortization


(129.6
)


(111.3
)


18.3



16.4
%Total other income and (expenses),
    net

$
(39.5
)

$
(57.3
)

$
(17.8
)


(31.1
)%   development-for-sale
  Discontinued Operations

2006


2005


$ Change


% ChangeIncome attributable to
    discontinued operations, net of minority interests

$
3.9


$
7.7


$
(3.8
)


49.4
%Gains from dispositions of real
    estate, net of minority interests


25.5



51.4



(25.9
)


(50.4
)%Total discontinued operations

$
29.4


$
59.1


$
(29.7
)


(50.3
)%     Preferred Units

2006


2005


$ Change


% ChangePreferred unit distributions

$
(14.4
)

$
(10.1
)

$
4.3



42.6
%Preferred unit redemption issuance
    costs


(1.0
)






1.0




%Total preferred units

$
(15.4
)

$
(10.1
)

$
5.3



52.5
%  44




---



##### Table of Contents



LIQUIDITY
    AND CAPITAL RESOURCES
  Balance Sheet Strategy. and/or
    
    retained earnings and cash flow from operations;
    private capital from co-investment partners;
    net proceeds from contribution of properties and completed
    development projects to our co-investment joint ventures;
    borrowings under our unsecured credit facilities;
    other forms of secured or unsecured financing;
    proceeds from debt or limited partnership unit offerings
    (including issuances of limited partnership units by our
    subsidiaries); and
    net proceeds from divestitures of properties.    
    working capital;
    development, expansion and renovation of properties;
    acquisitions, including our global expansion;
    debt service; and
    distributions on outstanding common and preferred limited
    partnership units.  Cash flows.
 45




---



##### Table of Contents



Capital
    Resources
  Property Divestitures.
  Gains from Contributions of Real Estate
    Interests.
  Development Sales.
  Development Contributions.
  Properties Held for Contribution.
  Properties Held for Divestiture.
 46




---



##### Table of Contents



development-for-sale
  Co-investment Joint Ventures.
    OurApproximateOwnership

Original PlannedConsolidated Co-investment Joint Venture

Joint Venture Partner

Percentage

Capitalization(1)AMB/Erie, L.P.

Erie Insurance Company and
    affiliates


50
%

$
200,000AMB Partners II, L.P.

City and County of
    San Francisco Employees Retirement System


20
%

$
580,000AMB-SGP, L.P.

Industrial JV Pte Ltd(2)


50
%

$
425,000AMB Institutional Alliance
    Fund II, L.P.

AMB Institutional Alliance
    REIT II, Inc.(3)


20
%

$
489,000AMB-AMS,
    L.P.(4)

PMT, SPW and TNO(5)


39
%

$
200,000AMB Institutional Alliance
    Fund III, L.P.(6)

AMB Institutional Alliance
    REIT III, Inc.


20
%


N/A     (1)
    
    Planned capitalization includes anticipated debt and both
    partners expected equity contributions.(2)
    
    A subsidiary of the real estate investment subsidiary of the
    Government of Singapore Investment Corporation.(3)
    
    Comprised of 14 institutional investors as stockholders and one
    third-party limited partner as of September 30, 2006.(4)
    
    AMB-AMS,
    L.P. is a co-investment partnership with three Dutch pension
    funds advised by Mn Services NV.(5)
    
    PMT is Stichting Pensioenfonds Metaal en Techniek, SPW is
    Stichting Pensioenfonds voor de Woningcorporaties and TNO is
    Stichting Pensioenfonds TNO.(6)
    
    AMB Institutional Alliance Fund III, L.P. is an open-ended
    co-investment partnership formed in 2004 with institutional
    investors, which invest through a private real estate investment
    trust.    OurApproximateOwnership

Original PlannedUnconsolidated Co-investment Joint Venture

Joint Venture Partner

Percentage

Capitalization(1)AMB-SGP Mexico, LLC

Industrial (Mexico) JV Pte Ltd(2)


20
%

$
715,000AMB Japan Fund I, L.P.

Institutional investors(3)


20
%

$
2,093,000
(4)     (1)
    
    Planned capitalization includes anticipated debt and both
    partners expected equity contributions.(2)
    
    A subsidiary of the real estate investment subsidiary of the
    Government of Singapore Investment Corporation.(3)
    
    Comprised of 13 institutional investors as of September 30,
    2006.(4)
    
    Using the exchange rate at September 30, 2006. 47




---



##### Table of Contents



Partners Capital.
            Debt. debt-to-our debt-to-our loan-to-value
   48




---



##### Table of Contents



Credit Facilities.
   49




---



##### Table of Contents



50




---



##### Table of Contents



DebtOur


Joint


UnsecuredSecured


Venture


Senior


Credit


Other


TotalDebt(4)


Debt


Debt


Facilities(1)


Debt


Debt2006

$
43,411


$
40,269


$
150,000
(6)

$



$
179


$
233,8592007


13,353



79,221



75,000







7,784



175,3582008


41,955



180,562



175,000







810



398,3272009


4,012



133,380



100,000







873



238,2652010


69,833



132,078



250,000



801,656



941



1,254,5082011


21,486



376,561



75,000







1,014



474,0612012


95,884



178,260











1,093



275,2372013


37,209



206,755



175,000







65,920
(5)


484,8842014


16,024



6,110











616



22,7502015


2,087



110,384



112,491







664



225,626Thereafter


14,617



62,390



125,000











202,007Subtotal


359,871



1,505,970



1,237,491



801,656



79,894



3,984,882Unamortized premiums/(discounts)


1,912



7,134



(10,930
)










(1,884
)Total consolidated debt


361,783



1,513,104



1,226,561



801,656



79,894



3,982,998Our share of unconsolidated joint
    venture debt(2)(3)






179,973















179,973Total debt


361,783



1,693,077



1,226,561



801,656



79,894



4,162,971Joint venture partners share
    of consolidated joint venture debt






(1,043,729
)










(52,000
)


(1,095,729
)Our share of total debt(3)

$
361,783


$
649,348


$
1,226,561


$
801,656


$
27,894


$
3,067,242Weighed average interest rate


5.0
%


6.3
%


6.2
%


3.2
%


6.8
%


5.5
%Weighed average maturity (in years)


5.3



5.2



4.6



3.6



6.1



4.7     (1)
    
    Includes $455.1 million, $227.7 million and
    $108.9 million in Euro, Yen and Canadian dollar based
    borrowings, respectively, translated to U.S. dollars using
    the functional exchange rates in effect on September 30,
    2006.(2)
    
    The weighted average interest and maturity for the
    unconsolidated joint venture debt were 4.5% and 4.2 years,
    respectively.(3)
    
    Our share of total debt is the pro rata portion of the total
    debt based on our percentage of equity interest in each of the
    consolidated or unconsolidated joint ventures holding the debt.
    We believe that our share of total debt is a meaningful
    supplemental measure, which enables both management and
    investors to analyze our leverage and to compare our leverage to
    that of other companies. In addition, it allows for a more
    meaningful comparison of our debt to that of other companies
    that do not consolidate their joint ventures. Our share of total
    debt is not intended to reflect our actual liability should
    there be a default under any or all of such loans or a
    liquidation of the joint ventures. The above table reconciles
    our share of total debt to total consolidated debt, a GAAP
    financial measure. 51




---



##### Table of Contents



(4)
    
    Our secured debt and joint venture debt include debt related to
    international assets in the amount of $271.2 million. Of
    this, $84.6 million is associated with assets located in
    Asia and the remaining $186.6 million is related to assets
    located in Europe.(5)
    
    Maturity includes $65.0 million balance outstanding on a
    $65.0 million non-recourse credit facility obtained by AMB
    Partners II, L.P.(6)
    
    Includes $50.0 million in notes which we currently intend
    to pay off at maturity in November 2006 and a
    $100.0 million term loan that matures in December 2006,
    which we currently intend to re-finance.  Market Capital (dollars in thousands, except share and per
    share data)UnitsSecurity

Outstanding


Market Price(1)


Market Value(1)Common general partnership units


89,000,686


$
55.11


$
4,904,828Common limited partnership units(2)


3,872,950



55.11



213,438Total


92,873,636






$
5,118,266     (1)
    
    Assumes that our general partnership units are exchanged for AMB
    Property Corporations common stock on a
    one-for-one
    basis because there is no public market for our units.(2)
    
    Includes 127,878 class B common limited partnership units
    issued by AMB Property II, L.P. in November 2003.  Preferred UnitsDistribution


Liquidation


Redemption/CallableSecurity

Rate


Preference


ProvisionsSeries D preferred units


7.75
%

$
79,767


May 2004Series I preferred units


8.00
%


25,500


March 2006Series J preferred units


7.95
%


40,000


September 2006Series K preferred units


7.95
%


40,000


April 2007Series L preferred units


6.50
%


50,000


June 2008Series M preferred units


6.75
%


57,500


November 2008Series O preferred units


7.00
%


75,000


December 2010Series P preferred units


6.85
%


50,000


August 2011Weighted average/total


7.27
%

$
417,767   Capitalization Ratios as of September 30, 2006Total
    debt-to-total
    market capitalization(1)


42.9
%Our share of total
    debt-to-our
    share of total market capitalization(1)


35.7
%Total debt plus
    preferred-to-total
    market capitalization(1)


47.2
%Our share of total debt plus
    preferred-to-our
    share of total market capitalization(1)


40.5
%Our share of total
    debt-to-our
    share of total book capitalization(1)


56.9
%     (1)
    
    Our definition of total market capitalization is
    total debt plus preferred equity liquidation preferences plus
    market equity. Our definition of our share of total market
    capitalization is our share of total debt plus preferred
    equity liquidation preferences plus market equity. Our
    definition of market equity is the total number of
    outstanding shares of our general partners common stock
    and our common limited partnership units multiplied by the
    closing price per share of our general partners common
    stock as of September 30, 2006. Our definition of
    preferred is preferred equity liquidation
    preferences. Our share of total book capitalization is defined
    as our share of total debt plus minority interests to preferred
    unitholders and limited partnership unitholders plus
    partners capital. Our share of total debt is the pro rata
    portion of the total debt based on our percentage of equity
    interest in each of the consolidated or unconsolidated ventures
    holding the debt. We believe that our share of total debt is a
    meaningful supplemental measure, which enables both management
    and 52




---



##### Table of Contents



investors to analyze our leverage and to compare our leverage to
    that of other companies. In addition, it allows for a more
    meaningful comparison of our debt to that of other companies
    that do not consolidate their joint ventures. Our share of total
    debt is not intended to reflect our actual liability should
    there be a default under any or all of such loans or a
    liquidation of the joint ventures. For a reconciliation of our
    share of total debt to total consolidated debt, a GAAP financial
    measure, please see the table of debt maturities and
    capitalization above.  Liquidity
      For the three months ended

For the nine months endedSeptember 30,

September 30,Paying Entity

Security

2006

2005

2006

2005Operating Partnership

Common limited partnership units

$
0.460


$
0.440


$
1.380


$
1.320Operating Partnership

Series J preferred units

$
0.994


$
0.994


$
2.981


$
2.981Operating Partnership

Series K preferred units

$
0.994


$
0.994


$
2.981


$
2.981AMB Property II, L.P.

Class B common limited
    partnership units

$
0.460


$
0.440


$
1.380


$
1.320AMB Property II, L.P.

Series D preferred units

$
0.969


$
0.969


$
2.906


$
2.906AMB Property II, L.P.

Series E preferred units(1)


n/a


$
0.969


$
1.776


$
2.906AMB Property II, L.P.

Series F preferred units(2)

$
0.729


$
0.994


$
2.716


$
2.981AMB Property II, L.P.

Series H preferred units(3)


n/a


$
1.016


$
0.970


$
3.047AMB Property II, L.P.

Series I preferred units

$
1.000


$
1.000


$
3.000


$
3.000AMB Property II, L.P.

Series N preferred units(4)


n/a


$
0.625


$
0.215


$
1.875     (1)
    
    In June 2006, AMB Property II, L.P. repurchased all of its
    outstanding series E preferred units.(2)
    
    In September 2006, AMB Property II, L.P. repurchased all of
    its outstanding series F preferred units.(3)
    
    In March 2006, AMB Property II, L.P. repurchased all of its
    outstanding series H preferred units.(4)
    
    The holder of the series N preferred units exercised its
    put option in January 2006 and sold all of its series N
    preferred units to us and AMB Property II, L.P. repurchased
    all of such units from us.    Capital
    Commitments
  Developments Starts.
 53




---



##### Table of Contents



Development Pipeline.
  Acquisitions.
  Lease Commitments.
  Co-investment Joint Ventures.
  Captive Insurance Company.
 54




---



##### Table of Contents



Potential Unknown Liabilities.
  
    liabilities for
    clean-up or
    remediation of undisclosed environmental conditions;
    claims of customers, vendors or other persons dealing with our
    predecessors prior to our formation or acquisition transactions
    that had not been asserted prior to our formation or acquisition
    transactions;
    accrued but unpaid liabilities incurred in the ordinary course
    of business;
    tax liabilities; and
    claims for indemnification by the officers and directors of our
    general partners predecessors and others indemnified by
    these entities.  OFF-BALANCE
    SHEET ARRANGEMENTS
  Standby Letters of Credit.
  Guarantees. ,
  Performance and Surety Bonds.
  Promoted Interests and Other Contractual
    Obligations.
  SUPPLEMENTAL
    EARNINGS MEASURES
  FFO.
 55




---



##### Table of Contents



56




---



##### Table of Contents



For the Three Months


For the Nine MonthsEnded September 30,


Ended September 30,2006


2005


2006


2005Net income(1)

$
36,226


$
32,077


$
147,133


$
127,492Income available to common
    unitholders attributable to limited partners


(1,249
)


(1,419
)


(6,046
)


(6,098
)Gains from dispositions of real
    estate, net of minority interests


(213
)


(14,330
)


(24,335
)


(66,596
)Depreciation and amortization:Total depreciation and amortization


48,761



40,494



136,160



121,279Discontinued operations
    depreciation


(37
)


4,216



270



12,483Non-real estate depreciation


(1,001
)


(892
)


(3,069
)


(2,439
)Adjustments to derive FFO from
    consolidated joint ventures:Joint venture partners
    minority interests (Net income)


12,317



8,806



30,145



27,039Limited partnership
    unitholders minority interests (Net income)


108



528



1,469



1,505Limited partnership
    unitholders minority interests (Development profits)


1,086



16



3,260



568Discontinued operations
    minority interests (Net income)


(18
)


2,226



(278
)


6,850FFO attributable to minority
    interests


(24,471
)


(24,944
)


(66,654
)


(72,634
)Adjustments to derive FFO from
    unconsolidated joint ventures:Our share of net income


(2,239
)


(1,529
)


(12,605
)


(9,959
)Our share of FFO


4,030



4,592



9,335



11,808Our share of development profits,
    net














5,441Preferred unit distributions


(5,030
)


(3,373
)


(14,401
)


(10,119
)Preferred unit redemption issuance
    costs


16







(1,004
)


Funds from operations

$
68,286


$
46,468


$
199,380


$
146,620Basic FFO per common
    unit

$
0.74


$
0.52


$
2.18


$
1.66Diluted FFO per common
    unit

$
0.72


$
0.50


$
2.10


$
1.59Weighted average common
    units:Basic


92,088,600



89,098,104



91,569,011



88,407,261Diluted


95,117,597



93,034,016



94,734,736



92,121,224     (1)
    
    Includes gains from undepreciated land sales of
    $4.8 million and $0.2 million for the three months
    ended September 30, 2006 and 2005, respectively. Includes
    gains from undepreciated land sales of $5.3 million and
    $8.6 million for the nine months ended September 30,
    2006 and 2005, respectively.  SS NOI.
 57




---



##### Table of Contents



year-over-year
      For the Three Months


For the Nine MonthsEnded September 30,


Ended September 30,2006


2005


2006


2005Net income

$
36,226


$
32,077


$
147,133


$
127,492Private capital income


(7,490
)


(5,764
)


(17,539
)


(12,520
)Depreciation and amortization


48,761



40,494



136,160



121,279Impairment losses










5,394



General and administrative


25,851



16,815



74,043



54,876Other expenses


893



2,925



1,134



3,663Fund costs


495



329



1,588



1,073Total other income and expenses


16,136



32,414



39,492



57,347Total minority interests
    share of income


14,584



12,637



37,710



48,038Total discontinued operations


(1,243
)


(17,457
)


(29,371
)


(59,076
)Cumulative effect of change in
    accounting principle










(193
)


Net Operating Income (NOI)


134,213



114,470



395,551



342,172Less non same-store NOI


(21,926
)


(7,896
)


(67,142
)


(20,383
)Less non-cash adjustments(1)


(2,673
)


(2,957
)


(7,379
)


(10,234
)Cash-basis same-store NOI

$
109,614


$
103,617


$
321,030


$
311,555     (1)
    
    Non-cash adjustments include straight line rents and
    amortization of lease intangibles for the same store pool only. 58




---



##### Table of Contents



OPERATING
    AND LEASING STATISTICS SUMMARY
    For the Three


For the NineMonths Ended


Months EndedSeptember 30,


September 30,Operating Portfolio(1)

2006


2006Square feet owned at
    September 30, 2006(2)


93,562,702



93,562,702Occupancy percentage at
    September 30, 2006


95.9
%


95.9
%Weighted average lease terms:Original


6.1 years



6.1 yearsRemaining


3.3 years



3.3 yearsTenant retention


81.0
%


72.0
%Same Space Leasing Activity(3):Rent increases (decreases) on
    renewals and rollovers


9.9
%


(1.7
)%Same space square footage
    commencing (millions)


3.6



12.9Second Generation Leasing
    Activity(4):Tenant improvements and leasing
    commissions per sq. ft.:Renewals

$
1.52


$
1.34Re-tenanted


3.57



3.19Weighted average

$
2.33


$
2.16Square footage commencing
    (millions)


4.5



14.6     (1)
    
    Includes all consolidated industrial operating properties and
    excludes industrial development and renovation projects.(2)
    
    In addition to owned square feet as of September 30, 2006,
    we managed, but did not have an ownership interest in,
    approximately 0.4 million additional square feet of
    industrial properties. One of our subsidiaries also manages
    approximately 1.1 million square feet of properties
    representing the IAT portfolio on behalf of the IAT Air Cargo
    Facilities Income Fund. We also have investments in
    approximately 14.8 million square feet of industrial
    operating properties through our investments in unconsolidated
    joint ventures.(3)
    
    Consists of second generation leases renewing or re-tenanting
    with current and prior lease terms greater than one year.(4)
    
    Second generation tenant improvements and leasing commissions
    per square foot are the total cost of tenant improvements,
    leasing commissions and other leasing costs incurred during
    leasing of second generation space divided by the total square
    feet leased. Costs incurred prior to leasing available space are
    not included until such space is leased. Second generation space
    excludes newly-developed square footage or square footage vacant
    at acquisition. 59




---



##### Table of Contents



For the Three


For the NineMonths Ended


Months EndedSeptember 30, 2006


September 30, 2006Square feet in same store pool at
    September 30, 2006(1)


79,057,056



79,057,056% of total industrial square feet


84.5
%


84.5
%Occupancy percentage at period end:September 30, 2006


96.1
%


96.1
%September 30, 2005


94.7
%


94.7
%Weighted average lease terms:Original


6.0 years



6.0 yearsRemaining


3.1 years



3.1 yearsTenant retention


75.3
%


72.3
%Rent increases (decreases) on
    renewals and rollovers


9.9
%


(1.9
)%Same space square footage
    commencing (millions)


3.6



12.7Cash basis NOI growth  %
    increase (decrease):Revenues


4.4
%


3.0
%Expenses


0.7
%


3.0
%Net operating income


5.8
%


3.0
%Net operating income without lease
    termination fees


5.5
%


3.3
%     (1)
    
    Same store properties are those properties that we owned during
    both the current and prior year reporting periods, excluding
    development properties prior to being stabilized (generally
    defined as properties that are 90% leased or properties for
    which we have held a certificate of occupancy or where building
    has been substantially complete for at least 12 months).  Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk      2006


2007


2008


2009


2010


Thereafter


TotalFixed rate debt(1)

$
183,297


$
137,595


$
376,517


$
191,001


$
451,131


$
1,455,815


$
2,795,356Average interest rate


6.2
%


7.0
%


7.1
%


5.2
%


6.4
%


6.1
%


6.3
%Variable rate debt(2)

$
50,562


$
37,763


$
21,810


$
47,264


$
803,377


$
228,750


$
1,189,526Average interest rate


5.8
%


7.1
%


6.9
%


5.6
%


3.1
%


3.9
%


3.7
%Interest Payments

$
14,349


$
12,272


$
28,122


$
12,519


$
54,313


$
98,035


$
219,610     (1)
    
    Represents 70.1% of all outstanding debt.(2)
    
    Represents 29.9% of all outstanding debt. 60




---



##### Table of Contents



Financial Instruments.
  Maturity Dates


Notional


FairRelated Derivatives (in thousands)

December 2006


December 2008


June 2010


November 2014


Amount


ValueForeign Exchange
    Agreements:Japanese Yen Call
    OptionNotional Amount (U.S. Dollars)

$
20,000














$
20,000Fair Market Value





















$
124Interest Rate Swaps:Plain Interest Rate Swap,
    EuropeNotional Amount (U.S. Dollars)





$
9,332











9,332Receive Floating (%)






3M EURIBORPay Fixed Rate (%)






3.72
%Fair Market Value






















(4
)Plain Interest Rate Swap,
    USDNotional Amount (U.S. Dollars)









$
25,000







25,000Receive Floating (%)










3M LIBORPay Fixed Rate (%)










5.17
%Fair Market Value






















(171
)Plain Interest Rate Swap,
    EuropeNotional Amount (U.S. Dollars)













$
3,367



3,367Receive Floating (%)














3M EURIBORPay Fixed Rate (%)














4.26
%Fair Market Value






















(77
)Total

















$
57,699


$
(128
)   International Operations.
 61




---



##### Table of Contents



Item 4.
    Controls
    and Procedures    Rule 13a-15(b)
   62




---



##### Table of Contents



PART II  Item 1.
    Legal
    Proceedings    Item 1A.
    Risk
    Factors  Form 10-K Form 10-Q
  Item 2.
    Unregistered
    Sales of Equity 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  No. 001-13545.
  ExhibitNumber

Description3
.1

Twelfth Amended and Restated
    Agreement of Limited Partnership of AMB Property, L.P., dated as
    of August 25, 2006 (incorporated herein by reference to
    Exhibit 3.1 of AMB Property, L.P.s Current Report on
    Form 8-K
    filed on August 30, 2006).4
.1

Seventh Supplemental Indenture,
    dated as of August 10, 2006, by and among AMB Property,
    L.P., AMB Property Corporation and U.S. Bank National
    Association, as
    successor-in-interest
    to State Street Bank and Trust Company of California, N.A., as
    trustee, including the Form of Fixed Rate Medium-Term Note,
    Series C, attaching the Form of Parent Guarantee, and the
    Form of Floating Rate Medium-Term Note, Series C, attaching
    the Form of Parent Guarantee (incorporated herein by reference
    to Exhibit 4.2 of AMB Property, L.P.s Current Report
    on
    Form 8-K
    filed on August 10, 2006).4
.2

$175,000,000 Fixed Rate
    Note No. FXR-C-1,
    attaching the Parent Guarantee (incorporated herein by reference
    to Exhibit 4.1 of AMB Property, L.P.s Current Report
    on
    Form 8-K
    filed on August 15, 2006).10
.1

AMB 2005 Nonqualified Deferred
    Compensation Plan (incorporated herein by reference to
    Exhibit 10.1 of AMB Property, L.P.s Current Report on
    Form 8-K
    filed on October 4, 2006).10
.2

Amended and Restated 2002
    Nonqualified Deferred Compensation Plan (incorporated herein by
    reference to Exhibit 10.2 of AMB Property, L.P.s
    Current Report on
    Form 8-K
    filed on October 4, 2006).10
.3

Form of Amended and Restated
    Change of Control and Noncompetition Agreement by and between
    AMB Property, L.P. and executive officers (incorporated herein
    by reference to Exhibit 10.3 of AMB Property, L.P.s
    Current Report on
    Form 8-K
    filed on October 4, 2006).31
.1

Rule 13a-14 (a)/15d-14 (a) Certifications
    dated November 7, 2006.32
.1

18 U.S.C.§ 1350
    Certifications dated November 7, 2006. The certifications
    in this exhibit are being furnished solely to accompany this
    report pursuant to 18 U.S.C. sec. 1350, and are not being
    filed for purposes of Section 18 of the Securities Exchange
    Act of 1934, as amended, and are not to be incorporated by
    reference into any of our filings, whether made before or after
    the date hereof, regardless of any general incorporation
    language in such filing.  63




---



##### Table of Contents



SIGNATURES
    AMB Property, L.P.
  Registrant
    By:
    /s/  Hamid
    R. Moghadam    Chairman and CEO
    (Duly Authorized Officer and
 Principal Executive Officer)
  By:
    /s/  W.
    Blake Baird    President and Director
 (Duly Authorized Officer)
  By:
    /s/  Michael
    A. Coke    CFO and Executive Vice President
 (Duly Authorized Officer and Principal Financial
 and Accounting Officer)
   64