##### 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
    June 30, 2007ORo

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

94111(Address of Principal Executive
    Offices)

(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 June 30, 2007 and December 31,
    2006


1Consolidated
    Statements of Operations for the Three and Six Months Ended
    June 30, 2007 and 2006


2Consolidated
    Statement of Partners Capital for the Six Months Ended
    June 30, 2007


3Consolidated
    Statements of Cash Flows for the Six Months Ended June 30,
    2007 and 2006


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


62Item 4.


Controls and
    Procedures


63PART II.
    OTHER INFORMATIONItem 1.


Legal
    Proceedings


64Item 1A.


Risk
    Factors


64Item 2.


Unregistered Sales
    of Equity Securities and Use of Proceeds


65Item 3.


Defaults Upon
    Senior Securities


65Item 4.


Submission of
    Matters to a Vote of Security Holders


65Item 5.


Other
    Information


65Item 6.


Exhibits


66EXHIBIT 31.1EXHIBIT 32.1




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##### Table of Contents



PART I  Item 1.Financial
    Statements  AMB
    PROPERTY, L.P.
  CONSOLIDATED BALANCE SHEETS
 As of
    June 30, 2007 and December 31, 2006
  June 30,


December 31,2007


2006(Unaudited, dollars in thousands)ASSETSInvestments in real estate:Land

$
1,274,122


$
1,351,123Buildings and improvements


3,757,804



4,038,474Construction in progress


1,375,056



1,186,136Total investments in properties


6,406,982



6,575,733Accumulated depreciation and
    amortization


(854,227
)


(789,693
)Net investments in properties


5,552,755



5,786,040Investments in unconsolidated joint
    ventures


349,534



274,381Properties held for contribution,
    net


245,632



154,036Properties held for divestiture, net


45,146



20,916Net investments in real estate


6,193,067



6,235,373Cash and cash equivalents


223,968



174,763Restricted cash


27,084



21,115Accounts receivable, net of
    allowance for doubtful accounts of $7,175 and $6,361,
    respectively


166,449



133,998Deferred financing costs, net


24,861



20,394Other assets


123,835



127,869Total assets

$
6,759,264


$
6,713,512LIABILITIES AND PARTNERS
    CAPITALDebt:Secured debt

$
1,340,702


$
1,395,354Unsecured senior debt


1,057,498



1,101,874Unsecured credit facilities


562,184



852,033Other debt


85,110



88,154Total debt


3,045,494



3,437,415Security deposits


38,994



36,106Distributions payable


55,891



48,967Accounts payable and other
    liabilities


184,036



186,807Total liabilities


3,324,415



3,709,295Commitments and contingencies
    (Note 11)Minority interests:Joint venture partners


535,280



555,201Preferred unitholders


108,993



129,764Total minority interests


644,273



684,965Partners capital:General partner, 99,430,873 and
    89,433,024 units outstanding, respectively; 2,000,000
    Series L preferred units issued and outstanding with a
    $50,000 liquidation preference, 2,300,000 Series M
    preferred units issued and outstanding with a $57,500
    liquidation preference, 3,000,000 Series O preferred units
    issued and outstanding with a $75,000 liquidation preference and
    2,000,000 Series P preferred units issued and outstanding
    with
    a $50,000 liquidation preference


2,712,085



2,166,657Limited partners, 3,143,461 and
    3,450,343 units, respectively


78,491



152,595Total partners capital


2,790,576



2,319,252Total liabilities and
    partners capital

$
6,759,264


$
6,713,512    1




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##### Table of Contents



AMB
    PROPERTY, L.P.
  CONSOLIDATED STATEMENTS OF OPERATIONS
 For the
    Three and Six Months Ended June 30, 2007 and
    2006
  For the Three Months


For the Six MonthsEnded June 30,


Ended June 30,2007


2006


2007


2006(Unaudited, dollars in thousands, except unit and per unit
    amounts)REVENUESRental revenues

$
162,914


$
170,974


$
324,996


$
342,276Private capital income


8,518



4,943



14,443



10,049Total revenues


171,432



175,917



339,439



352,325COSTS AND EXPENSESProperty operating expenses


(24,435
)


(23,765
)


(49,806
)


(48,065
)Real estate taxes


(18,869
)


(19,824
)


(37,745
)


(39,667
)Depreciation and amortization


(41,483
)


(44,500
)


(82,504
)


(87,254
)Impairment losses






(5,394
)


(257
)


(5,394
)General and administrative


(30,260
)


(25,142
)


(60,114
)


(48,190
)Other expenses


(1,139
)


296



(2,051
)


(241
)Fund costs


(277
)


(479
)


(518
)


(1,093
)Total costs and expenses


(116,463
)


(118,808
)


(232,995
)


(229,904
)OTHER INCOME AND
    EXPENSESEquity in earnings of
    unconsolidated joint ventures, net


1,748



8,278



3,861



10,366Other income


6,472



2,258



11,979



5,765Gains from sale or contribution of
    real estate interests, net


74,707







74,843



Development profits, net of taxes


28,996



45,698



41,188



46,372Interest expense, including
    amortization


(33,369
)


(44,310
)


(67,951
)


(83,704
)Total other income and expenses, net


78,554



11,924



63,920



(21,201
)Income before minority interests,
    discontinued operations and cumulative effect of change in
    accounting principle


133,523



69,033



170,364



101,220Minority interests share of
    income:Joint venture partners share
    of income before minority interests and discontinued operations


(8,067
)


(8,895
)


(15,260
)


(17,297
)Joint venture partners share
    of development (profits) losses


(1,323
)


589



(1,335
)


589Preferred unitholders


(2,438
)


(2,450
)


(4,680
)


(5,887
)Total minority interests
    share of income


(11,828
)


(10,756
)


(21,275
)


(22,595
)Income from continuing operations
    before cumulative effect of change in accounting principle


121,695



58,277



149,089



78,625Discontinued operations:Income attributable to discontinued
    operations, net of minority interests


507



4,333



1,297



6,795Gains from dispositions of real
    estate, net of minority interests


315



17,928



359



25,294Total discontinued operations


822



22,261



1,656



32,089Net income before cumulative effect
    of change in accounting principle


122,517



80,538



150,745



110,714Cumulative effect of change in
    accounting principle














193Net income


122,517



80,538



150,745



110,907Series L, M, O and P preferred
    unit distributions


(3,952
)


(3,095
)


(7,904
)


(6,191
)Series J and K preferred unit
    distributions


(18
)


(1,590
)


(1,608
)


(3,180
)Preferred unit redemption (issuance
    costs) discount


(2,927
)


77



(2,927
)


(1,020
)Net income available to common
    unitholders

$
115,620


$
75,930


$
138,306


$
100,516Income available to common
    unitholders attributable to:General partner

$
111,390


$
72,335


$
133,120


$
95,719Limited partners


4,230



3,595



5,186



4,797Net income available to common
    unitholders

$
115,620


$
75,930


$
138,306


$
100,516Basic income per common
    unitIncome from continuing operations
    (after preferred unit distributions and preferred unit
    redemption discount /issuance costs) before cumulative effect of
    change in accounting principle

$
1.11


$
0.59


$
1.36


$
0.75Discontinued operations


0.01



0.24



0.02



0.35Cumulative effect of change in
    accounting principle














Net income available to common
    unitholders

$
1.12


$
0.83


$
1.38


$
1.10Diluted income per common
    unitIncome from continuing operations
    (after preferred unit distributions and preferred unit
    redemption discount/issuance costs) before cumulative effect of
    change in accounting principle

$
1.08


$
0.56


$
1.32


$
0.72Discontinued operations


0.01



0.24



0.02



0.34Cumulative effect of change in
    accounting principle














Net income available to common
    unitholders

$
1.09


$
0.80


$
1.34


$
1.06WEIGHTED AVERAGE COMMON UNITS
    OUTSTANDINGBasic


103,382,918



91,702,701



100,193,117



91,302,729Diluted


105,806,524



94,520,866



102,866,432



94,534,263    2




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##### Table of Contents



AMB
    PROPERTY, L.P.
  CONSOLIDATED STATEMENT OF PARTNERS CAPITAL
 For the
    Six Months Ended June 30, 2007
  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, 2006


9,300,000


$
223,417



89,433,024


$
1,943,240



1,600,000


$
77,815



3,450,343


$
74,780


$
2,319,252Comprehensive income:Net income






7,904







133,120







1,608







5,186Unrealized gain on securities and
    derivatives














305















Currency translation adjustment














(595
)














Total comprehensive income


































147,528Stock-based compensation
    amortization and issuance of common limited partnership units in
    connection with the issuance of restricted stock and options










19,734



9,403



















9,403Issuance of common units










8,365,800



472,072



















472,072Issuance of common limited
    partnership units in connection with the exercise of stock
    options










1,305,433



21,920



















21,920Conversion of operating partnership
    units to common stock










306,882



18,598











(306,882
)


(6,138
)


12,460Forfeiture of common limited
    partnership units in connection with the forfeiture of
    restricted stock














(1,331
)


















(1,331
)Repurchase of preferred units


















(1,600,000
)


(77,815
)










(77,815
)Offering costs






(5
)






(557
)


















(562
)Reallocation of interests














(8,323
)














9,197



874Distributions






(7,904
)






(99,179
)






(1,608
)






(4,534
)


(113,225
)Balance as of June 30, 2007


9,300,000


$
223,412



99,430,873


$
2,488,673






$




3,143,461


$
78,491


$
2,790,576    3




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##### Table of Contents



AMB
    PROPERTY, L.P.
  CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the
    Six Months Ended June 30, 2007 and 2006
  2007


2006(Unaudited, dollars in thousands)CASH FLOWS FROM OPERATING
    ACTIVITIESNet income

$
150,745


$
110,907Adjustments to net income:Straight-line rents and
    amortization of lease intangibles


(4,950
)


(11,300
)Depreciation and amortization


82,504



87,254Impairment losses


257



5,394Exchange losses


2,883



Stock-based compensation
    amortization


9,403



10,941Equity in earnings of
    unconsolidated joint ventures


(3,861
)


(10,366
)Operating distributions received
    from unconsolidated joint ventures


7,409



1,147Gains from sale or contribution of
    real estate interests, net


(74,843
)


Development profits, net of taxes


(41,188
)


(46,372
)Debt premiums, discounts and
    finance cost amortization, net


958



5,247Total minority interests
    share of net income


21,275



22,595Discontinued operations:Depreciation and amortization


8



452Joint venture partners share
    of net income


(63
)


139Gains from dispositions of real
    estate, net of minority interests


(359
)


(25,294
)Cumulative effect of change in
    accounting principle






(193
)Changes in assets and liabilities:Accounts receivable and other assets


(29,194
)


13,635Accounts payable and other
    liabilities


10,596



(4,239
)Net cash provided by operating
    activities


131,580



159,947CASH FLOWS FROM INVESTING
    ACTIVITIESChange in restricted cash


(5,979
)


5,353Cash paid for property acquisitions


(32,948
)


(311,507
)Additions to land, buildings,
    development costs, building improvements and lease costs


(537,709
)


(497,947
)Net proceeds from divestiture of
    real estate


402,614



149,559Additions to interests in
    unconsolidated joint ventures


(47,512
)


(5,121
)Capital distributions received from
    unconsolidated joint ventures


218



13,633Repayment of mortgage and loan
    receivables


1,589



2,805Cash transferred to unconsolidated
    joint venture


(32,465
)


Net cash used in investing
    activities


(252,192
)


(643,225
)CASH FLOWS FROM FINANCING
    ACTIVITIESIssuance of common units, net


493,992



33,400Borrowings on secured debt


509,033



196,149Payments on secured debt


(237,541
)


(208,377
)Borrowings on other debt


15,956



65,000Payments on other debt


(19,347
)


(746
)Borrowings on unsecured credit
    facilities


709,176



646,509Payments on unsecured credit
    facilities


(986,558
)


(252,828
)Payment of financing fees


(10,956
)


(5,736
)Net proceeds from issuances of
    senior debt


24,889



99,456Payments on senior debt securities


(70,000
)


(25,000
)Issuance costs on preferred units


(562
)


(217
)Repurchase of preferred units


(102,735
)


(88,180
)Contributions from co-investment
    partners


30,335



124,185Distributions paid to partners


(101,845
)


(86,536
)Distributions to minority
    interests, including preferred units


(76,574
)


(52,810
)Net cash provided by financing
    activities


177,263



444,269Net effect of exchange rate changes
    on cash


(7,446
)


8,473Net increase (decrease) in cash and
    cash equivalents


49,205



(30,536
)Cash and cash equivalents at
    beginning of period


174,763



232,881Cash and cash equivalents at end of
    period

$
223,968


$
202,345Supplemental Disclosures of Cash
    Flow InformationCash paid for interest, net of
    capitalized interest

$
64,900


$
77,244Non-cash transactions:Acquisition of properties

$
35,050


$
399,625Assumption of secured debt






(61,006
)Assumption of other assets and
    liabilities


388



(19,096
)Acquisition capital


(590
)


(8,016
)Minority interest contribution,
    including units issues


(1,900
)


Net cash paid for property
    acquisitions

$
32,948


$
311,507Preferred unit redemption issuance
    costs

$
2,927


$
1,020Contribution of properties to
    unconsolidated joint ventures, net

$
60,027


$
126,067Purchase of equity interest of
    unconsolidated joint venture, net

$
26,031


$
    4




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##### Table of Contents



AMB
    PROPERTY, L.P.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    June 30, 2007
    (unaudited)
  1.
    Organization
    and Formation of the Company  ® ®
         5




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##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    
    on an owned and managed basis, which includes investments held
    on a consolidated basis or through unconsolidated joint
    ventures, the Operating Partnership owned or partially owned
    approximately 111.3 million square feet (principally
    warehouse distribution buildings) that were 96.1% leased;
    on an owned and managed basis, which includes investments held
    on a consolidated basis or through unconsolidated joint
    ventures, the Operating Partnership had investments in 46
    industrial development projects, which are expected to total
    approximately 15.7 million square feet upon completion;
    on a consolidated basis, the Operating Partnership owned nine
    development projects, totaling approximately 2.2 million
    square feet, which are available for sale or contribution;
    through non-managed unconsolidated joint ventures, the Operating
    Partnership had investments in 46 industrial operating
    properties, totaling approximately 7.3 million square
    feet; and
    the Operating Partnership held approximately 0.2 million
    square feet through its investment in AMB Pier One, LLC. which
    is the location of the Operating Partnerships global
    headquarters.  2.
    Interim
    Financial Statements    Form 10-K Form 10-Q
    Investments in Real Estate. property-by-property re-evaluated
 6




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##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Reclassifications.
  Comprehensive Income.
  International Operations.
      Goodwill and Intangible Assets. Goodwill and Other
    Intangible Assets
  New Accounting Pronouncements. Accounting
    for Uncertainty in Income Taxes  an interpretation of
    FASB Statement No. 109,
    3.
    Real
    Estate Acquisition and Development Activity  Acquisition Activity.
 7




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##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Development Starts.
  Development Completions.
 8




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##### 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
  Development Contributions.
 9




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##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Gains from Sale or Contribution of Real Estate
    Interests.
  Properties Held for Contribution. 15-20%.
  Properties Held for Divestiture.
    For the Three


For the SixMonths Ended


Months EndedJune 30,


June 30,2007


2006


2007


2006Rental revenues

$
(178
)

$
4,183


$
(241
)

$
9,232Straight-line rents and
    amortization of lease intangibles






207







362Property operating expenses


(14
)


(739
)


(50
)


(2,195
)Real estate taxes


(59
)


(595
)


(92
)


(1,222
)Depreciation and amortization


(4
)


62



(8
)


(452
)General and administrative






166







166Other income and expenses, net






15



2



19Interest, including amortization


764



1,036



1,623



1,024Joint venture partners share
    of (income) loss


(2
)


(2
)


63



(139
)Income attributable to
    discontinued operations

$
507


$
4,333


$
1,297


$
6,795  10




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##### Table of Contents



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


December 31,2007


2006Other assets

$
123


$
165Accounts payable and other
    liabilities

$
4,840


$
1,602   5.
    Debt    June 30,


December 31,2007


2006Operating Partnership secured
    debt, varying interest rates from 1.1% to 9.0%, due December
    2007 to January 2012 (weighted average interest rate of 6.0% and
    5.6% at June 30, 2007 and December 31, 2006,
    respectively)

$
220,968


$
368,332Consolidated joint venture secured
    debt, varying interest rates from 3.5% to 9.4%, due September
    2007 to February 2024 (weighted average interest rates of 6.2%
    and 6.5% at June 30, 2007 and December 31, 2006,
    respectively)


1,114,797



1,020,678Unsecured senior debt securities,
    varying interest rates from 3.5% to 8.0%, due August 2007 to
    June 2018 (weighted average interest rates of 6.2% and 6.2% at
    June 30, 2007 and December 31, 2006, respectively and
    of unamortized discounts of $10.0 million and
    $10.6 million, respectively)


1,067,491



1,112,491Other debt, varying interest rates
    from 3.4% to 7.5%, due August 2007 to November 2015 (weighted
    average interest rates of 6.4% and 6.6% at June 30, 2007
    and December 31, 2006, respectively)


85,110



88,154Unsecured credit facilities,
    variable interest rates, due February 2010 and June 2010
    (weighted average interest rates of 2.1% and 3.1% at
    June 30, 2007 and December 31, 2006, respectively)


562,184



852,033Total debt before unamortized net
    (discounts)


3,050,550



3,441,688Unamortized net discounts


(5,056
)


(4,273
)Total consolidated debt

$
3,045,494


$
3,437,415      11




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##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
           12




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##### Table of Contents



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




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##### Table of Contents



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


ConsolidatedPartnership


Joint Venture


UnsecuredSecured


Secured


Senior Debt


Credit


OtherDebt


Debt


Securities


Facilities


Debt


Total2007

$
57,917


$
29,640


$
55,000


$



$
13,179


$
155,7362008


69,188



79,398



175,000







810



324,3962009


25,799



127,993



100,000







873



254,6652010


65,905



95,179



250,000



562,184



941



974,2092011


115



189,611



75,000







1,014



265,7402012


2,044



449,587











1,093



452,7242013






46,447



175,000







65,920



287,3672014






4,076











616



4,6922015






18,780



112,491







664



131,9352016






54,995















54,995Thereafter






19,091



125,000











144,091Sub Total


220,968



1,114,797



1,067,491



562,184



85,110



3,050,550Unamortized net discounts


1,225



3,712



(9,993
)










(5,056
)Total consolidated debt

$
222,193


$
1,118,509


$
1,057,498


$
562,184


$
85,110


$
3,045,494   6.
    Minority
    Interests  Consolidation of Variable Interest Entities
     14




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##### Table of Contents



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


Total InvestmentPartnerships


in Real Estate(1)


Property Debt(2)


Other DebtOwnership


June 30,


December 31,


June 30,


December 31,


June 30,


December 31,Co-investment Joint Venture

Joint Venture Partner

Percentage


2007


2006


2007


2006


2007


2006AMB/Erie, L.P.

Erie Insurance Company and
    affiliates


50
%

$
52,654


$
52,942


$
20,318


$
20,605


$



$
AMB Partners II, L.P.

City and County of
    San Francisco Employees Retirement System


20
%


687,323



679,138



320,662



323,532



65,000



65,000AMB-SGP, L.P.

Industrial JV Pte Ltd(3)


50
%


448,399



444,990



348,928



235,480







AMB Institutional Alliance
    Fund II, L.P.

AMB Institutional Alliance REIT II,
    Inc.(4)


20
%


523,766



519,534



240,812



243,263







AMB-AMS,
    L.P.(5)

PMT, SPW and TNO(6)


39
%


155,235



153,563



84,118



78,904







Total







$
1,867,377


$
1,850,167


$
1,014,838


$
901,784


$
65,000


$
65,000     (1)
    
    The Operating Partnership also had other consolidated joint
    ventures with total investments in real estate of
    $606.0 million as of June 30, 2007.(2)
    
    The Operating Partnership also had other consolidated joint
    ventures with property debt of $103.7 million as of
    June 30, 2007.(3)
    
    A subsidiary of GIC Real Estate Pte. Ltd., the real estate
    investment subsidiary of the Government of Singapore Investment
    Corporation.(4)
    
    Comprised of 14 institutional investors as stockholders and one
    third-party limited partner as of June 30, 2007.(5)
    
    AMB-AMS,
    L.P. is a co-investment partnership with three Dutch pension
    funds.(6)
    
    PMT is Stichting Pensioenfonds Metaal en Techniek, SPW is
    Stichting Pensioenfonds voor de Woningcorporaties and TNO is
    Stichting Pensioenfonds TNO.    June 30,


December 31,


Redemption/Callable2007


2006


DateJoint Venture Partners

$
535,280


$
555,201



N/AHeld through AMB Property II, L.P.:Class B Common Limited
    Partnership Units


31,430



27,281



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


77,563



77,684



February 2012Series I preferred units
    (liquidation preference of $25,500)






24,799



Repurchased in April 2007Total minority interests

$
644,273


$
684,965  15




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##### Table of Contents



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


For the Six MonthsEnded June 30,


Ended June 30,2007


2006


2007


2006Joint Venture Partners share
    of income

$
8,067


$
8,895


$
15,260


$
17,297Joint Venture Partners share
    of development profits (losses)


1,323



(589
)


1,335



(589
)Held through AMB Property II, L.P.:Class B common limited
    partnership units


976



16



1,109



42Series D preferred units
    (liquidation preference of $79,767)


1,337



1,546



2,936



3,091Series E preferred units
    (repurchased in June 2006)






178







392Series F preferred units
    (repurchased in September 2006)






200







400Series H preferred units
    (repurchased in March 2006)














815Series I preferred units
    (repurchased in April 2007)


125



510



635



1,020Series N preferred units
    (repurchased in January 2006)














127Total minority interests
    share of income

$
11,828


$
10,756


$
21,275


$
22,595      16




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##### Table of Contents



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




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##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  7.
    Investments
    in Unconsolidated Joint Ventures    OperatingPartnershipsSquare


June 30,


December 31,


OwnershipUnconsolidated Joint Ventures

Feet


2007


2006


PercentageCo-Investment Joint
    VenturesAMB Institutional Alliance
    Fund III, L.P.(1)


17,999,126


$
139,448


$
136,971



20
%AMB Europe Fund I, FCP-FIS(2)


6,005,508



48,686



n/a



20
%AMB Japan Fund I, L.P.(3)


4,877,468



44,905



31,811



20
%AMB DFS Fund I, LLC(4)


1,218,483



17,833



11,700



15
%AMB-SGP Mexico, LLC(5)


4,688,440



12,839



7,601



20
%Other Industrial Operating
    Joint Ventures


7,669,507



49,361



47,955



53
%G. Accion, S.A. de C.V.,
    (G.Accion)


n/a



36,462



38,343



39
%Total Unconsolidated Joint
    Ventures


42,458,532


$
349,534


$
274,381     (1)
    
    AMB Institutional Alliance Fund III, L.P. is an open-ended
    co-investment partnership formed in 2004 with institutional
    investors, which invests through a private real estate
    investment trust. Prior to October 1, 2006, the Operating
    Partnership accounted for AMB Institutional Alliance Fund III,
    L.P. as a consolidated joint venture.(2)
    
    AMB Europe Fund I, FCP-FIS, is an open-ended co-investment
    venture formed in 2007 with institutional investors. This fund
    is Euro-denominated. U.S. dollar amounts are converted at the
    exchange rate in effect on June 30, 2007.(3)
    
    AMB Japan Fund I, L.P. is a co-investment partnership
    formed in 2005 with institutional investors. This fund is
    Yen-denominated. U.S. dollar amounts are converted at the
    exchange rate in effect on June 30, 2007.(4)
    
    AMB DFS Fund I, LLC is a co-investment partnership formed
    in 2006 with a subsidiary of GE Real Estate to build and sell
    properties.(5)
    
    AMB-SGP Mexico, LLC, is a co-investment partnership formed in
    2004 with Industrial (Mexico) JV Pte. Ltd., a subsidiary of GIC
    Real Estate Pte. Ltd, the real estate investment subsidiary of
    the Government of Singapore Investment Corporation.     18




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##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
             19




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##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
        8.
    Partners
    Capital       20




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##### Table of Contents



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


For the SixMonths Ended


Months EndedJune 30,


June 30,Paying Entity

Security

2007


2006


2007


2006Operating Partnership

Common limited partnership units

$
0.500


$
0.460


$
1.000


$
0.920Operating Partnership

Series J preferred units(1)

$
0.011


$
0.994


$
1.005


$
1.988Operating Partnership

Series K preferred units(1)

$
0.011


$
0.994


$
1.005


$
1.988AMB Property II, L.P.

Class B common limited partnership
    units

$
0.500


$
0.460


$
1.000


$
0.920AMB Property II, L.P.

Series D preferred units

$
0.838


$
0.969


$
1.840


$
1.938AMB Property II, L.P.

Series E preferred units(2)


n/a


$
0.807



n/a


$
1.776AMB Property II, L.P.

Series F preferred units(3)


n/a


$
0.994



n/a


$
1.988AMB Property II, L.P.

Series H preferred units(4)


n/a



n/a



n/a


$
0.970AMB Property II, L.P.

Series I preferred units(5)

$
0.244


$
1.000


$
1.244


$
2.000AMB Property II, L.P.

Series N preferred units(6)


n/a



n/a



n/a


$
0.215     (1)
    
    In April 2007, the Operating Partnership redeemed all of its
    Series J and Series K preferred units.(2)
    
    In June 2006, AMB Property II, L.P. repurchased all of its
    outstanding Series E preferred units.(3)
    
    In September 2006, AMB Property II, L.P. repurchased all of its
    outstanding Series F preferred units.(4)
    
    In March 2006, AMB Property II, L.P. repurchased all of its
    outstanding Series H preferred units.(5)
    
    In April 2007, AMB Property II, L.P., repurchased all of its
    Series I preferred units.(6)
    
    The holder of the Series N preferred units exercised its
    put option in January 2006 and sold all of its Series N
    preferred units to the Operating Partnership and AMB Property
    II, L.P. repurchased all of such units from the Operating
    Partnership.       21




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##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    9.
    Income
    Per Unit    For the Three Months


For the Six MonthsEnded June 30,


Ended June 30,2007


2006


2007


2006NumeratorIncome from continuing operations
    before cumulative effect of change in accounting principle

$
121,695


$
58,277


$
149,089


$
78,625Preferred unit distributions


(3,970
)


(4,685
)


(9,512
)


(9,371
)Preferred unit redemption
    discount/issuance costs


(2,927
)


77



(2,927
)


(1,020
)Income from continuing operations
    before cumulative effect of change in accounting principle
    (after preferred unit distributions)


114,798



53,669



136,650



68,234Total discontinued operations


822



22,261



1,656



32,089Cumulative effect of change in
    accounting principle














193Net income available to common
    unitholders

$
115,620


$
75,930


$
138,306


$
100,516DenominatorBasic


103,382,918



91,702,701



100,193,117



91,302,729Stock options and restricted stock
    dilution(1)


2,423,606



2,818,165



2,673,315



3,231,534Diluted weighted average common
    units


105,806,524



94,520,866



102,866,432



94,534,263 22




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##### Table of Contents



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


For the Six MonthsEnded June 30,


Ended June 30,2007


2006


2007


2006Basic income per common
    unitIncome from continuing operations
    (after preferred unit distributions) before cumulative effect of
    change in accounting principle

$
1.11


$
0.59


$
1.36


$
0.75Discontinued operations


0.01



0.24



0.02



0.35Cumulative effect of change in
    accounting principle














Net income available to common
    unitholders

$
1.12


$
0.83


$
1.38


$
1.10Diluted income per common
    unitIncome from continuing operations
    (after preferred unit distributions) before cumulative effect of
    change in accounting principle

$
1.08


$
0.56


$
1.32


$
0.72Discontinued operations


0.01



0.24



0.02



0.34Cumulative effect of change in
    accounting principle














Net income available to common
    unitholders

$
1.09


$
0.80


$
1.34


$
1.06     (1)
    
    Excludes anti-dilutive stock options of 623,347 and 437,228, for
    the three and six months ended June 30, 2007, respectively.
    Excludes anti-dilutive stock options of 704,323 and 548,195, for
    the three and six months ended June 30, 2006, respectively.
    These weighted average shares relate to anti-dilutive stock
    options, which is calculated using the treasury stock method,
    and could be dilutive in the future.  10.
    Segment
    Information    
    Real Estate Operations.  The Operating
    Partnership operates industrial properties and manages its
    business by geographic markets. Such industrial properties
    typically comprise multiple distribution warehouse facilities
    suitable for single or multiple customers who are engaged in
    various types of businesses. The geographic markets where it
    owns industrial properties are managed separately because the
    Operating Partnership believes each market has its own economic
    characteristics and requires its own operating, pricing and
    leasing strategies. Each market is considered to be an
    individual operating segment. The accounting policies of the
    segments are the same as those described in the summary of
    significant accounting policies. The Operating Partnership
    evaluates performance based upon property net operating income
    of the combined properties in each segment, which are listed
    below. In addition, the Operating Partnerships development
    business is included under real estate operations. It primarily
    consists of the Operating Partnerships development of real
    estate properties that are subsequently contributed to a joint
    venture fund in which the Operating Partnership has an ownership
    interest in and acts as manager for, or that are sold to third
    parties. The Operating Partnership evaluates performance of the
    development business by reported operating segment based upon
    gains generated from the disposition
    and/or
    contribution of real estate. The assets of the development
    business generally include properties under development and land
    held for development. During the period between the completion
    of development of a property and the date the property is
    contributed to an unconsolidated joint venture or sold to a
    third party, the property and its 23




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##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  associated rental income and property operating costs are
    included in the real estate operations segment because the
    primary activity associated with the property during that period
    is leasing. Upon contribution or sale, the resulting gain or
    loss is included as gains from dispositions of real estate
    interests or development profits, as appropriate.  
    Private Capital.  The Operating Partnership,
    through its private capital group, AMB Capital Partners, LLC,
    provides real estate investment, portfolio management and
    reporting services to co-investment joint ventures and clients.
    The private capital income earned consists of acquisition and
    development fees, asset management fees and priority
    distributions, and promoted interests and incentive
    distributions from the Operating Partnerships
    co-investment joint ventures and AMB Capital Partners
    clients. With respect to the Operating Partnerships
    U.S. and Mexico funds and joint ventures, the Operating
    Partnership typically earns a 90 basis points acquisition
    fee on the acquisition cost of third party acquisitions, asset
    management priority distributions of 7.5% of net operating
    income on stabilized properties, 70 basis points of total
    projected costs as asset management fees on renovation or
    development properties, and incentive distributions of 15% of
    the return over a 9% internal rate of return and 20% of the
    return over a 12% internal rate of return to investors on a
    periodic basis or at the end of a funds life. In Japan,
    the Operating Partnership earns a 90 basis points
    acquisition fee on the acquisition cost of third party
    acquisitions, asset management priority distributions of 1.5% of
    80% of the committed equity during the investment period and
    then 1.5% of unreturned equity, and incentive distributions of
    20% of the return over a 10% internal rate of return and 25% of
    the return over a 13% internal rate of return to investors at
    the end of a funds life. In Europe, the Operating
    Partnership earns a 90 basis points acquisition fee on the
    acquisition cost of third party acquisitions, asset management
    fees of 75 basis points on the gross asset value of the
    fund, and incentive distributions of 20% of the return over a 9%
    internal rate of return and 25% of the return over a 12%
    internal rate of return to investors on a periodic basis. The
    accounting policies of the segment are the same as those
    described in the summary of significant accounting policies
    under Note 2, Interim Financial Statements. The Operating
    Partnership evaluates performance based upon private capital
    income. 24




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##### Table of Contents



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


Property NOI(2)


Development GainsFor the Three Months


For the Three Months


For the Three MonthsEnded June 30,


Ended June 30,


Ended June 30,Segments(1)

2007


2006


2007


2006


2007


2006U.S. MarketsSouthern California

$
27,428


$
27,840


$
21,809


$
21,962


$
336


$
No. New Jersey/New York


17,561



20,400



11,932



14,903







San Francisco Bay Area


21,077



20,980



16,617



16,439







Chicago


12,966



13,643



9,014



9,748







On-Tarmac


13,419



13,849



7,706



7,934







South Florida


11,055



10,319



7,246



6,809



4,159



176Seattle


9,106



9,768



7,131



7,683



5,161



(986
)Non - U.S. MarketsEurope


10,208



7,961



8,302



6,291



15,807



Asia


1,928



5,726



869



2,910







43,225Total markets


124,748



130,486



90,626



94,679



25,463



42,415Other Markets


35,753



38,724



26,498



29,608



3,533



3,283Straight-line rents and
    amortization of lease intangibles


2,235



6,154



2,235



6,154







Discontinued operations


178



(4,390
)


251



(3,056
)






Private capitalPrivate capital income


8,518



4,943















Total

$
171,432


$
175,917


$
119,610


$
127,385


$
28,996


$
45,698   25




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##### Table of Contents



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


Property NOI(2)


Development GainsFor the Six Months


For the Six Months


For the Six MonthsEnded June 30,


Ended June 30,


Ended June 30,Segments(1)

2007


2006


2007


2006


2007


2006U.S. MarketsSouthern California

$
53,847


$
55,255


$
42,598


$
43,780


$
9,340


$
No. New Jersey/New York


35,551



40,053



24,074



28,250







San Francisco Bay Area


42,688



42,535



33,723



33,392







Chicago


26,480



27,272



18,221



19,072



2,668



On-Tarmac


26,879



27,904



14,982



15,802







South Florida


21,772



19,570



14,483



13,104



4,637



850Seattle


18,430



19,122



14,325



14,929



5,161



(986
)Non - U.S. MarketsEurope


21,950



14,493



17,662



11,523



15,807



Asia


3,346



15,599



1,519



10,848







43,225Total markets


250,943



261,803



181,587



190,700



37,613



43,089Other Markets


68,862



78,767



50,525



58,721



3,575



3,283Straight-line rents and
    amortization of lease intangibles


4,950



11,300



4,950



11,300







Discontinued operations


241



(9,594
)


383



(6,177
)






Private capitalPrivate capital income


14,443



10,049















Total

$
339,439


$
352,325


$
237,445


$
254,544


$
41,188


$
46,372     (1)
    
    The markets included are a subset of the Operating
    Partnerships regions defined as East, Southwest and West
    Central in North America, Europe and Asia.(2)
    
    Property net operating income (NOI) is defined as
    rental revenue, including reimbursements, less property
    operating expenses, which excludes depreciation, amortization,
    general and administrative expenses and interest expense. For a
    reconciliation of NOI to net income, see the table below.   26




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##### Table of Contents



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


For the Six MonthsEnded June 30,


Ended June 30,2007


2006


2007


2006Property NOI

$
119,610


$
127,385


$
237,445


$
254,544Development profits, net of taxes


28,996



45,698



41,188



46,372Private capital income


8,518



4,943



14,443



10,049Depreciation and amortization


(41,483
)


(44,500
)


(82,504
)


(87,254
)Impairment losses






(5,394
)


(257
)


(5,394
)General and administrative


(30,260
)


(25,142
)


(60,114
)


(48,190
)Other expenses


(1,139
)


296



(2,051
)


(241
)Fund costs


(277
)


(479
)


(518
)


(1,093
)Equity in earnings of
    unconsolidated joint ventures


1,748



8,278



3,861



10,366Other income


6,472



2,258



11,979



5,765Gains from sale or contribution of
    real estate interests


74,707







74,843



Interest, including amortization


(33,369
)


(44,310
)


(67,951
)


(83,704
)Total minority interests
    share of income


(11,828
)


(10,756
)


(21,275
)


(22,595
)Total discontinued operations


822



22,261



1,656



32,089Cumulative effect of change in
    accounting principle














193Net income

$
122,517


$
80,538


$
150,745


$
110,907     Total Assets as ofJune 30,


December 31,2007


2006U.S. MarketsSouthern California

$
911,325


$
895,610No. New Jersey/New York


623,024



607,727San Francisco Bay Area


739,570



703,660Chicago


440,369



446,662On-Tarmac


204,784



210,798South Florida


347,772



371,603Seattle


377,861



380,459Non-U.S.
    MarktesEurope


313,261



723,326Asia


556,561



434,706Total marktes


4,514,527



4,774,551Other Markets


1,619,374



1,430,308Investments in unconsolidated
    joint ventures


349,534



274,381Non-segment assets


275,829



234,272Total assets

$
6,759,264


$
6,713,512  27




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##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   11.
    Commitments
    and Contingencies  Commitments
  Lease Commitments.
  Standby Letters of Credit.
  Guarantees and Contribution Obligations.
        Performance and Surety Bonds.
  Promoted Interests and Other Contractual
    Obligations.
  Contingencies
  Litigation.
 28




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##### Table of Contents



AMB
    PROPERTY, L.P.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Environmental Matters.
  General Uninsured Losses.
  Captive Insurance Company.
  12.
    Subsequent
    Events     29




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##### 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 numerous risks and
    uncertainties, there are important factors that could cause our
    actual results to differ materially from those in the
    forward-looking statements, and you should not rely on the
    forward-looking statements as predictions of future events. The
    events or circumstances reflected in forward-looking statements
    might not occur. You can identify forward-looking statements by
    the use of forward-looking terminology such as
    believes, expects, may,
    will, should, seeks,
    approximately, intends,
    plans, pro forma, estimates
    or anticipates, or the negative of these words and
    phrases, or similar words or phrases. You can also identify
    forward-looking statements by discussions of strategy, plans or
    intentions. Forward-looking statements should not be read as
    guarantees of future performance or results, and will not
    necessarily be accurate indicators of whether, or the time at
    which, such performance or results will be achieved. There is no
    assurance that the events or circumstances reflected in
    forward-looking statements will occur or be achieved.
    Forward-looking statements are necessarily dependent on
    assumptions, data or methods that may be incorrect or imprecise
    and we may not be able to realize them.
  The 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, public
    opposition to these activities, as well as the risks associated
    with our expansion of and increased investment in our
    development business);
    risks of doing business internationally, including
    unfamiliarity with new markets and currency risks;
    risks of opening offices globally (including increasing
    headcount);
    a downturn in the California, U.S., or the global economy or
    real estate conditions;
    risks of changing personnel and roles;
    losses in excess of our insurance coverage;
    our failure to divest of properties on advantageous terms or
    to timely reinvest proceeds from any such divestitures;
    unknown liabilities acquired in connection with acquired
    properties or otherwise;
    risks associated with using debt to fund acquisitions and
    development, including re-financing risks;
    risks related to our obligations in the event of certain
    defaults under joint venture and other debt;
    our failure to obtain necessary financing;
    our failure to maintain our current credit agency ratings;
    risks associated with equity and debt securities financings
    and issuances (including the risk of dilution);
    changes in local, state and federal regulatory
    requirements;
    increases in real property tax rates;
    risks associated with our tax structuring; 30




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##### Table of Contents



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




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##### Table of Contents



non-U.S. markets non-U.S. operating
 32




---



##### Table of Contents



Principal


Other


Total/WeightedOwned and Managed Property Data(1)

Global Markets(2)


Global Markets(3)


AverageAs of and for the three months
    ended June 30, 2007:Rentable square feet


72,044,446



39,291,182



111,335,628Occupancy percentage at period end


96.6
%


95.2
%


96.1
%Same space square footage leased


3,356,475



1,159,959



4,516,434Rent increases (decreases) on
    renewals and rollovers(4)


2.6
%


(0.2
)%


2.0
%As of and for the three months
    ended June 30, 2006:Rentable square feet


48,924,541



47,696,087



96,620,628Occupancy percentage at period end


96.1
%


94.2
%


95.2
%Same space square footage leased


3,382,662



1,225,307



4,607,969Rent increases (decreases) on
    renewals and rollovers


0.2
%


(5.2
)%


(0.9
)%As of and for the six months ended
    June 30, 2007:Rentable square feet


72,044,446



39,291,182



111,335,628Occupancy percentage at period end


96.6
%


95.2
%


96.1
%Same space square footage leased


6,929,972



2,810,971



9,740,943Rent increases on renewals and
    rollovers(4)


2.7
%


1.3
%


2.4
%As of and for the six months ended
    June 30, 2006:Rentable square feet


48,924,541



47,696,087



96,620,628Occupancy percentage at period end


96.1
%


94.2
%


95.2
%Same space square footage leased


6,624,227



2,712,092



9,336,319Rent decreases on renewals and
    rollovers


(6.2
)%


(5.4
)%


(6.0
)%     (1)
    
    Owned and managed operating properties are defined as properties
    in which we have at least a 10% ownership interest, for which we
    are the property or asset manager, and which we intend to hold
    for the long-term.(2)
    
    Our principal global markets are Chicago, Northern New
    Jersey/New York City, Paris, the San Francisco Bay Area,
    Seattle, South Florida, Southern California, Tokyo and U.S.
    On-Tarmac.(3)
    
    Our other global markets in North America are Atlanta, Austin,
    Baltimore, Boston, Columbus, Dallas, Guadalajara, Houston,
    Mexico City, Minneapolis, New Orleans, Orlando, Querétaro,
    Tijuana and Toronto. In Europe, our other global markets are
    Amsterdam, Brussels, Frankfurt, Hamburg and Lyon. In Asia, our
    other global markets are Osaka, Shanghai and Singapore.(4)
    
    For the quarter ended June 30, 2007, on a consolidated
    basis, rent increases on renewals and rollovers were 1.4%, 0.7%
    and 1.3%, for our principal global markets, other global markets
    and total markets, respectively. For the year-to-date ended
    June 30, 2007, on a consolidated basis, rent increases on
    renewals and rollovers were 2.0%, 2.1% and 2.0%, for our
    principal global markets, other global markets and total
    markets, respectively.   33




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##### Table of Contents



Summary
    of Key Transactions
    
    Formed an unconsolidated open-ended co-investment joint venture,
    AMB Europe Fund I, FCP-FIS, with the contribution of
    $584.0 million of operating properties and completed
    development projects to the fund;
    Acquired, on an owned and managed basis, 23 properties in North
    America, Asia and Europe aggregating approximately
    5.4 million square feet, for $494.6 million;
    Committed to ten development projects in North America and Asia
    totaling 3.2 million square feet with an estimated total
    investment of approximately $265.1 million;
    Acquired 515 acres of land for development in North America
    and Asia for approximately $72.4 million;
    Sold three development projects totaling approximately
    0.2 million square feet for an aggregate sale price of
    $20.9 million;
    Contributed three completed development projects, aggregating
    approximately 0.7 million square feet, for approximately
    $57.3 million to AMB Institutional Alliance Fund III,
    L.P.;
    Contributed one 0.2 million square foot operating property
    to AMB Institutional Alliance Fund III, L.P., for
    approximately $17.5 million; and
    Exercised the purchase option for the remaining equity interest
    of AMB Pier One, LLC, which is the location of our global
    headquarters.    
    Acquired, on an owned and managed basis, 31 properties in North
    America, Asia and Europe aggregating approximately
    7.2 million square feet, for $636.4 million;
    Committed to 15 development projects in North America and Asia
    totaling 5.1 million square feet with an estimated total
    investment of approximately $455.8 million;
    Acquired 937 acres of land for development in North America
    and Asia for approximately $113.2 million;
    Sold five development projects totaling approximately
    0.3 million square feet for an aggregate sale price of
    $45.6 million;
    Contributed five completed development projects, aggregating
    approximately 1.2 million square feet, for approximately
    $113.3 million to AMB Institutional Alliance Fund III,
    L.P., and AMB-SGP Mexico;
    Contributed two operating properties, aggregating approximately
    0.3 million square feet, to AMB-SGP Mexico, LLC, and AMB
    Institutional Alliance Fund III, L.P., for approximately
    $22.1 million;
    Contributed two land parcels to AMB-DFS Fund I, LLC;
    Formed an unconsolidated open-end co-investment joint venture,
    AMB Europe Fund I, FCP-FIS, with the contribution of
    $584.0 million of operating properties and completed
    development projects to the fund; and
    Exercised the purchase option for the remaining equity interest
    of AMB Pier One, LLC, which is the location of our global
    headquarters. 34




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##### Table of Contents




    Redeemed all 800,000 outstanding 7.95% Series J Cumulative
    Redeemable Preferred Limited Partnership Units for an aggregate
    cost of $40.0 million, plus accrued and unpaid
    distributions;
    Redeemed all 800,000 outstanding 7.95% Series K Cumulative
    Redeemable Preferred Limited Partnership Units for an aggregate
    cost of $40.0 million, plus accrued and unpaid
    distributions;
    Repurchased all 510,000 of AMB Property II, L.P.s
    outstanding 8.00% Series I Cumulative Redeemable Preferred
    Limited Partnership Units for an aggregate cost of
    $25.5 million, plus accrued and unpaid distributions, less
    applicable withholding; and
    Increased the capacity of our Yen credit facility by
    10.0 billion Yen from 45.0 billion Yen to
    55.0 billion Yen (an increase of approximately
    $81.1 million in U.S. dollars, using the exchange rate
    at June 30, 2007).    
    Raised approximately $472.1 million in net proceeds from
    AMB Property Corporations issuance of approximately
    8.4 million shares of its common stock which was
    contributed to us in exchange for the issuance of approximately
    8.4 million common general partnership units;
    Obtained long-term secured debt financings for our co-investment
    joint ventures of $324.0 million with a weighted average
    interest rate of 5.7%;
    Obtained $122.1 million of debt (using the exchange rate at
    June 30, 2007) with a weighted average interest rate
    of 3.4% for international assets;
    Refinanced $305.0 million of secured debt, with a weighted
    average interest rate of 5.7% for AMB-SGP, L.P., one of our
    co-investment joint ventures;
    Expanded the European revolving credit facility agreement by
    100.0 million Euro to 328.0 million Euro
    (approximately $444.2 million in U.S. dollars, using
    the exchange rate at June 30, 2007), which was assumed by
    AMB Europe Fund I, FCP-FIS, on June 12, 2007;
    Refinanced the Series D Cumulative Redeemable Preferred
    Limited Partnership Units to, among other things, change the
    rate applicable from 7.75% to 7.18% and change the date prior to
    which such units may not be redeemed from May 5, 2004 to
    February 22, 2012;
    Increased the capacity of our Yen credit facility by
    10.0 billion Yen from 45.0 billion Yen to
    55.0 billion Yen (approximately $81.1 million in
    U.S. dollars, using the exchange rate at June 30,
    2007);
    Redeemed all 800,000 outstanding 7.95% Series J Cumulative
    Redeemable Preferred Limited Partnership Units for an aggregate
    cost of $40.0 million, plus accrued and unpaid
    distributions;
    Redeemed all 800,000 outstanding 7.95% Series K Cumulative
    Redeemable Preferred Limited Partnership Units for an aggregate
    cost of $40.0 million, plus accrued and unpaid
    distributions; and
    Repurchased all 510,000 of AMB Property II, L.P.s
    outstanding 8.00% Series I Cumulative Redeemable Preferred
    Limited Partnership Units for an aggregate cost of
    $25.5 million, plus accrued and unpaid distributions, less
    applicable withholding.   35




---



##### Table of Contents



Critical
    Accounting Policies
  Form 10-K
  THE
    COMPANY
  ® ®
          ® ® ®
    
    on an owned and managed basis, which include investments held on
    a consolidated basis or through unconsolidated joint ventures,
    we owned or partially owned approximately 111.3 million
    square feet (principally warehouse distribution buildings) that
    were 96.1% leased; 36




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##### Table of Contents




    on an owned and managed basis, which include investments held on
    a consolidated basis or through unconsolidated joint ventures,
    we had investments in 46 industrial development projects, which
    are expected to total approximately 15.7 million square
    feet upon completion;
    on a consolidated basis, we owned nine development projects,
    totaling approximately 2.2 million square feet, which are
    available for sale or contribution;
    through non-managed unconsolidated joint ventures, we had
    investments in 46 industrial operating properties, totaling
    approximately 7.3 million square feet; and
    we held approximately 0.2 million square feet through our
    investment in AMB Pier One, LLC, which is the location of our
    global headquarters.  (415) 394-9000. www.amb.com Form 10-K, Form 10-Q, Form 8-K 1-800-SEC-0330. http://www.sec.gov
  Operating
    Strategy
      Growth
    Strategies
  Growth
    through Operations
   37




---



##### Table of Contents



Growth
    through Development and Value-Added Conversions
      Growth
    through Acquisitions and Capital Redeployment
      Growth
    through Global Expansion
  non-U.S. markets non-U.S. operating
 38




---



##### Table of Contents



®
  Growth
    through Co-Investments
  15-50%
  CONSOLIDATED
    RESULTS OF OPERATIONS
       39




---



##### Table of Contents



For the
    Three Months Ended June 30, 2007 and 2006 (dollars in
    millions):
  For the ThreeMonths Ended June 30,Revenues

2007


2006


$ Change


% ChangeRental revenuesU.S. industrial:Same store

$
138.5


$
149.8


$
(11.3
)


(7.5
)%2006 acquisitions


2.4



2.1



0.3



14.3
%Development


2.8



1.3



1.5



115.4
%Other industrial


2.9



2.5



0.4



16.0
%Non U.S. industrial


16.3



15.3



1.0



6.5
%Total rental revenues


162.9



171.0



(8.1
)


(4.7
)%Private capital income


8.5



4.9



3.6



73.5
%Total revenues

$
171.4


$
175.9


$
(4.5
)


(2.6
)%   non-U.S. industrial
  For the ThreeMonths Ended June 30,Costs and Expenses

2007


2006


$ Change


% ChangeProperty operating costs:Rental expenses

$
24.4


$
23.8


$
0.6



2.5
%Real estate taxes


18.9



19.8



(0.9
)


(4.5
)%Total property operating costs

$
43.3


$
43.6


$
(0.3
)


(0.7
)%Property operating costsU.S. industrialSame store

$
37.8


$
39.7


$
(1.9
)


(4.8
)%2006 acquisitions


0.6



0.5



0.1



20.0
%Development


1.0



0.6



0.4



66.7
%Other industrial


0.7



0.8



(0.1
)


(12.5
)%Non U.S. industrial


3.2



2.0



1.2



60.0
%Total property operating costs


43.3



43.6



(0.3
)


(0.7
)%Depreciation and amortization


41.5



44.5



(3.0
)


(6.7
)%General and administrative


30.3



25.1



5.2



20.7
%Impairment losses






5.4



(5.4
)


100.0
%Other expenses


1.1



(0.3
)


1.4



(466.7
)%Fund costs


0.3



0.5



(0.2
)


(40.0
)%Total costs and expenses

$
116.5


$
118.8


$
(2.3
)


(1.9
)%  40




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##### Table of Contents



For the ThreeMonths Ended June 30,Other Income and (Expenses)

2007


2006


$ Change


% ChangeEquity in earnings of
    unconsolidated joint ventures, net

$
1.8


$
8.3


$
(6.5
)


(78.3
)%Other income


6.5



2.2



4.3



195.5
%Gains from sale or contribution of
    real estate interests, net


74.7







74.7



100.0
%Development profits, net of taxes


29.0



45.7



(16.7
)


(36.5
)%Interest expense, including
    amortization


(33.4
)


(44.3
)


(10.9
)


(24.6
)%Total other income and (expenses),
    net

$
78.6


$
11.9


$
(66.7
)


560.5
%    41




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##### Table of Contents



For the ThreeMonths Ended June 30,Discontinued Operations

2007


2006


$ Change


% ChangeIncome attributable to
    discontinued operations, net of minority interests

$
0.5


$
4.3


$
(3.8
)


(88.4
)%Gains from dispositions of real
    estate, net of minority interests


0.3



17.9



(17.6
)


(98.3
)%Total discontinued operations

$
0.8


$
22.2


$
(21.4
)


(96.4
)%     For the ThreeMonths Ended June 30,Preferred Units

2007


2006


$ Change


% ChangePreferred unit distributions

$
(4.0
)

$
(4.7
)

$
(0.7
)


(14.9
)%Preferred unit redemption issuance
    costs


(2.9
)


0.1



3.0



(3,000.0
)%Total preferred units

$
(6.9
)

$
(4.6
)

$
2.3



50.0
%    42




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##### Table of Contents



For the
    Six Months Ended June 30, 2007 and 2006 (dollars in
    millions):
  For the SixMonths Ended June 30,Revenues

2007


2006


$ Change


% ChangeRental revenuesU.S. industrial:Same store

$
277.2


$
300.6


$
(23.4
)


(7.8
)%2006 acquisitions


4.9



2.4



2.5



104.2
%Development


5.5



2.6



2.9



111.5
%Other industrial


5.9



5.1



0.8



15.7
%Non U.S. industrial


31.5



31.6



(0.1
)


(0.3
)%Total rental revenues


325.0



342.3



(17.3
)


(5.1
)%Private capital income


14.4



10.0



4.4



44.0
%Total revenues

$
339.4


$
352.3


$
(12.9
)


(3.7
)%     For the SixMonths Ended June 30,Costs and Expenses

2007


2006


$ Change


% ChangeProperty operating costs:Rental expenses

$
49.9


$
48.0


$
1.9



4.0
%Real estate taxes


37.7



39.7



(2.0
)


(5.0
)%Total property operating costs

$
87.6


$
87.7


$
(0.1
)


(0.1
)%Property operating costsU.S. industrialSame store

$
76.5


$
80.1


$
(3.6
)


(4.5
)%2006 acquisitions


1.3



0.6



0.7



116.7
%Development


2.0



1.0



1.0



100.0
%Other industrial


1.4



0.5



0.9



180.0
%Non U.S. industrial


6.4



5.5



0.9



16.4
%Total property operating costs


87.6



87.7



(0.1
)


(0.1
)%Depreciation and amortization


82.5



87.3



(4.8
)


(5.5
)%General and administrative


60.1



48.2



11.9



24.7
%Impairment losses


0.3



5.4



(5.1
)


(94.4
)%Other expenses


2.0



0.2



1.8



900.0
%Fund costs


0.5



1.1



(0.6
)


(54.5
)%Total costs and expenses

$
233.0


$
229.9


$
3.1



1.3
%  43




---



##### Table of Contents



non-U.S. industrial
  For the SixMonths Ended June 30,Other Income and (Expenses)

2007


2006


$ Change


% ChangeEquity in earnings of
    unconsolidated joint ventures, net

$
3.9


$
10.4


$
(6.5
)


(62.5
)%Other income


12.0



5.7



6.3



110.5
%Gains from sale or contribution of
    real estate interests, net


74.8







74.8



100.0
%Development profits, net of taxes


41.2



46.4



(5.2
)


(11.2
)%Interest expense, including
    amortization


(68.0
)


(83.7
)


(15.7
)


(18.8
)%Total other income and (expenses),
    net

$
63.9


$
(21.2
)

$
(85.1
)


(401.4
)%    44




---



##### Table of Contents



For the SixMonths Ended June 30,Discontinued Operations

2007


2006


$ Change


% ChangeIncome attributable to
    discontinued operations, net of minority interests

$
1.3


$
6.8


$
(5.5
)


(80.9
)%Gains from dispositions of real
    estate, net of minority interests


0.4



25.3



(24.9
)


(98.4
)%Total discontinued operations

$
1.7


$
32.1


$
(30.4
)


(94.7
)%     For the SixMonths Ended June 30,Preferred Units

2007


2006


$ Change


% ChangePreferred unit distributions

$
(9.5
)

$
(9.4
)

$
0.1



1.1
%Preferred unit redemption issuance
    costs


(2.9
)


(1.0
)


1.9



190.0
%Total preferred units

$
(12.4
)

$
(10.4
)

$
2.0



19.2
%    45




---



##### 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;
    proceeds from equity (common and preferred) or debt securities
    offerings;
    borrowings under our unsecured credit facilities;
    other forms of secured or unsecured financing;
    proceeds from 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;
    debt service; and
    distributions on outstanding common and preferred limited
    partnership units.  Cash flows.
   46




---



##### Table of Contents



Capital
    Resources
  Property Divestitures.
  Gains from Sale or Contribution of Real Estate
    Interests.
  Development Starts.
  Development Contributions.
  Properties Held for Contribution. 15-20%.
 47




---



##### Table of Contents



Properties Held for Divestiture.
  Co-Investment Joint Ventures. No. 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
    ApproximateOwnership


PlannedUnconsolidated Co-Investment Joint Venture

Joint Venture Partner

Percentage


Capitalization(1)AMB-SGP Mexico, LLC(2)

Industrial (Mexico) JV Pte Ltd


20
%

$
715,153AMB Japan Fund I, L.P.(3)

Institutional investors


20
%

$
1,977,580AMB Europe Fund I,
    FCP-FIS(4)(6)

Institutional investors


20
%

$
942,863AMB Institutional Alliance
    Fund III, L.P.(5)(6)

AMB Institutional Alliance REIT
    III, Inc.


20
%

$
1,874,461AMB DFS Fund I, LLC(7)

Strategic Realty Ventures, LLC


15
%

$
446,821     (1)
    
    Planned capitalization includes anticipated debt and all
    partners expected equity contributions.(2)
    
    AMB-SGP Mexico, LLC is a co-investment partnership formed in
    2004 with Industrial (Mexico) JV Pte. Ltd., a subsidiary of GIC
    Real Estate Pte. Ltd., the real estate investment subsidiary of
    the Government of Singapore Investment Corporation.(3)
    
    AMB Japan Fund I, L.P. is a co-investment partnership
    formed in 2005 with 13 institutional investors. The fund is
    Yen-denominated. U.S. dollar amounts are converted at the
    exchange rate in effect at June 30, 2007.(4)
    
    AMB Europe Fund I, FCP-FIS, is an open-ended co-investment
    venture formed in 2007 with institutional investors. The fund is
    Euro-denominated. U.S. dollar amounts are converted at the
    exchange rate in effect at June 30, 2007.(5)
    
    AMB Institutional Alliance Fund III, L.P. is an open-ended
    co-investment partnership formed in 2004 with institutional
    investors, which invests through a private real estate
    investment trust. Prior to October 1, 2006, we accounted
    for AMB Institutional Alliance Fund III, L.P. as a
    consolidated joint venture.(6)
    
    The planned gross capitalization and investment capacity of AMB
    Europe Fund I, FCP-FIS, and AMB Institutional Alliance
    Fund III, L.P. as open-ended funds are not limited. The
    planned gross capitalization represents the gross book value of
    real estate assets plus estimated investment capacity, as of the
    most recent quarter end.(7)
    
    AMB DFS Fund I, LLC is a co-investment partnership formed
    in 2006 with a subsidiary of GE Real Estate to build and sell
    properties.   48




---



##### Table of Contents



Partners Capital.
      Debt. 50-65%
       49




---



##### Table of Contents



Credit Facilities.
     50




---



##### Table of Contents



51




---



##### Table of Contents



DebtOur


Joint


UnsecuredSecured


Venture


Senior Debt


Credit


Other


TotalDebt(1)


Debt(1)


Securities


Facilities(2)


Debt


Debt2007

$
57,917


$
29,640


$
55,000


$



$
13,179


$
155,7362008


69,188



79,398



175,000







810



324,3962009


25,799



127,993



100,000







873



254,6652010


65,905



95,179



250,000



562,184



941



974,2092011


115



189,611



75,000







1,014



265,7402012


2,044



449,587











1,093



452,7242013






46,447



175,000







65,920
(5)


287,3672014






4,076











616



4,6922015






18,780



112,491







664



131,9352016






54,995















54,995Thereafter






19,091



125,000











144,091Subtotal


220,968



1,114,797



1,067,491



562,184



85,110



3,050,550Unamortized premiums (discounts)


1,225



3,712



(9,993
)










(5,056
)Total consolidated debt


222,193



1,118,509



1,057,498



562,184



85,110



3,045,494Our share of unconsolidated joint
    venture debt(3)






458,931











42,252



501,183Total debt(4)


222,193



1,577,440



1,057,498



562,184



127,362



3,546,677Joint venture partners share
    of consolidated joint venture debt






(717,813
)










(52,000
)


(769,813
)Our share of total debt(4)

$
222,193


$
859,627


$
1,057,498


$
562,184


$
75,362


$
2,776,864Weighed average interest rate


6.0
%


6.2
%


6.2
%


2.1
%


6.4
%


5.4
%Weighed average maturity
    (in years)


1.6



4.6



4.5



2.8



5.0



4.0     (1)
    
    Our secured debt and joint venture debt include debt related to
    European and Asian assets in the amount of $60.5 million
    and $45.5 million, respectively, translated to U.S. dollars
    using the exchange rate in effect on June 30, 2007.(2)
    
    Represents three credit facilities with total capacity of
    approximately $1.2 billion. Includes $403.8 million
    and $158.3 million in Yen and Canadian dollar-based
    borrowings, respectively, translated to U.S. dollars using the
    foreign exchange rates in effect on June 30, 2007.(3)
    
    The weighted average interest and average maturity for the
    unconsolidated joint venture debt were 4.5% and 5.1 years,
    respectively.(4)
    
    Our share of total debt represents the pro rata portion of the
    total debt based on our percentage of equity interest in each of
    the consolidated or unconsolidated joint ventures holding the
    debt. We believe that our share of total debt is a meaningful
    supplemental measure, which enables both management and
    investors to analyze our leverage and to compare our leverage to
    that of other companies. In addition, it allows for a more
    meaningful comparison of our debt to that of other companies
    that do not consolidate their joint ventures. Our share of total
    debt is not intended to reflect our actual liability should
    there be a default under any or all of such loans or a
    liquidation of the joint ventures. The above table reconciles
    our share of total debt to total consolidated debt, a GAAP
    financial measure.(5)
    
    Maturity includes $65.0 million balance outstanding on a
    $65.0 million non-recourse credit facility obtained by AMB
    Partners II, L.P. 52




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##### Table of Contents



Market Capital as of June 30, 2007Units


Market


MarketSecurity

Outstanding


Price(1)


Value(1)Common general partnership units


99,430,873


$
53.22


$
5,291,711Common limited partnership units(2)


4,402,174



53.22



234,284Total


103,833,047






$
5,525,995     (1)
    
    Assumes that our general partnership units are exchanged for AMB
    Property Corporations common stock on a one-for-one basis
    because there is no public market for our units.(2)
    
    Includes 1,258,713 class B common limited partnership units
    issued by AMB Property II, L.P.  Preferred Units as of June 30, 2007Distribution


Liquidation


Redemption/CallableSecurity

Rate


Preference


ProvisionsSeries D preferred units(1)


7.18
%

$
79,767


February 2012Series 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


6.90
%

$
312,267     (1)
    
    On January 29, 2007, all of the outstanding 7.75%
    Series D Cumulative Redeemable Preferred Limited
    Partnership Units of AMB Property II, L.P. were transferred from
    one institutional investor to another institutional investor. In
    connection with that transfer, AMB Property II, L.P. agreed to
    amend the terms of the Series D Cumulative Redeemable
    Preferred Limited Partnership Units to, among other things,
    change the rate applicable to the Series D Cumulative
    Redeemable Preferred Limited Partnership Units from 7.75% to
    7.18% and change the date prior to which the Series D
    Cumulative Redeemable Preferred Limited Partnership Units may
    not be redeemed from May 5, 2004 to February 22, 2012.  Capitalization Ratios as of June 30, 2007Total debt-to-total market
    capitalization(1)


37.8
%Our share of total debt-to-our
    share of total market capitalization(1)


32.2
%Total debt plus preferred-to-total
    market capitalization(1)


41.1
%Our share of total debt plus
    preferred-to-our share of total market capitalization(1)


35.9
%Our share of total debt-to-our
    share of total book capitalization(1)


48.9
%     (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 AMB Property Corporations common
    stock and our common limited partnership units multiplied by the
    closing price per share of AMB Property Corporations
    common stock as of June 30, 2007. 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 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 53




---



##### Table of Contents



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


For the SixMonths Ended


Months EndedJune 30,


June 30,Paying Entity

Security

2007


2006


2007


2006Operating Partnership

Common limited partnership units

$
0.500


$
0.460


$
1.000


$
0.920Operating Partnership

Series J preferred units(1)

$
0.011


$
0.994


$
1.005


$
1.988Operating Partnership

Series K preferred units(1)

$
0.011


$
0.994


$
1.005


$
1.988AMB Property II, L.P.

Class B common limited partnership
    units

$
0.500


$
0.460


$
1.000


$
0.920AMB Property II, L.P.

Series D preferred units

$
0.838


$
0.969


$
1.840


$
1.938AMB Property II, L.P.

Series E preferred units(2)


n/a


$
0.807



n/a


$
1.776AMB Property II, L.P.

Series F preferred units(3)


n/a


$
0.994



n/a


$
1.988AMB Property II, L.P.

Series H preferred units(4)


n/a



n/a



n/a


$
0.970AMB Property II, L.P.

Series I preferred units(5)

$
0.244


$
1.000


$
1.244


$
2.000AMB Property II, L.P.

Series N preferred units(6)


n/a



n/a



n/a


$
0.215     (1)
    
    In April 2007, the operating partnership redeemed all of its
    series J and series K preferred units.(2)
    
    In June 2006, AMB Property II, L.P. repurchased all of its
    outstanding series E preferred units.(3)
    
    In September 2006, AMB Property II, L.P. repurchased all of its
    outstanding series F preferred units.(4)
    
    In March 2006, AMB Property II, L.P. repurchased all of its
    outstanding series H preferred units.(5)
    
    In April 2007, AMB Property II, L.P. repurchased all of its
    series I preferred units.(6)
    
    The holder of the series N preferred units exercised its
    put option in January 2006 and sold all of its series N
    preferred units to us. AMB Property II, L.P. repurchased all of
    such units from us.    Capital
    Commitments
  Development Starts.
 54




---



##### Table of Contents



Development Pipeline.
  Acquisition Activity.
  Lease Commitments.
  Co-Investment Joint Ventures.
  Captive Insurance Company.
 55




---



##### Table of Contents



Potential Contingent and Unknown
    Liabilities.
  
    liabilities for environmental conditions;
    claims of customers, vendors or other persons dealing with our
    general partners 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
    predecessors and others indemnified by these entities.  OFF-BALANCE
    SHEET ARRANGEMENTS
  Standby Letters of Credit.
  Guarantees and Contribution Obligations.
        Performance and Surety Bonds.
 56




---



##### Table of Contents



Promoted Interests and Other Contractual
    Obligations.
  SUPPLEMENTAL
    EARNINGS MEASURES
  FFO.
   57




---



##### Table of Contents



For the Three Months


For the Six MonthsEnded June 30,


Ended June 30,2007


2006


2007


2006Net income available to common
    unitholders(1)

$
115,620


$
75,930


$
138,306


$
100,516Income available to common
    unitholders attributable to limited partners


(4,230
)


(3,595
)


(5,186
)


(4,797
)Gains from sale or contribution of
    real estate, net of minority interests


(75,091
)


(17,073
)


(75,262
)


(24,087
)Depreciation and amortization:Total depreciation and amortization


41,483



44,500



82,504



87,254Discontinued operations
    depreciation


4



(62
)


8



452Non-real estate depreciation


(1,401
)


(1,068
)


(2,578
)


(2,068
)Adjustments to derive FFO from
    consolidated joint ventures:Joint venture partners
    minority interests (Net income)


8,067



8,895



15,260



17,297Limited partnership
    unitholders minority interests (Net income)


4,001



341



4,495



1,068Limited partnership
    unitholders minority interests (Development profits)


1,251



2,208



1,801



2,240Discontinued operations
    minority interests (Net income)


25



209



(4
)


463FFO attributable to minority
    interests


(15,312
)


(21,748
)


(31,616
)


(42,183
)Adjustments to derive FFO from
    unconsolidated joint ventures:Our share of net income


(1,748
)


(8,278
)


(3,861
)


(10,366
)Our share of FFO


5,805



2,096



11,480



5,305Funds from operations

$
78,474


$
82,355


$
135,347


$
131,094Basic FFO per common
    unit

$
0.76


$
0.90


$
1.35


$
1.44Diluted FFO per common
    unit

$
0.74


$
0.87


$
1.32


$
1.39Weighted average common
    units:Basic


103,382,918



91,702,701



100,193,117



91,302,729Diluted


105,806,524



94,520,866



102,866,432



94,534,263     (1)
    
    Includes losses from undepreciated land sales of
    ($0.2) million for the three months ended 2006. Includes
    gains from undepreciated land sales of $0.2 million and
    $0.5 million for the six months ended June 30, 2007
    and 2006, respectively.  SS NOI.
 58




---



##### Table of Contents



For the Three Months


For the Six MonthsEnded June 30,


Ended June 30,2007


2006


2007


2006Net income

$
122,517


$
80,538


$
150,745


$
110,907Private capital income


(8,518
)


(4,943
)


(14,443
)


(10,049
)Depreciation and amortization


41,483



44,500



82,504



87,254Impairment losses






5,394



257



5,394General and administrative


30,260



25,142



60,114



48,190Other expenses


1,139



(296
)


2,051



241Fund costs


277



479



518



1,093Total other income and expenses


(78,554
)


(11,924
)


(63,920
)


21,201Total minority interests
    share of income


11,828



10,756



21,275



22,595Total discontinued operations


(822
)


(22,261
)


(1,656
)


(32,089
)Cumulative effect of change in
    accounting principle














(193
)Net Operating Income (NOI)


119,610



127,385



237,445



254,544Less non same store NOI


(17,715
)


(29,568
)


(35,019
)


(59,034
)Less non-cash adjustments(1)


(1,103
)


(2,153
)


(2,271
)


(5,962
)Cash-basis same store NOI

$
100,792


$
95,664


$
200,155


$
189,548     (1)
    
    Non-cash adjustments include straight line rents and
    amortization of lease intangibles for the same store pool only. 59




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##### Table of Contents



OWNED AND
    MANAGED OPERATING AND LEASING STATISTICS
  Owned and
    Managed Operating and Leasing Statistics(1)
    For the Three


For the SixMonths Ended


Months EndedOperating Portfolio(1)

June 30, 2007


June 30, 2007Square feet owned(2)(3)


111,335,628



111,335,628Occupancy percentage(3)


96.1
%


96.1
%Average occupancy percentage


94.9
%


94.9
%Weighted average lease terms
    (years)Original


6.0



6.0Remaining


3.4



3.4Trailing four quarter tenant
    retention


76.0
%


76.0
%Same Space Leasing Activity(4):Rent increases on renewals and
    rollovers


2.0
%


2.4
%Same space square footage
    commencing (millions)


4.5



9.7Second Generation Leasing
    Activity(5):Tenant improvements and leasing
    commissions per sq. ft.:Retained

$
1.30


$
1.12Re-tenanted


2.86



3.07Weighted average

$
2.08


$
1.94Square footage commencing
    (millions)


5.7



11.7     (1)
    
    Schedule includes owned and managed operating properties which
    we define as properties in which we have at least a 10%
    ownership interest, for which we are the property or asset
    manager, and which we intend to hold for the long-term. This
    excludes development and renovation projects and recently
    completed development projects available for sale or
    contribution which have not reached 90% economic occupancy.(2)
    
    In addition to owned square feet as of June 30, 2007, we
    managed, but did not have an ownership interest in,
    approximately 0.4 million additional square feet of
    properties. As of June 30, 2007, one of our subsidiaries
    also managed approximately 1.1 million additional square
    feet of properties representing the IAT portfolio on behalf of
    the IAT Air Cargo Facilities Income Fund. As of June 30,
    2007, we also had investments in 7.3 million square feet of
    operating properties through our investments in non-managed
    unconsolidated joint ventures.(3)
    
    On a consolidated basis, we had approximately 77.4 million
    rentable square feet with an occupancy rate of 96.6% at
    June 30, 2007.(4)
    
    Consists of second generation leases renewing or re-tenanting
    with current and prior lease terms greater than one year.(5)
    
    Second generation tenant improvements and leasing commissions
    per square foot are the total cost of tenant improvements,
    leasing commissions and other leasing costs incurred during
    leasing of second generation space divided by the total square
    feet leased. Costs incurred prior to leasing available space are
    not included until such space is leased. Second generation space
    excludes newly developed square footage or square footage vacant
    at acquisition. 60




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##### Table of Contents



Owned and
    Managed Same Store Operating Statistics(1)
    For the Three


For the SixMonths Ended


Months EndedSame Store Pool(1)

June 30, 2007


June 30, 2007Square feet in same store
    pool(2)(3)


85,808,842



85,808,842% of total square feet


77.1
%


77.1
%Occupancy percentage(3)June 30, 2007


96.4
%


96.4
%June 30, 2006


95.6
%


95.6
%Weighted average lease terms
    (years)Original


6.1



6.1Remaining


3.2



3.2Trailing four quarter tenant
    retention


75.8
%


75.8
%Same Space Leasing Activity(4):Rent increases on renewals and
    rollovers


1.6
%


2.2
%Same space square footage
    commencing (millions)


4.3
%


8.5
%Growth     %
    increase (decrease) (including straight-line rents and
    amortization of lease intangibles):Revenues(5)


4.2
%


4.0
%Expenses(5)


4.8
%


4.8
%Net operating income(5)(6)


4.0
%


3.7
%Growth     %
    increase (decrease) (excluding straight-line rents and
    amortization of lease intangibles):Revenues(5)


5.5
%


5.8
%Expenses(5)


4.8
%


4.8
%Net operating income(5)(6)


5.8
%


6.2
%     (1)
    
    Same store properties are those properties that we owned and
    managed during both the current and prior year reporting
    periods, excluding properties purchased and development
    properties stabilized after December 31, 2005 (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).(2)
    
    Schedule includes owned and managed operating properties which
    we define as properties in which we have at least a 10%
    ownership interest, for which we are the property or asset
    manager, and which we intend to hold for the long-term. This
    excludes development and renovation projects and recently
    completed development projects available for sale or
    contribution.(3)
    
    On a consolidated basis, we had approximately 73.6 million
    square feet with an occupancy rate of 96.6% at June 30,
    2007.(4)
    
    Consists of second generation leases renewing or re-tenanting
    with current and prior lease terms greater than one year.(5)
    
    For the three months ended June 30, 2007, on a consolidated
    basis, the percentage change was 4.2%, 5.5% and 3.7%,
    respectively, for revenues, expenses and net operating income
    (including straight-line rents and amortization of lease
    intangibles) and 5.4%, 5.5% and 5.4%, respectively, for the
    revenues, expenses and net operating income (excluding straight
    line rents and amortization of lease intangibles). For the six
    months ended June 30, 2007, on a consolidated basis, the
    percentage change was 4.4%, 5.9% and 3.7%, respectively, for
    revenues, expenses and net operating income (including
    straight-line rents and amortization of lease intangibles) and
    5.7%, 5.9% and 5.6%, respectively, for the revenues, expenses
    and net operating income (excluding straight line rents and
    amortization of lease intangibles). 61




---



##### Table of Contents



(6)
    
    See Part I, Item 2: Managements Discussion
    and Analysis of Financial Condition and Results of
    Operations  Supplemental Earnings Measures for
    a discussion of same store net operating income and cash-basis
    same store net operating income and a reconciliation of same
    store net operating income and cash-basis same store net
    operating income and net income.  Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk      2007


2008


2009


2010


2011


Thereafter


TotalFixed rate debt(1)

$
136,417


$
258,350


$
185,284


$
411,593


$
248,314


$
966,902


$
2,206,860Average interest rate


6.6
%


6.9
%


5.0
%


6.6
%


6.7
%


6.1
%


6.3
%Variable rate debt(2)

$
19,319


$
66,046


$
69,381


$
562,616


$
17,426


$
108,902


$
843,690Average interest rate


4.6
%


3.0
%


6.0
%


2.1
%


6.6
%


6.6
%


3.2
%Interest Payments

$
9,855


$
19,807


$
13,375


$
39,094


$
17,840


$
65,915


$
165,886     (1)
    
    Represents 72.3% of all outstanding debt.(2)
    
    Represents 27.7% of all outstanding debt.      Financial Instruments.
 62




---



##### Table of Contents



Maturity DatesRelated Derivatives (in thousands)

June 9, 2010


Notional Amount


Fair ValueNotional Amount (U.S. Dollars)

$
25,000


$
25,000Receive Floating (%)


US LIBORPay Fixed Rate (%)


5.17
%Fair Market Value

$
81






$
81Total





$
25,000


$
81   International Operations.
      Item 4.
    Controls
    and Procedures    Rule 13a-15(b)
   63




---



##### Table of Contents



PART II  Item 1.
    Legal
    Proceedings    Item 1A.
    Risk
    Factors  Form 10-K
  We
    face risks associated with the use of debt to fund acquisitions
    and developments, including refinancing and interest rate
    risk.
       64




---



##### Table of Contents



Adverse
    changes in our credit ratings could negatively affect our
    financing activity.
    We may
    not be successful in contributing properties to our joint
    venture funds or disposing of properties to third
    parties.
    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   65




---



##### Table of Contents



Item 6.
    Exhibits  No. 001-14245.
  ExhibitNumber

Description10
.1

Amended and Restated 2002 Stock
    Option and Incentive Plan of AMB Property Corporation and AMB
    Property, L.P. (incorporated by reference to Exhibit 10.1
    of AMB Property, L.P.s Current Report on
    Form 8-K
    filed on May 15, 2007).31
.1

Rule 13a-14(a)/15d-14(a) Certifications
    dated August 9, 2007.32
.1

18 U.S.C. § 1350
    Certifications dated August 9, 2007. The certifications in
    this exhibit are being furnished solely to accompany this report
    pursuant to 18 U.S.C. § 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.  66




---



##### Table of Contents



SIGNATURES
    AMB Property,
    L.P.,  By: AMB Property
    Corporation,
  its general partner
  By:
    /s/  Hamid
    R. Moghadam   Chairman of the Board and
 Chief Executive Officer
 (Duly Authorized Officer and
 Principal Executive Officer)
  By:
    /s/  Thomas
    S. Olinger   Chief Financial Officer
 (Duly Authorized Officer
 and Principal Financial Officer)
  By:
    /s/  Nina
    A. Tran   Senior Vice President and
 Chief Accounting Officer
 (Duly Authorized Officer and
 Principal Accounting Officer)
   67