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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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Form 10-K



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|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended December 31,
    2002                                             
|          
|or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR
    15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-13545

AMB Property, L.P.

(Exact name of Registrant as specified in its
charter)


|                                                                   |  |                                  
|------------------------------------------------------------------ |  | ---------------------------------
|Delaware                                                           |  | 94-3285362                       
|(State or Other Jurisdiction of
    Incorporation or Organization) |  | (IRS 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)


Securities registered pursuant to
Section 12(b) of the Act:

None


Securities registered pursuant to
Section 12(g) of the Act:

None


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

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this
Form 10-K.     o

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Exchange Act
Rule 12b-2).     Yes þ          No o

State the aggregate market value of common shares
held by non-affiliates of the registrant: None. No market for
the Registrants partnership units exists and, therefore, a
market value for such units cannot be determined.

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates by reference the
Registrants Proxy Statement for its Annual Meeting of
Stockholders which the Registrant anticipates will be filed no
later than 120 days after the end of its fiscal year
pursuant to Regulation 14A.



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PART I

Item 1.     Business

General

AMB Property, L.P., a Delaware limited
partnership, acquires, develops and operates industrial property
in key distribution markets throughout North America, in Europe
and in Asia. We commenced operations as a fully integrated real
estate company effective with the completion of AMB Property
Corporations initial public offering on November 26,
1997. Increasingly, our properties are designed for customers
who value the efficient movement of goods in the worlds
busiest distribution markets: large, supply-constrained
locations with close proximity to airports, seaports and major
freeway systems. We currently serve 2,550 customers in a
portfolio (owned, managed or under development) totaling 992
buildings, encompassing approximately 94.6 million square
feet (8.8 million square meters), in 30 global markets.

We are engaged in the acquisition, ownership,
operation, management, renovation, expansion and development of
primarily industrial properties in target markets in North
America, in Europe and in Asia. As of December 31, 2002,
AMB Property Corporation owned an approximate 94.5% general
partnership interest in us, excluding preferred units. As our
sole general partner, AMB Property Corporation has the full,
exclusive and complete responsibility and discretion in our
day-to-day management and control. Unless the context otherwise
requires, the terms we, us and
our refer to AMB Property, L.P. and our other
controlled subsidiaries.

Our investment strategy targets customers whose
businesses are growing at a faster rate than world gross
domestic product (GDP)  specifically, participants in
global trade. To serve the facilities needs of these customers,
we invest in major markets: transportation hubs and gateways in
the U.S., and targeted distribution and airport markets
internationally. Our target markets are characterized by large
population densities and typically offer substantial consumer
bases, proximity to large clusters of distribution-facility
users and significant labor pools. When measured by annual base
rents, approximately 70% of these assets are concentrated in
eight U.S. hub and gateway distribution markets: Atlanta,
Chicago, Dallas/ Fort Worth, Los Angeles, Northern New Jersey/
New York City, San Francisco Bay Area, Miami and Seattle.

By focusing on an investment strategy that
benefits from high customer demand and limited competition from
new supply, we believe that over time net operating income will
grow and our property values will increase. We work to implement
this strategy by investing in locations that have geographic or
regulatory supply constraints, high barriers to entry and close
proximity to large population centers, and in buildings with
customer-preferred characteristics.

Our portfolio is comprised of strategically
located industrial buildings in in-fill submarkets; in-fill
locations are characterized by supply constraints on the
availability of land for competing projects as well as physical,
political or economic barriers to new development. A substantial
majority of our owned or managed buildings function as High
Throughput Distribution®, or HTD® facilities;
buildings designed to quickly distribute our customers
products, rather than store them. Our investment focus on HTD
assets is based on the secular change toward lower inventory
levels and expedited supply chains.

HTD facilities have a variety of characteristics
that allow the rapid transport of goods from point-to-point;
examples include numerous dock doors, shallower building depths,
fewer columns, large truck courts and more space for trailer
parking. These facilities function best when located in
convenient proximity to transportation infrastructure such as
major airports and seaports. We believe that these building
characteristics represent an important success factor for
time-sensitive tenants such as air express, logistics and
freight forwarding companies.

As of December 31, 2002, we owned and
operated (exclusive of properties that we managed for third
parties) 904 industrial buildings and nine retail and other
properties, totaling approximately 85.2 million rentable
square feet, located in 28 markets throughout North America and
in France. As of December 31, 2002, our industrial and
retail properties were 94.6% and 88.6% leased, respectively. As
of December 31, 2002, through our subsidiary, AMB Capital
Partners, LLC, we also managed, but did not have an ownership
interest

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in, industrial buildings and retail centers,
totaling approximately 1.7 million rentable square feet, on
behalf of various clients. In addition, as of December 31,
2002, we had investments in 43 industrial buildings, totaling
approximately 5.5 million rentable square feet, through
unconsolidated joint ventures.


As of December 31, 2002, we had two retail
centers, four industrial properties and two development
properties that we are holding for divestiture. Over the next
few years, we intend to dispose of non-strategic assets and
redeploy the resulting capital into industrial properties in
supply-constrained markets in the U.S. and internationally that
better fit our current investment focus.

Our principal executive office is located at
Pier 1, Bay 1, San Francisco, California 94111; our
telephone number is (415) 394-9000. We also maintain
regional offices in Boston, Massachusetts and Amsterdam, the
Netherlands. As of December 31, 2002, we employed 184
individuals, 141 at our San Francisco headquarters, 42 in our
Boston office and one in our Amsterdam office. Our website
address is www.amb.com. Our annual report on
Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K and any amendments to those reports
filed or furnished pursuant to Section 13(a) or 15(d) of
the Exchange Act are available on our website free of charge as
soon as reasonably practicable after we electronically file such
material with, or furnish it to, the Securities and Exchange
Commission.

The following marks are the registered trademarks
of AMB Property Corporation: AMB®; Broker Alliance
Partners®; Broker Alliance Program®; Customer Alliance
Partners®; Customer Alliance Program®; Development
Alliance Partners®; Development Alliance Program®;
HTD®; High Throughput Distribution®; Institutional
Alliance Partners®; Institutional Alliance Program®;
Management Alliance Partners®; Management Alliance
Program®; Strategic Alliance Partners®; UPREIT
Alliance Partners®; and UPREIT Alliance Program®. The
following mark is the unregistered trademark of AMB Property
Corporation: Strategic Alliance ProgramsTM.

Co-investment Joint Ventures

We enter into co-investment joint ventures with
institutional investors. These co-investment joint ventures
provide us with an additional source of capital to fund certain
acquisitions, development projects and renovation projects, as
well as private capital income, which enhances our returns. As
of December 31, 2002, we had investments in five
co-investment joint ventures with a gross book value of
$1.6 billion, which are consolidated for financial
reporting purposes.

Acquisition, Development and Disposition
Activity

During 2002, we invested $403.3 million in
operating properties, consisting of 43 industrial buildings,
aggregating approximately 5.4 million square feet, and a
parking lot adjacent to Los Angeles International Airport. Our
acquisitions included the investment of $166.5 million in
31 buildings, aggregating approximately 3.1 million square
feet, through two of our co-investment joint ventures.

During 2002, we completed industrial developments
valued at $135.4 million, aggregating approximately
3.1 million square feet. We also initiated eight new
industrial development projects valued at $90.6 million,
aggregating approximately 1.8 million square feet,
including new international industrial development projects
valued at $50.3 million, aggregating approximately
1.1 million square feet.

As of December 31, 2002, we had in our
development pipeline ten industrial projects, which will total
approximately 1.7 million square feet and have an aggregate
estimated investment of $106.8 million upon completion and
three development projects available for sale, which will total
approximately 0.6 million square feet and have an aggregate
estimated investment of $49.1 million upon completion. As
of December 31, 2002, we and our partners had funded an
aggregate of $92.8 million and needed to fund an estimated
additional $63.1 million in order to complete current and
planned projects.

During 2002, we disposed of 58 industrial
buildings, two retail buildings, and an undeveloped retail land
parcel, aggregating approximately 5.7 million rentable
square feet, for an aggregate price of $244.0 million.
During 2002, we also sold $76.9 million in operating
properties, consisting of 15 industrial buildings aggregating
approximately 1.9 million square feet, to one of our
co-investment joint ventures. During 2002, we

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also completed and sold six buildings developed
as part of our development-for-sale program for a net gain of
$1.0 million.


Operating Strategy

We base our operating strategy on extensive
operational and service offerings, including in-house
acquisitions, development, redevelopment, asset management,
leasing, finance, accounting and market research. We leverage
our expertise across a large customer base and have
long-standing relationships with entrepreneurial real estate
management and development firms in our target markets, our
Strategic Alliance Partners®.

We believe that real estate is fundamentally a
local business and best operated by forging alliances with
service providers in each target market. We believe that this
strategy results in a mutually beneficial relationship as these
alliance partners provide us with high-quality, local market
expertise and intelligence. We, in turn, contribute value to the
alliance relationship through national and global customer
relationship development, industry knowledge, perspective and
financial strength.

While our alliance relationships give us local
market benefits, we retain flexibility to focus on our core
competencies: developing and executing our strategic approach to
real estate investment and management and raising private
capital to finance growth and enhance returns.

Growth Strategies



| |                          
| | -------------------------
| | Growth Through Operations

We seek to generate internal growth through rent
increases on existing space and renewals on rollover space. We
do this by seeking to maintain a high occupancy rate at our
properties and by seeking to control expenses by capitalizing on
the economies of owning, operating and growing a large global
portfolio. As of December 31, 2002, our industrial
properties and retail centers were 94.6% leased and 88.6%
leased, respectively. During 2002, average industrial base
rental rates (on a cash basis) decreased by 1.0% from the
expiring rent for that space, on leases entered into or renewed
during the period. This amount excludes expense reimbursements,
rental abatements and percentage rents. During 2002, we
increased cash-basis same-store net operating income by 3.5% on
our industrial properties. Since AMB Property Corporations
initial public offering in November 1997, we have experienced
average annual increases in industrial base rental rates (on a
cash basis) of 14.5%; and we have experienced average quarterly
increases in industrial same-store net operating income (on a
cash basis) of 6.5%. While we believe that it is important to
view real estate as a long-term investment, past results are not
necessarily an indication of future performance.

While occupancy levels in our industrial
portfolio were similar in 2002 and 2001, rents on lease renewals
and rollovers were lower in 2002 as the general contraction in
business activity nationwide caused a reduction in demand for
industrial warehouse facilities. This reduction in demand was
evidenced by two significant factors: decreases in national
industrial occupancy levels and negative net absorption of
industrial facility space. Specifically, according to Torto
Wheaton Research, at December 31, 2001, national industrial
occupancy was 90.2%; by December 31, 2002, national
occupancy fell to 88.8%. As reported by Torto Wheaton Research,
national net absorption of industrial space (the change in the
amount of square footage leased in existing and newly
constructed industrial properties) was positive from 1989
through 2000. By contrast, Torto Wheaton Research reported that
net absorption was negativeby 152 million square
feet in 2001 and 34 million square feet in 2002. In 2002,
these factors combined to reduce market rents for industrial
properties by approximately 15% to 20% nationally from peak
levels at the beginning of 2001. While the level of rental rate
reduction varied by market, we strove to maintain high occupancy
by pricing lease renewals and new leases with sensitivity to
local market conditions.



| |                                                         
| | --------------------------------------------------------
| | Growth Through Acquisitions and Capital
    Redeployment

We believe that our significant acquisition
experience, our alliance-based operating strategy and our
extensive network of property acquisition sources will continue
to provide opportunities for external growth.

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


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



| |                           
| | --------------------------
| | Growth Through Development

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

The multidisciplinary backgrounds of our
employees should provide us with the skills and experience to
capitalize on strategic renovation, expansion and development
opportunities. Several of our general partners officers
have extensive experience in real estate development, both with
us and with national development firms. We generally pursue
development projects in joint ventures with our Development
Alliance Partners®. This way, we leverage the development
skill, access to opportunities and capital of such developers
and we eliminate the need and expense of an extensive in-house
development staff. Under a typical joint venture agreement with
a Development Alliance Partner, we would fund 95% of the
construction costs and our partner would fund 5%; however, in
certain cases we may own as little as 50% or as much as 98% of
the joint venture. Upon completion, we generally would purchase
our partners interest in the joint venture. We may also
structure developments where we would own 100% of the asset with
an incentive development fee to be paid upon completion to our
development partner.



| |                              
| | -----------------------------
| | Growth Through Co-Investments

We co-invest with third-party partners (some of
whom may be clients of AMB Capital Partners, LLC, to the extent
such partners commit new investment capital) through
partnerships, limited liability companies or joint ventures. We
currently use a co-investment formula with each third party
whereby we will own at least a 20% interest in all ventures. In
general, we control all significant operating and investment
decisions of our co-investment entities. We believe that our
co-investment program will continue to serve as a source of
capital for acquisitions and developments and private capital
income; however, there can be no assurance that it will continue
to do so. During 2002, we sold $76.9 million in operating
properties, consisting of 15 industrial buildings, aggregating
approximately 1.9 million square feet, to one of our
co-investment joint ventures, AMB-SGP, L.P. We recognized a gain
of $3.3 million related to this sale, representing the
portion of the sold

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properties acquired by the third-party
co-investor. We also sold 30% of our interest in AMB
Partners II, L.P., our co-investment joint venture with the
City and County of San Francisco Employees Retirement
System, to our co-investment joint venture partner; we now own
20% of AMB Partners II, L.P. We recognized a gain of
$6.3 million related to this sale.




| |                                         
| | ----------------------------------------
| | Growth Through Developments for
    Sale

We, through our taxable REIT subsidiaries,
conduct a variety of businesses that include incremental income
programs, such as our development projects available for sale to
third parties. Such development properties include value-added
conversion projects and build-to-sell projects. During 2002, we
completed and sold six value-added conversion buildings for a
net gain of $1.0 million. As of December 31, 2002, we
were developing three projects for sale to third parties. During
2001, we completed and sold two value-added conversion projects
for a net gain of $13.2 million.



| |                                    
| | -----------------------------------
| | Growth Through Global
    Expansion

Over the next three to five years, we expect to
have from 10% to 15% of our assets invested in international
markets. Our Mexican target markets currently include Mexico
City, Guadalajara and Monterrey. Our European target markets
currently include Paris, Amsterdam, London, Frankfurt and
Madrid. Our Asian target markets currently include Singapore,
Hong Kong and Tokyo. In 2002, our first year of international
operation, we earned $0.7 million in rental revenues from
our Mexico City, Guadalajara and Paris properties. There are
many factors that could cause our entry into target markets and
future capital allocation to differ from our current
expectations, which are discussed under the subheading Our
International Growth is Subject to Special Political and
Monetary Risks and elsewhere under the heading
Business Risks in this report.

We believe that expansion into target
international markets represents a natural extension of our
well-established strategy to invest in industrial markets with
high population densities, close proximity to large customer
clusters and available labor pools, and major distribution
centers serving the global supply chain. Our expansion strategy
mirrors our domestic focus on in-fill locations, which are
supply-constrained submarkets with political, economic or
physical constraints to new development; and, land, as a high
percentage of total asset value, becoming more valuable for
higher and better use over time. Our international investments
will extend our offering of High Throughput Distribution
facilities for customers who value speed-to-market over storage.
Specifically, we are focused on customers whose business is
derived from world air-cargo flows, a sector expected to grow
significantly faster than world GDP growth. In addition, our
investments target major consumer distribution markets and
customers.

We believe that our established customer
relationships, our contacts in the air cargo and logistics
industries, diligent underwriting of markets and investment
considerations and our strategic alliance partnerships with
knowledgeable, local-market property brokers, developers and
managers will assist us in competing internationally.

Business Risks

See: Item 7. Managements
Discussion and Analysis of Financial Condition and Results of
Operations  Business Risks for a complete
discussion of the various risks that could adversely affect us.



|        |           
|------- | ----------
|Item 2. | Properties

Industrial Properties

As of December 31, 2002, we owned 904
industrial buildings aggregating approximately 84.2 million
rentable square feet, located in 28 markets throughout North
America and France. Our industrial properties accounted for
$501.2 million, or 97.7%, of our total annualized base rent
as of December 31, 2002. Our industrial properties were
94.6% leased to over 2,300 customers, the largest of which
accounted for no more

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than 2.6% of our annualized base rent from our
industrial properties. See Item 14. Note 17 of
Notes to Consolidated Financial Statements for segment
information related to our operations.


Property Characteristics.Our industrial properties, which
consist primarily of warehouse distribution facilities suitable
for single or multiple customers, are typically comprised of
multiple buildings. The following table identifies type and
characteristics of our industrial buildings and each types
percentage of our total portfolio based on square footage at
December 31:

|                 |  |                                                                 |  |      |      |      |  |  |      |  
|---------------- |  | --------------------------------------------------------------- |  | ---- | ---- | ---- |  |  | ---- | -
|Building Type    |  | Description                                                     |  | 2002 |      | 2001
|                 |  |                                                                 |  |      |      |     
|Warehouse        |  | 15,000-75,000 SF, single or multi-customer                      |  |      | 40.2 | %    |  |  | 40.3 | %
|Bulk Warehouse   |  | Over 75,000 SF, single or multi-customer                        |  |      | 39.6 | %    |  |  | 37.8 | %
|Flex Industrial  |  | Includes assembly or R&D, single or
    multi-customer          |  |      | 7.5  | %    |  |  | 9.6  | %
|Light Industrial |  | Smaller customers, 15,000 SF or less, higher
    office finish  |  |      | 6.5  | %    |  |  | 7.3  | %
|Trans-Shipment   |  | Unique configurations for truck terminals and
    cross-docking |  |      | 2.3  | %    |  |  | 1.8  | %
|Air Cargo        |  | On-tarmac or airport land for transfer of air
    cargo goods   |  |      | 2.6  | %    |  |  | 1.6  | %
|Office           |  | Single or multi-customer, used strictly for office              |  |      | 1.3  | %    |  |  | 1.5  | %

Lease Terms.Our
industrial properties are typically subject to lease on a
triple net basis, in which customers pay their
proportionate share of real estate taxes, insurance and
operating costs, or are subject to leases on a modified
gross basis, in which customers pay expenses over certain
threshold levels. In addition, most of our leases include fixed
rental increases or CPI rental increases. Lease terms typically
range from three to ten years, with an average of six years,
excluding renewal options. However, the majority of our
industrial leases do not include renewal options.

Overview of Major Target Markets.Our industrial properties are located
near key passenger and air cargo airports, key interstate
highways, and seaports in major domestic metropolitan areas,
such as Atlanta, Chicago, Dallas/ Fort Worth, Los Angeles,
Northern New Jersey/ New York, the San Francisco Bay Area, Miami
and Seattle. Our international industrial facilities are located
in major distributions markets including Mexico City,
Guadalajara and Paris. We believe our industrial
properties strategic location, transportation network and
infrastructure, and large consumer and manufacturing bases
support strong demand for industrial space.

Within these metropolitan areas, our industrial
properties are concentrated in locations with limited new
construction opportunities within established, relatively large
submarkets, which we believe should provide a higher rate of
occupancy and rent growth than properties located elsewhere.
These in-fill locations are typically near major passenger and
air cargo facilities, seaports or convenient to major highways
and rail lines, and are proximate to a diverse labor pool. There
is typically broad demand for industrial space in these
centrally located submarkets due to a diverse mix of industries
and types of industrial uses, including warehouse distribution,
light assembly and manufacturing. We generally avoid locations
at the periphery of metropolitan areas where there are fewer
constraints to the supply of additional industrial properties.

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Industrial Market Operating
Statistics

As of December 31, 2002, we operated in
eight domestic hub and gateway markets, in addition to 20 other
markets throughout North America and France. The following table
represents properties in which we own a fee simple interest or a
controlling interest (consolidated), and excludes properties in
which we only own a non-controlling interest
(unconsolidated) and properties under development.

|                                          |           |         |           |            |   |          |            |           |   |          |           |           |   |       |            |           |   |         |           |           |   |       |            |           |   |   |           |           |   |   |           |           |   |   |            |           |   |   |            |           |   |   |            |           |  
|----------------------------------------- | --------- | ------- | --------- | ---------- | - | -------- | ---------- | --------- | - | -------- | --------- | --------- | - | ----- | ---------- | --------- | - | ------- | --------- | --------- | - | ----- | ---------- | --------- | - | - | --------- | --------- | - | - | --------- | --------- | - | - | ---------- | --------- | - | - | ---------- | --------- | - | - | ---------- | --------- | -
|                                          |           |         |           |            |   |          |            |           |   | No. New  |           | San       |   |       |            |           |   | Total   |           | Total     |   |      
|                                          |           |         |           |            |   | Dallas/  |            | Los       |   | Jersey/  |           | Francisco |   |       |            |           |   | Hub     |           | Other     |   |      
|                                          |           | Atlanta |           | Chicago(1) |   | Ft.Worth |            | Angeles   |   | New York |           | Bay Area  |   | Miami |            | Seattle   |   | Markets |           | Markets   |   | Total
|                                          |           |         |           |            |   |          |            |           |   |          |           |           |   |       |            |           |   |         |           |           |   |      
|Square feet owned(1)                      |           |         | 7,235,434 |            |   |          | 7,821,563  |           |   |          | 3,728,532 |           |   |       | 12,205,784 |           |   |         | 7,487,729 |           |   |       | 11,296,618 |           |   |   | 4,432,361 |           |   |   | 4,857,434 |           |   |   | 58,975,455 |           |   |   | 25,227,567 |           |   |   | 84,203,022 |          
|Our pro rata share of square feet         |           |         | 4,699,741 |            |   |          | 6,049,044  |           |   |          | 2,740,714 |           |   |       | 8,544,968  |           |   |         | 5,121,955 |           |   |       | 8,801,807  |           |   |   | 4,008,449 |           |   |   | 3,008,807 |           |   |   | 42,885,515 |           |   |   | 22,413,294 |           |   |   | 65,298,809 |          
|Occupancy Percentage                      |           |         | 90.8      | %          |   |          | 94.5       | %         |   |          | 96.3      | %         |   |       | 97.7       | %         |   |         | 97.1      | %         |   |       | 94.7       | %         |   |   | 95.7      | %         |   |   | 97.2      | %         |   |   | 95.5       | %         |   |   | 92.5       | %         |   |   | 94.6       | %        
|Annualized base rent (000s)              |           | $       | 27,187    |            |   | $        | 34,879     |           |   | $        | 14,761    |           |   | $     | 71,391     |           |   | $       | 46,997    |           |   | $     | 94,458     |           |   | $ | 30,357    |           |   | $ | 22,718    |           |   | $ | 342,748    |           |   | $ | 158,461    |           |   | $ | 501,209    |          
|Annualized base rent per square foot      |           | $       | 4.14      |            |   | $        | 4.72       |           |   | $        | 4.11      |           |   | $     | 5.99       |           |   | $       | 6.46      |           |   | $     | 8.83       |           |   | $ | 7.31      |           |   | $ | 4.81      |           |   | $ | 6.09       |           |   | $ | 6.79       |           |   | $ | 6.29       |          
|Lease expirations as a percentage of ABR: |           |         |           |            |   |          |            |           |   |          |           |           |   |       |            |           |   |         |           |           |   |       |            |           |   |   |           |           |   |   |           |           |   |   |            |           |   |   |            |           |   |   |            |          
|                                          | 2003      |         |           | 11.9       | % |          |            | 19.7      | % |          |           | 16.3      | % |       |            | 17.7      | % |         |           | 16.7      | % |       |            | 14.6      | % |   |           | 12.6      | % |   |           | 22.3      | % |   |            | 16.1      | % |   |            | 13.7      | % |   |            | 15.4      | %
|                                          | 2004      |         |           | 13.1       | % |          |            | 21.9      | % |          |           | 18.8      | % |       |            | 15.8      | % |         |           | 28.4      | % |       |            | 15.1      | % |   |           | 22.4      | % |   |           | 18.1      | % |   |            | 18.5      | % |   |            | 10.4      | % |   |            | 16.0      | %
|                                          | 2005      |         |           | 20.7       | % |          |            | 16.3      | % |          |           | 22.5      | % |       |            | 14.7      | % |         |           | 9.3       | % |       |            | 16.8      | % |   |           | 20.6      | % |   |           | 11.4      | % |   |            | 15.9      | % |   |            | 15.8      | % |   |            | 16.0      | %
|                                          | 2006      |         |           | 17.8       | % |          |            | 22.1      | % |          |           | 13.8      | % |       |            | 16.0      | % |         |           | 8.2       | % |       |            | 10.4      | % |   |           | 14.3      | % |   |           | 11.1      | % |   |            | 13.5      | % |   |            | 11.0      | % |   |            | 12.8      | %
|                                          | 2007      |         |           | 6.4        | % |          |            | 7.8       | % |          |           | 8.0       | % |       |            | 11.0      | % |         |           | 15.4      | % |       |            | 12.1      | % |   |           | 15.5      | % |   |           | 19.6      | % |   |            | 12.1      | % |   |            | 16.6      | % |   |            | 13.4      | %
|Weighted average lease terms Original     |           |         | 6.0 years |            |   |          | 6.3 years  |           |   |          | 5.4 years |           |   |       | 5.9 years  |           |   |         | 5.5 years |           |   |       | 5.8 years  |           |   |   | 5.9 years |           |   |   | 6.0 years |           |   |   | 5.9 years  |           |   |   | 7.0 years  |           |   |   | 6.2 years  |          
|                                          | Remaining |         |           | 3.9 years  |   |          |            | 2.3 years |   |          |           | 1.9 years |   |       |            | 3.1 years |   |         |           | 2.9 years |   |       |            | 3.0 years |   |   |           | 3.0 years |   |   |           | 3.0 years |   |   |            | 3.0 years |   |   |            | 4.0 years |   |   |            | 3.3 years |  
|Tenant Retention (Year-to-date)           |           |         | 64.7      | %          |   |          | 88.1       | %         |   |          | 55.6      | %         |   |       | 83.4       | %         |   |         | 96.3      | %         |   |       | 60.7       | %         |   |   | 57.3      | %         |   |   | 65.2      | %         |   |   | 74.0       | %         |   |   | 74.7       | %         |   |   | 74.2       | %        
|Rent increases on renewals and rollovers  |           |         | -8.3      | %          |   |          | -5.6       | %         |   |          | 3.4       | %         |   |       | 10.8       | %         |   |         | 11.7      | %         |   |       | -8.0       | %         |   |   | -15.1     | %         |   |   | -12.2     | %         |   |   | -1.8       | %         |   |   | 1.0        | %         |   |   | -1.0       | %        
|Same space leased                         |           |         | 1,121,943 |            |   |          | 1,220,090  |           |   |          | 387,071   |           |   |       | 2,092,507  |           |   |         | 1,566,866 |           |   |       | 2,083,734  |           |   |   | 706,839   |           |   |   | 1,124,633 |           |   |   | 10,303,683 |           |   |   | 4,396,916  |           |   |   | 14,700,599 |          
|Same store cash basis NOI growth          |           |         | -2.8      | %          |   |          | 5.7        | %         |   |          | 2.1       | %         |   |       | 2.1        | %         |   |         | -5.3      | %         |   |       | 15.1       | %         |   |   | 4.0       | %         |   |   | -4.9      | %         |   |   | 5.2        | %         |   |   | -0.4       | %         |   |   | 3.5        | %        
|Square feet owned in same store pool(2)   |           |         | 5,160,923 |            |   |          | 6,492,649  |           |   |          | 3,413,679 |           |   |       | 9,319,905  |           |   |         | 5,280,207 |           |   |       | 8,775,561  |           |   |   | 4,342,361 |           |   |   | 3,520,291 |           |   |   | 46,305,576 |           |   |   | 21,693,009 |           |   |   | 67,998,585 |          
|Total market square footage(3)            |           |         | 7,587,220 |            |   |          | 11,992,828 |           |   |          | 4,328,659 |           |   |       | 15,080,058 |           |   |         | 7,914,243 |           |   |       | 12,298,081 |           |   |   | 4,968,046 |           |   |   | 4,984,898 |           |   |   | 69,154,033 |           |   |   | 25,432,716 |           |   |   | 94,586,749 |          



---



|    |                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes all industrial consolidated operating
    properties and excludes industrial developments and renovation
    projects.                                                                                               
|   
|(2) | Same store pool excludes properties purchased or
    developments stabilized after December 31, 2000.                                                                                                                         
|   
|(3) | Total market square footage includes industrial
    and retail operating properties, development properties,
    unconsolidated properties, properties managed for third parties
    and reallocation of on-tarmac properties.

7



---



##### 



Industrial Operating Portfolio
Overview

As of December 31, 2002, our 904 industrial
buildings were diversified across 28 markets throughout
North America and France. The average age of our industrial
properties is 19 years (since the property was built or
substantially renovated). The following table represents
properties in which we own a fee simple interest or a
controlling interest (consolidated), and excludes properties in
which we only own a non-controlling interest (unconsolidated).

|                         |                              |                            |                         |          |     |             |  |            |            |            |  |            |      |           |   |             |      |      |   |        |         |         |  |      |      |       |   |     |       |       |   |       |      |      | 
|------------------------ | ---------------------------- | -------------------------- | ----------------------- | -------- | --- | ----------- |  | ---------- | ---------- | ---------- |  | ---------- | ---- | --------- | - | ----------- | ---- | ---- | - | ------ | ------- | ------- |  | ---- | ---- | ----- | - | --- | ----- | ----- | - | ----- | ---- | ---- | 
|                         |                              |                            |                         | Total    |     | Percentage  |  |            |            |            |  | Percentage |      |           |   | Annualized 
|                         |                              |                            |                         | Rentable |     | of Total    |  |            |            | Annualized |  | of Total   |      |           |   | Base Rent  
|                         |                              | Number of                  |                         | Square   |     | Rentable    |  | Percentage |            | Base Rent  |  | Annualized |      | Number    |   | per Leased 
|Industrial Properties    |                              | Buildings                  |                         | Feet(1)  |     | Square Feet |  | Leased     |            | (000s)    |  | Base Rent  |      | of Leases |   | Square Foot
|                         |                              |                            |                         |          |     |             |  |            |            |            |  |            |      |           |   |            
|Hub and Gateway Markets: |                              |                            |                         |          |     |             |  |            |            |            |  |            |      |           |   |             |      |      |   |        |         |         |  |      |      |       |   |     |       |       |   |      
|                         | Atlanta                      |                            |                         | 61       |     |             |  | 7,235,434  |            |            |  | 8.6        | %    |           |   | 90.8        | %    |      | $ | 27,187 |         |         |  | 5.4  | %    |       |   | 183 |       |       | $ | 4.14  |     
|                         | Chicago(2)                   |                            |                         | 92       |     |             |  | 7,821,563  |            |            |  | 9.3        |      |           |   | 94.5        |      |      |   | 34,879 |         |         |  | 7.0  |      |       |   | 184 |       |       |   | 4.72  |     
|                         | Dallas/ Ft. Worth            |                            |                         | 41       |     |             |  | 3,728,532  |            |            |  | 4.4        |      |           |   | 96.3        |      |      |   | 14,761 |         |         |  | 2.9  |      |       |   | 105 |       |       |   | 4.11  |     
|                         | Los Angeles(3)               |                            |                         | 144      |     |             |  | 12,205,784 |            |            |  | 14.5       |      |           |   | 97.7        |      |      |   | 71,391 |         |         |  | 14.2 |      |       |   | 364 |       |       |   | 5.99  |     
|                         | N. New Jersey/ New York City |                            |                         | 79       |     |             |  | 7,487,729  |            |            |  | 8.9        |      |           |   | 97.1        |      |      |   | 46,997 |         |         |  | 9.4  |      |       |   | 254 |       |       |   | 6.46  |     
|                         | San Francisco Bay Area       |                            |                         | 143      |     |             |  | 11,296,618 |            |            |  | 13.4       |      |           |   | 94.7        |      |      |   | 94,458 |         |         |  | 18.8 |      |       |   | 400 |       |       |   | 8.83  |     
|                         | Miami                        |                            |                         | 42       |     |             |  | 4,342,361  |            |            |  | 5.2        |      |           |   | 95.7        |      |      |   | 30,557 |         |         |  | 6.1  |      |       |   | 225 |       |       |   | 7.31  |     
|                         | Seattle                      |                            |                         | 47       |     |             |  | 4,857,434  |            |            |  | 5.8        |      |           |   | 97.2        |      |      |   | 22,718 |         |         |  | 4.5  |      |       |   | 168 |       |       |   | 4.81  |     
|                         |                              |                            |                         |          |     |             |  |            |            |            |  |            |      |           |   |             |      |      |   |        |         |         |  |      |      |       |   |     |       |       |   |      
|                         |                              | Subtotal/ Weighted Average |                         |          | 649 |             |  |            | 58,975,455 |            |  |            | 70.0 |           |   |             | 95.5 |      |   |        | 342,748 |         |  |      | 68.4 |       |   |     | 1,883 |       |   |       | 6.09 |     
|Other Markets:           |                              |                            |                         |          |     |             |  |            |            |            |  |            |      |           |   |             |      |      |   |        |         |         |  |      |      |       |   |     |       |       |   |      
|                         | Austin                       |                            |                         | 9        |     |             |  | 1,365,873  |            |            |  | 1.6        |      |           |   | 94.1        |      |      |   | 9,559  |         |         |  | 1.9  |      |       |   | 27  |       |       |   | 7.44  |     
|                         | Baltimore/ Washington D.C.   |                            |                         | 63       |     |             |  | 4,105,921  |            |            |  | 4.9        |      |           |   | 96.9        |      |      |   | 30,749 |         |         |  | 6.1  |      |       |   | 287 |       |       |   | 7.73  |     
|                         | Boston                       |                            |                         | 38       |     |             |  | 4,401,018  |            |            |  | 5.2        |      |           |   | 95.1        |      |      |   | 22,933 |         |         |  | 4.6  |      |       |   | 57  |       |       |   | 5.48  |     
|                         | Charlotte                    |                            |                         | 10       |     |             |  | 729,836    |            |            |  | 0.9        |      |           |   | 55.9        |      |      |   | 1,900  |         |         |  | 0.4  |      |       |   | 24  |       |       |   | 4.66  |     
|                         | Cincinnati                   |                            |                         | 6        |     |             |  | 812,053    |            |            |  | 1.0        |      |           |   | 95.1        |      |      |   | 2,512  |         |         |  | 0.5  |      |       |   | 13  |       |       |   | 3.25  |     
|                         | Columbus                     |                            |                         | 2        |     |             |  | 465,433    |            |            |  | 0.6        |      |           |   | 48.4        |      |      |   | 683    |         |         |  | 0.1  |      |       |   | 1   |       |       |   | 3.03  |     
|                         | Guadalajara, Mexico          |                            |                         | 5        |     |             |  | 687,088    |            |            |  | 0.8        |      |           |   | 88.3        |      |      |   | 3,691  |         |         |  | 0.7  |      |       |   | 13  |       |       |   | 6.08  |     
|                         | Memphis                      |                            |                         | 17       |     |             |  | 1,883,845  |            |            |  | 2.2        |      |           |   | 97.4        |      |      |   | 9,014  |         |         |  | 1.8  |      |       |   | 46  |       |       |   | 4.91  |     
|                         | Mexico City                  |                            |                         | 1        |     |             |  | 786,979    |            |            |  | 0.9        |      |           |   | 100.0       |      |      |   | 4,246  |         |         |  | 0.8  |      |       |   | 1   |       |       |   | 5.40  |     
|                         | Minneapolis                  |                            |                         | 42       |     |             |  | 4,456,905  |            |            |  | 5.3        |      |           |   | 95.9        |      |      |   | 18,382 |         |         |  | 3.7  |      |       |   | 203 |       |       |   | 4.30  |     
|                         | New Orleans                  |                            |                         | 5        |     |             |  | 411,689    |            |            |  | 0.5        |      |           |   | 94.5        |      |      |   | 1,959  |         |         |  | 0.4  |      |       |   | 47  |       |       |   | 5.04  |     
|                         | Newport News                 |                            |                         | 1        |     |             |  | 60,215     |            |            |  | 0.1        |      |           |   | 78.8        |      |      |   | 584    |         |         |  | 0.1  |      |       |   | 3   |       |       |   | 12.31 |     
|                         | Orlando                      |                            |                         | 19       |     |             |  | 1,845,494  |            |            |  | 2.2        |      |           |   | 81.9        |      |      |   | 6,608  |         |         |  | 1.3  |      |       |   | 80  |       |       |   | 4.37  |     
|                         | Paris, France                |                            |                         | 1        |     |             |  | 67,415     |            |            |  | 0.1        |      |           |   | 100.0       |      |      |   | 677    |         |         |  | 0.1  |      |       |   | 1   |       |       |   | 10.04 |     
|                         | Portland                     |                            |                         | 5        |     |             |  | 676,104    |            |            |  | 0.8        |      |           |   | 100.0       |      |      |   | 2,940  |         |         |  | 0.6  |      |       |   | 11  |       |       |   | 4.35  |     
|                         | San Diego                    |                            |                         | 5        |     |             |  | 276,167    |            |            |  | 0.3        |      |           |   | 100.0       |      |      |   | 2,545  |         |         |  | 0.5  |      |       |   | 21  |       |       |   | 9.22  |     
|                         | On-Tarmac(4)                 |                            |                         | 26       |     |             |  | 2,195,532  |            |            |  | 2.6        |      |           |   | 91.0        |      |      |   | 39,479 |         |         |  | 7.9  |      |       |   | 167 |       |       |   | 19.76 |     
|                         |                              |                            |                         |          |     |             |  |            |            |            |  |            |      |           |   |             |      |      |   |        |         |         |  |      |      |       |   |     |       |       |   |      
|                         |                              | Subtotal/ Weighted Average |                         |          | 255 |             |  |            | 25,227,567 |            |  |            | 30.0 |           |   |             | 92.5 |      |   |        | 158,461 |         |  |      | 31.6 |       |   |     | 1,002 |       |   |       | 6.79 |     
|                         |                              |                            |                         |          |     |             |  |            |            |            |  |            |      |           |   |             |      |      |   |        |         |         |  |      |      |       |   |     |       |       |   |      
|                         |                              |                            | Total/ Weighted Average |          |     | 904         |  |            |            | 84,203,022 |  |            |      | 100.0     | % |             |      | 94.6 | % |        | $       | 501,209 |  |      |      | 100.0 | % |     |       | 2,885 |   |       | $    | 6.29 | 
|                         |                              |                            |                         |          |     |             |  |            |            |            |  |            |      |           |   |             |      |      |   |        |         |         |  |      |      |       |   |     |       |       |   |      



---



|    |                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In addition to owned square feet, we manage,
    through our subsidiary, AMB Capital Partners, LLC,
    1.7 million additional square feet of industrial, retail
    and other properties.    
|   
|(2) | We also have an ownership interest in 36
    industrial buildings totaling 4.0 million square feet in
    the Chicago market through our investment in an unconsolidated
    joint venture.   
|   
|(3) | We also have an ownership interest in 7
    industrial buildings totaling 1.4 million square feet in the Los
    Angeles market through our investment in an unconsolidated joint
    venture.
|   
|(4) | Includes on-tarmac airport air cargo facilities
    at 11 airports.                                                                                                                           

8



---



##### 



Industrial Lease Expirations

The following table summarizes the lease
expirations for our industrial properties for leases in place as
of December 31, 2002, without giving effect to the exercise
of renewal options or termination rights, if any, at or prior to
the scheduled expirations.

|                            |       |             |            |            |  |               |        |         |  |  |      |       |  
|--------------------------- | ----- | ----------- | ---------- | ---------- |  | ------------- | ------ | ------- |  |  | ---- | ----- | -
|                            |       |             |            | Annualized |  | Percentage of
|                            |       | Rentable    |            | Base Rent  |  | Annualized   
|Year of Lease Expiration(1) |       | Square Feet |            | (000s)(2)  |  | Base Rent    
|                            |       |             |            |            |  |              
|2003(3)                     |       |             | 14,068,516 |            |  | $             | 82,252 |         |  |  | 15.4 | %    
|2004                        |       |             | 13,476,638 |            |  |               | 85,679 |         |  |  | 16.0 |      
|2005                        |       |             | 13,542,987 |            |  |               | 84,741 |         |  |  | 16.0 |      
|2006                        |       |             | 9,916,313  |            |  |               | 68,271 |         |  |  | 12.8 |      
|2007                        |       |             | 9,572,812  |            |  |               | 71,905 |         |  |  | 13.4 |      
|2008                        |       |             | 6,265,707  |            |  |               | 38,605 |         |  |  | 7.2  |      
|2009                        |       |             | 3,697,563  |            |  |               | 21,802 |         |  |  | 4.1  |      
|2010                        |       |             | 2,589,890  |            |  |               | 26,418 |         |  |  | 4.9  |      
|2011                        |       |             | 1,898,797  |            |  |               | 21,040 |         |  |  | 3.9  |      
|2012                        |       |             | 2,593,493  |            |  |               | 19,794 |         |  |  | 3.7  |      
|2013 and beyond             |       |             | 1,508,054  |            |  |               | 14,131 |         |  |  | 2.6  |      
|                            |       |             |            |            |  |               |        |         |  |  |      |      
|                            | Total |             |            | 79,130,770 |  |               | $      | 534,638 |  |  |      | 100.0 | %
|                            |       |             |            |            |  |               |        |         |  |  |      |      



---



|    |                                                                                 
|--- | --------------------------------------------------------------------------------
|(1) | Schedule includes in-place leases and leases with
    future commencement dates.
|   
|(2) | Calculated as monthly rent at expiration
    multiplied by 12.                  
|   
|(3) | Includes month-to-month leases totaling
    0.5 million square feet.            

9



---



##### 



Customer Information

Largest Property Customers.Our 25 largest industrial
property customers by annualized base rent are set forth in the
table below.

|                               |       |        |    |             |  |                |         |            |  |               |     |      |   |   |        |        |  |  |     |      |  
|------------------------------ | ----- | ------ | -- | ----------- |  | -------------- | ------- | ---------- |  | ------------- | --- | ---- | - | - | ------ | ------ |  |  | --- | ---- | -
|                               |       |        |    |             |  | Percentage of  |         |            |  | Percentage of
|                               |       | Number |    | Aggregate   |  | Aggregate      |         |            |  | Aggregate    
|                               |       | of     |    | Rentable    |  | Leased         |         | Annualized |  | Annualized   
|Industrial Customer Name(1)    |       | Leases |    | Square Feet |  | Square Feet(2) |         | Base Rent  |  | Base Rent(3) 
|                               |       |        |    |             |  |                |         |            |  |              
|United States Government(4)(5) |       |        | 30 |             |  |                | 642,264 |            |  |               | 0.8 | %    |   | $ | 13,150 |        |  |  | 2.6 | %   
|FedEx Corporation(4)           |       |        | 30 |             |  |                | 727,965 |            |  |               | 0.9 |      |   |   | 9,608  |        |  |  | 1.9 |     
|Harmonic Inc.                  |       |        | 3  |             |  |                | 241,980 |            |  |               | 0.3 |      |   |   | 4,776  |        |  |  | 0.9 |     
|Proctor & Gamble Manufactura   |       |        | 2  |             |  |                | 797,168 |            |  |               | 1.0 |      |   |   | 4,308  |        |  |  | 0.8 |     
|International Paper Company    |       |        | 7  |             |  |                | 541,379 |            |  |               | 0.7 |      |   |   | 4,069  |        |  |  | 0.8 |     
|Abgenix, Inc.                  |       |        | 2  |             |  |                | 97,887  |            |  |               | 0.1 |      |   |   | 3,607  |        |  |  | 0.7 |     
|County of Los Angeles(6)       |       |        | 12 |             |  |                | 248,078 |            |  |               | 0.3 |      |   |   | 3,551  |        |  |  | 0.7 |     
|Waitex International Co. Ltd.  |       |        | 5  |             |  |                | 504,940 |            |  |               | 0.6 |      |   |   | 3,212  |        |  |  | 0.6 |     
|Ford Motor Company             |       |        | 1  |             |  |                | 610,878 |            |  |               | 0.8 |      |   |   | 3,034  |        |  |  | 0.6 |     
|Ahold NV                       |       |        | 7  |             |  |                | 680,565 |            |  |               | 0.8 |      |   |   | 2,879  |        |  |  | 0.6 |     
|TJX Companies, Inc.            |       |        | 4  |             |  |                | 699,157 |            |  |               | 0.9 |      |   |   | 2,824  |        |  |  | 0.6 |     
|FMI International              |       |        | 3  |             |  |                | 439,390 |            |  |               | 0.5 |      |   |   | 2,533  |        |  |  | 0.5 |     
|Wells Fargo and Company        |       |        | 5  |             |  |                | 213,432 |            |  |               | 0.3 |      |   |   | 2,510  |        |  |  | 0.5 |     
|Danzas AEI International       |       |        | 7  |             |  |                | 352,476 |            |  |               | 0.4 |      |   |   | 2,472  |        |  |  | 0.5 |     
|United Airlines Inc.(4)        |       |        | 4  |             |  |                | 121,381 |            |  |               | 0.2 |      |   |   | 2,437  |        |  |  | 0.5 |     
|Home Depot USA Inc.            |       |        | 3  |             |  |                | 577,813 |            |  |               | 0.7 |      |   |   | 2,392  |        |  |  | 0.5 |     
|BAX Global Inc.(4)             |       |        | 4  |             |  |                | 151,452 |            |  |               | 0.2 |      |   |   | 2,332  |        |  |  | 0.5 |     
|Forward Air Corporation        |       |        | 7  |             |  |                | 344,765 |            |  |               | 0.4 |      |   |   | 2,249  |        |  |  | 0.4 |     
|CNF Inc.                       |       |        | 9  |             |  |                | 545,495 |            |  |               | 0.4 |      |   |   | 2,242  |        |  |  | 0.4 |     
|Boeing Company                 |       |        | 5  |             |  |                | 457,565 |            |  |               | 0.6 |      |   |   | 2,237  |        |  |  | 0.4 |     
|Johnson & Johnson              |       |        | 4  |             |  |                | 129,449 |            |  |               | 0.2 |      |   |   | 2,196  |        |  |  | 0.4 |     
|Applied Materials, Inc.        |       |        | 1  |             |  |                | 290,557 |            |  |               | 0.4 |      |   |   | 2,152  |        |  |  | 0.4 |     
|Cirrus Logic                   |       |        | 1  |             |  |                | 48,384  |            |  |               | 0.1 |      |   |   | 2,113  |        |  |  | 0.4 |     
|United Liquors, Ltd.           |       |        | 1  |             |  |                | 440,000 |            |  |               | 0.5 |      |   |   | 2,057  |        |  |  | 0.4 |     
|DJ Air Services, Inc.          |       |        | 1  |             |  |                | 51,920  |            |  |               | 0.1 |      |   |   | 2,054  |        |  |  | 0.4 |     
|                               |       |        |    |             |  |                |         |            |  |               |     |      |   |   |        |        |  |  |     |     
|                               | Total |        |    |             |  |                |         | 9,756,340  |  |               |     | 12.1 | % |   | $      | 86,994 |  |  |     | 17.0 | %
|                               |       |        |    |             |  |                |         |            |  |               |     |      |   |   |        |        |  |  |     |     



---



|    |                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Customer(s) may be a subsidiary of or an entity
    affiliated with the named customer. We also hold a lease at Park
    One with an annualized base rent of $6.5 million, which is
    not included because it is not an industrial operating property.
|   
|(2) | Computed as aggregate leased square feet divided
    by the aggregate leased square feet of the industrial and retail
    properties.                                                                                                                   
|   
|(3) | Computed as aggregate annualized base rent
    divided by the aggregate annualized base rent of the industrial
    and retail and other properties.                                                                                                     
|   
|(4) | Apron rental amount (but not square footage) are
    included.                                                                                                                                                                                          
|   
|(5) | United States Government includes the United
    States Postal Service (USPS), U.S. Customs and the United
    Stated Department of Agriculture (USDA).                                                                                                 
|   
|(6) | County of Los Angeles includes Childrens
    Services, the Fire Department, the District Attorneys
    Office, the Sheriff and the Unified School District.                                                                                           

10



---



##### 



Operating and Leasing Statistics

Industrial Operating and Leasing
Statistics

The following table summarizes key operating and
leasing statistics for all of our industrial properties as of
and for the years ended December 31, 2002, 2001 and 2000:

|                                         |                                                 |             |                  |      |           |      |            |      |           |      |            |      |           |      | 
|---------------------------------------- | ----------------------------------------------- | ----------- | ---------------- | ---- | --------- | ---- | ---------- | ---- | --------- | ---- | ---------- | ---- | --------- | ---- | 
|                                         |                                                 | 2002        |                  | 2001 |           | 2000
|                                         |                                                 |             |                  |      |           |     
|Square feet owned at December 31(1)(2)   |                                                 |             | 84,203,022       |      |           |      | 81,550,880 |      |           |      | 77,795,989 |     
|Occupancy percentage at December 31      |                                                 |             | 94.6             | %    |           |      | 94.5       | %    |           |      | 96.4       | %   
|Weighted average lease term:             |                                                 |             |                  |      |           |      |            |      |           |      |            |     
|                                         |                                                 | Original    |                  |      | 6.2 years |      |            |      | 6.3 years |      |            |      | 6.4 years |     
|                                         |                                                 | Remaining   |                  |      | 3.3 years |      |            |      | 3.3 years |      |            |      | 3.5 years |     
|Tenant retention                         |                                                 |             | 74.2             | %    |           |      | 66.8       | %    |           |      | 59.0       | %   
|Same Space Leasing Activity:(3)          |                                                 |             |                  |      |           |      |            |      |           |      |            |     
|Rent increases on renewals and rollovers |                                                 |             | (1.0             | )%   |           |      | 20.4       | %    |           |      | 25.6       | %   
|                                         | Same space square footage commencing (millions) |             |                  | 14.7 |           |      |            | 11.9 |           |      |            | 11.9 |          
|2nd generation leasing activity:(4)      |                                                 |             |                  |      |           |      |            |      |           |      |            |     
|                                         |                                                 | Renewals    |                  | $    | 1.30      |      |            | $    | 0.99      |      |            | $    | 1.22      |     
|                                         |                                                 | Re-tenanted |                  |      | 2.45      |      |            |      | 3.25      |      |            |      | 2.27      |     
|                                         |                                                 |             |                  |      |           |      |            |      |           |      |            |     
|                                         |                                                 |             | Weighted average |      | $         | 1.90 |            |      | $         | 2.05 |            |      | $         | 1.86 | 
|                                         |                                                 |             |                  |      |           |      |            |      |           |      |            |     
|                                         | Same space square footage commencing (millions) |             |                  | 19.0 |           |      |            | 13.9 |           |      |            | n/a  |          



---



|    |                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes all consolidated operating properties
    and excludes industrial development and renovation projects.                                                                                                                                                                                                                                                                 
|   
|(2) | In addition to owned square feet as of
    December 31, 2002, we manage, through our subsidiary, AMB
    Capital Partners, 1.7 million additional square feet of
    industrial, retail and other properties. We also have
    investments in 5.5 million square feet of industrial
    properties through our investments in unconsolidated joint
    ventures.                
|   
|(3) | Consists of second-generation leases renewing or
    re-tenanting with current and prior lease terms greater than one
    year.                                                                                                                                                                                                                                                 
|   
|(4) | Second generation leasing activity includes total
    tenant improvements, lease commissions and other leasing costs
    incurred during the leasing of second generation space. Costs
    incurred prior to leasing available space are not included until
    such space is leased. Second generation space excludes newly
    developed space or space vacant at acquisition.

11



---



##### 



Industrial Same Store Operating
Statistics

The following table summarizes key operating and
leasing statistics for our same store properties as of and for
the years ended December 31, 2002, 2001 and 2000. The same
store pool excludes properties purchased and developments
stabilized after December 31, 2000. For an explanation of
our same store properties, see Managements
Discussion and Analysis of Financial Condition and Results of
Operations  Results of Operations.

|                                                  |                                                 |      |            |      |   |      |            |      |   |  |            |     |  
|------------------------------------------------- | ----------------------------------------------- | ---- | ---------- | ---- | - | ---- | ---------- | ---- | - |  | ---------- | --- | -
|                                                  |                                                 | 2002 |            | 2001 |   | 2000
|                                                  |                                                 |      |            |      |   |     
|Square feet in same store pool at December 31     |                                                 |      | 67,998,585 |      |   |      | 60,165,437 |      |   |  | 52,145,350 |    
|% of total industrial square feet                 |                                                 |      | 80.8       | %    |   |      | 73.8       | %    |   |  | 68.8       | %  
|Occupancy percentage at period end                |                                                 |      | 94.6       | %    |   |      | 94.6       | %    |   |  | 96.8       | %  
|Tenant retention                                  |                                                 |      | 73.3       | %    |   |      | 64.5       | %    |   |  | 59.2       | %  
|Rent increases on renewals and rollovers          |                                                 |      | (1.4       | )%   |   |      | 23.5       | %    |   |  | 27.0       | %  
|                                                  | Same space square footage commencing (millions) |      |            | 13.8 |   |      |            | 10.0 |   |  |            | 9.9 |  
|Cash basis net operating income growth % increase |                                                 |      |            |      |   |      |            |      |   |  |            |    
|                                                  | Revenues                                        |      |            | 3.9  | % |      |            | 6.4  | % |  |            | 7.3 | %
|                                                  | Expenses                                        |      |            | 5.1  | % |      |            | 6.9  | % |  |            | 3.5 | %
|                                                  | NOI                                             |      |            | 3.5  | % |      |            | 6.3  | % |  |            | 8.5 | %

Retail Properties

Retail and Other Property Summary

The following table sets forth the rentable
square footage of our retail centers and other properties as of
December 31, 2002, and represents properties in which we
own a fee simple interest or a controlling interest
(consolidated).

|                               |                         |             |         |            |  |            |       |      |   |   |       |        | 
|------------------------------ | ----------------------- | ----------- | ------- | ---------- |  | ---------- | ----- | ---- | - | - | ----- | ------ | 
|                               |                         | Total       |         |            |  | Annualized
|                               |                         | Rentable    |         | Percentage |  | Base Rent 
|Retail Properties              |                         | Square Feet |         | Leased     |  | (000s)(1)
|                               |                         |             |         |            |  |           
|Around Lenox(3)                |                         |             | 120,946 |            |  |            | 67.1  | %    |   | $ | 2,185 |       
|Beacon Center                  |                         |             | 63,240  |            |  |            | 61.9  |      |   |   | 754   |       
|Charles & Chase                |                         |             | 48,000  |            |  |            | 100.0 |      |   |   | 300   |       
|Howard & Western(4)            |                         |             | 88,544  |            |  |            | 94.3  |      |   |   | 1,196 |       
|Mazzeo Drive                   |                         |             | 88,420  |            |  |            | 100.0 |      |   |   | 717   |       
|Novato Fair Shopping Center(3) |                         |             | 126,193 |            |  |            | 90.1  |      |   |   | 1,002 |       
|Palm Aire                      |                         |             | 131,233 |            |  |            | 96.9  |      |   |   | 1,648 |       
|Springs Gate land(3)           |                         |             | n/a     |            |  |            | n/a   |      |   |   | n/a   |       
|The Plaza at Delray(3)(4)      |                         |             | 332,908 |            |  |            | 91.5  |      |   |   | 4,161 |       
|                               |                         |             |         |            |  |            |       |      |   |   |       |       
|                               | Total/ Weighted Average |             |         | 999,484    |  |            |       | 88.6 | % |   | $     | 11,963 | 
|                               |                         |             |         |            |  |            |       |      |   |   |       |       



---



|    |                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Annualized base rent means the monthly
    contractual amount under existing leases at December 31,
    2002, multiplied by 12. This amount excludes expense
    reimbursements, rental abatements, and percentage rents.
|   
|(2) | Calculated as total Annualized Base Rent divided
    by total rentable square feet actually leased as of
    December 31, 2002.                                                                                          
|   
|(3) | We hold an interest in this property through a
    joint venture interest in a limited partnership.                                                                                                                      
|   
|(4) | This property is held for divestiture as of
    December 31, 2002.                                                                                                                                                       

12



---



##### 



Our retail properties have an average age of
12 years since they were built, expanded or renovated.
During 2002, we sold two retail properties totaling
approximately 0.3 million rentable square feet and an
undeveloped retail land parcel. As of December 31, 2002, we
had two retail centers, aggregating approximately
0.4 million rentable square feet, held for divestiture.

Development Pipeline

The following table sets forth the properties
owned by us as of December 31, 2002, which were undergoing
renovation, expansion or new development. No assurance can be
given that any of such projects will be completed on schedule or
within budgeted amounts.

Industrial Development and Renovation
Deliveries

|                                                     |                                            |                               |                                   |                       |  |               |                   |                       |  |               |           |            |  |  |         |         |           |    |           |        |         |            |        |     |    |   |    |  
|---------------------------------------------------- | ------------------------------------------ | ----------------------------- | --------------------------------- | --------------------- |  | ------------- | ----------------- | --------------------- |  | ------------- | --------- | ---------- |  |  | ------- | ------- | --------- | -- | --------- | ------ | ------- | ---------- | ------ | --- | -- | - | -- | -
|                                                     |                                            |                               |                                   |                       |  | Estimated     |                   | Estimated             |  | Estimated     |           | Our       
|                                                     |                                            |                               |                                   | Development Alliance  |  | Stabilization |                   | Square Feet at        |  | Total         |           | Ownership 
|Project                                              |                                            | Location                      |                                   | Partner®              |  | Date          |                   | Completion            |  | Investment(1) |           | Percentage
|                                                     |                                            |                               |                                   |                       |  |               |                   |                       |  |               |           |           
|                                                     |                                            |                              
|                                                     |                                            | (Dollars in thousands)       
|2003 Deliveries                                      |                                            |                               |                                   |                       |  |               |                   |                       |  |               |           |            |  |  |         |         |           |    |           |        |         |            |        |    
|                                                     | 1. Van Nuys Buildings 3 & 4                |                               |                                   | Van Nuys, CA          |  |               |                   | Trammell Crow Company |  |               |           | January    |  |  |         | 161,000 |           |    | $         | 12,600 |         |            |        | 95  | % 
|                                                     | 2. Dulles Airport Park
    Building  300   |                               |                                   | Dulles, VA            |  |               |                   | Seefried Properties   |  |               |           | April      |  |  |         | 77,000  |           |    |           | 5,600  |         |            |        | 21  | % 
|                                                     | 3. Airport South Building 700              |                               |                                   | College Park, GA      |  |               |                   | Seefried Properties   |  |               |           | July       |  |  |         | 64,000  |           |    |           | 4,100  |         |            |        | 20  | % 
|                                                     | 4. Sunset Distribution Center(3)           |                               |                                   | Brea, CA              |  |               |                   | None                  |  |               |           | July       |  |  |         | 348,000 |           |    |           | 18,100 |         |            |        | 20  | % 
|                                                     | 5. Suwanee Creek Phase V                   |                               |                                   | Atlanta, GA           |  |               |                   | Seefried Properties   |  |               |           | July       |  |  |         | 167,000 |           |    |           | 6,000  |         |            |        | 100 | % 
|                                                     | 6. Des Plaines
    Distribution  Center(4) |                               |                                   | Des Plaines, IL       |  |               |                   | Seefried Properties   |  |               |           | August     |  |  |         | 36,000  |           |    |           | 6,900  |         |            |        | 18  | % 
|                                                     | 7. Paris Nord Distribution II              |                               |                                   | Paris, France         |  |               |                   | None                  |  |               |           | September  |  |  |         | 101,000 |           |    |           | 8,300  |         |            |        | 100 | % 
|                                                     | 8. Carson Town Center, SE                  |                               |                                   | Carson, CA            |  |               |                   | Mar Ventures          |  |               |           | September  |  |  |         | 349,000 |           |    |           | 23,200 |         |            |        | 95  | % 
|                                                     | 9. Houston Air Cargo                       |                               |                                   | Houston, TX           |  |               |                   | Trammell Crow Company |  |               |           | October    |  |  |         | 156,000 |           |    |           | 10,800 |         |            |        | 20  | % 
|                                                     |                                            |                               |                                   |                       |  |               |                   |                       |  |               |           |            |  |  |         |         |           |    |           |        |         |            |        |    
|                                                     |                                            |                               |                                   | Total 2003 Deliveries |  |               |                   |                       |  |               |           |            |  |  |         |         |           |    | 1,459,000 |        |         |            | 95,600 |     |    |   | 60 | %
|                                                     |                                            |                               | % Pre-leased/funded-to-date(2)    |                       |  |               |                   |                       |  |               |           |            |  |  |         |         |           | 33 | %         |        | $       | 57,700     | (2)    |     |    |   |   
|                                                     |                                            |                               | Weighted Average Estimated Yield  |                       |  |               |                   |                       |  |               |           |            |  |  |         |         |           |    |           |        |         | 9.9%/9.4   | %      |     |    |   |   
|                                                     |                                            | GAAP/Cash(5)                  |                                   |                       |  |               |                   |                       |  |               |           |            |  |  |         |         |           |    |           |        |         |            |        |     |    |  
|2004 Deliveries                                      |                                            |                               |                                   |                       |  |               |                   |                       |  |               |           |            |  |  |         |         |           |    |           |        |         |            |        |    
|10. Airport Logistics Park
    of  Singapore Phase I |                                            |                               | Changi, Singapore                 |                       |  |               | Boustead Projects |                       |  |               | September |            |  |  | 234,000 |         |           |    | 11,200    |        |         |            | 50     | %  
|                                                     |                                            |                               |                                   |                       |  |               |                   |                       |  |               |           |            |  |  |         |         |           |    |           |        |         |            |        |    
|                                                     |                                            |                               | % Pre-leased/funded-to-  date(2)  |                       |  |               |                   |                       |  |               |           |            |  |  |         |         |           | 0  | %         |        | $       | 100        |        |     |    |   |   
|                                                     |                                            |                               | Weighted Average Estimated  Yield |                       |  |               |                   |                       |  |               |           |            |  |  |         |         |           |    |           |        |         | 11.9%/11.9 | %      |     |    |   |   
|                                                     |                                            | GAAP/Cash(5)                  |                                   |                       |  |               |                   |                       |  |               |           |            |  |  |         |         |           |    |           |        |         |            |        |     |    |  
|                                                     |                                            | Total Scheduled Deliveries(1) |                                   |                       |  |               |                   |                       |  |               |           |            |  |  |         |         | 1,693,000 |    |           | $      | 106,800 |            |        |     | 59 | %
|                                                     |                                            |                               |                                   |                       |  |               |                   |                       |  |               |           |            |  |  |         |         |           |    |           |        |         |            |        |    
|                                                     |                                            |                               | % Pre-leased/funded-to-date(2)    |                       |  |               |                   |                       |  |               |           |            |  |  |         |         |           | 28 | %         |        | $       | 57,800     | (2)    |     |    |   |   
|                                                     |                                            |                               | Weighted Average Estimated Yield  |                       |  |               |                   |                       |  |               |           |            |  |  |         |         |           |    |           |        |         | 10.1%/9.7  | %      |     |    |   |   
|                                                     |                                            | GAAP/Cash(5)                  |                                   |                       |  |               |                   |                       |  |               |           |            |  |  |         |         |           |    |           |        |         |            |        |     |    |  



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents total estimated cost or renovation,
    expansion or development, including initial acquisition costs,
    Development Alliance Partner® earnouts and associated
    equity carry costs. The estimates are based on our current
    estimates and forecasts and are subject to change. Excludes 178
    acres of land held for future development and other
    acquisition-related costs totaling $27.1 million.
|   
|(2) | As of December 31, 2002, our share of
    amounts funded to date for 2003 deliveries was
    $36.8 million.                                                                                                                                                                                                                                                                                                                 
|   
|(3) | Represents a renovation project.                                                                                                                                                                                                                                                                                                                                                                                            

13



---



##### 





|    |                                                                  
|--- | -----------------------------------------------------------------
|(4) | This is a 79-door truck terminal.                                
|   
|(5) | The yield on international projects is on an
    after-tax basis.

Development Projects Available for
Sale(1)

|                               |      |                                |                     |                   |  |               |               |                |  |               |               |            |  |  |         |  |         |   |        |  |        |     |     |   |    |  
|------------------------------ | ---- | ------------------------------ | ------------------- | ----------------- |  | ------------- | ------------- | -------------- |  | ------------- | ------------- | ---------- |  |  | ------- |  | ------- | - | ------ |  | ------ | --- | --- | - | -- | -
|                               |      |                                |                     |                   |  | Estimated     |               | Estimated      |  | Estimated     |               | Our       
|                               |      |                                |                     | Development       |  | Stabilization |               | Square Feet at |  | Total         |               | Ownership 
|Project                        |      | Market                         |                     | Alliance Partner® |  | Date(2)       |               | Completion     |  | Investment(3) |               | Percentage
|                               |      |                                |                     |                   |  |               |               |                |  |               |               |           
|                               |      |                               
|                               |      | (Dollars in thousands)        
|Value-Added Conversion         |      |                                |                     |                   |  |               |               |                |  |               |               |            |  |  |         |  |         |   |        |  |        |     |     |  
|                               | None |                                |                     |                   |  |               |               |                |  |               |               |            |  |  |         |  |         |   |        |  |        |     |     |   |   
|Build-to-Sell(4)               |      |                                |                     |                   |  |               |               |                |  |               |               |            |  |  |         |  |         |   |        |  |        |     |     |  
|1. Carson Town Center SW       |      |                                | Southern California |                   |  |               | Mar Ventures  |                |  |               | Completed     |            |  |  | 247,000 |  |         | $ | 18,900 |  |        |     | 95  | %
|2. Novato Fair Shopping Center |      |                                | SF Bay Area         |                   |  |               | AIG           |                |  |               | November 2003 |            |  |  | 134,000 |  |         |   | 18,300 |  |        |     | 50  | %
|3. Wilsonville Phase II        |      |                                | Southern California |                   |  |               | Trammell Crow |                |  |               | March 2004    |            |  |  | 250,000 |  |         |   | 11,900 |  |        |     | 100 | %
|                               |      |                                |                     |                   |  |               |               |                |  |               |               |            |  |  |         |  |         |   |        |  |        |     |     |  
|                               |      | Total Build-to-Sell Properties |                     |                   |  |               |               |                |  |               |               |            |  |  |         |  | 631,000 |   |        |  | 49,100 |     |     |   | 79 | %
|                               |      |                                |                     |                   |  |               |               |                |  |               |               |            |  |  |         |  |         |   |        |  |        |     |     |  
|                               |      | Funded-to-date                 |                     |                   |  |               |               |                |  |               |               |            |  |  |         |  |         |   |        |  | 35,000 | (5) |     |   |    |  



---



|    |                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Excludes 47 acres of land and other
    acquisition-related costs totaling $11.2 million.                                                                                                                                                                          
|   
|(2) | We intend to sell these properties within two
    years of completion.                                                                                                                                                                                             
|   
|(3) | Represents total estimated cost of renovation,
    expansion or development, including initial acquisition costs,
    debt and equity carry and partner earnouts. The estimates are
    based on our current estimates and forecasts and are subject to
    change.
|   
|(4) | Represents build-to-suit and speculative
    development or redevelopment.                                                                                                                                                                                         
|   
|(5) | As of December 31, 2002, our share of
    amounts funded to date was $27.0 million.                                                                                                                                                                                

Properties Held Through Joint Ventures,
Limited Liability Companies, and Partnerships

Consolidated:

As of December 31, 2002, we held interests
in joint ventures, limited liability companies and partnerships
with third parties, which are consolidated in our consolidated
financial statements. Such investments are consolidated because
we own a majority interest or exercise significant control over
major operating decisions such as approval of budgets, selection
of property managers and changes in financing. Under the
agreements governing the joint ventures, we and the other party
to the joint venture may be required to make additional capital
contributions and, subject to certain limitations, the joint
ventures may incur additional debt. Such agreements also impose
certain restrictions on the transfer of joint venture interests
by us or the other party to the joint venture and provide
certain rights to us or the other party to the joint venture to
sell its interest to the joint venture or to the other joint
venture partner on terms specified in the agreement. See
Item 14. Note 10 of the Notes to Consolidated
Financial Statements.

14



---



##### 



Industrial Consolidated Joint
Ventures

|                                       |                                           |                                                  |                                    |           |    |         |    |            |     |      |           |              |            |            |         |         |           |           |        |         |         |         |       |         |         |         | 
|-------------------------------------- | ----------------------------------------- | ------------------------------------------------ | ---------------------------------- | --------- | -- | ------- | -- | ---------- | --- | ---- | --------- | ------------ | ---------- | ---------- | ------- | ------- | --------- | --------- | ------ | ------- | ------- | ------- | ----- | ------- | ------- | ------- | 
|                                       |                                           | Our                                              |                                    |           |    |         |    |            |     |      |           | JV Partners
|                                       |                                           | Ownership                                        |                                    | Number of |    | Square  |    | Gross Book |     |      |           | Share of    
|Joint Ventures                         |                                           | Percentage                                       |                                    | Buildings |    | Feet(1) |    | Value(2)   |     | Debt |           | Debt        
|                                       |                                           |                                                  |                                    |           |    |         |    |            |     |      |           |             
|                                       |                                           |                                                 
|                                       |                                           | (Dollars in thousands)                          
|Operating Joint Ventures:              |                                           |                                                  |                                    |           |    |         |    |            |     |      |           |              |            |            |         |         |           |           |        |         |         |         |       |        
|Co-investment joint ventures with AMB: |                                           |                                                  |                                    |           |    |         |    |            |     |      |           |              |            |            |         |         |           |           |        |         |         |         |       |        
|                                       | AMB/ Erie(3)                              |                                                  |                                    | 50        | %  |         |    | 32         |     |      |           | 2,837,459    |            |            | $       | 166,184 |           |           | $      | 58,248  |         |         | $     | 29,124  |        
|                                       | AMB Institutional Alliance Fund I(4)      |                                                  |                                    | 21        | %  |         |    | 103        |     |      |           | 5,902,060    |            |            |         | 393,827 |           |           |        | 171,813 |         |         |       | 136,413 |        
|                                       | AMB Partners II(5)                        |                                                  |                                    | 20        | %  |         |    | 56         |     |      |           | 4,416,908    |            |            |         | 237,173 |           |           |        | 120,874 |         |         |       | 91,428  |        
|                                       | AMB-SGP(6)                                |                                                  |                                    | 50        | %  |         |    | 73         |     |      |           | 8,594,016    |            |            |         | 379,207 |           |           |        | 252,475 |         |         |       | 126,238 |        
|                                       | AMB Institutional Alliance Fund II(4)     |                                                  |                                    | 20        | %  |         |    | 56         |     |      |           | 5,725,598    |            |            |         | 337,865 |           |           |        | 227,955 |         |         |       | 182,216 |        
|                                       |                                           |                                                  |                                    |           |    |         |    |            |     |      |           |              |            |            |         |         |           |           |        |         |         |         |       |        
|                                       |                                           |                                                  | Total co-investment joint ventures |           |    | 31      | %  |            |     | 320  |           |              |            | 27,476,041 |         |         |           | 1,514,256 |        |         |         | 831,365 |       |         |         | 565,419 | 
|Other Joint Ventures                   |                                           |                                                  | 92                                 | %         |    |         | 41 |            |     |      | 4,094,640 |              |            |            | 320,721 |         |           |           | 80,250 |         |         |         | 4,944 |        
|                                       |                                           |                                                  |                                    |           |    |         |    |            |     |      |           |              |            |            |         |         |           |           |        |         |         |         |       |        
|                                       |                                           | Total Operating Joint Ventures                   |                                    |           | 42 | %       |    |            | 361 |      |           |              | 31,570,681 |            |         |         | 1,834,977 |           |        |         | 911,615 |         |       |         | 570,363 |        
|                                       |                                           |                                                  |                                    |           |    |         |    |            |     |      |           |              |            |            |         |         |           |           |        |         |         |         |       |        
|Development Alliance Joint Ventures:   |                                           |                                                  |                                    |           |    |         |    |            |     |      |           |              |            |            |         |         |           |           |        |         |         |         |       |        
|                                       | AMB/ Erie(3)                              |                                                  |                                    | 50        | %  |         |    |           |     |      |           |             |            |            |         | 13,985  |           |           |        |        |         |         |       |        |        
|                                       | AMB Institutional Alliance Fund I(4)      |                                                  |                                    | 21        | %  |         |    | 2          |     |      |           | 233,000      |            |            |         | 9,933   |           |           |        | 9,748   |         |         |       | 7,701   |        
|                                       | AMB Partners II(5)                        |                                                  |                                    | 20        | %  |         |    | 1          |     |      |           | 64,000       |            |            |         | 3,006   |           |           |        |        |         |         |       |        |        
|                                       | AMB Institutional Alliance Fund II(4)     |                                                  |                                    | 20        | %  |         |    | 3          |     |      |           | 384,000      |            |            |         | 17,805  |           |           |        |        |         |         |       |        |        
|                                       | Other Development Alliance Joint Ventures |                                                  |                                    | 93        | %  |         |    | 8          |     |      |           | 757,000      |            |            |         | 52,674  |           |           |        |        |         |         |       |        |        
|                                       |                                           |                                                  |                                    |           |    |         |    |            |     |      |           |              |            |            |         |         |           |           |        |         |         |         |       |        
|                                       |                                           | Total Development Joint Ventures                 |                                    |           | 64 | %       |    |            | 14  |      |           |              | 1,438,000  |            |         |         | 97,403    |           |        |         | 9,748   |         |       |         | 7,701   |        
|                                       |                                           |                                                  |                                    |           |    |         |    |            |     |      |           |              |            |            |         |         |           |           |        |         |         |         |       |        
|                                       |                                           | Total Industrial Consolidated Joint
    Ventures |                                    |           | 43 | %       |    |            | 375 |      |           |              | 33,008,681 |            |         | $       | 1,932,380 |           |        | $       | 921,363 |         |       | $       | 578,064 |        
|                                       |                                           |                                                  |                                    |           |    |         |    |            |     |      |           |              |            |            |         |         |           |           |        |         |         |         |       |        



---



|    |                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For development properties, this represents
    estimated square feet at completion of development for committed
    phases of development and renovation projects.                                                                                                                                                        
|   
|(2) | Represents the book value of the property (before
    accumulated depreciation) owned by the joint venture entity and
    excludes net other assets.                                                                                                                                                                       
|   
|(3) | AMB Erie is a co-investment partnership formed in
    1998 with the Erie Insurance Company and certain related
    entities.                                                                                                                                                                                               
|   
|(4) | AMB Institutional Alliance Fund I (closed in
    2000) and II (closed in 2001) are co-investment partnerships
    with institutional investors, which invest through private REITs.                                                                                                                                        
|   
|(5) | AMB Partners II is a co-investment partnership
    formed in 2001 with the City and County of San Francisco
    Employees Retirement System. In November 2002, CCSF
    increased its ownership in AMB Partners II from 50% to 80% by
    acquiring an additional 30% partnership interest in AMB Partners
    II from us.
|   
|(6) | AMB-SGP is a co-investment partnership formed in
    2001 with Industrial JV Pte Ltd, a subsidiary of GIC Real Estate
    Pte Ltd., the real estate investment subsidiary of the
    government of Singapore Investment Corporation.                                                                                       

15



---



##### 



Retail and Other Consolidated Joint
Ventures

|                                   |                                          |                        |  |            |     |        |   |            |         |      |        |              |  |        |         |   |       |       | 
|---------------------------------- | ---------------------------------------- | ---------------------- |  | ---------- | --- | ------ | - | ---------- | ------- | ---- | ------ | ------------ |  | ------ | ------- | - | ----- | ----- | 
|                                   |                                          |                        |  | Our        |     |        |   |            |         |      |        | JV Partners
|                                   |                                          |                        |  | Ownership  |     | Square |   | Gross Book |         |      |        | Share of    
|Properties                         |                                          | Market                 |  | Percentage |     | Feet   |   | Value(1)   |         | Debt |        | Debt        
|                                   |                                          |                        |  |            |     |        |   |            |         |      |        |             
|                                   |                                          |                       
|                                   |                                          | (Dollars in thousands)
|Operating Joint Ventures           |                                          |                        |  |            |     |        |   |            |         |      |        |              |  |        |         |   |       |      
|1. Around Lenox                    |                                          | Atlanta                |  |            | 90  | %      |   | 120,946    |         | $    | 21,408 |              |  | $9,424 |         | $ | 942   |      
|2. Palm Aire                       |                                          | Miami                  |  |            | 100 | %      |   | 131,233    |         |      | 18,787 |              |  |       |         |   |      |      
|3. Plaza at Delray(2)              |                                          | Miami                  |  |            | 76  | %      |   | 332,908    |         |      | 41,306 |              |  |       |         |   |      |      
|                                   |                                          |                        |  |            |     |        |   |            |         |      |        |              |  |        |         |   |       |      
|                                   | Total Operating Joint Ventures           |                        |  |            |     | 85     | % |            | 585,087 |      |        | 81,501       |  |        | 9,424   |   |       | 942   | 
|                                   |                                          |                        |  |            |     |        |   |            |         |      |        |              |  |        |         |   |       |      
|Development Alliance Joint Venture |                                          |                        |  |            |     |        |   |            |         |      |        |              |  |        |         |   |       |      
|4. Springs Gate land(3)            |                                          | Miami                  |  |            | 100 | %      |   |           |         |      | 6,717  |              |  |       |         |   |      |      
|5. Novato Fair Shopping Center     |                                          | SF Bay Area            |  |            | 50  | %      |   | 134,000    |         |      | 14,522 |              |  | 7,806  |         |   | 3,903 |      
|                                   |                                          |                        |  |            |     |        |   |            |         |      |        |              |  |        |         |   |       |      
|                                   | Total Development Joint Ventures         |                        |  |            |     | 66     | % |            | 134,000 |      |        | 21,239       |  |        | 7,806   |   |       | 3,903 | 
|                                   |                                          |                        |  |            |     |        |   |            |         |      |        |              |  |        |         |   |       |      
|                                   | Total Retail Consolidated Joint Ventures |                        |  |            |     | 81     | % |            | 719,087 |      | $      | 102,740      |  |        | $17,230 |   | $     | 4,845 | 
|                                   |                                          |                        |  |            |     |        |   |            |         |      |        |              |  |        |         |   |       |      



---



|    |                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents the book value of the property (before
    accumulated depreciation) owned by the joint-venture entity and
    excludes net other assets.
|   
|(2) | Included as properties held for divestiture.                                                                                                        
|   
|(3) | Represents 26 acres of land for future
    development. We sold 13 acres of our 39 acres in December 2002.                                          



| |                                                                               
| | ------------------------------------------------------------------------------
| | Unconsolidated Joint Ventures, Mortgage
    Investments and Other Investments:

As of December 31, 2002, we held interests
in four equity investment joint ventures that are unconsolidated
in our financial statements. The management and control over
significant aspects of these investments are with the third
party joint venture partner. In addition, as of
December 31, 2002, we held one mortgage investment from
which we receive interest income.

Unconsolidated Joint Ventures,

Mortgage and Other Investments


|                                                      |                                     |                        |  |                   |  |        |           |            |  |            |        |         |  |  |     |     |  |         |        
|----------------------------------------------------- | ----------------------------------- | ---------------------- |  | ----------------- |  | ------ | --------- | ---------- |  | ---------- | ------ | ------- |  |  | --- | --- |  | ------- | -------
|                                                      |                                     |                        |  |                   |  |        |           | Our        |  |            |        |        
|                                                      |                                     |                        |  |                   |  | Total  |           | Net        |  | Our        |        | Our    
|                                                      |                                     |                        |  |                   |  | Square |           | Equity     |  | Ownership  |        | Share  
|Joint Ventures                                        |                                     | Market                 |  | Alliance Partner  |  | Feet   |           | Investment |  | Percentage |        | of Debt
|                                                      |                                     |                        |  |                   |  |        |           |            |  |            |        |        
|                                                      |                                     |                       
|                                                      |                                     | (Dollars in thousands)
|1. Elk Grove Du Page                                  |                                     | Chicago                |  | Hamilton Partners |  |        | 4,046,721 |            |  | $          | 58,966 |         |  |  | 56% |     |  | $13,438
|2. Pico Rivera                                        |                                     | Southern California    |  | Majestic Realty   |  |        | 855,600   |            |  |            | 2,444  |         |  |  | 50% |     |  | 16,826 
|3. Monte Vista Spectrum                               |                                     | Southern California    |  | Majestic Realty   |  |        | 576,700   |            |  |            | 2,983  |         |  |  | 50% |     |  | 9,024  
|4. Airport Logistics Park of Singapore
    Phase I(1) |                                     | Singapore              |  | Boustead Projects |  |        | 234,000   |            |  |            | 35     |         |  |  | 50% |     |  |       
|                                                      |                                     |                        |  |                   |  |        |           |            |  |            |        |         |  |  |     |     |  |        
|                                                      | Total Unconsolidated Joint Ventures |                        |  |                   |  |        |           | 5,713,021  |  |            | $      | 64,428  |  |  |     | 56% |  |         | $39,288
|                                                      |                                     |                        |  |                   |  |        |           |            |  |            |        |         |  |  |     |     |  |        

16



---



##### 



|                    |  |                        |  |          |  |               |        |      |  |  |       | 
|------------------- |  | ---------------------- |  | -------- |  | ------------- | ------ | ---- |  |  | ----- | 
|                    |  |                        |  |          |  | Mortgage      |        |     
|Mortgage Investment |  | Market                 |  | Maturity |  | Receivable(2) |        | Rate
|                    |  |                        |  |          |  |               |        |     
|                    |  |                       
|                    |  | (Dollars in thousands)
|1. Pier 1(3)        |  | SF Bay Area            |  | May 2026 |  | $             | 13,133 |      |  |  | 13.0% | 

|                  |  |                        |  |             |  |            |        |            |  |  |     |  
|----------------- |  | ---------------------- |  | ----------- |  | ---------- | ------ | ---------- |  |  | --- | -
|                  |  |                        |  |             |  |            |        | Our       
|                  |  |                        |  | Property    |  |            |        | Ownership 
|Other Investments |  | Market                 |  | Type        |  | Investment |        | Percentage
|                  |  |                        |  |             |  |            |        |           
|                  |  |                       
|                  |  | (Dollars in thousands)
|1. Park One(4)    |  | Southern California    |  | Parking Lot |  | $          | 75,500 |            |  |  | 100 | %



---



|    |                                                                                                                                                                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Square feet for development alliance joint
    ventures represents estimated square feet at completion of
    development project.                                                                                                        
|   
|(2) | We also hold inter-company loans that we
    eliminate in consolidation.                                                                                                                                                                  
|   
|(3) | We also have a 0.1% unconsolidated equity
    interest (with a 33% economic interest) in this property and
    have an option to purchase the remaining equity interest
    beginning January 1, 2007, and expiring December 31,
    2009.
|   
|(4) | Park One is a 19.9 acre parking lot with 2,720
    parking spaces and 12 billboard signs in the Los Angeles market,
    immediately adjacent to Los Angeles International Airport.                                                        

Secured Debt

As of December 31, 2002, we had
$1.3 billion of indebtedness, net of unamortized premiums,
secured by deeds of trust on 104 properties. As of
December 31, 2002, the total gross investment value of
those properties secured by debt was $2.6 billion. Of the
$1.3 billion of secured indebtedness, $893.1 million was
joint venture debt secured by properties with a gross investment
value of $1.6 billion. See Managements
Discussion and Analysis of Financial Condition and Results of
Operations  Liquidity and Capital Resources and
Item 14. Note 7 of Notes to Consolidated
Financial Statements included in this report. We believe
that as of December 31, 2002, the value of the properties
securing the respective obligations in each case exceeded the
principal amount of the outstanding obligations.



|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

As of December 31, 2002, there were no
pending legal proceedings to which we were a party or of which
any of our properties was the subject, the adverse determination
of which we anticipate would have a material adverse effect upon
our financial condition, results of operations and cash flows.



|        |                                                        
|------- | -------------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security
    Holders

None.

PART II



|        |                                                                          
|------- | -------------------------------------------------------------------------
|Item 5. | Market For Registrants Common Equity
    and Related Shareholder Matters

There is no established public trading market for
our partnership units. As of December 31, 2002, we had
outstanding 93,542,225 partnership units, consisting of
85,795,838 general partnership units (consisting of 81,800,038
common units and 3,995,800 8 1/2% Series A Cumulative
Redeemable Preferred Units) held by AMB Property Corporation and
7,746,387 limited partnership units (consisting of 4,846,387
common units, 1,300,000 8 5/8% Series B Cumulative
Redeemable Preferred Units, 800,000 7.95% Series J
Cumulative Redeemable Preferred Units and 800,000 7.95%
Series K Cumulative Redeemable Preferred Units). Subject to
certain terms and conditions, the limited partnership units are
redeemable by the holders or, at the option of AMB Property
Corporation, exchangeable on a one-for-one basis for shares of
the common stock of AMB Property Corporation. As of
December 31, 2002, there were 84 holders of our common
partnership units (including AMB Property Corporations
general partnership interest). As of the same date, AMB Property
Corporation was the only holder of the 8 1/2% Series A
Cumulative Redeemable Preferred Units, there was one

17



---



##### 



holder of the 8 5/8% Series B
Cumulative Redeemable Units, there was one holder of the 7.95%
Series J Cumulative Redeemable Units and there was one
holder of the 7.95% Series K Cumulative Redeemable Units.


During 2002, 122,640 limited partnership units
were redeemed for shares of AMB Property Corporations
common stock.

Set forth below are the distributions per limited
partnership unit paid by us during the years ended
December 31, 2002, 2001 and 2000:

|     |             |              |   |       | 
|---- | ----------- | ------------ | - | ----- | 
|Year |             | Distribution
|     |             |             
|2002 |             |              |   |      
|     | 1st Quarter |              | $ | 0.410 | 
|     | 2nd Quarter |              |   | 0.410 | 
|     | 3rd Quarter |              |   | 0.410 | 
|     | 4th Quarter |              |   | 0.410 | 
|    
|2001 |             |              |   |      
|     | 1st Quarter |              |   | 0.395 | 
|     | 2nd Quarter |              |   | 0.395 | 
|     | 3rd Quarter |              |   | 0.395 | 
|     | 4th Quarter |              |   | 0.395 | 
|2000 |             |              |   |      
|     | 1st Quarter |              |   | 0.370 | 
|     | 2nd Quarter |              |   | 0.370 | 
|     | 3rd Quarter |              |   | 0.370 | 
|     | 4th Quarter |              |   | 0.370 | 

18



---



##### 





|        |                                      
|------- | -------------------------------------
|Item 6. | Selected Financial and Other
    Data

SELECTED OPERATING PARTNERSHIP FINANCIAL AND
OTHER DATA(1)

The following table sets forth selected
consolidated historical financial and other data for AMB
Property, L.P. on an historical basis as of and for the years
ended December 31:

|                                                                                   |                      |                                                 |           |          |   |      |           |          |   |      |           |          |   |   |           |          |   |   |           |          |  
|---------------------------------------------------------------------------------- | -------------------- | ----------------------------------------------- | --------- | -------- | - | ---- | --------- | -------- | - | ---- | --------- | -------- | - | - | --------- | -------- | - | - | --------- | -------- | -
|                                                                                   |                      | 2002                                            |           | 2001     |   | 2000 |           | 1999     |   | 1998
|                                                                                   |                      |                                                 |           |          |   |      |           |          |   |     
|                                                                                   |                      |                                                
|                                                                                   |                      | (Dollars in thousands, except per unit amounts)
|Operating Data                                                                     |                      |                                                 |           |          |   |      |           |          |   |      |           |          |   |   |           |          |   |   |           |         
|Total revenues                                                                     |                      | $                                               | 615,843   |          |   | $    | 562,777   |          |   | $    | 447,098   |          |   | $ | 420,023   |          |   | $ | 338,521   |         
|Income before minority interests                                                   |                      |                                                 | 148,505   |          |   |      | 148,742   |          |   |      | 151,639   |          |   |   | 144,209   |          |   |   | 113,671   |         
|Income from continuing operations                                                  |                      |                                                 | 94,371    |          |   |      | 121,653   |          |   |      | 107,847   |          |   |   | 163,975   |          |   |   | 102,526   |         
|Net income available to
    common unitholders attributable
    to general partner |                      |                                                 | 116,153   |          |   |      | 125,053   |          |   |      | 113,282   |          |   |   | 167,603   |          |   |   | 108,954   |         
|Net income from continuing operations per common
    unit:                         |                      |                                                 |           |          |   |      |           |          |   |      |           |          |   |   |           |          |   |   |           |         
|                                                                                   | Basic(2)             |                                                 |           | 1.03     |   |      |           | 1.29     |   |      |           | 1.18     |   |   |           | 1.80     |   |   |           | 1.15     |  
|                                                                                   | Diluted(2)           |                                                 |           | 1.02     |   |      |           | 1.28     |   |      |           | 1.18     |   |   |           | 1.80     |   |   |           | 1.15     |  
|Net income per common unit:                                                        |                      |                                                 |           |          |   |      |           |          |   |      |           |          |   |   |           |          |   |   |           |         
|                                                                                   | Basic(2)             |                                                 |           | 1.39     |   |      |           | 1.49     |   |      |           | 1.35     |   |   |           | 1.94     |   |   |           | 1.27     |  
|                                                                                   | Diluted(2)           |                                                 |           | 1.37     |   |      |           | 1.47     |   |      |           | 1.35     |   |   |           | 1.94     |   |   |           | 1.26     |  
|Distributions declared per
    common unit                                         |                      |                                                 | 1.64      |          |   |      | 1.58      |          |   |      | 1.48      |          |   |   | 1.40      |          |   |   | 1.37      |         
|Other Data                                                                         |                      |                                                 |           |          |   |      |           |          |   |      |           |          |   |   |           |          |   |   |           |         
|Funds from operations(3)                                                           |                      |                                                 | 217,628   |          |   |      | 212,907   |          |   |      | 208,651   |          |   |   | 191,147   |          |   |   | 170,407   |         
|Cash flows provided by (used in):                                                  |                      |                                                 |           |          |   |      |           |          |   |      |           |          |   |   |           |          |   |   |           |         
|                                                                                   | Operating activities |                                                 |           | 288,801  |   |      |           | 288,562  |   |      |           | 261,175  |   |   |           | 190,391  |   |   |           | 177,180  |  
|                                                                                   | Investing activities |                                                 |           | (318,471 | ) |      |           | (363,152 | ) |      |           | (726,499 | ) |   |           | 63,732   |   |   |           | (793,366 | )
|                                                                                   | Financing activities |                                                 |           | 45,931   |   |      |           | 127,303  |   |      |           | 452,370  |   |   |           | (240,721 | ) |   |           | 604,202  |  
|Balance Sheet Data                                                                 |                      |                                                 |           |          |   |      |           |          |   |      |           |          |   |   |           |          |   |   |           |         
|Investments in real estate at cost                                                 |                      | $                                               | 4,925,982 |          |   | $    | 4,530,711 |          |   | $    | 4,026,597 |          |   | $ | 3,249,452 |          |   | $ | 3,369,060 |         
|Total assets                                                                       |                      |                                                 | 4,992,494 |          |   |      | 4,768,943 |          |   |      | 4,433,207 |          |   |   | 3,631,175 |          |   |   | 3,571,327 |         
|Total consolidated debt                                                            |                      |                                                 | 2,235,361 |          |   |      | 2,143,714 |          |   |      | 1,843,857 |          |   |   | 1,279,662 |          |   |   | 1,376,638 |         
|Our share of total debt                                                            |                      |                                                 | 1,691,737 |          |   |      | 1,655,386 |          |   |      | 1,681,161 |          |   |   | 1,168,218 |          |   |   | 1,348,107 |         
|Contractual obligations(4)                                                         |                      |                                                 | 2,609,935 |          |   |      | 2,329,152 |          |   |      | 2,002,884 |          |   |   | 1,279,662 |          |   |   | 1,376,638 |         
|General partners capital                                                          |                      |                                                 | 1,684,150 |          |   |      | 1,752,342 |          |   |      | 1,767,930 |          |   |   | 1,829,259 |          |   |   | 1,765,360 |         



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Certain items in the consolidated financial
    statements for prior periods have been reclassified to conform
    with current classifications with no effect on net income or
    partners capital.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(2) | Basic and diluted net income per weighted average
    unit equals the net income available to common unitholders
    divided by 88,204,208 and 89,689,310 shares, respectively, for
    2002; 89,286,379 and 90,325,801 units, respectively, for 2001;
    89,566,375 and 90,024,511 units, respectively, for 2000;
    90,792,310 and 90,867,934 units, respectively, for 1999; and
    89,493,394 and 89,852,187 units, respectively, for 1998.                                                                                                                                                                                                                               
|   
|(3) | Funds from Operations, or FFO, is defined as
    income from operations before minority interest plus real estate
    depreciation, discontinued operations FFO and adjustments
    to derive our pro rata share of the FFO of unconsolidated joint
    ventures, less minority interests pro rata share of the
    FFO of consolidated joint ventures and preferred unit
    distributions. In accordance with the National Association of
    Real Estate Investment Trust White Paper on funds from
    operations, we include the effects of straight-line rents in
    funds from operations. We believe that FFO is an appropriate
    measure of performance for a real

19



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##### 



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | estate investment trust because it is widely used
    by investors and analysts. While FFO is a relevant and widely
    used measure of operating performance of real estate investment
    trusts, it does not represent cash flow from operations or net
    income as defined by accounting principles generally accepted in
    the United States of America, or GAAP, and it should not be
    considered as an alternative to these indicators in evaluating
    liquidity or operating performance. Further, FFO as disclosed by
    other real estate investment trusts may not be comparable. For a
    presentation of and a quantitative reconciliation of FFO with
    the most directly comparable financial measure to FFO calculated
    in accordance with GAAP, please see the supplemental earnings
    table in Managements Discussion and Analysis of Financial
    Condition and Results of Operations.
|   
|(4) | Contractual obligations include short-term and
    long-term debt payments and lease obligations. Amounts due
    within one year were $160.3 million, $103.5 million,
    $54.1 million, $128.1 million and $14.1 million
    as of December 31, 2002, 2001, 2000, 1999 and 1998,
    respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

20



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##### 





|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis
    of Financial Condition and Results of Operations

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

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



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

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

GENERAL

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

We generate revenue primarily from rent received
from customers under long-term operating leases at our
properties, including reimbursements from customers for certain
operating costs and our private capital business. In addition,
our growth is, in part, dependent on our ability to increase
occupancy rates or increase rental rates at our properties and
our ability to continue the acquisition and development of
additional properties. Although the weak economy has decreased
customer demand for new space and has limited or in

21



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##### 



some cases lowered rent growth, many types of
investors are acquiring industrial real estate. In 2002, we
capitalized on this opportunity by accelerating our portfolio
repositioning program through the disposition of properties. Our
income would be adversely affected if a significant number of
customers were unable to pay rent or if we were unable to rent
our industrial space on favorable terms. Certain significant
expenditures associated with an investment in real estate (such
as mortgage payments, real estate taxes and maintenance costs)
generally do not decline when circumstances cause a reduction in
income from the property. Moreover, as the general partner of
the co-investment joint ventures, we generally will be liable
for all of the joint ventures unsatisfied obligations
other than non-recourse obligations. Any such liabilities could
adversely affect our financial condition, results of operations,
cash flow and ability to make distributions to our unitholders
and payments to our noteholders.


Critical Accounting Policies

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

Investments in Real Estate.Investments in real estate are stated
at cost unless circumstances indicate that cost cannot be
recovered, in which case, the carrying value of the property is
reduced to estimated fair value. Carrying values for financial
reporting purposes are reviewed for impairment on a
property-by-property basis whenever events or changes in
circumstances indicate that the carrying value of a property may
not be recoverable. Impairment is recognized when estimated
expected future cash flows (undiscounted and without interest
charges) are less than the carrying amount of the property. The
estimation of expected future net cash flows is inherently
uncertain and relies on assumptions regarding current and future
market conditions and the availability of capital. If impairment
analysis assumptions change, then an adjustment to the carrying
amount of our long-lived assets could occur in the future period
in which the assumptions change. To the extent that a property
is impaired, the excess of the carrying amount of the property
over its estimated fair value is charged to earnings.

Rental Revenues.We
record rental revenue from operating leases on a straight-line
basis over the term of the leases and maintain an allowance for
estimated losses that may result from the inability of our
customers to make required payments. If customers fail to make
contractual lease payments that are greater than our bad-debt
reserves, security deposits and letters of credit, then we may
have to recognize additional bad debt charges in future periods.
Each period we review our outstanding accounts receivable,
including straight-line rents, for doubtful accounts and provide
allowances as needed. Historically, our bad debt expense has
been between 50 and 150 basis points of total revenues.

Consolidated Joint Ventures.Minority interests represent the
limited partnership interests in the operating partnership and
interests held by certain third parties in several real estate
joint ventures, aggregating approximately 33.8 million
square feet, which are consolidated for financial reporting
purposes. Such investments are consolidated because we own a
majority interest or we exercise significant control over major
operating decisions such as approval of budgets, selection of
property managers, investment activity and changes in financing.

Investments in Unconsolidated Joint Ventures.We have non-controlling limited
partnership interests in four separate unconsolidated joint
ventures. These investments are not consolidated because we do
not exercise significant control over major operating decisions
such as approval of budgets, selection of property

22



---



##### 



managers, investment activity and changes in
financing. We account for the joint ventures using the equity
method of accounting.


Stock-based Compensation Expense.In 2002, we adopted the expense
recognition provisions of Statement of Financial Accounting
Standard (SFAS) No. 123, Accounting for
Stock-Based Compensation. We value stock options issued by
AMB Property Corporation, our general partner, using the
Black-Scholes option-pricing model and recognize this value as
an expense over the period in which the options vest. Under this
standard, recognition of expense for stock options is
retroactively applied to all options granted after the beginning
of the year of adoption. Prior to 2002, we followed the
intrinsic method set forth in APB Opinion 25, Accounting
for Stock Issued to Employees. During 2002, AMB Property
Corporation awarded 2.0 million stock options to our
employees. In accordance with SFAS No. 123, we will
recognize the associated expense over the three to five-year
vesting periods. The expense is included in general and
administrative expenses in the accompanying consolidated
statements of operations.

RESULTS OF OPERATIONS

The analysis below includes changes attributable
to acquisitions, development activity, divestitures and the
changes resulting from properties that we owned during both the
current and prior year reporting periods, excluding development
properties prior to being stabilized (generally defined as 90%
leased or 12 months after we receive a certificate of
occupancy for the building). We refer to these properties as the
same store properties. For the comparison between the years
ended December 31, 2002 and 2001, the same store industrial
properties consisted of properties aggregating approximately
68.0 million square feet. The properties acquired during
2002 consisted of 43 buildings, aggregating approximately
5.4 million square feet. The properties acquired during
2001 consisted of 65 buildings, aggregating approximately
6.8 million square feet. In 2002, property divestitures
consisted of 58 industrial buildings and two retail centers,
aggregating approximately 5.7 million square feet. In 2001,
property divestitures consisted of 24 industrial and two
retail buildings, aggregating approximately 3.2 million
square feet. Our future financial condition and results of
operations, including rental revenues, may be impacted by the
acquisition of additional properties and dispositions. Our
future revenues and expenses may vary materially from historical
rates.

While occupancy levels in our industrial
portfolio were similar in 2002 and 2001, rents on lease renewals
and rollovers were lower in 2002 as the general contraction in
business activity nationwide caused a reduction in demand for
industrial warehouse facilities. This reduction in demand was
evidenced by two significant factors: decreases in national
industrial occupancy levels and negative net absorption of
industrial facility space. Specifically, according to Torto
Wheaton Research, at December 31, 2001, national industrial
occupancy was 90.2%; by December 31, 2002, national
occupancy fell to 88.8%. As reported by Torto Wheaton Research,
national net absorption of industrial space (the change in the
amount of square footage leased in existing and newly
constructed industrial properties) was positive from 1989
through 2000. By contrast, Torto Wheaton Research reported that
net absorption was negativeby 152.0 million square
feet in 2001 and 34.0 million square feet in 2002. These
factors combined to reduce market rents for industrial
properties by approximately 15% to 20% nationally from peak
levels at the beginning of 2001. While the level of rental rate
reduction varied by market, we strove to maintain high occupancy
by pricing lease renewals and new leases with sensitivity to
local market conditions.

23



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##### 



For the Years Ended December 31, 2002
and 2001 (Dollars in millions)

|                        |                   |       |       |       |       |          |       |          |       |  |      |      |      |  |       |       |      |  
|----------------------- | ----------------- | ----- | ----- | ----- | ----- | -------- | ----- | -------- | ----- |  | ---- | ---- | ---- |  | ----- | ----- | ---- | -
|Rental Revenues         |                   | 2002  |       | 2001  |       | $ Change |       | % Change
|                        |                   |       |       |       |       |          |       |         
|Industrial:             |                   |       |       |       |       |          |       |          |       |  |      |      |      |  |       |      
|                        | Same store        |       | $     | 490.9 |       |          | $     | 472.4    |       |  | $    | 18.5 |      |  |       | 3.9   | %   
|                        | 2001 acquisitions |       |       | 46.7  |       |          |       | 20.3     |       |  |      | 26.4 |      |  |       | 130.0 | %   
|                        | 2002 acquisitions |       |       | 21.2  |       |          |       |         |       |  |      | 21.2 |      |  |       |      |     
|                        | Developments      |       |       | 20.2  |       |          |       | 9.6      |       |  |      | 10.6 |      |  |       | 110.4 | %   
|                        | Divestitures      |       |       | 21.9  |       |          |       | 31.3     |       |  |      | (9.4 | )    |  |       | (30.0 | )%  
|Retail                  |                   |       | 16.9  |       |       |          | 24.3  |          |       |  | (7.4 | )    |      |  | (30.5 | )%   
|Discontinued operations |                   |       | (40.3 | )     |       |          | (38.0 | )        |       |  | 2.3  |      |      |  |      |      
|Straight-line rents     |                   |       | 11.0  |       |       |          | 10.1  |          |       |  | 0.9  |      |      |  | 8.9   | %    
|                        |                   |       |       |       |       |          |       |          |       |  |      |      |      |  |       |      
|                        |                   | Total |       | $     | 588.5 |          |       | $        | 530.0 |  |      | $    | 58.5 |  |       |       | 11.0 | %
|                        |                   |       |       |       |       |          |       |          |       |  |      |      |      |  |       |      

The growth in rental revenues in same store
properties resulted primarily from increased lease termination
fees, fixed rent increases on existing leases and reimbursement
of expenses, partially offset by lower average occupancies.
Industrial same store occupancy was 94.6% at December 31,
2002, and 95.0% at December 31, 2001. Year-to-date, the
same store rent decrease on industrial renewals and rollovers
(cash basis) was (1.4%) on 13.8 million square feet leased.
The increase in straight-line rents was partially offset by
write-offs associated with lease terminations. In 2002, lease
termination fees increased $9.5 million, net of
straight-line rent adjustments and lease cost and tenant
improvement write-downs, over 2001.

|                                                        |       |      |      |      |  |          |      |          |  |   |      |      |   |  |       |       |   
|------------------------------------------------------- | ----- | ---- | ---- | ---- |  | -------- | ---- | -------- |  | - | ---- | ---- | - |  | ----- | ----- | --
|Private Capital and Other Income                        |       | 2002 |      | 2001 |  | $ Change |      | % Change
|                                                        |       |      |      |      |  |          |      |         
|Equity in earnings of unconsolidated joint
    ventures |       | $    | 5.7  |      |  | $        | 5.5  |          |  | $ | 0.2  |      |   |  | 3.6   | %    
|Private capital income                                  |       |      | 11.2 |      |  |          | 11.0 |          |  |   | 0.2  |      |   |  | 1.8   | %    
|Interest and other income                               |       |      | 10.4 |      |  |          | 16.3 |          |  |   | (5.9 | )    |   |  | (36.2 | )%   
|                                                        |       |      |      |      |  |          |      |          |  |   |      |      |   |  |       |      
|                                                        | Total |      | $    | 27.3 |  |          | $    | 32.8     |  |   | $    | (5.5 | ) |  |       | (16.8 | )%
|                                                        |       |      |      |      |  |          |      |          |  |   |      |      |   |  |       |      

The decrease in interest and other income was
primarily due to the repayment of the $74.0 million
mortgage note in July 2002. We carried a 9.5% mortgage note
secured by the retail center that we sold in September 2000 in
the principal amount of $74.0 million.

|                                                  |                             |       |       |       |       |          |       |          |       |   |      |      |      |  |       |       |      |  
|------------------------------------------------- | --------------------------- | ----- | ----- | ----- | ----- | -------- | ----- | -------- | ----- | - | ---- | ---- | ---- |  | ----- | ----- | ---- | -
|Property Operating Expenses and Real Estate Taxes |                             | 2002  |       | 2001  |       | $ Change |       | % Change
|                                                  |                             |       |       |       |       |          |       |         
|(Exclusive of depreciation and amortization)      |                             |       |       |       |       |          |       |         
|Rental expenses                                   |                             | $     | 77.5  |       |       | $        | 64.5  |          |       | $ | 13.0 |      |      |  | 20.2  | %    
|Real estate taxes                                 |                             |       | 68.4  |       |       |          | 63.3  |          |       |   | 5.1  |      |      |  | 8.1   | %    
|                                                  |                             |       |       |       |       |          |       |          |       |   |      |      |      |  |       |      
|                                                  | Property operating expenses |       | $     | 145.9 |       |          | $     | 127.8    |       |   | $    | 18.1 |      |  |       | 14.2  | %   
|                                                  |                             |       |       |       |       |          |       |          |       |   |      |      |      |  |       |      
|Industrial:                                       |                             |       |       |       |       |          |       |          |       |   |      |      |      |  |       |      
|                                                  | Same store                  |       | $     | 118.3 |       |          | $     | 112.6    |       |   | $    | 5.7  |      |  |       | 5.1   | %   
|                                                  | 2001 acquisitions           |       |       | 11.0  |       |          |       | 3.9      |       |   |      | 7.1  |      |  |       | 182.1 | %   
|                                                  | 2002 acquisitions           |       |       | 6.8   |       |          |       |         |       |   |      | 6.8  |      |  |       |      |     
|                                                  | Developments                |       |       | 7.2   |       |          |       | 3.1      |       |   |      | 4.1  |      |  |       | 132.3 | %   
|                                                  | Divestitures                |       |       | 6.7   |       |          |       | 10.0     |       |   |      | (3.3 | )    |  |       | (33.0 | )%  
|Retail                                            |                             |       | 6.3   |       |       |          | 8.6   |          |       |   | (2.3 | )    |      |  | (26.7 | )%   
|Discontinued operations                           |                             |       | (10.4 | )     |       |          | (10.4 | )        |       |   | 0.0  |      |      |  |      |      
|                                                  |                             |       |       |       |       |          |       |          |       |   |      |      |      |  |       |      
|                                                  |                             | Total |       | $     | 145.9 |          |       | $        | 127.8 |   |      | $    | 18.1 |  |       |       | 14.2 | %
|                                                  |                             |       |       |       |       |          |       |          |       |   |      |      |      |  |       |      

24



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##### 



The $5.7 million increase in same store
properties operating expenses primarily relates to
increases in real estate taxes of $1.2 million and
insurance expenses of $3.7 million due to premium increases.

|                                 |       |      |       |       |  |          |       |          |  |   |      |      |  |  |      |      |  
|-------------------------------- | ----- | ---- | ----- | ----- |  | -------- | ----- | -------- |  | - | ---- | ---- |  |  | ---- | ---- | -
|Other Expenses                   |       | 2002 |       | 2001  |  | $ Change |       | % Change
|                                 |       |      |       |       |  |          |       |         
|Interest, including amortization |       | $    | 147.1 |       |  | $        | 124.9 |          |  | $ | 22.2 |      |  |  | 17.8 | %   
|Depreciation and amortization    |       |      | 127.2 |       |  |          | 104.8 |          |  |   | 22.4 |      |  |  | 21.4 | %   
|General and administrative       |       |      | 47.2  |       |  |          | 35.8  |          |  |   | 11.4 |      |  |  | 31.8 | %   
|                                 |       |      |       |       |  |          |       |          |  |   |      |      |  |  |      |     
|                                 | Total |      | $     | 321.5 |  |          | $     | 265.5    |  |   | $    | 56.0 |  |  |      | 21.1 | %
|                                 |       |      |       |       |  |          |       |          |  |   |      |      |  |  |      |     

The increase in interest expense was primarily
due to the issuance of additional unsecured senior debt
securities and an increase in secured debt balances, partially
offset by decreased borrowings on our unsecured credit facility.
The secured debt issuances were primarily for our co-investment
joint ventures properties. The increase in depreciation
expense was due to the increase in our net investment in real
estate. The increase in general and administrative expenses was
primarily due to the consolidation of AMB Investment Management,
Inc. (predecessor-in-interest to AMB Capital Partners, LLC)
and Headlands Realty Corporation on May 31, 2001. Prior to
May 31, 2001, general and administrative expenses did not
include expenses incurred by two unconsolidated preferred stock
subsidiaries, Headlands Realty Corporation and AMB Investment
Management, Inc. General and administrative expenses would have
been $39.4 million had the subsidiaries been consolidated
beginning January 1, 2001. The increase in general and
administrative expenses was also due to increased stock-based
compensation expense, additional staffing and expenses for new
initiatives, including our international expansion and income
taxes for our taxable REIT subsidiaries.

In 2001, we recognized $20.8 million of
losses on investments in other companies, including our
investment in Webvan Group, Inc. and other technology-related
companies. The loss reflects a 100% write-down of the
investments. No gains or losses were recognized in 2002.

For the Years Ended December 31, 2001
and 2000 (Dollars in millions)

|                        |       |      |       |       |  |          |       |          |  |   |      |      |  |  |       |      |  
|----------------------- | ----- | ---- | ----- | ----- |  | -------- | ----- | -------- |  | - | ---- | ---- |  |  | ----- | ---- | -
|Rental Revenues         |       | 2001 |       | 2000  |  | $ Change |       | % Change
|                        |       |      |       |       |  |          |       |         
|Same store              |       | $    | 400.2 |       |  | $        | 376.7 |          |  | $ | 23.5 |      |  |  | 6.2   | %   
|2000 acquisitions       |       |      | 97.1  |       |  |          | 25.6  |          |  |   | 71.5 |      |  |  | 279.3 | %   
|2001 acquisitions       |       |      | 22.8  |       |  |          |      |          |  |   | 22.8 |      |  |  |      |     
|Developments            |       |      | 26.9  |       |  |          | 14.6  |          |  |   | 12.3 |      |  |  | 84.0  | %   
|Discontinued operations |       |      | (38.0 | )     |  |          | (33.1 | )        |  |   | (4.9 | )    |  |  | 14.8  | %   
|Straight-line rents     |       |      | 10.1  |       |  |          | 10.2  |          |  |   | (0.1 | )    |  |  | (1.0  | )%  
|                        |       |      |       |       |  |          |       |          |  |   |      |      |  |  |       |     
|                        | Total |      | $     | 530.0 |  |          | $     | 431.1    |  |   | $    | 98.9 |  |  |       | 22.9 | %
|                        |       |      |       |       |  |          |       |          |  |   |      |      |  |  |       |     

The growth in rental revenues in same store
properties resulted primarily from the incremental effect of
cash rental rate increases on renewals and rollovers, fixed rent
increases on existing leases, and reimbursement of expenses,
partially offset by lower average occupancies. During 2001, the
same store rent increases on industrial renewals and rollovers
(cash basis) was 23.5% on 10.0 million square feet leased.

|                                                        |       |      |      |      |  |          |     |          |  |   |     |      |  |  |       |       |  
|------------------------------------------------------- | ----- | ---- | ---- | ---- |  | -------- | --- | -------- |  | - | --- | ---- |  |  | ----- | ----- | -
|Private Capital and Other Income                        |       | 2001 |      | 2000 |  | $ Change |     | % Change
|                                                        |       |      |      |      |  |          |     |         
|Equity in earnings of unconsolidated joint
    ventures |       | $    | 5.5  |      |  | $        | 5.2 |          |  | $ | 0.3 |      |  |  | 5.8   | %    
|Private capital income                                  |       |      | 11.0 |      |  |          | 4.3 |          |  |   | 6.7 |      |  |  | 155.8 | %    
|Interest and other income                               |       |      | 16.3 |      |  |          | 6.5 |          |  |   | 9.8 |      |  |  | 150.8 | %    
|                                                        |       |      |      |      |  |          |     |          |  |   |     |      |  |  |       |      
|                                                        | Total |      | $    | 32.8 |  |          | $   | 16.0     |  |   | $   | 16.8 |  |  |       | 105.0 | %
|                                                        |       |      |      |      |  |          |     |          |  |   |     |      |  |  |       |      

The $6.7 million increase in private capital
income was due primarily to increased asset management and
acquisition fees and priority distributions from our
co-investment joint ventures. The $9.8 million increase in

25



---



##### 



interest and other income was primarily due to
interest income from our mortgage note on the retail center that
we sold in 2000 and from interest income resulting from higher
average cash balances.


|                                                  |                             |       |       |       |       |          |      |          |      |   |      |      |      |  |       |      |      |  
|------------------------------------------------- | --------------------------- | ----- | ----- | ----- | ----- | -------- | ---- | -------- | ---- | - | ---- | ---- | ---- |  | ----- | ---- | ---- | -
|Property Operating Expenses and Real Estate Taxes |                             | 2001  |       | 2000  |       | $ Change |      | % Change
|                                                  |                             |       |       |       |       |          |      |         
|(Exclusive of depreciation and amortization)      |                             |       |       |       |       |          |      |         
|Rental expenses                                   |                             | $     | 64.5  |       |       | $        | 46.4 |          |      | $ | 18.1 |      |      |  | 39.0  | %   
|Real estate taxes                                 |                             |       | 63.3  |       |       |          | 52.0 |          |      |   | 11.3 |      |      |  | 21.7  | %   
|                                                  |                             |       |       |       |       |          |      |          |      |   |      |      |      |  |       |     
|                                                  | Property operating expenses |       | $     | 127.8 |       |          | $    | 98.4     |      |   | $    | 29.4 |      |  |       | 29.9 | %   
|                                                  |                             |       |       |       |       |          |      |          |      |   |      |      |      |  |       |     
|Same store                                        |                             | $     | 93.2  |       |       | $        | 87.2 |          |      | $ | 6.0  |      |      |  | 6.9   | %   
|2000 acquisitions                                 |                             |       | 27.9  |       |       |          | 7.1  |          |      |   | 20.8 |      |      |  | 293.0 | %   
|2001 acquisitions                                 |                             |       | 4.4   |       |       |          |     |          |      |   | 4.4  |      |      |  |      |     
|Developments                                      |                             |       | 9.6   |       |       |          | 4.3  |          |      |   | 5.3  |      |      |  | 123.3 | %   
|Divestitures                                      |                             |       | 3.1   |       |       |          | 9.2  |          |      |   | (6.1 | )    |      |  | (66.3 | )%  
|Discontinued operations                           |                             |       | (10.4 | )     |       |          | (9.4 | )        |      |   | (1.0 | )    |      |  | 10.6  | %   
|                                                  |                             |       |       |       |       |          |      |          |      |   |      |      |      |  |       |     
|                                                  |                             | Total |       | $     | 127.8 |          |      | $        | 98.4 |   |      | $    | 29.4 |  |       |      | 29.9 | %
|                                                  |                             |       |       |       |       |          |      |          |      |   |      |      |      |  |       |     

The increase in same store properties
operating expenses primarily relates to increases in common area
maintenance expenses of $2.3 million, real estate taxes of
$2.5 million and insurance expense of $0.8 million.

|                                 |       |      |       |       |  |          |      |          |  |   |      |      |  |  |      |      |  
|-------------------------------- | ----- | ---- | ----- | ----- |  | -------- | ---- | -------- |  | - | ---- | ---- |  |  | ---- | ---- | -
|Other Expenses                   |       | 2001 |       | 2000  |  | $ Change |      | % Change
|                                 |       |      |       |       |  |          |      |         
|Interest, including amortization |       | $    | 124.9 |       |  | $        | 85.8 |          |  | $ | 39.1 |      |  |  | 45.6 | %   
|Depreciation and amortization    |       |      | 104.8 |       |  |          | 85.0 |          |  |   | 19.8 |      |  |  | 23.3 | %   
|General and administrative       |       |      | 35.8  |       |  |          | 23.7 |          |  |   | 12.1 |      |  |  | 51.1 | %   
|                                 |       |      |       |       |  |          |      |          |  |   |      |      |  |  |      |     
|                                 | Total |      | $     | 265.5 |  |          | $    | 194.5    |  |   | $    | 71.0 |  |  |      | 36.5 | %
|                                 |       |      |       |       |  |          |      |          |  |   |      |      |  |  |      |     

The increase in interest expense was primarily
due to the issuance of additional unsecured senior debt
securities and an increase in secured debt balances, partially
offset by decreased borrowings on our unsecured credit facility.
The secured debt issuances were primarily for our co-investment
joint ventures properties. The increase in depreciation
expense was due to the increase in our net investment in real
estate. The increase in general and administrative expenses was
primarily due to increased personnel and occupancy costs. In
addition, the consolidation of AMB Investment Management, Inc.
(predecessor-in-interest to AMB Capital Partners, LLC) and
Headlands Realty Corporation on May 31, 2001, resulted in
an increase in general and administrative expenses of
$4.9 million.

During 2001, we recognized $20.8 million of
losses on investments in other companies, related to our
investment in Webvan Group, Inc. and other technology-related
companies. The loss reflects a 100% write-down of the book value
of the investments.

LIQUIDITY AND CAPITAL RESOURCES

We currently expect that our principal sources of
working capital and funding for acquisitions, development,
expansion and renovation of properties will include:



| |   |                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------
| |  | cash flow from operations;                                                                                                              
|
| |  | borrowings under our unsecured credit facility;                                                                                         
|
| |  | other forms of secured or unsecured financing;                                                                                          
|
| |  | proceeds from debt or limited partnership unit
    offerings (including issuances of limited partnership units by
    our subsidiaries);
|
| |  | net proceeds from divestitures of properties; and                                                                                       

26



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##### 





| |   |                                             
| | - | --------------------------------------------
| |  | private capital from co-investment partners.

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

Capital Resources

Property Divestitures.During 2002, we divested ourselves of
58 industrial buildings, two retail centers and an undeveloped
retail land parcel for an aggregate price of
$244.0 million, with a resulting net gain of
$9.6 million. During 2002, we also completed and sold six
buildings developed as part of our development-for-sale program
for a net gain of $1.0 million.

Properties Held for Divestiture.We have decided to divest ourselves of
two retail centers, four industrial properties and two
development properties, which are not in our core markets or
which do not meet our current strategic objectives. The
divestitures of the properties are subject to negotiation of
acceptable terms and other customary conditions. As of
December 31, 2002, the net carrying value of the properties
held for divestiture was $107.9 million.

Co-investment Joint Ventures.We consolidate the financial position,
results of operations and cash flows of our five co-investment
joint ventures. Our five co-investment joint ventures are
engaged in the acquisition, ownership, operation, management
and, in some cases, the renovation, expansion and development of
industrial buildings in target markets nationwide. We
consolidate these joint ventures for financial reporting
purposes because we are the sole managing general partner and,
as a result, control all major operating decisions. Third-party
equity interests in the joint ventures are reflected as minority
interests in the consolidated financial statements. As of
December 31, 2002, we owned approximately 28.2 million
square feet of our properties through these five co-investment
joint ventures and 5.6 million square feet of our
properties through our other consolidated joint ventures. We may
make additional investments through these joint ventures or new
joint ventures in the future and presently plan to do so.

During 2002, we sold $76.9 million in
operating properties, consisting of 15 industrial buildings,
aggregating approximately 1.9 million square feet, to one
of our co-investment joint ventures, AMB-SGP, L.P. We recognized
a gain of $3.3 million related to this sale, representing
the portion of the sold properties acquired by the third-party
co-investor. We also sold 30% of our interest in AMB
Partners II, L.P. to our co-investment joint venture
partner, we now own 20% of AMB Partners II, L.P. We
recognized a gain of $6.3 million related to this sale.

Our co-investment joint ventures at
December 31, 2002 (dollars in thousands):

|                                         |  |                                                                   |  |             |     |                   |  |   |         | 
|---------------------------------------- |  | ----------------------------------------------------------------- |  | ----------- | --- | ----------------- |  | - | ------- | 
|                                         |  |                                                                   |  | Our         |     |                  
|                                         |  |                                                                   |  | Approximate |     |                  
|                                         |  |                                                                   |  | Ownership   |     | Total Planned    
|Co-investment Joint Venture              |  | Joint Venture Partner                                             |  | Percentage  |     | Capitalization(1)
|                                         |  |                                                                   |  |             |     |                  
|AMB/ Erie, L.P.                          |  | Erie Insurance Company and affiliates                             |  |             | 50% |                   |  | $ | 200,000 | 
|AMB Institutional Alliance Fund I, L.P.  |  | AMB Institutional Alliance REIT I, Inc.(2)                        |  |             | 21% |                   |  | $ | 420,000 | 
|AMB Partners II, L.P.                    |  | City and County of San Francisco Employees
    Retirement System |  |             | 20% | (5)               |  | $ | 500,000 | 
|AMB-SGP, L.P.                            |  | Industrial JV Pte Ltd. GIC Real Estate Pte Ltd.(3)                |  |             | 50% |                   |  | $ | 425,000 | 
|AMB Institutional Alliance Fund II, L.P. |  | AMB Institutional Alliance REIT II, Inc.(4)                       |  |             | 20% |                   |  | $ | 489,000 | 



---



|    |                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------
|(1) | Planned capitalization includes anticipated debt
    and both partners expected equity contributions.
|   
|(2) | Included 15 institutional investors as
    stockholders as of December 31, 2002.                      

27



---



##### 





|    |                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | A subsidiary of the real estate investment
    subsidiary of the Government of Singapore Investment Corporation.                                                                              
|   
|(4) | Included 14 institutional investors as
    stockholders as of December 31, 2002.                                                                                                              
|   
|(5) | In November 2002, our partner increased its
    ownership in AMB Partners II, L.P. from 50% to 80% by acquiring
    30% of our partnership interest. We recognized a gain of
    $6.3 million.

Partners Capital.As of December 31, 2002, we had
outstanding 81,800,038 common general partnership units,
4,846,387 common limited partnership units, 3,995,800
8 1/2% Series A Cumulative Redeemable Partnership
Units, 1,300,000 8 5/8% Series B Cumulative Redeemable
Partnership Units, 800,000 7.95% Series J Cumulative
Redeemable Partnership Units and 800,000 7.95% Series K
Cumulative Redeemable Partnership Units. On July 31, 2002,
AMB Property II, L.P., one of our subsidiaries, repurchased
130,000 7.95% Series F Cumulative Redeemable Preferred
Limited Partnership Units and all 20,000 of its outstanding
7.95% Series G Cumulative Redeemable Preferred Limited
Partnership Units from a single institutional investor. We
redeemed the units for an aggregate cost of $7.1 million,
including accrued and unpaid dividends and a redemption discount
of $0.4 million.

On April 17, 2002, we issued and sold
800,000 7.95% Series K Cumulative Redeemable Partnership
Units at a price of $50.00 per unit in a private placement.
Distributions are cumulative from the date of issuance and
payable quarterly in arrears. The Series K preferred units
are redeemable by us on or after April 17, 2007, subject to
certain conditions, for cash at a redemption price equal to
$50.00 per unit, plus accumulated and unpaid distributions
thereon, if any, to the redemption date. The Series K
preferred units are exchangeable at specified times and subject
to certain conditions, on a one-for-one basis, for shares of AMB
Property Corporations Series K preferred stock. We
used the net proceeds of $39.0 million for general
corporate purposes, which included the partial repayment of
indebtedness and the acquisition and development of additional
properties.

During 2002, we redeemed 122,640 common limited
partnership units for shares of AMB Property Corporations
common stock.

In December 2001, AMB Property Corporations
board of directors approved a new stock repurchase program for
the repurchase of up to $100.0 million worth of its common
and preferred stock. In December 2002, AMB Property
Corporations board of directors increased the repurchase
program to $200.0 million. The current stock repurchase
program expires in December 2003 and as of December 31,
2002, $130.6 million of repurchase capacity remained under
AMB Property Corporations current stock repurchase
program. During 2002, AMB Property Corporation repurchased
2,651,600 shares of its common stock for $69.4 million,
including commissions, and we retired the same number of common
general partnership units. In July 2002, AMB Property
Corporation also repurchased 4,200 shares of its
Series A preferred stock for an aggregate cost of
$0.1 million, including accrued and unpaid dividends, and
we retired the same number of Series A preferred general
partnership units.

Debt.In order to
maintain financial flexibility and facilitate the deployment of
capital through market cycles, we presently intend to operate
with a debt-to-total market capitalization ratio (our share) of
approximately 45% or less. As of December 31, 2002, our
share of total debt-to-total market capitalization ratio was
37.7%. Additionally, we currently intend to manage our
capitalization in order to maintain an investment grade rating
on our senior unsecured debt. In spite of these policies, our
organizational documents do not contain any limitation on the
amount of indebtedness that we may incur. Accordingly, our
general partners board of directors could alter or
eliminate these policies without unitholder or noteholder
approval or circumstances could arise that could render us
unable to comply with these policies.

As of December 31, 2002, the aggregate
principal amount of our secured debt was $1.3 billion,
excluding unamortized debt premiums of $9.8 million. Of the
$1.3 billion of secured debt, $0.9 billion is secured
by properties in our joint ventures. The secured debt is
generally non-recourse and bears interest at rates varying from
3.0% to 10.4% per annum (with a weighted average rate of 7.3%)
and final maturity dates ranging from January 2003 to June 2023.
All of the secured debt bears interest at fixed rates, except
for seven loans with an aggregate principal amount of
$65.6 million as of December 31, 2002, which bear
interest at variable rates

28



---



##### 



(with a weighted average interest rate of 3.5% as
of December 31, 2002). Over time, we intend to repay the
secured debt on our 100%-owned assets and may prepay if market
conditions warrant.


In May 2002, we commenced a medium-term note
program for the issuance of up to $400.0 million in
principal amount of medium-term notes, which will be guaranteed
by AMB Property Corporation. As of December 31, 2002, we
had issued no medium-term notes under this program.

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

If we are unable to refinance or extend principal
payments due at maturity or pay them with proceeds from other
capital transactions, then our cash flow may be insufficient to
pay distributions to our unitholders in all years, make payments
to our noteholders and to repay debt upon maturity. Furthermore,
if prevailing interest rates or other factors at the time of
refinancing (such as the reluctance of lenders to make
commercial real estate loans) result in higher interest rates
upon refinancing, then the interest expense relating to that
refinanced indebtedness would increase. This increased interest
expense would adversely affect our financial condition, results
of operations, cash flow and ability to make distributions to
our unitholders and payments to our noteholders.

Credit Facilities.In December 2002, we renewed our
$500.0 million unsecured revolving line of credit. AMB
Property Corporation guarantees our obligations under the credit
facility. The credit facility matures in December 2005, has a
one-year extension option and is currently subject to a 20 basis
point annual facility fee. Borrowings under our credit facility
currently bear interest at LIBOR plus 60 basis points. Both the
facility fee and the interest rate are based on our credit
rating, which is currently investment grade. However, if our
credit rating falls below investment grade, then our facility
fee and interest rate may increase. The credit facility includes
a multi-currency component under which up to $150.0 million
may be drawn in either British pounds sterling, euros or yen,
provided that such currency is readily available and freely
transferable and convertible to U.S. dollars. The Reuters
Monitor Money Rates Service reports LIBOR for such currency in
interest periods of 1, 2, 3 or 6 months. We have the
ability to increase available borrowings to $700.0 million
by adding additional banks to the facility or obtaining the
agreement of existing banks to increase their commitments. We
use our unsecured credit facility principally for acquisitions
and for general working capital requirements. Monthly debt
service payments on our credit facility are interest only. The
total amount available under our credit facility fluctuates
based upon the borrowing base, as defined in the agreement
governing the credit facility, generally the value of our
unencumbered properties. As of December 31, 2002, the
outstanding balance on our unsecured credit facility was
$95.0 million and the remaining amount available was $379.0
million, net of outstanding letters of credit (excluding the
$200.0 million of potential additional capacity).

In July 2001, AMB Institutional Alliance
Fund II, L.P. obtained a $150.0 million credit
facility secured by the unfunded capital commitments of the
investors in AMB Institutional Alliance REIT II, Inc. and
AMB Institutional Alliance Fund II, L.P. Borrowings currently
bear interest at LIBOR plus 87.5 basis points. As of
December 31, 2002, the outstanding balance was
$45.5 million and the remaining amount available was
$31.2 million, net of outstanding letters of credit and
capital contributions from third-party investors.

Mortgage Receivables.In September 2000, we sold a retail
center located in Southern California. We carried a 9.5%
mortgage note secured by the retail center in the principal
amount of $74.0 million, due September 30, 2002. On
July 3, 2002, we received a full repayment of the mortgage.
Through a wholly-owned subsidiary, we also hold a mortgage loan
receivable on AMB Pier One, LLC, an unconsolidated joint
venture. The note bears interest at 13.0% and matures in May
2026. As of December 31, 2002, the outstanding balance on
the note was $13.1 million.

29



---



##### 



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

Debt

|                                                                     |                      |                         |         |         |         |             |          |           |         |            |         |         |         |   |        |        |        |   |         |         |         |   |           |           |           | 
|-------------------------------------------------------------------- | -------------------- | ----------------------- | ------- | ------- | ------- | ----------- | -------- | --------- | ------- | ---------- | ------- | ------- | ------- | - | ------ | ------ | ------ | - | ------- | ------- | ------- | - | --------- | --------- | --------- | 
|                                                                     |                      | Our                     |         | Joint   |         | Unsecured   |          |           |         |            |         |        
|                                                                     |                      | Secured                 |         | Venture |         | Senior Debt |          | Unsecured |         | Credit     |         | Total  
|                                                                     |                      | Debt                    |         | Debt    |         | Securities  |          | Debt      |         | Facilities |         | Debt   
|                                                                     |                      |                         |         |         |         |             |          |           |         |            |         |        
|2003                                                                 |                      | $                       | 74,631  |         |         | $           | 19,678   |           |         | $          |        |         |         | $ | 558    |        |        | $ | 45,500  |         |         | $ | 140,367   |          
|2004                                                                 |                      |                         | 63,465  |         |         |             | 64,928   |           |         |            |        |         |         |   | 601    |        |        |   |        |         |         |   | 128,994   |          
|2005                                                                 |                      |                         | 45,511  |         |         |             | 59,326   |           |         |            | 250,000 |         |         |   | 647    |        |        |   | 95,000  |         |         |   | 450,484   |          
|2006                                                                 |                      |                         | 85,023  |         |         |             | 65,676   |           |         |            | 25,000  |         |         |   | 698    |        |        |   |        |         |         |   | 176,397   |          
|2007                                                                 |                      |                         | 24,073  |         |         |             | 43,163   |           |         |            | 75,000  |         |         |   | 752    |        |        |   |        |         |         |   | 142,988   |          
|2008                                                                 |                      |                         | 32,669  |         |         |             | 154,684  |           |         |            | 175,000 |         |         |   | 810    |        |        |   |        |         |         |   | 363,163   |          
|2009                                                                 |                      |                         | 4,147   |         |         |             | 76,826   |           |         |            |        |         |         |   | 873    |        |        |   |        |         |         |   | 81,846    |          
|2010                                                                 |                      |                         | 50,948  |         |         |             | 105,854  |           |         |            | 75,000  |         |         |   | 941    |        |        |   |        |         |         |   | 232,743   |          
|2011                                                                 |                      |                         | 409     |         |         |             | 179,295  |           |         |            | 75,000  |         |         |   | 1,014  |        |        |   |        |         |         |   | 255,718   |          
|2012                                                                 |                      |                         | 407     |         |         |             | 101,399  |           |         |            |        |         |         |   | 1,092  |        |        |   |        |         |         |   | 102,898   |          
|Thereafter                                                           |                      |                         | 481     |         |         |             | 22,264   |           |         |            | 125,000 |         |         |   | 2,200  |        |        |   |        |         |         |   | 149,945   |          
|                                                                     |                      |                         |         |         |         |             |          |           |         |            |         |         |         |   |        |        |        |   |         |         |         |   |           |          
|                                                                     | Subtotal             |                         |         | 381,764 |         |             |          | 893,093   |         |            |         | 800,000 |         |   |        | 10,186 |        |   |         | 140,500 |         |   |           | 2,225,543 |          
|                                                                     | Unamortized premiums |                         |         | 7,835   |         |             |          | 1,983     |         |            |         |        |         |   |        |       |        |   |         |        |         |   |           | 9,818     |          
|                                                                     |                      |                         |         |         |         |             |          |           |         |            |         |         |         |   |        |        |        |   |         |         |         |   |           |          
|                                                                     |                      | Total consolidated debt |         |         | 389,599 |             |          |           | 895,076 |            |         |         | 800,000 |   |        |        | 10,186 |   |         |         | 140,500 |   |           |           | 2,235,361 | 
|Our share of unconsolidated joint venture debt(1)                    |                      |                         |        |         |         |             | 39,288   |           |         |            |        |         |         |   |       |        |        |   |        |         |         |   | 39,288    |          
|                                                                     |                      |                         |         |         |         |             |          |           |         |            |         |         |         |   |        |        |        |   |         |         |         |   |           |          
|                                                                     |                      | Total debt              |         |         | 389,599 |             |          |           | 934,364 |            |         |         | 800,000 |   |        |        | 10,186 |   |         |         | 140,500 |   |           |           | 2,274,649 | 
|Joint venture partners share of
    consolidated joint venture debt |                      |                         |        |         |         |             | (546,509 | )         |         |            |        |         |         |   |       |        |        |   | (36,400 | )       |         |   | (582,909  | )        
|                                                                     |                      |                         |         |         |         |             |          |           |         |            |         |         |         |   |        |        |        |   |         |         |         |   |           |          
|Our share of total debt                                              |                      | $                       | 389,599 |         |         | $           | 387,855  |           |         | $          | 800,000 |         |         | $ | 10,186 |        |        | $ | 104,100 |         |         | $ | 1,691,740 |          
|                                                                     |                      |                         |         |         |         |             |          |           |         |            |         |         |         |   |        |        |        |   |         |         |         |   |           |          
|Weighed average interest rate                                        |                      |                         | 8.1     | %       |         |             | 7.0      | %         |         |            | 7.2     | %       |         |   | 7.5    | %      |        |   | 2.1     | %       |         |   | 7.0       | %        
|Weighed average maturity (in years)                                  |                      |                         | 3.7     |         |         |             | 7.1      |           |         |            | 6.5     |         |         |   | 11.8   |        |        |   | 2.2     |         |         |   | 6.0       |          



---



|    |                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------
|(1) | The weighted average interest and maturity for
    the unconsolidated joint venture debt were 6.4% and
    6.6 years, respectively.

Market Capital

|                                 |       |             |            |            |  |          |       |  |  |   |           |           | 
|-------------------------------- | ----- | ----------- | ---------- | ---------- |  | -------- | ----- |  |  | - | --------- | --------- | 
|                                 |       | Units       |            | Market     |  | Market  
|Security                         |       | Outstanding |            | Price(1)   |  | Value(1)
|                                 |       |             |            |            |  |         
|Common general partnership units |       |             | 81,800,038 |            |  | $        | 27.36 |  |  | $ | 2,238,049 |          
|Common limited partnership units |       |             | 4,846,387  |            |  |          | 27.36 |  |  |   | 132,597   |          
|                                 |       |             |            |            |  |          |       |  |  |   |           |          
|                                 | Total |             |            | 86,646,425 |  |          |       |  |  |   | $         | 2,370,646 | 
|                                 |       |             |            |            |  |          |       |  |  |   |           |          



---



|    |                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Assumes that the general partnership units are
    exchanged for AMB Property Corporations common stock
    because there is no public market for the units.

30



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##### 



Preferred Units

|                         |                        |              |      |             |   |            |        |         |  |  |                |  | 
|------------------------ | ---------------------- | ------------ | ---- | ----------- | - | ---------- | ------ | ------- |  |  | -------------- |  | 
|                         |                        | Distribution |      | Liquidation |   | Redemption
|Security                 |                        | Rate         |      | Preference  |   | Provisions
|                         |                        |              |      |             |   |           
|Series A preferred units |                        |              | 8.50 | %           |   | $          | 99,895 |         |  |  | July 2003      | 
|Series B preferred units |                        |              | 8.63 | %           |   |            | 65,000 |         |  |  | November 2003  | 
|Series D preferred units |                        |              | 7.75 | %           |   |            | 79,767 |         |  |  | May 2004       | 
|Series E preferred units |                        |              | 7.75 | %           |   |            | 11,022 |         |  |  | August 2004    | 
|Series F preferred units |                        |              | 7.95 | %           |   |            | 13,372 |         |  |  | March 2005     | 
|Series H preferred units |                        |              | 8.13 | %           |   |            | 42,000 |         |  |  | September 2005 | 
|Series I preferred units |                        |              | 8.00 | %           |   |            | 25,500 |         |  |  | March 2006     | 
|Series J preferred units |                        |              | 7.95 | %           |   |            | 40,000 |         |  |  | September 2006 | 
|Series K preferred units |                        |              | 7.95 | %           |   |            | 40,000 |         |  |  | April 2007     | 
|                         |                        |              |      |             |   |            |        |         |  |  |                | 
|                         | Weighted average/total |              |      | 8.17        | % |            | $      | 416,556 |  |  |                |  | 
|                         |                        |              |      |             |   |            |        |         |  |  |                | 

Capitalization Ratios

|                                                                          |  |  |      |  
|------------------------------------------------------------------------- |  |  | ---- | -
|Total debt-to-total market capitalization                                 |  |  | 44.9 | %
|Our share of total debt-to-total market
    capitalization                |  |  | 37.7 | %
|Total debt plus preferred-to-total market
    capitalization              |  |  | 53.1 | %
|Our share of total debt plus preferred-to-total
    market capitalization |  |  | 47.0 | %
|Our share of total debt-to-total book
    capitalization                  |  |  | 45.9 | %

Liquidity

As of December 31, 2002, we had
$117.2 million in cash, restricted cash and cash
equivalents, and $379.0 million of additional available
borrowings under our credit facility. We also had
$31.2 million of additional available borrowings under our
AMB Institutional Alliance Fund II, L.P. credit facility. To
fund acquisitions, development activities and capital
expenditures, and to provide for general working capital
requirements, we intend to use:



| |   |                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |  | cash flow from operations;                                                                                                                         
|
| |  | borrowings under our unsecured credit facility;                                                                                                    
|
| |  | other forms of secured and unsecured financing;                                                                                                    
|
| |  | proceeds from any future debt or limited
    partnership unit offerings (including issuances of limited
    partnership units by our subsidiaries);
|
| |  | net proceeds from divestitures of properties; and                                                                                                  
|
| |  | private capital from our co-investment partners.                                                                                                   

The unavailability of capital would adversely
affect our financial condition, results of operations, cash flow
and ability to make distributions to our unitholders and
payments to our noteholders.

We declared a regular cash distribution for the
quarter ending December 31, 2002, of $0.41 per common unit.
The distribution was payable on January 6, 2003, to common
unitholders of record on December 20, 2002. The
Series A, B, E, F, J and K preferred unit distributions
were payable on January 15, 2003, to unitholders of record
on January 3, 2003. The Series D, H and I preferred
unit distributions were payable on

31



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December 26, 2002. The following table sets
forth the distributions paid or payable per unit for the years
ended December 31, 2002, 2001 and 2000:


|                      |  |                                  |  |       |  |       |  |      
|--------------------- |  | -------------------------------- |  | ----- |  | ----- |  | -----
|Paying Entity         |  | Security                         |  | 2002  |  | 2001  |  | 2000 
|                      |  |                                  |  |       |  |       |  |      
|AMB Property, L.P.    |  | Common limited partnership units |  | $1.64 |  | $1.58 |  | $1.48
|AMB Property, L.P.    |  | Series A preferred units         |  | $2.13 |  | $2.13 |  | $2.13
|AMB Property, L.P.    |  | Series B preferred units         |  | $4.31 |  | $4.31 |  | $4.31
|AMB Property, L.P.    |  | Series J preferred units         |  | $3.98 |  | $1.24 |  | n/a  
|AMB Property, L.P.    |  | Series K preferred units         |  | $2.96 |  | n/a   |  | n/a  
|AMB Property II, L.P. |  | Series C preferred units         |  | n/a   |  | $3.88 |  | $4.38
|AMB Property II, L.P. |  | Series D preferred units         |  | $3.88 |  | $3.88 |  | $3.88
|AMB Property II, L.P. |  | Series E preferred units         |  | $3.88 |  | $3.88 |  | $3.88
|AMB Property II, L.P. |  | Series F preferred units(1)      |  | $3.34 |  | $3.98 |  | $3.09
|AMB Property II, L.P. |  | Series G preferred units(1)      |  | $2.14 |  | $3.98 |  | $1.35
|AMB Property II, L.P. |  | Series H preferred units         |  | $4.06 |  | $4.06 |  | $1.30
|AMB Property II, L.P. |  | Series I preferred units         |  | $4.00 |  | $3.04 |  | n/a  



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | On July 31, 2002, AMB Property II,
    L.P., one of our subsidiaries, repurchased 130,000 of its 7.95%
    Series F Cumulative Redeemable Preferred Limited
    Partnership Units and all 20,000 of its outstanding 7.95%
    Series G Cumulative Redeemable Preferred Limited
    Partnership Units from a single institutional investor. On July,
    31, 2002, AMB Property II, L.P. paid a distribution, which
    accrued during the period from July 15, 2002 to
    July 31, 2002, of $0.155 per unit on the 130,000
    Series F preferred units that were redeemed.

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

Capital
Commitments

Developments.In
addition to recurring capital expenditures, which consist of
building improvements and leasing costs incurred to renew or
re-tenant space, as of December 31, 2002, we are developing
ten projects representing a total estimated investment of
$106.8 million upon completion and three development
projects available for sale representing a total estimated
investment of $49.1 million upon completion. Of this total,
$92.8 million had been funded as of December 31, 2002,
and an estimated $63.1 million is required to complete
current and planned projects. We expect to fund these
expenditures with cash from operations, borrowings under our
credit facility, debt or limited partnership unit issuances and
net proceeds from property divestitures, which could have an
adverse effect on our cash flow.

Acquisitions.During
2002, we invested $403.3 million in 43 operating
industrial buildings, aggregating approximately 5.4 million
rentable square feet, and a parking lot adjacent to Los Angeles
International Airport. We funded these acquisitions and
initiated development and renovation projects through private
capital contributions, borrowings under our credit facility,
cash, debt issuances and net proceeds from property divestitures.

Lease Commitments.We have entered into operating ground
leases on certain land parcels, primarily on-tarmac facilities,
and office space with remaining lease terms from one to
38 years. Future minimum rental

32



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##### 



payments required under non-cancelable operating
leases in effect as of December 31, 2002, were as follows
(dollars in thousands):


|           |                         |   |         |         | 
|---------- | ----------------------- | - | ------- | ------- | 
|2003       |                         | $ | 19,921  |        
|2004       |                         |   | 19,753  |        
|2005       |                         |   | 19,819  |        
|2006       |                         |   | 20,553  |        
|2007       |                         |   | 20,772  |        
|Thereafter |                         |   | 283,574 |        
|           |                         |   |         |        
|           | Total lease commitments |   | $       | 384,392 | 
|           |                         |   |         |        

These operating lease payments are being
amortized ratably over the terms of the related leases.

Captive Insurance Company.We have responded to recent trends
towards increasing costs and decreasing coverage availability in
the insurance markets by obtaining higher-deductible property
insurance from third-party insurers and by forming a
wholly-owned captive insurance company, Arcata National
Insurance Ltd., in December 2001. Arcata National Insurance Ltd.
provides insurance coverage for all or a portion of losses below
the increased deductible under the third-party policies. We
capitalized Arcata National Insurance Ltd. in accordance with
regulatory requirements. Arcata National Insurance Ltd.
established annual premiums based on projections derived from
the past loss experience of our properties. Annually, we engage
an independent third party to perform an actuarial estimate of
future projected claims and projected expenses necessary to fund
associated risk management programs. Premiums paid to Arcata
National Insurance Ltd. may be adjusted based on this estimate.
Premiums paid to Arcata National Insurance Ltd. have a
retrospective component, so that if expenses, including losses,
are less than premiums collected, the excess will be returned to
the property owners (and, in turn, as appropriate, to the
customers) and conversely, subject to certain limitations, if
expenses, including losses, are greater than premiums collected,
an additional premium will be charged. As with all recoverable
expenses, differences between estimated and actual insurance
premiums will be recognized in the subsequent year. Through this
structure, we believe that we have been able to obtain insurance
for our portfolio with more comprehensive coverage at a
projected overall lower cost than would otherwise be available
in the market.

Potential Unknown Liabilities.Unknown liabilities may include the
following:



| |   |                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | liabilities for clean-up or remediation of
    undisclosed environmental conditions;                                                                                                       
|
| |  | claims of customers, vendors or other persons
    dealing with our predecessors prior to our formation
    transactions that had not been asserted prior to our formation
    transactions;
|
| |  | accrued but unpaid liabilities incurred in the
    ordinary course of business;                                                                                                            
|
| |  | tax liabilities; and                                                                                                                                                                       
|
| |  | claims for indemnification by the officers and
    directors of our general partners predecessors and others
    indemnified by these entities.                                           

Overview of
Contractual Obligations

The following tables summarizes our debt and
lease commitments as of December 31, 2002 (dollars in
thousands):

|                        |                               |           |         |           |  |           |         |           |  |       |         |         |  |   |           |           |  |   |           |           | 
|----------------------- | ----------------------------- | --------- | ------- | --------- |  | --------- | ------- | --------- |  | ----- | ------- | ------- |  | - | --------- | --------- |  | - | --------- | --------- | 
|                        |                               | Less than |         |           |  |           |         | More than |  |      
|Contractual Obligations |                               | 1 year    |         | 1-3 years |  | 3-5 years |         | 5 years   |  | Total
|                        |                               |           |         |           |  |           |         |           |  |      
|Debt                    |                               | $         | 140,367 |           |  | $         | 579,478 |           |  | $     | 319,385 |         |  | $ | 1,186,313 |           |  | $ | 2,225,543 |          
|Lease commitments       |                               |           | 19,921  |           |  |           | 39,572  |           |  |       | 41,325  |         |  |   | 283,574   |           |  |   | 384,392   |          
|                        |                               |           |         |           |  |           |         |           |  |       |         |         |  |   |           |           |  |   |           |          
|                        | Total contractual obligations |           | $       | 160,288   |  |           | $       | 619,050   |  |       | $       | 360,710 |  |   | $         | 1,469,887 |  |   | $         | 2,609,935 | 
|                        |                               |           |         |           |  |           |         |           |  |       |         |         |  |   |           |           |  |   |           |          

33



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##### 



OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet transactions,
arrangements, obligations, guarantees or other relationships
with unconsolidated entities or other persons that have, or are
reasonably likely to have, a material effect on our financial
condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources.

Supplemental Earning Measure

We believe that net income, as defined by GAAP,
is the most appropriate earnings measure. However, the real
estate industry has adopted a supplemental earnings measure,
funds from operations, or FFO, as defined by the National
Association of Real Estate Investment Trusts
(NAREIT), that is widely used by investors and
analysts. While FFO is a relevant and widely used measure of
operating performance of real estate investment trusts, such as
AMB Property Corporation, our general partner, it does not
represent cash flow from operations or net income as defined by
GAAP and it should not be considered as an alternative to those
indicators in evaluating liquidity or operating performance.
Further, FFO as disclosed by other real estate investment trusts
may not be comparable.

FFO is defined as income from operations before
minority interest plus real estate depreciation, discontinued
operations FFO and adjustments to derive our pro rata
share of FFO of unconsolidated joint ventures, less minority
interests pro rata share of FFO of consolidated joint
ventures and perpetual preferred unit distributions. In
accordance with the NAREIT White Paper on FFO, we include the
effects of straight-line rents in FFO. Further, we do not adjust
FFO to eliminate the effects of non-recurring charges.

The following table reflects the calculation of
FFO for the years ended December 31, (dollars in thousands):

|                                                                      |                                                                                     |                       |         |         |         |      |         |         |         |      |         |        |         |   |         |        |         |   |         |        |         | 
|--------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | --------------------- | ------- | ------- | ------- | ---- | ------- | ------- | ------- | ---- | ------- | ------ | ------- | - | ------- | ------ | ------- | - | ------- | ------ | ------- | 
|                                                                      |                                                                                     | 2002                  |         | 2001    |         | 2000 |         | 1999    |         | 1998
|                                                                      |                                                                                     |                       |         |         |         |      |         |         |         |     
|Net income available to common unitholders                            |                                                                                     | $                     | 122,996 |         |         | $    | 132,756 |         |         | $    | 121,324 |        |         | $ | 176,392 |        |         | $ | 113,838 |       
|Minority interests                                                    |                                                                                     |                       | 30,963  |         |         |      | 27,132  |         |         |      | 12,281  |        |         |   | 5,697   |        |         |   | 4,466   |       
|Gains from dispositions of real estate, net of
    minority interests |                                                                                     |                       | (7,789  | )       |         |      | (23,259 | )       |         |      | (1,144  | )      |         |   | (51,263 | )      |         |   |        |       
|Gains from dispositions of real estate,
    discontinued operations   |                                                                                     |                       | (11,372 | )       |         |      |        |         |         |      |        |        |         |   |        |        |         |   |        |       
|Preferred unit redemption discount/ (premium)                         |                                                                                     |                       | (412    | )       |         |      | 4,400   |         |         |      |        |        |         |   |        |        |         |   |        |       
|Real estate related depreciation and amortization:                    |                                                                                     |                       |         |         |         |      |         |         |         |      |         |        |         |   |         |        |         |   |         |       
|                                                                      | Total depreciation and amortization                                                 |                       |         | 127,160 |         |      |         | 104,838 |         |      |         | 84,960 |         |   |         | 63,747 |         |   |         | 55,210 |        
|                                                                      | Discontinued operations depreciation                                               |                       |         | 7,529   |         |      |         | 6,600   |         |      |         | 5,398  |         |   |         | 3,758  |         |   |         | 2,254  |        
|                                                                      | Furniture, fixtures and equipment depreciation
    and ground lease amortization(1) |                       |         | (2,450  | )       |      |         | (1,963  | )       |      |         | (1,114 | )       |   |         | (1,002 | )       |   |         | (463   | )      
|FFO attributable to minority interests                                |                                                                                     |                       | (52,051 | )       |         |      | (40,144 | )       |         |      | (15,030 | )      |         |   | (8,158  | )      |         |   | (5,887  | )     
|Adjustments to derive FFO in unconsolidated joint
    ventures:       |                                                                                     |                       |         |         |         |      |         |         |         |      |         |        |         |   |         |        |         |   |         |       
|                                                                      | Our share of net income                                                             |                       |         | (5,674  | )       |      |         | (5,467  | )       |      |         | (5,212 | )       |   |         | (4,701 | )       |   |         | (1,750 | )      
|                                                                      | Our share of FFO                                                                    |                       |         | 8,728   |         |      |         | 8,014   |         |      |         | 7,188  |         |   |         | 6,677  |         |   |         | 2,739  |        
|                                                                      |                                                                                     |                       |         |         |         |      |         |         |         |      |         |        |         |   |         |        |         |   |         |       
|                                                                      |                                                                                     | Funds from operations |         | $       | 217,628 |      |         | $       | 212,907 |      |         | $      | 208,651 |   |         | $      | 191,147 |   |         | $      | 170,407 | 
|                                                                      |                                                                                     |                       |         |         |         |      |         |         |         |      |         |        |         |   |         |        |         |   |         |       



---



|    |                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Ground lease amortization represents the
    amortization of our investments in ground lease properties, for
    which we do not have a purchase option.

34



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##### 



The following table reflects supplemental cash
flow information and recurring capital expenditures for the
years ended December 31, (dollars in thousands):

|                                                                             |                                                           |                                             |        |        |        |      |        |        |        |   |        |        |        | 
|---------------------------------------------------------------------------- | --------------------------------------------------------- | ------------------------------------------- | ------ | ------ | ------ | ---- | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                                                                             |                                                           | 2002                                        |        | 2001   |        | 2000
|                                                                             |                                                           |                                             |        |        |        |     
|Straight-line rents                                                          |                                                           | $                                           | 11,013 |        |        | $    | 10,093 |        |        | $ | 10,203 |       
|Our share of unconsolidated joint venture
    partners net operating income |                                                           | $                                           | 11,055 |        |        | $    | 10,181 |        |        | $ | 8,338  |       
|Joint venture partners share of cash basis
    net operating income         |                                                           | $                                           | 86,482 |        |        | $    | 65,010 |        |        | $ | 24,979 |       
|Discontinued operations net operating income                                |                                                           | $                                           | 29,949 |        |        | $    | 27,642 |        |        | $ | 23,727 |       
|Stock-based compensation amortization                                        |                                                           | $                                           | 5,265  |        |        | $    | 2,725  |        |        | $ | 1,022  |       
|Capitalized interest                                                         |                                                           | $                                           | 6,919  |        |        | $    | 13,650 |        |        | $ | 15,461 |       
|Recurring capital expenditures:                                              |                                                           |                                             |        |        |        |      |        |        |        |   |        |       
|                                                                             | Tenant improvements                                       |                                             | $      | 18,977 |        |      | $      | 8,168  |        |   | $      | 11,624 |       
|                                                                             | Lease commissions and other lease costs                   |                                             |        | 17,684 |        |      |        | 19,822 |        |   |        | 17,679 |       
|                                                                             | Building improvements                                     |                                             |        | 18,270 |        |      |        | 19,852 |        |   |        | 11,270 |       
|                                                                             |                                                           |                                             |        |        |        |      |        |        |        |   |        |       
|                                                                             |                                                           | Subtotal                                    |        |        | 54,931 |      |        |        | 47,842 |   |        |        | 40,573 | 
|                                                                             | Joint venture partners share of capital
    expenditures |                                             |        | (9,547 | )      |      |        | (5,824 | )      |   |        | (2,659 | )     
|                                                                             |                                                           |                                             |        |        |        |      |        |        |        |   |        |       
|                                                                             |                                                           | Our share of recurring capital expenditures |        | $      | 45,384 |      |        | $      | 42,108 |   |        | $      | 37,914 | 
|                                                                             |                                                           |                                             |        |        |        |      |        |        |        |   |        |       

35



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##### 



BUSINESS RISKS

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

General Real Estate Risks

There are Factors Outside of Our Control
that Affect the Performance and Value of Our
Properties.

Real property investments are subject to varying
degrees of risk. The yields available from equity investments in
real estate depend on the amount of income earned and capital
appreciation generated by the related properties as well as the
expenses incurred in connection with the properties. If our
properties do not generate income sufficient to meet operating
expenses, including debt service and capital expenditures, then
our ability to make distributions to our unitholders and
payments to our noteholders could be adversely affected. Income
from, and the value of, our properties may be adversely affected
by the general economic climate, local conditions, such as
oversupply of industrial space or a reduction in demand for
industrial space, the attractiveness of our properties to
potential customers, competition from other properties, our
ability to provide adequate maintenance and insurance and an
increase in operating costs. Periods of economic slowdown or
recession in the United States and in other countries, rising
interest rates or declining demand for real estate, or public
perception that any of these events may occur, would result in a
general decrease in rents or an increased occurrence of defaults
under existing leases, which would adversely affect our
financial condition and results of operations.

Our properties are currently concentrated
predominantly in the industrial real estate sector. Our
concentration in a certain property type exposes us to the risk
of economic downturns in this sector to a greater extent than if
our portfolio also included other property types. As a result of
such concentration, economic downturns in the industrial real
estate sector could adversely affect our financial condition,
results of operations, cash flow and ability to make
distributions to our unitholders and payments to our
noteholders. In addition, revenues from properties and real
estate values are also affected by factors such as the cost of
compliance with regulations, the potential for liability under
applicable laws (including changes in tax laws), interest rate
levels and the availability of financing. Our income would be
adversely affected if a significant number of customers were
unable to pay rent or if we were unable to rent our industrial
space on favorable terms. Certain significant expenditures
associated with an investment in real estate (such as mortgage
payments, real estate taxes, and maintenance costs) generally do
not decline when circumstances cause a reduction in income from
the property. Future terrorist attacks in the United States may
result in declining economic activity, which could harm the
demand for and the value of our properties. To the extent that
our customers are impacted by future attacks, their businesses
similarly could be adversely affected, including their ability
to continue to honor their existing leases.

We May Be Unable to Renew Leases or Relet
Space as Leases Expire.

We are subject to the risks that leases may not
be renewed, space may not be relet, or the terms of renewal or
reletting (including the cost of required renovations) may be
less favorable than current lease terms. Leases on a total of
15.4% of our industrial properties (based on annualized base
rent) as of December 31, 2002, will expire on or prior to
December 31, 2003. In addition, numerous properties compete
with our properties in attracting customers to lease space,
particularly with respect to retail centers. The number of
competitive commercial properties in a particular area could
have a material adverse effect on our ability to lease space in
our properties and on the rents that we are able to charge. Our
financial condition, results of operations, cash flow and our
ability to make distributions to our unitholders and payments to
our noteholders could be adversely affected if we are unable to
promptly relet or renew the leases for all or a substantial
portion of expiring leases, if the rental rates upon renewal or
reletting is significantly lower than expected, or if our
reserves for these purposes prove inadequate.

36



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##### 



Real Estate Investments are
Illiquid.

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

A Significant Number of Our Properties are
Located in California.

Our industrial properties located in California
as of December 31, 2002, represented 28.4% of the aggregate
square footage of our industrial operating properties as of
December 31, 2002, and 33.9% of our industrial annualized
base rent. Annualized base rent means the monthly contractual
amount under existing leases as of December 31, 2002,
multiplied by 12. This amount excludes expense reimbursements
and rental abatements. Our revenue from, and the value of, our
properties located in California may be affected by a number of
factors, including local real estate conditions (such as
oversupply of or reduced demand for industrial properties) and
the local economic climate. Business layoffs, downsizing,
industry slowdowns, changing demographics, and other factors may
adversely impact the local economic climate. A downturn in
Californias economy, fiscal situation or real estate
conditions could adversely affect our financial condition,
results of operations, cash flow and ability to make
distributions to our unitholders and payments to our
noteholders. Certain of our properties are also subject to
possible loss from seismic activity. See Some Potential
Losses are not Covered by Insurance.

Some Potential Losses are not Covered by
Insurance.

We carry commercial liability, property and
rental loss insurance covering all properties owned and managed
by us, with policy specifications and insured limits that we
believe are adequate and appropriate under the circumstances
given relative risks, the cost of such coverage and industry
practice. Certain losses such as losses due to terrorism,
windstorms, floods or seismic activity may be insured subject to
certain limitations, including large deductibles or co-payments
and policy limits. Although we have obtained coverage for
certain acts of terrorism, with policy specifications and
insured limits that we believe are commercially reasonable, it
is not certain that we will be able to renew coverage or collect
under such policies. From time to time, we evaluate the amount
of earthquake coverage that we carry for all properties owned
and managed by us, to assess whether, in our good faith
discretion, the coverage is adequate. We may incur material
losses in excess of insurance proceeds and we may not be able to
continue to obtain insurance at commercially reasonable rates.
In addition, there are certain losses that are not generally
insured because it is not economically feasible to insure
against them, including losses due to riots or acts of war. If
an uninsured loss or a loss in excess of insured limits occurs
with respect to one or more of our properties, then we could
lose the capital we invested in the properties, as well as the
anticipated future revenue from the properties and, in the case
of debt, which is with recourse to us, we would remain obligated
for any mortgage debt or other financial obligations related to
the properties. Moreover, as the general partner of the joint
ventures, we generally will be liable for all of the joint
ventures unsatisfied obligations other than non-recourse
obligations. Any such liabilities could adversely affect our
financial condition, results of operations, cash flow and
ability to make distributions to our unitholders and payments to
our noteholders.

A number of our properties are located in areas
that are known to be subject to earthquake activity, including
California where, as of December 31, 2002,
295 industrial buildings, aggregating approximately
23.9 million square feet (representing 28.4% of our
industrial operating properties based on aggregate square
footage and 33.9% based on industrial annualized base rent), are
located. We carry replacement-cost earthquake insurance on all
of our properties located in areas historically subject to
seismic activity, subject to coverage limitations and
deductibles that we believe are commercially reasonable. This
insurance coverage also applies to the properties managed by AMB
Capital Partners, LLC, with a single aggregate policy limit

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and deductible applicable to those properties and
our properties. Through an annual analysis prepared by outside
consultants, we evaluate our earthquake insurance coverage in
light of current industry practice and determine the appropriate
amount of earthquake insurance to carry, which we believe is
commercially reasonable. We may incur material losses in excess
of insurance proceeds and we may not be able to continue to
obtain insurance at commercially reasonable rates.


We are Subject to Risks and Liabilities In
Connection With Properties Owned Through Joint Ventures, Limited
Liability Companies and Partnerships.

As of December 31, 2002, we had ownership
interests in several joint ventures, limited liability companies
or partnerships with third parties, as well as interests in
three unconsolidated entities. As of December 31, 2002, we
owned approximately 33.7 million square feet (excluding
three unconsolidated joint ventures) of our properties through
these entities. We may make additional investments through these
ventures in the future and presently plan to do so. Such
partners may share certain approval rights over major decisions.
Partnership, limited liability company or joint venture
investments may involve risks such as the following:



| |   |                                                                                                                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our partners, co-members or joint venturers might
    become bankrupt (in which event we and any other remaining
    general partners, members, or joint venturers would generally
    remain liable for the liabilities of the partnership, limited
    liability company, or joint venture);                                                       
|
| |  | our partners, co-members or joint venturers might
    at any time have economic or other business interests or goals
    that are inconsistent with our business interests or goals;                                                                                                                                                                 
|
| |  | our partners, co-members or joint venturers may
    be in a position to take action contrary to our instructions,
    requests, policies, or objectives; and                                                                                                                                                                                         
|
| |  | agreements governing joint ventures, limited
    liability companies and partnerships often contain restrictions
    on the transfer of a joint venturers, members or
    partners interest or buy-sell or other
    provisions that may result in a purchase or sale of the interest
    at a disadvantageous time or on disadvantageous terms.

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

We May be Unable to Consummate Acquisitions
on Advantageous Terms or Acquisitions May Not Perform As We
Expect.

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

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We May be Unable to Complete Divestitures
on Advantageous Terms.

We have decided to divest ourselves of retail
centers and industrial properties that are not in our core
markets or which do not meet our strategic objectives. The
divestitures of the properties are subject to negotiation of
acceptable terms and other customary conditions. Our ability to
dispose of properties on advantageous terms is dependent upon
factors beyond our control, including competition from other
owners (including other real estate investment trusts) that are
attempting to dispose of industrial and retail properties and
the availability of attractive financing for potential buyers of
our properties. Our inability to dispose of properties on
favorable terms or redeploy the proceeds of property
divestitures in accordance with our investment strategy could
adversely affect our financial condition, results of operations,
cash flow and ability to make distributions to our unitholders
and payments to our noteholders.

We May be Unable to Complete Renovation and
Development Projects on Advantageous Terms.

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



| |   |                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we may not be able to obtain financing on
    favorable terms for development projects and we may not complete
    construction on schedule or within budget, resulting in
    increased debt service expense and construction costs and delays
    in leasing such properties and generating cash flow;
|
| |  | we may not be able to obtain, or we may
    experience delays in obtaining, all necessary zoning, land-use,
    building, occupancy and other governmental permits and
    authorizations;                                                                                                              
|
| |  | new or renovated properties may perform below
    anticipated levels, producing cash flow below budgeted amounts;                                                                                                                                                                                       
|
| |  | substantial renovation as well as new development
    activities, regardless of their ultimate success, typically
    require a substantial portion of managements time and
    attention, diverting our attention from our day-to-day
    operations; and                                             
|
| |  | upon completion of construction, we may not be
    able to obtain permanent financing, or obtain permanent
    financing on advantageous terms, for activities that we have
    financed through construction loans.                                                                                    

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

Debt Financing

We Could Incur More Debt.

It is our policy to incur debt, either directly
or through our subsidiaries, only if it will not cause our share
of debt-to-total market capitalization ratio to exceed
approximately 45%. The aggregate amount of indebtedness that we
may incur under our policy varies directly with the valuation of
AMB Property Corporations capital stock and the number of
shares of capital stock outstanding. Accordingly, we would be
able to incur additional indebtedness under our policy as a
result of increases in the market price per share of AMB
Property Corporations common stock or other outstanding
classes of capital stock, and future issuance of shares of AMB
Property Corporations capital stock. However, our
organizational documents do not contain any limitation on the
amount of indebtedness that we may incur. Accordingly, AMB
Property Corporation, as our general partner, could alter or
eliminate this policy without unitholder or noteholder consent.
If we change this policy, then we could become more highly
leveraged, resulting in an increase in debt service that could
adversely affect our financial condition, results of operations,
cash flow and ability to make distributions to our unitholders
and payments to our noteholders.

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Scheduled Debt Payments Could Adversely
Affect Our Financial Condition.

We are subject to risks normally associated with
debt financing, including that cash flow will be insufficient to
make distributions to our unitholders and payments to our
noteholders, that we will be unable to refinance existing
indebtedness on our properties (which in all cases will not have
been fully amortized at maturity), and that the terms of
refinancing will not be as favorable as the terms of existing
indebtedness. As of December 31, 2002, we had total debt
outstanding of $2.2 billion.

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

Rising Interest Rates Could Adversely
Affect Our Cash Flow.

As of December 31, 2002, we had
$45.5 million outstanding under our Alliance Fund II
secured credit facility, $95.0 million outstanding on our
unsecured credit facility, and we had seven secured loans with
an aggregate principal amount of $65.6 million that bear
interest at variable rates (with weighted average interest rate
of 3.5% as of December 31, 2002). In addition, we may incur
other variable rate indebtedness in the future. Increases in
interest rates on this indebtedness could increase our interest
expense, which would adversely affect our financial condition,
results of operations, cash flow and ability to make
distributions to our unitholders and payments to our
noteholders. Accordingly, in the future, we may engage in
transactions to limit our exposure to rising interest rates.

We Are Dependent on External Sources of
Capital.

In order for our general partner, AMB Property
Corporation, to qualify as a real estate investment trust under
the Internal Revenue Code, we are required each year to make
distributions to enable our general partner to distribute to its
stockholders at least 90% of our real estate investment trust
taxable income (determined without regard to the dividends-paid
deduction and by excluding any net capital gain) and it is
subject to tax on its income to the extent it is not
distributed. Because of this distribution requirement, we may
not be able to fund all future capital needs, including capital
needs in connection with acquisitions, from cash retained from
operations. As a result, to fund capital needs we rely on
third-party sources of capital, which we may not be able to
obtain on favorable terms or at all. Our access to third-party
sources of capital depends upon a number of factors, including:



| |   |                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | general market conditions;                                                                                                                                        
|
| |  | the markets perception of our growth
    potential;                                                                                                              
|
| |  | our current and potential future earnings and
    cash distributions; and                                                                                         
|
| |  | the market price of AMB Property
    Corporations capital stock. Additional debt financing may
    substantially increase our debt-to-total capitalization ratio.

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

As of December 31, 2002, we had 26
non-recourse secured loans that are cross-collateralized by
60 properties, totaling $711.7 million (not including
unamortized debt premium). If we default on any of these

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loans, then we could be required to repay the
aggregate of all indebtedness, together with applicable
prepayment charges, to avoid foreclosure on all the
cross-collateralized properties within the applicable pool.
Foreclosure on our properties, or our inability to refinance our
loans on favorable terms, could adversely impact our financial
condition, results of operations, cash flow and ability to make
distributions to our unitholders and payments to our
noteholders. In addition, our credit facilities and senior debt
securities contain certain cross-default provisions, which are
triggered in the event that our other material indebtedness is
in default. These cross-default provisions may require us to
repay or restructure the credit facilities and the senior debt
securities in addition to any mortgage or other debt that is in
default, which could adversely affect our financial condition,
results of operations, cash flow and ability to make
distributions to our unitholders and payments to our noteholders.


Contingent or Unknown Liabilities Could
Adversely Affect Our Financial Condition.

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



| |   |                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | liabilities for clean-up or remediation of
    undisclosed environmental conditions;                                                                                                        
|
| |  | claims of customers, vendors, or other persons
    dealing with our predecessors prior to the formation
    transactions that had not been asserted prior to the formation
    transactions;
|
| |  | accrued but unpaid liabilities incurred in the
    ordinary course of business;                                                                                                             
|
| |  | tax liabilities; and                                                                                                                                                                        
|
| |  | claims for indemnification by the officers and
    directors of AMB Property Corporations predecessors and
    others indemnified by these entities.                                       

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

Conflicts of Interest

Some of AMB Property Corporations
Directors and Executive Officers are Involved in Other Real
Estate Activities and Investments.

Some of AMB Property Corporations executive
officers own interests in real estate-related businesses and
investments. These interests include minority ownership
interests in Institutional Housing Partners, L.P., a residential
housing finance company (Messrs. Burke and Moghadam) and
Aspire Development, Inc. and Aspire Development, L.P.,
developers of properties not within our investment criteria
(Messrs. Belmonte, Burke and Moghadam). The continued
involvement in other real estate-related activities by some of
AMB Property Corporations executive officers and directors
could divert managements attention from our day-to-day
operations. AMB Property Corporations executive officers
have entered into non-competition agreements

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with AMB Property Corporation pursuant to which
they have agreed not to engage in any activities, directly or
indirectly, in respect of commercial real estate, and not to
make any investment in respect of any industrial or retail real
estate, other than through ownership of not more than 5% of the
outstanding shares of a public company engaged in such
activities or through the existing investments referred to in
this report. State law may limit our ability to enforce these
agreements.


Certain of AMB Property Corporations
Executive Officers and Directors May Have Conflicts of Interest
with Us in Connection with Other Properties that They Own or
Control.

As of December 31, 2002, Aspire Development,
L.P. owned interests in several retail development projects in
the U.S., which are individually less than 10,000 feet. In
addition, Messrs. Moghadam and Burke, each a founder and
director, own less than 1% interests in two partnerships that
own office buildings in various markets; these interests have
negligible value. Luis A. Belmonte, an executive officer of AMB
Property Corporation, owns less than a 10% interest,
representing an estimated value of $150,000, in a limited
partnership, which owns an office building located in Oakland,
California.

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



| |   |                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------
| |  | less than 1% interests in the stocks of certain
    publicly-traded real estate investment trusts;                   
|
| |  | certain interests in and rights to developed and
    undeveloped real property located outside the United States; and
|
| |  | certain other de minimus holdings in equity
    securities of real estate companies.                                 

Thomas W. Tusher, a member of AMB Property
Corporations board of directors and chair of the
boards compensation committee, is a limited partner in a
venture in which Messrs. Moghadam and Burke are two of
three members in the controlling general partner. The venture
owns an office building. Mr. Tusher owns a 20% interest in the
venture and Messrs. Moghadam and Burke each have a 26.7%
interest in the venture. These interests in the venture have
negligible value. The venture was formed in 1985, prior to the
time of our initial public offering, and we continue to act as
property and asset manager of the office building, for which
services the venture pays us a fee. In our capacity as property
and asset manager, we oversee the management and operation of
the property, including the obtaining of financing and
negotiating with third party lenders in connection therewith.
The largest tenant, which occupies 68% of the building, filed
for bankruptcy in January 2003.

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

AMB Property Corporations Duty to its
Stockholders May Conflict with the Interests of Our Limited
Partners and Noteholders.

AMB Property Corporation has fiduciary
obligations to its stockholders, the discharge of which may
conflict with the interests of our limited partners and
noteholders.

AMB Property Corporations Directors,
Executive Officers, and Significant Stockholders Could Act in a
Manner that is Not in the Best Interest of Our Limited Partners
or Noteholders.

As of December 31, 2002, AMB Property
Corporations two largest stockholders, Morgan Stanley
Investment Management, Inc. (with respect to various client
accounts for which Morgan Stanley Investment Management, Inc.
serves as investment advisor) and ABP Investments U.S. (with
respect to various client

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accounts for which ABP Investments U.S. serves as
investment advisor) together beneficially owned 10.8% of AMB
Property Corporations outstanding common stock. In
addition, AMB Property Corporations executive officers and
directors beneficially owned 4.3% of AMB Property
Corporations outstanding common stock as of
December 31, 2002, and will have influence on AMB Property
Corporations management and operation and, as
stockholders, will have influence on the outcome of any matters
submitted to a vote of AMB Property Corporations
stockholders. This influence might be exercised in a manner that
is inconsistent with the interests of our limited partners and
noteholders. Although there is no understanding or arrangement
for these directors, officers, and stockholders and their
affiliates to act in concert, these parties would be in a
position to exercise significant influence over AMB Property
Corporations affairs if they choose to do so.


Government Regulations

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

We May Incur Costs to Comply with Americans
with Disabilities Act.

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

We Could Encounter Environmental
Problems.

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

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

Some of our properties are leased or have been
leased, in part, to owners and operators of businesses that use,
store, or otherwise handle petroleum products or other hazardous
or toxic substances. These operations create a potential for the
release of petroleum products or other hazardous or toxic
substances. Some of our properties are adjacent to or near other
properties that have contained or currently contain petroleum
products or other hazardous or toxic substances. In addition,
certain of our properties are on, are adjacent to, or are near
other properties upon which others, including former owners or
customers of the properties, have engaged or

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


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

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

Our Financial Condition Could be Adversely
Affected if We Fail to Comply with Other
Regulations.

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

Certain Property Transfers May Generate
Prohibited Transaction Income.

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

44



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disposition of property constituted a prohibited
transaction, then our general partner would be required to pay a
100% penalty tax on any gain allocable to us from the prohibited
transaction.


We May Be Unable to Manage Our
Growth.

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

Our International Growth is Subject to
Special Political and Monetary Risks.

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

We Are Dependent On Our General
Partners Key Personnel.

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

Item 7a.     Qualitative
Disclosures about Market Risk

Market risk is the risk of loss from adverse
changes in market prices and interest rates. Our future earnings
and cash flows are dependent upon prevailing market rates.
Accordingly, we manage our market risk by matching projected
cash inflows from operating, investing and financing activities
with projected cash outflows for debt service, acquisitions,
capital expenditures, distributions to unitholders and payments
to noteholders, and other cash requirements. The majority of our
outstanding debt has fixed interest rates, which minimizes the
risk of fluctuating interest rates. Our exposure to market risk
includes: (1) interest rate fluctuations in connection with
our credit facilities and other variable rate borrowings; and
(2) our ability to incur more debt without unitholder or
noteholder approval, thereby increasing our debt service
obligations, which could adversely affect our cash flows. As of
December 31, 2002, we had no interest rate caps or swaps.
See Item 7: Managements Discussion and Analysis
of Financial Condition and Results of Operations 
Liquidity and Capital Resources  Capital Resources 
Market Capitalization.

45



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##### 



The table below summarizes the market risks
associated with our fixed and variable rated debt outstanding
before unamortized debt premiums of $9.8 million as of
December 31, 2002:

|                      |  |                        |        |      |  |      |        |      |  |      |         |            |  |            |         |   |  |   |         |   |  |   |           |   |  |   |           |  
|--------------------- |  | ---------------------- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------- | ---------- |  | ---------- | ------- | - |  | - | ------- | - |  | - | --------- | - |  | - | --------- | -
|                      |  |                       
|                      |  | Expected Maturity Date
|                      |  |                       
|                      |  | 2003                   |        | 2004 |  | 2005 |        | 2006 |  | 2007 |         | Thereafter |  | Total Debt
|                      |  |                        |        |      |  |      |        |      |  |      |         |            |  |           
|Fixed rate debt(1)    |  | $                      | 93,088 |      |  | $    | 98,490 |      |  | $    | 351,996 |            |  | $          | 167,804 |   |  | $ | 136,120 |   |  | $ | 1,171,945 |   |  | $ | 2,019,443 |  
|Average interest rate |  |                        | 7.8    | %    |  |      | 8.0    | %    |  |      | 7.3     | %          |  |            | 7.4     | % |  |   | 7.4     | % |  |   | 7.3       | % |  |   | 7.4       | %
|Variable rate debt(2) |  | $                      | 47,279 |      |  | $    | 30.504 |      |  | $    | 98,488  |            |  | $          | 8,593   |   |  | $ | 6,868   |   |  | $ | 14,368    |   |  | $ | 206,100   |  
|Average interest rate |  |                        | 2.8    | %    |  |      | 3.3    | %    |  |      | 2.1     | %          |  |            | 3.1     | % |  |   | 3.1     | % |  |   | 4.4       | % |  |   | 2.7       | %



---



|    |                                          
|--- | -----------------------------------------
|(1) | Represents 93.9% of all outstanding debt.
|   
|(2) | Represents 6.1% of all outstanding debt. 

If market rates of interest on our variable rate
debt increased by 10% (or approximately 27 basis points), then
the increase in interest expense on the variable rate debt would
be $0.6 million annually. As of December 31, 2002, the
estimated fair value of our fixed rate debt was
$2,152.6 million based on our estimate of current market
interest rates.

Item 8.     Financial
Statements and Supplementary Data

See Item 14. Exhibits, Financial
Statement Schedules, and Reports of Form 8-K.

Item 9.     Changes
in and Disagreements With Accountants on Accounting and
Financial Disclosure

None.

PART III

Items 10, 11, 12 and 13.

Directors and Executive Officers of AMB
Property Corporation, Executive Compensation, Security Ownership
of Certain Beneficial Owners and Management, and Certain
Relationships and Related Transactions

The information required by Item 10,
Item 11, Item 12 and Item 13 will be contained in
a definitive proxy statement for AMB Property Corporations
Annual Meeting of Stockholders, which we anticipate will be
filed no later than 120 days after the end of AMB Property
Corporations fiscal year pursuant to Regulation 14A
and accordingly these items have been omitted in accordance with
General Instruction G(3) to Form 10-K.

Item 14.     Controls
and Procedures

We maintain disclosure controls and procedures
that are designed to ensure that information required to be
disclosed in our reports filed under the Securities Exchange Act
of 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the Securities and
Exchange Commissions rules and forms, and that such
information is accumulated and communicated to our management,
including our general partners chief executive officer,
president and chief financial officer, as appropriate, to allow
timely decisions regarding required disclosure. In designing and
evaluating the disclosure controls and procedures, our
management recognized that any controls and procedures, no
matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control
objectives, and our management necessarily was required to apply
its judgment in evaluating the cost-benefit relationship of
possible controls and procedures. Also, we have investments in
certain unconsolidated entities, which are accounted for using
the equity method of accounting. As we do not control or manage
these entities, our disclosure controls and procedures with
respect to such entities are necessarily substantially more
limited than those we maintain with respect to our consolidated
subsidiaries.

46



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##### 



Within 90 days prior to the date of this
report, we carried out an evaluation, under the supervision and
with the participation of our management, including our general
partners chief executive officer, president and chief
financial officer, of the effectiveness of the design and
operation of our disclosure controls and procedures. Based on
the foregoing, our general partners chief executive
officer, president and chief financial officer each concluded
that our disclosure controls and procedures were effective.

There have been no significant changes in our
internal controls or in other factors that could significantly
affect the internal controls subsequent to the date we completed
our evaluation.

PART IV

Item 15.     Exhibits,
Financial Statement Schedules, and Reports on
Form 8-K

(a)(1) and (2) Financial Statements and
Schedules:

The following consolidated financial information
is included as a separate section of this report on
Form 10-K.

|                                                                                                      |  |      |     | 
|----------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                      |  | Page
|                                                                                                      |  |     
|Report of Independent Accountants                                                                     |  |      | F-1 | 
|Consolidated Balance Sheets as of
    December 31, 2002 and 2001                                      |  |      | F-2 | 
|Consolidated Statements of Operations for the
    years ended December 31, 2002, 2001 and 2000        |  |      | F-3 | 
|Consolidated Statements of Partners Capital
    for the years ended December 31, 2002, 2001 and 2000 |  |      | F-4 | 
|Consolidated Statements of Cash Flows for the
    years ended December 31, 2002, 2001 and 2000        |  |      | F-5 | 
|Notes to Consolidated Financial Statements                                                            |  |      | F-6 | 
|Schedule III  Real Estate and
    Accumulated Depreciation                                           |  |      | S-1 | 

All other schedules are omitted since the
required information is not present in amounts sufficient to
require submission of the schedule or because the information
required is included in the financial statements and notes
thereto.

(a)(3) Exhibits:

|        |     |             |  |                                                                                                                                                                                                                                                                                            
|------- | --- | ----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |            
|Number  |     | Description
|        |     |            
|        | 3.1 |             |  | Sixth Amended and Restated Partnership Agreement
    of Limited Partnership of AMB Property, L.P. dated
    April 17, 2002 (incorporated herein by reference as
    Exhibit 10.1 to AMB Property, L.P.s Current Report on
    Form 8-K filed on April 23, 2002).                          
|        | 3.2 |             |  | First Amendment to the Sixth Amended and Restated
    Agreement of Limited Partnership of AMB Property, L.P. dated
    October 30, 2002 (incorporated by reference to
    Exhibit 10.1 of AMB Property, L.P.s Quarterly Report
    on Form 10-Q for the quarter ended September 30, 2002).
|        | 4.1 |             |  | $30,000,000 7.925% Fixed Rate Note No. 1
    dated August 18, 2000, attaching the Parent Guarantee dated
    August 18, 2000 (incorporated by reference to
    Exhibit 4.5 of AMB Property, L.P.s Annual Report on
    Form 10-K for the year ended December 31, 2000).                   
|        | 4.2 |             |  | $25,000,000,000 7.925% Fixed Rate Note No. 2
    dated September 12, 2000, attaching the Parent Guarantee
    dated September 12, 2000 (incorporated by reference to
    Exhibit 4.6 of AMB Property, L.P.s Annual Report on
    Form 10-K for the year ended December 31, 2000).         
|        | 4.3 |             |  | $50,000,000 8.00% Fixed Rate Note No. 3
    dated October 26, 2000, attaching the Parent Guarantee
    dated October 26, 2000 (incorporated by reference to
    Exhibit 4.7 of AMB Property, L.P.s Annual Report on
    Form 10-K for the year ended December 31, 2000).                  
|        | 4.4 |             |  | $25,000,000 8.000% Fixed Rate Note No. 4
    dated October 26, 2000, attaching the Parent Guarantee
    dated October 26, 2000 (incorporated by reference to
    Exhibit 4.8 of AMB Property, L.P.s Annual Report on
    Form 10-K for the year ended December 31, 2000).                 

47



---



##### 



|        |      |             |  |                                                                                                                                                                                                                                                                                                                                       
|------- | ---- | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |            
|Number  |      | Description
|        |      |            
|        | 4.5  |             |  | $50,000,000 7.20% Fixed Rate Note No. 5
    dated December 19, 2000, attaching the Parent Guarantee
    dated December 19, 2000 (incorporated herein by reference
    to Exhibit 4.1 of AMB Property, L.P.s Current Report
    on Form 8-K filed on January 8, 2001).                                                                
|        | 4.6  |             |  | $50,000,000 7.20% Fixed Rate Note No. 6
    dated December 19, 2000, attaching the Parent Guarantee
    dated December 19, 2000 (incorporated herein by reference
    to Exhibit 4.2 of AMB Property, L.P.s Current Report
    on Form 8-K filed on January 8, 2001).                                                                
|        | 4.7  |             |  | $50,000,000 7.20% Fixed Rate Note No. 7
    dated December 19, 2000, attaching the Parent Guarantee
    dated December 19, 2000 (incorporated herein by reference
    to Exhibit 4.3 of AMB Property, L.P.s Current Report
    on Form 8-K filed on January 8, 2001).                                                                
|        | 4.8  |             |  | Indenture dated as of June 30, 1998, by and
    among AMB Property, L.P., AMB Property Corporation and State
    Street Bank and Trust Company of California, N.A., as trustee
    (incorporated by reference to Exhibit 4.1 of AMB Property,
    L.P.s Registration Statement on Form S-11
    (No. 333-49163)).                    
|        | 4.9  |             |  | First Supplemental Indenture dated as of
    June 30, 1998 by and among AMB Property, L.P., AMB Property
    Corporation and State Street Bank and Trust Company of
    California, N.A., as trustee (incorporated by reference to
    Exhibit 4.2 of AMB Property, L.P.s Registration
    Statement on Form S-11 (No. 333-49163)).  
|        | 4.10 |             |  | Second Supplemental Indenture dated as of
    June 30, 1998, by and among AMB Property, L.P., AMB
    Property Corporation and State Street Bank and Trust Company of
    California, N.A., as trustee (incorporated by reference to
    Exhibit 4.3 of AMB Property, L.P.s Registration
    Statement on Form S-11 (No. 333-49163)).
|        | 4.11 |             |  | Third Supplemental Indenture dated as of
    June 30, 1998, by and among AMB Property, L.P., AMB
    Property Corporation and State Street Bank and Trust Company of
    California, N.A., as trustee (incorporated by reference to
    Exhibit 4.4 of AMB Property, L.P.s Registration
    Statement on Form S-11 (No. 333-49163)). 
|        | 4.12 |             |  | Fourth Supplemental Indenture, by and among AMB
    Property, L.P., AMB Property Corporation and State Street Bank
    and Trust Company of California, N.A., as trustee (incorporated
    herein by reference as Exhibit 4.1 of AMB Property,
    L.P.s Current Report on Form 8-K/ A filed on
    November 9, 2000).               
|        | 4.13 |             |  | Fifth Supplemental Indenture dated as of
    May 7, 2002, by and among AMB Property, L.P., AMB Property
    Corporation and State Street Bank and Trust Company of
    California, N.A., as trustee.                                                                                                                                  
|        | 4.14 |             |  | Specimen of 7.10% Notes due 2008 (included in the
    First Supplemental Indenture incorporated by reference as
    Exhibit 4.2 of AMB Property, L.P.s Registration
    Statement on Form S-11 (No. 333-49163)).                                                                                                                     
|        | 4.15 |             |  | Specimen of 7.50% Notes due 2018 (included in the
    Second Supplemental Indenture incorporated by reference as
    Exhibit 4.3 of AMB Property, L.P.s Registration
    Statement on Form S-11 (No. 333-49163)).                                                                                                                    
|        | 4.16 |             |  | Specimen of 6.90% Reset Put Securities due 2015
    (included in the Third Supplemental Indenture incorporated by
    reference as Exhibit 4.4 of AMB Property, L.P.s
    Registration Statement on Form S-11 (No. 333-49163)).                                                                                                      
|        | 4.17 |             |  | $25,000,000 6.90% Fixed Rate Note No. 8
    dated January 9, 2001, attaching the Parent Guarantee dated
    January 9, 2001 (incorporated by reference to
    Exhibit 4.1 of AMB Property, L.P.s Current Report on
    Form 8-K filed on January 31, 2001).                                                                          
|        | 4.18 |             |  | $50,000,000 7.00% Fixed Rate Note No. 9
    dated March 7, 2001, attaching the Parent Guarantee dated
    March 7, 2001 (incorporated by reference to
    Exhibit 4.1 of AMB Property, L.P.s Current Report on
    Form 8-K filed on March 16, 2001).                                                                                
|        | 4.19 |             |  | $25,000,000 6.75% Fixed Rate Note No. 10
    dated September 6, 2001, attaching the Parent Guarantee
    dated September 6, 2001 (incorporated by reference to
    Exhibit 4.1 of AMB Property, L.P.s Current Report on
    Form 8-K filed on September 18, 2001).                                                                   

48



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##### 



|        |       |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------- | ----- | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|Number  |       | Description
|        |       |            
|        | 4.20  |             |  | $20,000,000 5.90% Fixed Rate Note No. 11
    dated January 17, 2002, attaching the Parent Guarantee
    dated January 17, 2002 (incorporated by reference to
    Exhibit 4.1 of AMB Property, L.P.s Current Report on
    Form 8-K filed on January 23, 2002).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|        | 10.1  |             |  | Distribution Agreement dated August 15, 2000
    by and among AMB Property Corporation, AMB Property, L.P.,
    Morgan Stanley & Co., Incorporated, Banc of America
    Securities LLC, Banc One Capital Markets, Inc., Chase
    Securities, Inc., Merrill Lynch, Pierce, Fenner & Smith
    Incorporated, J.P. Morgan Securities Inc., and Salomon Smith
    Barney Inc. (incorporated herein by reference to
    Exhibit 1.1 of AMB Property, L.P.s Current Report on
    Form 8-K/ A filed on November 9, 2000).                                                                                                                                                                                                                                                                                                                                                                                                                                   
|        | 10.2  |             |  | Terms Agreement dated as of December 14,
    2000, by and between Morgan Stanley & Co., Incorporated and
    J.P. Morgan Securities Inc. and AMB Property, L.P. (incorporated
    herein by reference to Exhibit 1.1 of AMB Property,
    L.P.s Current Report on Form 8-K filed on
    January 8, 2001).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|        | 10.3  |             |  | Terms Agreement dated as of January 4, 2001,
    by and between A.G. Edwards & Sons, Inc. and AMB Property,
    L.P. (incorporated herein by reference to Exhibit 1.1 of
    AMB Property, L.P.s Current Report on Form 8-K filed
    on January 31, 2001).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 10.4  |             |  | Terms Agreement dated as of March 2, 2001,
    by and among First Union Securities, Inc., AMB Property, L.P.
    and AMB Property Corporation (incorporated by reference to
    Exhibit 1.1 of AMB Property, L.P.s current report on
    Form 8-K filed on March 16, 2001).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|        | 10.5  |             |  | Form of Change in Control and Noncompetition
    Agreement between AMB Property Corporation and Executive
    Officers (incorporated by reference to AMB Property, L.P.s
    Annual Report on Form 10-K for the year ended
    December 31, 1998).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 10.6  |             |  | Eleventh Amended and Restated Agreement of
    Limited Partnership of AMB Property II, L.P., dated
    July 31, 2002 (incorporated by reference to
    Exhibit 10.2 of AMB Property, L.P.s Quarterly Report
    on Form 10-Q for the quarter ended June 30, 2002).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|        | 10.7  |             |  | Revolving Credit Agreement dated as of
    August 23, 2001, among AMB Institutional Alliance
    Fund II, L.P., AMB Institutional Alliance REIT II,
    Inc., the banks and financial institutions listed therein, Bank
    of America, N.A. as Administrative Agent, Dresdner Bank AG, as
    Syndication Agent, and Bank One, NA, as Documentation Agent
    (incorporated by reference to Exhibit 10.4 of AMB Property,
    L.P.s Quarterly Report on Form 10-Q for the quarter
    ended September 30, 2001).                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        | 10.8  |             |  | Amended and Restated Revolving Credit Agreement,
    dated as of December 11, 2002, by and among AMB Property,
    L.P., the banks listed therein, JPMorgan Chase Bank, as
    administrative agent, J.P. Morgan Europe Limited, as
    administrative agent for alternate currencies, Bank of America,
    N.A., as syndication agent, J.P. Morgan Securities Inc. and
    Banc of America Securities LLC, as joint lead arrangers and
    joint bookrunners, Bank One, NA, Commerzbank Aktiengesellschaft,
    New York and Grand Cayman Branches and Wachovia Bank, N.A., as
    documentation agents, PNC Bank, National Association, The Bank
    of Nova Scotia, acting through its San Francisco Agency, and
    Wells Fargo Bank, N.A., as managing agents, and KeyBank National
    Association, as co-agent (incorporated by reference to
    Exhibit 10.1 of AMB Property, L.P.s Current Report on
    Form 8-K filed on December 18, 2002).
|        | 10.9  |             |  | Guaranty of Payment, dated as of
    December 11, 2002, by AMB Property Corporation for the
    benefit of JPMorgan Chase Bank, as administrative agent, and
    J.P. Morgan Europe Limited, as administrative agent for
    alternate currencies, for the banks listed on the signature page
    to the Revolving Credit Agreement (incorporated by reference to
    Exhibit 10.2 of AMB Property, L.P.s Current Report on
    Form 8-K filed on December 18, 2002).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 10.10 |             |  | Qualified Borrower Guaranty, dated as of
    December 11, 2002, by AMB Property, L.P. for the benefit of
    JPMorgan Chase Bank and J.P. Morgan Europe Limited, as
    administrative agents for the banks listed on the signature page
    to the Revolving Credit Agreement (incorporated by reference to
    Exhibit 10.3 of AMB Property, L.P.s Current Report on
    Form 8-K filed on December 18, 2002).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        | 10.11 |             |  | Terms Agreement dated as of August 30, 2001,
    by and among Lehman Brothers Inc., AMB Property, L.P., and AMB
    Property Corporation (incorporated by reference to
    Exhibit 1.1 of AMB Property, L.P.s Current Report on
    Form 8-K filed on September 18, 2001).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

49



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##### 



|        |       |             |  |                                                                                                                                                                                                                                                                                                
|------- | ----- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|Number  |       | Description
|        |       |            
|        | 10.12 |             |  | Terms Agreement dated as of January 14,
    2002, by and among Lehman Brothers Inc., AMB Property, L.P., and
    AMB Property Corporation (incorporated by reference to
    Exhibit 1.1 of AMB Property, L.P.s Current Report on
    Form 8-K filed on January 23, 2002).                     
|        | 10.13 |             |  | Third Amended and Restated 1997 Stock Option and
    Incentive Plan of AMB Property Corporation and AMB Property,
    L.P. (incorporated by reference to Exhibit 10.22 of AMB
    Property, L.P.s Annual Report on Form 10-K for the
    year ended December 31, 2001).                       
|        | 10.14 |             |  | Amendment No. 1 to the Third Amended and
    Restated 1997 Stock Option and Incentive Plan of AMB Property
    Corporation and AMB Property, L.P. (incorporated by reference to
    Exhibit 10.23 of AMB Property, L.P.s Annual Report on
    Form 10-K for the year ended December 31, 2001).
|        | 10.15 |             |  | 2002 Stock Option and Incentive Plan of AMB
    Property Corporation and AMB Property, L.P. (incorporated by
    reference to Exhibit 10.21 of AMB Property, L.P.s
    Annual Report on Form 10-K for the year ended
    December 31, 2001).                                                  
|        | 10.16 |             |  | Amended and Restated AMB Nonqualified Deferred
    Compensation Plan (incorporated by reference to
    Exhibit 4.17 of AMB Property, L.P.s Registration
    Statement on Form S-8 (No. 333-100214)).                                                                                          
|        | 21.1  |             |  | Subsidiaries of AMB Property, L.P.                                                                                                                                                                                                                                                             
|        | 23.1  |             |  | Consent of PricewaterhouseCoopers LLP.                                                                                                                                                                                                                                                         
|        | 24.1  |             |  | Powers of Attorney (included in Part IV of this
    Form 10-K)                                                                                                                                                                                                                                 



---



| |     |                     
| | --- | --------------------
| | (b) | Reports on Form 8-K:



| |   |                                                                                                                                                                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | AMB Property, L.P. filed a Current Report on
    Form 8-K on December 18, 2002, in connection with its
    entrance into an amended and restated $500 million
    unsecured revolving credit agreement that replaced its then
    existing $500 million credit facility that was to mature in
    May 2003.

(c) Exhibits:

See Item 15(a)(3) above.

(d) Financial Statement Schedules:

See Item 15(a)(1) and (2) above.

50



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##### 



SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, AMB Property,
L.P. has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized on March 19,
2003.



| |                                                                
| | ---------------------------------------------------------------
| | AMB PROPERTY, L.P.                                             
| | By: AMB Property Corporation, its General
    Partner          
|
| | By: /s/ HAMID R. MOGHADAM                                      
| | _______________________________________ 
     Hamid R. Moghadam
| | Chairman of the Board and                                      
| | Chief Executive Officer                                        

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that we, the
undersigned officers and directors of AMB Property Corporation,
the general partner of AMB Property, L.P., hereby severally
constitute Hamid R. Moghadam, W. Blake Baird,
David S. Fries and Michael A. Coke, and each of them
singly, our true and lawful attorneys with full power to them,
and each of them singly, to sign for us and in our names in the
capacities indicated below, the Form 10-K filed herewith
and any and all amendments to said Form 10-K, and generally
to do all such things in our names and in our capacities as
officers and directors of the general partner of AMB Property,
L.P. to enable AMB Property, L.P. to comply with the provisions
of the Securities Exchange Act of 1934, and all requirements of
the Securities and Exchange Commission, hereby ratifying and
confirming our signatures as they may be signed by our said
attorneys, or any of them, to said Form 10-K and any and
all amendments thereto.

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the
following persons on behalf of AMB Property Corporation and in
the capacities and on the dates indicated.

|                                       |  |                                                                                         |  |                |  | 
|-------------------------------------- |  | --------------------------------------------------------------------------------------- |  | -------------- |  | 
|                                       |  |                                                                                         |  |               
|Name                                   |  | Title                                                                                   |  | Date          
|                                       |  |                                                                                         |  |               
|/s/ HAMID R. MOGHADAMHamid R. Moghadam |  | Chairman of the Board and
    Chief Executive Officer
    (Principal Executive Officer) |  | March 19, 2003
|                                      
|/s/ W. BLAKE BAIRDW. Blake Baird       |  | President and Director                                                                  |  | March 19, 2003
|                                      
|/s/ T. ROBERT BURKET. Robert Burke     |  | Director                                                                                |  | March 19, 2003
|                                      
|/s/ DAVID A. COLEDavid A. Cole         |  | Director                                                                                |  | March 19, 2003
|                                      
|/s/ J. MICHAEL LOSHJ. Michael Losh     |  | Director                                                                                |  | March 19, 2003
|                                      
|/s/ LYNN M. SEDWAYLynn M. Sedway       |  | Director                                                                                |  | March 19, 2003

51



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##### 



|                                                     |  |                                                                                                                                               |  |                |  | 
|---------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- |  | 
|                                                     |  |                                                                                                                                               |  |               
|Name                                                 |  | Title                                                                                                                                         |  | Date          
|                                                     |  |                                                                                                                                               |  |               
|/s/ JEFFREY L. SKELTON, PH.DJeffrey L. Skelton, Ph.D |  | Director                                                                                                                                      |  | March 19, 2003
|                                                    
|/s/ THOMAS W. TUSHERThomas W. Tusher                 |  | Director                                                                                                                                      |  | March 19, 2003
|                                                    
|/s/ CARYL B. WELBORN, ESQ.Caryl B. Welborn, Esq.     |  | Director                                                                                                                                      |  | March 19, 2003
|                                                    
|/s/ MICHAEL A. COKEMichael A. Coke                   |  | Chief Financial Officer and
    Executive Vice President
    (Duly Authorized Officer and
    Principal Financial and
    Accounting Officer) |  | March 19, 2003

52



---



##### 



CERTIFICATIONS

I, Hamid R. Moghadam, certify that:

(1) I have reviewed this annual report on
Form 10-K of AMB Property, L.P.;

(2) Based on my knowledge, this annual
report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period
covered by this annual report;

(3) Based on my knowledge, the financial
statements, and other financial information included in this
annual report, fairly present in all material respects the
financial condition, results of operations, and cash flows of
the registrant as of, and for, the periods presented in this
annual report;

(4) The registrants other certifying
officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                

(5) The registrants other certifying
officers and I have disclosed, based on our most recent
evaluation, to the registrants auditors and the audit
committee of the board of directors of the registrants
general partner (or persons performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls that could adversely
    affect the registrants ability to record, process,
    summarize, and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    

(6) The registrants other certifying
officers and I have indicated in this annual report whether or
not there were significant changes in internal controls or in
other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies
and material weaknesses.



| |                                                                
| | ---------------------------------------------------------------
| | By: /s/ HAMID R. MOGHADAM                                      
| | _______________________________________ 
     Hamid R. Moghadam
| | Chairman of the Board and                                      
| | Chief Executive Officer                                        
| | of AMB Property Corporation, the                               
| | general partner of AMB Property,
    L.P.                      

Date: March 19, 2003

53



---



##### 



I, W. Blake Baird, certify that:

(1) I have reviewed this annual report on
Form 10-K of AMB Property, L.P.;

(2) Based on my knowledge, this annual
report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period
covered by this annual report;

(3) Based on my knowledge, the financial
statements, and other financial information included in this
annual report, fairly present in all material respects the
financial condition, results of operations, and cash flows of
the registrant as of, and for, the periods presented in this
annual report;

(4) The registrants other certifying
officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                

(5) The registrants other certifying
officers and I have disclosed, based on our most recent
evaluation, to the registrants auditors and the audit
committee of the board of directors of the registrants
general partner (or persons performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls that could adversely
    affect the registrants ability to record, process,
    summarize, and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    

(6) The registrants other certifying
officers and I have indicated in this annual report whether or
not there were significant changes in internal controls or in
other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies
and material weaknesses.



| |                                                             
| | ------------------------------------------------------------
| | By: /s/ W. BLAKE BAIRD                                      
| | _______________________________________ 
     W. Blake Baird
| | President and Director                                      
| | of AMB Property Corporation, the                            
| | general partner of AMB Property,
    L.P.                   

Date: March 19, 2003

54



---



##### 



I, Michael A. Coke, certify that:

(1) I have reviewed this annual report on
Form 10-K of AMB Property, L.P.;

(2) Based on my knowledge, this annual
report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period
covered by this annual report;

(3) Based on my knowledge, the financial
statements, and other financial information included in this
annual report, fairly present in all material respects the
financial condition, results of operations, and cash flows of
the registrant as of, and for, the periods presented in this
annual report;

(4) The registrants other certifying
officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) designed such disclosure controls and
    procedures to ensure that material information relating to the
    registrant, including its consolidated subsidiaries, is made
    known to us by others within those entities, particularly during
    the period in which this annual report is being prepared;
|
| | b) evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this annual
    report (the Evaluation Date); and                                                                                                      
|
| | c) presented in this annual report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                

(5) The registrants other certifying
officers and I have disclosed, based on our most recent
evaluation, to the registrants auditors and the audit
committee of the board of directors of the registrants
general partner (or persons performing the equivalent function):



| |                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) all significant deficiencies in the
    design or operation of internal controls that could adversely
    affect the registrants ability to record, process,
    summarize, and report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) any fraud, whether or not material, that
    involves management or other employees who have a significant
    role in the registrants internal controls; and                                                                                                                                                    

(6) The registrants other certifying
officers and I have indicated in this annual report whether or
not there were significant changes in internal controls or in
other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies
and material weaknesses.



| |                                                              
| | -------------------------------------------------------------
| | By: /s/ MICHAEL A. COKE                                      
| | _______________________________________ 
     Michael A. Coke
| | Chief Financial Officer and                                  
| | Executive Vice President                                     
| | of AMB Property Corporation, the                             
| | general partner of AMB Property,
    L.P.                    

Date: March 19, 2003

55



---



##### 



REPORT OF INDEPENDENT ACCOUNTANTS

To the General Partner

of AMB Property, L.P.:


In our opinion, the accompanying consolidated
balance sheets and the related consolidated statements of
operations, of partners capital and of cash flows present
fairly, in all material respects, the financial position of AMB
Property, L.P. and its subsidiaries as of December 31, 2002
and 2001, and the results of their operations and their cash
flows for each of the three years in the period ended
December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America. These
financial statements are the responsibility of the management of
AMB Property Corporation, the general partner of AMB Property,
L.P.; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used
and significant estimates made by management and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

As discussed in Note 2 to the consolidated
financial statements, AMB Property, L.P. adopted Statement of
Financial Accounting Standards (SFAS) No. 144,
Accounting for the Impairment or Disposal of Long Lived
Assets, and the expense recognition provisions of SFAS
No. 123, Accounting for Stock-based Compensation, in
2002.



| |                           
| | --------------------------
| | PRICEWATERHOUSECOOPERS LLP

San Francisco, California

January 14, 2003


F-1



---



##### 



AMB PROPERTY, L.P.

CONSOLIDATED BALANCE SHEETS

As of December 31, 2002 and
2001


|                                                                                                  |                                                                                                                                                                                                                                                                                                                    |                                         |         |              |           |  |         |           |           | 
|------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------- | ------- | ------------ | --------- |  | ------- | --------- | --------- | 
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    | December 31,                            |         | December 31,
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    | 2002                                    |         | 2001        
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    |                                         |         |             
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    |                                        
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    | (Dollars in thousands,                 
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    | except unit amounts)                   
|ASSETS                                                                                           
|Investments in real estate:                                                                       |                                                                                                                                                                                                                                                                                                                    |                                         |         |              |           |  |         |          
|                                                                                                  | Land                                                                                                                                                                                                                                                                                                               |                                         | $       | 1,236,406    |           |  | $       | 1,064,422 |          
|                                                                                                  | Buildings and improvements                                                                                                                                                                                                                                                                                         |                                         |         | 3,557,086    |           |  |         | 3,285,110 |          
|                                                                                                  | Construction in progress                                                                                                                                                                                                                                                                                           |                                         |         | 132,490      |           |  |         | 181,179   |          
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    |                                         |         |              |           |  |         |          
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    | Total investments in properties         |         |              | 4,925,982 |  |         |           | 4,530,711 | 
|                                                                                                  | Accumulated depreciation and amortization                                                                                                                                                                                                                                                                          |                                         |         | (362,540     | )         |  |         | (265,653  | )        
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    |                                         |         |              |           |  |         |          
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    | Net investments in properties           |         |              | 4,563,442 |  |         |           | 4,265,058 | 
|Investments in unconsolidated joint ventures                                                      |                                                                                                                                                                                                                                                                                                                    |                                         | 64,428  |              |           |  | 71,097  |          
|Properties held for divestiture, net                                                              |                                                                                                                                                                                                                                                                                                                    |                                         | 107,871 |              |           |  | 157,174 |          
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    |                                         |         |              |           |  |         |          
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    | Net investments in real estate          |         |              | 4,735,741 |  |         |           | 4,493,329 | 
|Cash and cash equivalents                                                                         |                                                                                                                                                                                                                                                                                                                    |                                         | 89,332  |              |           |  | 73,071  |          
|Restricted cash                                                                                   |                                                                                                                                                                                                                                                                                                                    |                                         | 27,882  |              |           |  | 8,661   |          
|Mortgages receivable                                                                              |                                                                                                                                                                                                                                                                                                                    |                                         | 13,133  |              |           |  | 87,214  |          
|Accounts receivable net of allowance for doubtful
    accounts of $6,720 and $7,677, respectively |                                                                                                                                                                                                                                                                                                                    |                                         | 74,207  |              |           |  | 70,794  |          
|Other assets                                                                                      |                                                                                                                                                                                                                                                                                                                    |                                         | 52,199  |              |           |  | 35,874  |          
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    |                                         |         |              |           |  |         |          
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    | Total assets                            |         | $            | 4,992,494 |  |         | $         | 4,768,943 | 
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    |                                         |         |              |           |  |         |          
|LIABILITIES AND PARTNERS
    CAPITAL                                                            
|Debt:                                                                                             |                                                                                                                                                                                                                                                                                                                    |                                         |         |              |           |  |         |          
|                                                                                                  | Secured debt                                                                                                                                                                                                                                                                                                       |                                         | $       | 1,284,675    |           |  | $       | 1,228,214 |          
|                                                                                                  | Unsecured senior debt securities                                                                                                                                                                                                                                                                                   |                                         |         | 800,000      |           |  |         | 780,000   |          
|                                                                                                  | Alliance Fund II credit facility                                                                                                                                                                                                                                                                                   |                                         |         | 45,500       |           |  |         | 123,500   |          
|                                                                                                  | Unsecured debt                                                                                                                                                                                                                                                                                                     |                                         |         | 10,186       |           |  |         |          |          
|                                                                                                  | Unsecured credit facility                                                                                                                                                                                                                                                                                          |                                         |         | 95,000       |           |  |         | 12,000    |          
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    |                                         |         |              |           |  |         |          
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    | Total debt                              |         |              | 2,235,361 |  |         |           | 2,143,714 | 
|Distributions payable                                                                             |                                                                                                                                                                                                                                                                                                                    |                                         | 41,213  |              |           |  | 4,960   |          
|Accounts payable and other liabilities                                                            |                                                                                                                                                                                                                                                                                                                    |                                         | 140,503 |              |           |  | 133,641 |          
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    |                                         |         |              |           |  |         |          
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    | Total liabilities                       |         |              | 2,417,077 |  |         |           | 2,282,315 | 
|Commitments and contingencies (Note 12)                                                           |                                                                                                                                                                                                                                                                                                                    |                                         |         |              |           |  |         |          
|Minority interests                                                                                |                                                                                                                                                                                                                                                                                                                    |                                         | 655,790 |              |           |  | 534,276 |          
|Partners capital:                                                                                |                                                                                                                                                                                                                                                                                                                    |                                         |         |              |           |  |         |          
|                                                                                                  | General partner, 81,800,038 and 83,592,418 units,
    respectively, and 3,995,800 and 4,000,000 Series A
    preferred units outstanding with a $99,895 and $100,000
    liquidation preference, respectively                                                                                                      |                                         |         | 1,684,150    |           |  |         | 1,752,342 |          
|                                                                                                  | Limited partners, 4,846,387 and 4,9,69,027 units,
    respectively, 1,300,000 Series B preferred units with a
    $65,000 liquidation preference and 800,000 Series J
    preferred units with a $40,000 liquidation preference and
    800,000 Series K preferred units with a $40,000 liquidation
    preference |                                         |         | 235,477      |           |  |         | 200,010   |          
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    |                                         |         |              |           |  |         |          
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    | Total partners capital                 |         |              | 1,919,627 |  |         |           | 1,952,352 | 
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    |                                         |         |              |           |  |         |          
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    | Total liabilities and partners capital |         | $            | 4,992,494 |  |         | $         | 4,768,943 | 
|                                                                                                  |                                                                                                                                                                                                                                                                                                                    |                                         |         |              |           |  |         |          

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

F-2



---



##### 



AMB PROPERTY, L.P.

CONSOLIDATED STATEMENTS OF
OPERATIONS

For the Years Ended December 31, 2002,
2001 and 2000


|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |         |         |         | 
|--------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | ------------------------------------------ | ------- | ------- | ------- | ---------- | ------- | ------- | ------- | ---------- | ------- | ------- | ------- | 
|                                                                      |                                                                                                | 2002                                                                                 |                                            | 2001    |         | 2000   
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |        
|                                                                      |                                                                                                |                                                                                     
|                                                                      |                                                                                                | (Dollars in thousands, except unit and                                              
|                                                                      |                                                                                                | per unit amounts)                                                                   
|REVENUES AND OTHER INCOME                                             |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|Rental revenues                                                       |                                                                                                | $                                                                                    | 588,522                                    |         |         | $       | 530,041    |         |         | $       | 431,122    |        
|Equity in earnings of unconsolidated joint
    ventures               |                                                                                                |                                                                                      | 5,674                                      |         |         |         | 5,467      |         |         |         | 5,212      |        
|Private capital income                                                |                                                                                                |                                                                                      | 11,193                                     |         |         |         | 10,972     |         |         |         | 4,282      |        
|Interest and other income                                             |                                                                                                |                                                                                      | 10,454                                     |         |         |         | 16,297     |         |         |         | 6,482      |        
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|                                                                      |                                                                                                | Total revenues and other income                                                      |                                            |         | 615,843 |         |            |         | 562,777 |         |            |         | 447,098 |        
|EXPENSES                                                              |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|Property operating expenses                                           |                                                                                                |                                                                                      | 77,481                                     |         |         |         | 64,452     |         |         |         | 46,419     |        
|Real estate taxes                                                     |                                                                                                |                                                                                      | 68,389                                     |         |         |         | 63,301     |         |         |         | 51,996     |        
|Interest, including amortization                                      |                                                                                                |                                                                                      | 147,101                                    |         |         |         | 124,866    |         |         |         | 85,834     |        
|Depreciation and amortization                                         |                                                                                                |                                                                                      | 127,160                                    |         |         |         | 104,838    |         |         |         | 84,960     |        
|General and administrative                                            |                                                                                                |                                                                                      | 47,207                                     |         |         |         | 35,820     |         |         |         | 23,750     |        
|Loss on investments in other companies                                |                                                                                                |                                                                                      |                                           |         |         |         | 20,758     |         |         |         | 2,500      |        
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|                                                                      |                                                                                                | Total expenses                                                                       |                                            |         | 467,338 |         |            |         | 414,035 |         |            |         | 295,459 |        
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|                                                                      |                                                                                                | Income before minority interests                                                     |                                            |         | 148,505 |         |            |         | 148,742 |         |            |         | 151,639 |        
|Minority interests share of income:                                  |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|                                                                      | Preferred units                                                                                |                                                                                      |                                            | (13,873 | )       |         |            | (22,201 | )       |         |            | (19,005 | )      
|                                                                      | Minority interests                                                                             |                                                                                      |                                            | (30,963 | )       |         |            | (27,132 | )       |         |            | (12,281 | )      
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|                                                                      |                                                                                                | Total minority interests share of income                                            |                                            |         | (44,836 | )       |            |         | (49,333 | )       |            |         | (31,286 | )      
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|                                                                      |                                                                                                | Income from continuing operations, before gains
    on developments and dispositions |                                            |         | 103,669 |         |            |         | 99,409  |         |            |         | 120,353 |        
|Gains on developments and dispositions:                               |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|                                                                      | Gains on developments held for sale                                                            |                                                                                      |                                            | 1,032   |         |         |            | 13,169  |         |         |            |        |        
|                                                                      | Gains from dispositions of real estate, net of
    minority interests                          |                                                                                      |                                            | 7,789   |         |         |            | 23,259  |         |         |            | 1,144   |        
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|                                                                      |                                                                                                | Total gains on developments and dispositions                                         |                                            |         | 8,821   |         |            |         | 36,428  |         |            |         | 1,144   |        
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|                                                                      |                                                                                                | Income from continuing operations                                                    |                                            |         | 112,490 |         |            |         | 135,837 |         |            |         | 121,497 |        
|Discontinued operations:                                              |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|                                                                      | Income attributable to discontinued operations                                                 |                                                                                      |                                            | 18,494  |         |         |            | 16,300  |         |         |            | 13,935  |        
|                                                                      | Gains from dispositions of real estate,
    discontinued operations, net of minority interests |                                                                                      |                                            | 11,372  |         |         |            |        |         |         |            |        |        
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|                                                                      |                                                                                                | Total discontinued operations                                                        |                                            |         | 29,866  |         |            |         | 16,300  |         |            |         | 13,935  |        
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|                                                                      |                                                                                                |                                                                                      | Net income                                 |         |         | 142,356 |            |         |         | 152,137 |            |         |         | 135,432 | 
|Series A preferred unit distributions                                 |                                                                                                |                                                                                      | (8,496                                     | )       |         |         | (8,500     | )       |         |         | (8,500     | )      
|Series B preferred unit distributions                                 |                                                                                                |                                                                                      | (5,606                                     | )       |         |         | (5,608     | )       |         |         | (5,608     | )      
|Series J preferred unit distributions                                 |                                                                                                |                                                                                      | (3,303                                     | )       |         |         | (873       | )       |         |         |           |        
|Series K preferred unit distributions                                 |                                                                                                |                                                                                      | (2,367                                     | )       |         |         |           |         |         |         |           |        
|Preferred unit redemption discount/(premium)                          |                                                                                                |                                                                                      | 412                                        |         |         |         | (4,400     | )       |         |         |           |        
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|                                                                      |                                                                                                |                                                                                      | Net income available to common unitholders |         | $       | 122,996 |            |         | $       | 132,756 |            |         | $       | 121,324 | 
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|INCOME AVAILABLE TO COMMON UNITHOLDERS
    ATTRIBUTABLE TO:           |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|General partner                                                       |                                                                                                | $                                                                                    | 116,153                                    |         |         | $       | 125,053    |         |         | $       | 113,282    |        
|Limited partners                                                      |                                                                                                |                                                                                      | 6,843                                      |         |         |         | 7,703      |         |         |         | 8,042      |        
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|                                                                      |                                                                                                |                                                                                      | Net income available to common unitholders |         | $       | 122,996 |            |         | $       | 132,756 |            |         | $       | 121,324 | 
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|BASIC INCOME PER COMMON UNIT                                          |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|Income from continuing operations available to
    common unitholders |                                                                                                | $                                                                                    | 1.03                                       |         |         | $       | 1.29       |         |         | $       | 1.18       |        
|Discontinued operations                                               |                                                                                                |                                                                                      | 0.36                                       |         |         |         | 0.20       |         |         |         | 0.17       |        
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|                                                                      |                                                                                                |                                                                                      | Net income available to common unitholders |         | $       | 1.39    |            |         | $       | 1.49    |            |         | $       | 1.35    | 
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|DILUTED INCOME PER COMMON UNIT                                        |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|Income from continuing operations available to
    common unitholders |                                                                                                | $                                                                                    | 1.02                                       |         |         | $       | 1.28       |         |         | $       | 1.18       |        
|Discontinued operations                                               |                                                                                                |                                                                                      | 0.35                                       |         |         |         | 0.19       |         |         |         | 0.17       |        
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|                                                                      |                                                                                                |                                                                                      | Net income available to common unitholders |         | $       | 1.37    |            |         | $       | 1.47    |            |         | $       | 1.35    | 
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|WEIGHTED AVERAGE COMMON UNITS
    OUTSTANDING                         |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|Basic                                                                 |                                                                                                |                                                                                      | 88,204,208                                 |         |         |         | 89,286,379 |         |         |         | 89,566,375 |        
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        
|Diluted                                                               |                                                                                                |                                                                                      | 89,689,310                                 |         |         |         | 90,325,801 |         |         |         | 90,024,511 |        
|                                                                      |                                                                                                |                                                                                      |                                            |         |         |         |            |         |         |         |            |        

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

F-3



---



##### 



AMB PROPERTY, L.P.

CONSOLIDATED STATEMENTS OF PARTNERS
CAPITAL

For the Years Ended December 31, 2002,
2001 and 2000


|                                                                                                             |                                           |                                             |           |                  |  |                 |        |              |  |       |            |        |  |       |           |         |   |       |           |   |  |   |         |        |  |  |           |   |  |   |         |        |   |   |           |   |         | 
|------------------------------------------------------------------------------------------------------------ | ----------------------------------------- | ------------------------------------------- | --------- | ---------------- |  | --------------- | ------ | ------------ |  | ----- | ---------- | ------ |  | ----- | --------- | ------- | - | ----- | --------- | - |  | - | ------- | ------ |  |  | --------- | - |  | - | ------- | ------ | - | - | --------- | - | ------- | 
|                                                                                                             |                                           |                                             |           |                  |  |                
|                                                                                                             |                                           | General Partner                             |           | Limited Partners |  |                
|                                                                                                             |                                           |                                             |           |                  |  |                
|                                                                                                             |                                           |                                             |           |                  |  |                 |        |              |  |      
|                                                                                                             |                                           | Preferred Units                             |           | Common Units     |  | Preferred Units |        | Common Units |  |      
|                                                                                                             |                                           |                                             |           |                  |  |                 |        |              |  |      
|                                                                                                             |                                           | Units                                       |           | Amount           |  | Units           |        | Amount       |  | Units |            | Amount |  | Units |           | Amount  |   | Total
|                                                                                                             |                                           |                                             |           |                  |  |                 |        |              |  |       |            |        |  |       |           |         |   |      
|                                                                                                             |                                           |                                            
|                                                                                                             |                                           | (Dollars in thousands, except unit amounts)
|Balance at December 31, 1999                                                                                 |                                           |                                             | 4,000,000 |                  |  | $               | 96,100 |              |  |       | 84,903,630 |        |  | $     | 1,733,159 |         |   |       | 1,300,000 |   |  | $ | 62,190  |        |  |  | 4,507,689 |   |  | $ | 92,100  |        |   | $ | 1,983,549 |  
|Contributions                                                                                                |                                           |                                             |          |                  |  |                 |       |              |  |       |           |        |  |       |          |         |   |       |          |   |  |   |        |        |  |  | 94,771    |   |  |   | 2,228   |        |   |   | 2,228     |  
|Comprehensive income:                                                                                        |                                           |                                             |           |                  |  |                 |        |              |  |       |            |        |  |       |           |         |   |       |           |   |  |   |         |        |  |  |           |   |  |   |         |        |   |   |           |  
|                                                                                                             | Net Income                                |                                             |           |                 |  |                 |        | 8,500        |  |       |            |       |  |       |           | 113,282 |   |       |           |  |  |   |         | 5,608  |  |  |           |  |  |   |         | 8,042  |   |   |           |   |        
|                                                                                                             | Unrealized loss on securities             |                                             |           |                 |  |                 |        |             |  |       |            |       |  |       |           | (32,725 | ) |       |           |  |  |   |         |       |  |  |           |  |  |   |         | (2,275 | ) |   |           |   |        
|                                                                                                             |                                           | Total comprehensive income                  |           |                  |  |                 |        |              |  |       |            |        |  |       |           |         |   |       |           |   |  |   |         |        |  |  |           |   |  |   |         |        |   |   |           |   | 100,432 | 
|Issuance of common limited partnership units in
    connection with issuance of restricted stock             |                                           |                                             |          |                  |  |                 |       |              |  |       | 161,996    |        |  |       | 3,270     |         |   |       |          |   |  |   |        |        |  |  |          |   |  |   |        |        |   |   | 3,270     |  
|Issuance of common limited partnership units in
    connection with the exercise of stock options            |                                           |                                             |          |                  |  |                 |       |              |  |       | 103,217    |        |  |       | 2,180     |         |   |       |          |   |  |   |        |        |  |  |          |   |  |   |        |        |   |   | 2,180     |  
|Conversion of common limited partnership units to
    common stock                                           |                                           |                                             |          |                  |  |                 |       |              |  |       | 206,423    |        |  |       | 4,913     |         |   |       |          |   |  |   |        |        |  |  | (206,423  | ) |  |   | (4,153  | )      |   |   | 760       |  
|Conversion of common limited partnership units to
    cash                                                   |                                           |                                             |          |                  |  |                 |       |              |  |       |           |        |  |       |          |         |   |       |          |   |  |   |        |        |  |  | (34,046   | ) |  |   | (681    | )      |   |   | (681      | )
|Reallocation of common limited partnership units                                                             |                                           |                                             |          |                  |  |                 |       |              |  |       | (1,465,926 | )      |  |       | (29,318   | )       |   |       |          |   |  |   |        |        |  |  | 1,465,926 |   |  |   | 29,318  |        |   |   |          |  
|Deferred compensation                                                                                        |                                           |                                             |          |                  |  |                 |       |              |  |       |           |        |  |       | (3,270    | )       |   |       |          |   |  |   |        |        |  |  |          |   |  |   |        |        |   |   | (3,270    | )
|Deferred compensation amortization                                                                           |                                           |                                             |          |                  |  |                 |       |              |  |       |           |        |  |       | 1,022     |         |   |       |          |   |  |   |        |        |  |  |          |   |  |   |        |        |   |   | 1,022     |  
|Reallocation of interests                                                                                    |                                           |                                             |          |                  |  |                 |       |              |  |       |           |        |  |       | 3,622     |         |   |       |          |   |  |   |        |        |  |  |          |   |  |   | (237    | )      |   |   | 3,385     |  
|Distributions                                                                                                |                                           |                                             |          |                  |  |                 | (8,500 | )            |  |       |           |        |  |       | (124,305  | )       |   |       |          |   |  |   | (5,479  | )      |  |  |          |   |  |   | (8,688  | )      |   |   | (146,972  | )
|                                                                                                             |                                           |                                             |           |                  |  |                 |        |              |  |       |            |        |  |       |           |         |   |       |           |   |  |   |         |        |  |  |           |   |  |   |         |        |   |   |           |  
|Balance at December 31, 2000                                                                                 |                                           |                                             | 4,000,000 |                  |  |                 | 96,100 |              |  |       | 83,909,340 |        |  | $     | 1,671,830 |         |   |       | 1,300,000 |   |  |   | 62,319  |        |  |  | 5,827,917 |   |  |   | 115,654 |        |   |   | 1,945,903 |  
|Contributions                                                                                                |                                           |                                             |          |                  |  |                 |       |              |  |       |           |        |  |       |          |         |   |       | 800,000   |   |  |   | 38,906  |        |  |  |          |   |  |   |        |        |   |   | 38,906    |  
|Comprehensive income:                                                                                        |                                           |                                             |           |                  |  |                 |        |              |  |       |            |        |  |       |           |         |   |       |           |   |  |   |         |        |  |  |           |   |  |   |         |        |   |   |           |  
|                                                                                                             | Net Income                                |                                             |           |                 |  |                 |        | 8,500        |  |       |            |       |  |       |           | 129,453 |   |       |           |  |  |   |         | 6,481  |  |  |           |  |  |   |         | 7,703  |   |   |           |   |        
|                                                                                                             | Reversal of unrealized loss on securities |                                             |           |                 |  |                 |        |             |  |       |            |       |  |       |           | 3,732   |   |       |           |  |  |   |         |       |  |  |           |  |  |   |         | 230    |   |   |           |   |        
|                                                                                                             |                                           | Total comprehensive income                  |           |                  |  |                 |        |              |  |       |            |        |  |       |           |         |   |       |           |   |  |   |         |        |  |  |           |   |  |   |         |        |   |   |           |   | 156,099 | 
|Preferred unit redemption premium                                                                            |                                           |                                             |          |                  |  |                 |       |              |  |       |           |        |  |       | (4,400    | )       |   |       |          |   |  |   |        |        |  |  |          |   |  |   |        |        |   |   | (4,400    | )
|Issuance of common limited partnership units in
    connection with issuance of restricted stock             |                                           |                                             |          |                  |  |                 |       |              |  |       | 237,920    |        |  |       | 5,853     |         |   |       |          |   |  |   |        |        |  |  |          |   |  |   |        |        |   |   | 5,853     |  
|Issuance of common limited partnership units in
    connection with the exercise of stock options            |                                           |                                             |          |                  |  |                 |       |              |  |       | 201,960    |        |  |       | 4,274     |         |   |       |          |   |  |   |        |        |  |  |          |   |  |   |        |        |   |   | 4,274     |  
|Conversion of common limited partnership units to
    common stock                                           |                                           |                                             |          |                  |  |                 |       |              |  |       | 635,798    |        |  |       | 15,255    |         |   |       |          |   |  |   |        |        |  |  | (635,798  | ) |  |   | (12,650 | )      |   |   | 2,605     |  
|Conversion of common limited partnership units to
    cash                                                   |                                           |                                             |          |                  |  |                 |       |              |  |       |           |        |  |       |          |         |   |       |          |   |  |   |        |        |  |  | (223,092  | ) |  |   | (4,343  | )      |   |   | (4,343    | )
|Retirement of units                                                                                          |                                           |                                             |          |                  |  |                 |       |              |  |       | (1,392,600 | )      |  |       | (32,892   | )       |   |       |          |   |  |   |        |        |  |  |          |   |  |   |        |        |   |   | (32,892   | )
|Deferred compensation                                                                                        |                                           |                                             |          |                  |  |                 |       |              |  |       |           |        |  |       | (5,853    | )       |   |       |          |   |  |   |        |        |  |  |          |   |  |   |        |        |   |   | (5,853    | )
|Deferred compensation amortization                                                                           |                                           |                                             |          |                  |  |                 |       |              |  |       |           |        |  |       | 2,725     |         |   |       |          |   |  |   |        |        |  |  |          |   |  |   |        |        |   |   | 2,725     |  
|Reallocation of interests                                                                                    |                                           |                                             |          |                  |  |                 |       |              |  |       |           |        |  |       | (256      | )       |   |       |          |   |  |   | 256     |        |  |  |          |   |  |   |        |        |   |   |          |  
|Distributions                                                                                                |                                           |                                             |          |                  |  |                 | (8,500 | )            |  |       |           |        |  |       | (133,479  | )       |   |       |          |   |  |   | (6,481  | )      |  |  |          |   |  |   | (8,065  | )      |   |   | (156,525  | )
|                                                                                                             |                                           |                                             |           |                  |  |                 |        |              |  |       |            |        |  |       |           |         |   |       |           |   |  |   |         |        |  |  |           |   |  |   |         |        |   |   |           |  
|Balance at December 31, 2001                                                                                 |                                           |                                             | 4,000,000 |                  |  |                 | 96,100 |              |  |       | 83,592,418 |        |  |       | 1,656,242 |         |   |       | 2,100,000 |   |  |   | 101,225 |        |  |  | 4,969,027 |   |  |   | 98,785  |        |   |   | 1,952,352 |  
|Contributions                                                                                                |                                           |                                             |          |                  |  |                 |       |              |  |       |           |        |  |       |          |         |   |       | 800,000   |   |  |   | 38,932  |        |  |  |          |   |  |   |        |        |   |   | 38,932    |  
|Comprehensive income:                                                                                        |                                           |                                             |           |                  |  |                 |        |              |  |       |            |        |  |       |           |         |   |       |           |   |  |   |         |        |  |  |           |   |  |   |         |        |   |   |           |  
|                                                                                                             | Net Income                                |                                             |           |                 |  |                 |        | 8,496        |  |       |            |       |  |       |           | 115,741 |   |       |           |  |  |   |         | 11,276 |  |  |           |  |  |   |         | 6,843  |   |   |           |   |        
|                                                                                                             | Preferred unit redemption discount        |                                             |           |                 |  |                 |        |             |  |       |            |       |  |       |           | 412     |   |       |           |  |  |   |         |       |  |  |           |  |  |   |         |       |   |   |           |   |        
|                                                                                                             | Currency translation adjustment           |                                             |           |                 |  |                 |        |             |  |       |            |       |  |       |           | 31      |   |       |           |  |  |   |         |       |  |  |           |  |  |   |         |       |   |   |           |   |        
|                                                                                                             |                                           | Total comprehensive income                  |           |                  |  |                 |        |              |  |       |            |        |  |       |           |         |   |       |           |   |  |   |         |        |  |  |           |   |  |   |         |        |   |   |           |   | 142,799 | 
|Issuance of common limited partnership units in
    connection with issuance of restricted stock and options |                                           |                                             |          |                  |  |                 |       |              |  |       | 170,604    |        |  |       | 7,478     |         |   |       |          |   |  |   |        |        |  |  |          |   |  |   |        |        |   |   | 7,478     |  
|Issuance of common limited partnership units in
    connection with the exercise of stock options            |                                           |                                             |          |                  |  |                 |       |              |  |       | 565,976    |        |  |       | 14,830    |         |   |       |          |   |  |   |        |        |  |  |          |   |  |   |        |        |   |   | 14,830    |  
|Conversion of common limited partnership units to
    common stock                                           |                                           |                                             |          |                  |  |                 |       |              |  |       | 122,640    |        |  |       | 2,309     |         |   |       |          |   |  |   |        |        |  |  | (122,640  | ) |  |   | (2,309  | )      |   |   |          |  
|Retirement of units                                                                                          |                                           |                                             | (4,200    | )                |  |                 | (106   | )            |  |       | (2,651,600 | )      |  |       | (69,399   | )       |   |       |          |   |  |   |        |        |  |  |          |   |  |   |        |        |   |   | (69,505   | )
|Deferred compensation                                                                                        |                                           |                                             |          |                  |  |                 |       |              |  |       |           |        |  |       | (7,478    | )       |   |       |          |   |  |   |        |        |  |  |          |   |  |   |        |        |   |   | (7,478    | )
|Deferred compensation amortization                                                                           |                                           |                                             |          |                  |  |                 |       |              |  |       |           |        |  |       | 5,265     |         |   |       |          |   |  |   |        |        |  |  |          |   |  |   |        |        |   |   | 5,265     |  
|Reallocation of interests                                                                                    |                                           |                                             |          |                  |  |                 |       |              |  |       |           |        |  |       | (54       | )       |   |       |          |   |  |   | 946     |        |  |  |          |   |  |   | (982    | )      |   |   | (90       | )
|Distributions                                                                                                |                                           |                                             |          |                  |  |                 | (8,496 | )            |  |       |           |        |  |       | (137,221  | )       |   |       |          |   |  |   | (11,276 | )      |  |  |          |   |  |   | (7,963  | )      |   |   | (164,956  | )
|                                                                                                             |                                           |                                             |           |                  |  |                 |        |              |  |       |            |        |  |       |           |         |   |       |           |   |  |   |         |        |  |  |           |   |  |   |         |        |   |   |           |  
|Balance at December 31, 2002                                                                                 |                                           |                                             | 3,995,800 |                  |  | $               | 95,994 |              |  |       | 81,800,038 |        |  | $     | 1,588,156 |         |   |       | 2,900,000 |   |  | $ | 141,103 |        |  |  | 4,846,387 |   |  | $ | 94,374  |        |   | $ | 1,919,627 |  
|                                                                                                             |                                           |                                             |           |                  |  |                 |        |              |  |       |            |        |  |       |           |         |   |       |           |   |  |   |         |        |  |  |           |   |  |   |         |        |   |   |           |  

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

F-4



---



##### 



AMB PROPERTY, L.P.

CONSOLIDATED STATEMENTS OF CASH
FLOWS

For the Years Ended December 31, 2002,
2001 and 2000


|                                                                                      |                                                                       |                                           |                                                          |         |         |          |          |         |         |          |          |         |          |          |  
|------------------------------------------------------------------------------------- | --------------------------------------------------------------------- | ----------------------------------------- | -------------------------------------------------------- | ------- | ------- | -------- | -------- | ------- | ------- | -------- | -------- | ------- | -------- | -------- | -
|                                                                                      |                                                                       | 2002                                      |                                                          | 2001    |         | 2000    
|                                                                                      |                                                                       |                                           |                                                          |         |         |         
|                                                                                      |                                                                       |                                          
|                                                                                      |                                                                       | (Dollars in thousands)                   
|CASH FLOWS FROM OPERATING ACTIVITIES                                                  |                                                                       |                                           |                                                          |         |         |          |          |         |         |          |          |        
|Net income                                                                            |                                                                       | $                                         | 142,356                                                  |         |         | $        | 152,137  |         |         | $        | 135,432  |        
|Adjustments to reconcile net income to net cash
    provided by operating activities: |                                                                       |                                           |                                                          |         |         |          |          |         |         |          |          |        
|                                                                                      | Equity in loss of AMB Investment Management,
    L.P.                 |                                           |                                                          |        |         |          |          | 43      |         |          |          | 3,159   |         
|                                                                                      | Equity in earnings of unconsolidated joint
    ventures               |                                           |                                                          | (5,674  | )       |          |          | (5,467  | )       |          |          | (5,212  | )       
|                                                                                      | Straight-line rents                                                   |                                           |                                                          | (11,013 | )       |          |          | (10,093 | )       |          |          | (10,203 | )       
|                                                                                      | Debt premiums, discounts and finance cost
    amortization, net       |                                           |                                                          | (58     | )       |          |          | (3,562  | )       |          |          | (6,055  | )       
|                                                                                      | Depreciation and amortization, including
    discontinued operations  |                                           |                                                          | 134,663 |         |          |          | 111,414 |         |          |          | 90,358  |         
|                                                                                      | Stock-based compensation amortization                                 |                                           |                                                          | 5,265   |         |          |          | 2,725   |         |          |          | 1,022   |         
|                                                                                      | Loss on investments in other companies                                |                                           |                                                          |        |         |          |          | 20,758  |         |          |          | 2,500   |         
|                                                                                      | Minority interests, including discontinued
    operations             |                                           |                                                          | 44,862  |         |          |          | 49,357  |         |          |          | 31,311  |         
|                                                                                      | Gains on developments held for sale                                   |                                           |                                                          | (1,032  | )       |          |          | (13,169 | )       |          |          |        |         
|                                                                                      | Gains from dispositions of real estate, net of
    minority interests |                                           |                                                          | (19,161 | )       |          |          | (23,259 | )       |          |          | (1,144  | )       
|                                                                                      | Changes in assets and liabilities:                                    |                                           |                                                          |         |         |          |          |         |         |          |          |         |         
|                                                                                      |                                                                       | Accounts receivable and other assets      |                                                          |         | (8,269  | )        |          |         | 14,303  |          |          |         | (37,664  | )       
|                                                                                      |                                                                       | Accounts payable and other liabilities    |                                                          |         | 6,862   |          |          |         | (6,625  | )        |          |         | 57,671   |         
|                                                                                      |                                                                       |                                           |                                                          |         |         |          |          |         |         |          |          |        
|                                                                                      |                                                                       |                                           | Net cash provided by operating activities                |         |         | 288,801  |          |         |         | 288,562  |          |         |          | 261,175  |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                  |                                                                       |                                           |                                                          |         |         |          |          |         |         |          |          |        
|Change in restricted cash                                                             |                                                                       |                                           | (19,221                                                  | )       |         |          | 13,703   |         |         |          | (4,002   | )      
|Cash paid for property acquisitions                                                   |                                                                       |                                           | (355,964                                                 | )       |         |          | (402,208 | )       |         |          | (604,872 | )      
|Additions to buildings, development costs and
    other first generation improvements |                                                                       |                                           | (152,196                                                 | )       |         |          | (174,651 | )       |         |          | (153,534 | )      
|Additions to second generation building
    improvements and lease costs              |                                                                       |                                           | (54,931                                                  | )       |         |          | (47,842  | )       |         |          | (40,573  | )      
|Additions to interests in unconsolidated joint
    ventures                           |                                                                       |                                           | 35                                                       |         |         |          |         |         |         |          | (13,158  | )      
|Distributions received from unconsolidated joint
    ventures                         |                                                                       |                                           | 6,423                                                    |         |         |          | 5,341    |         |         |          | 4,295    |        
|Net proceeds from divestiture of real estate                                          |                                                                       |                                           | 257,383                                                  |         |         |          | 242,505  |         |         |          | 85,345   |        
|                                                                                      |                                                                       |                                           |                                                          |         |         |          |          |         |         |          |          |        
|                                                                                      |                                                                       |                                           | Net cash used in investing activities                    |         |         | (318,471 | )        |         |         | (363,152 | )        |         |          | (726,499 | )
|CASH FLOWS FROM FINANCING ACTIVITIES                                                  |                                                                       |                                           |                                                          |         |         |          |          |         |         |          |          |        
|Issuance of common units                                                              |                                                                       |                                           | 14,830                                                   |         |         |          | 4,274    |         |         |          | 2,180    |        
|Retirement of common and preferred units                                              |                                                                       |                                           | (69,505                                                  | )       |         |          | (32,892  | )       |         |          |         |        
|Borrowings on secured debt                                                            |                                                                       |                                           | 167,960                                                  |         |         |          | 362,052  |         |         |          | 156,797  |        
|Payments on secured debt                                                              |                                                                       |                                           | (146,118                                                 | )       |         |          | (88,866  | )       |         |          | (71,822  | )      
|Borrowings on unsecured credit facility                                               |                                                                       |                                           | 230,000                                                  |         |         |          | 210,000  |         |         |          | 510,000  |        
|Payments on unsecured credit facility                                                 |                                                                       |                                           | (147,000                                                 | )       |         |          | (414,000 | )       |         |          | (377,000 | )      
|Payments on Alliance Fund I credit facility                                           |                                                                       |                                           |                                                         |         |         |          |         |         |         |          | (80,000  | )      
|Borrowings on Alliance Fund II credit facility                                        |                                                                       |                                           | 67,250                                                   |         |         |          | 125,000  |         |         |          |         |        
|Payments on Alliance Fund II credit facility                                          |                                                                       |                                           | (145,250                                                 | )       |         |          | (1,500   | )       |         |          |         |        
|Payment of financing fees                                                             |                                                                       |                                           | (6,837                                                   | )       |         |          | (7,296   | )       |         |          | (6,364   | )      
|Repayment of mortgage receivable                                                      |                                                                       |                                           | 74,081                                                   |         |         |          |         |         |         |          |         |        
|Net proceeds from issuances of senior debt
    securities                             |                                                                       |                                           | 19,883                                                   |         |         |          | 99,406   |         |         |          | 278,183  |        
|Net proceeds from issuances of preferred units                                        |                                                                       |                                           | 38,932                                                   |         |         |          | 63,727   |         |         |          | 61,413   |        
|Repurchase of preferred units                                                         |                                                                       |                                           | (7,927                                                   | )       |         |          | (114,400 | )       |         |          |         |        
|Contributions from co-investment partners                                             |                                                                       |                                           | 146,572                                                  |         |         |          | 134,770  |         |         |          | 153,872  |        
|Distributions paid to general partner and
    preferred unitholders                   |                                                                       |                                           | (123,361                                                 | )       |         |          | (148,460 | )       |         |          | (136,288 | )      
|Distributions to limited partners, including
    preferred units                      |                                                                       |                                           | (67,579                                                  | )       |         |          | (64,512  | )       |         |          | (38,601  | )      
|                                                                                      |                                                                       |                                           |                                                          |         |         |          |          |         |         |          |          |        
|                                                                                      |                                                                       | Net cash provided by financing activities |                                                          |         | 45,931  |          |          |         | 127,303 |          |          |         | 452,370  |         
|                                                                                      |                                                                       |                                           |                                                          |         |         |          |          |         |         |          |          |        
|                                                                                      |                                                                       |                                           | Net increase (decrease) in cash and cash
    equivalents |         |         | 16,261   |          |         |         | 52,713   |          |         |          | (12,954  | )
|                                                                                      |                                                                       |                                           | Cash and cash equivalents at beginning of period         |         |         | 73,071   |          |         |         | 20,358   |          |         |          | 33,312   |  
|                                                                                      |                                                                       |                                           |                                                          |         |         |          |          |         |         |          |          |        
|                                                                                      |                                                                       |                                           | Cash and cash equivalents at end of period               |         | $       | 89,332   |          |         | $       | 73,071   |          |         | $        | 20,358   |  
|                                                                                      |                                                                       |                                           |                                                          |         |         |          |          |         |         |          |          |        
|Supplemental Disclosures of Cash Flow
    Information                                 |                                                                       |                                           |                                                          |         |         |          |          |         |         |          |          |        
|Cash paid for interest, net of capitalized
    interest                               |                                                                       | $                                         | 165,154                                                  |         |         | $        | 147,637  |         |         | $        | 90,138   |        
|Non-cash transactions:                                                                |                                                                       |                                           |                                                          |         |         |          |          |         |         |          |          |        
|                                                                                      |                                                                       | Acquisition of properties                 |                                                          | $       | 403,318 |          |          | $       | 428,254 |          |          | $       | 729,972  |         
|                                                                                      |                                                                       | Assumption of debt                        |                                                          |         | (39,687 | )        |          |         | (9,724  | )        |          |         | (125,100 | )       
|                                                                                      |                                                                       | Acquisition capital                       |                                                          |         | (7,667  | )        |          |         | (16,322 | )        |          |         |         |         
|                                                                                      |                                                                       |                                           |                                                          |         |         |          |          |         |         |          |          |        
|                                                                                      |                                                                       |                                           | Net cash paid                                            |         | $       | 355,964  |          |         | $       | 402,208  |          |         | $        | 604,872  |  
|                                                                                      |                                                                       |                                           |                                                          |         |         |          |          |         |         |          |          |        

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

F-5



---



##### 



AMB PROPERTY, L.P.

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

December 31, 2002 and 2001


1.     Organization
and Formation of the Operating Partnership

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

As of December 31, 2002, the Company owned
an approximate 94.5% general partner interest in the Operating
Partnership, excluding preferred units. The remaining 5.5%
limited partner interest is owned by non-affiliated investors
and certain current and former directors and officers of the
Company. For local law purposes, certain properties are owned
through limited partnerships and limited liability companies.
The ownership of such properties through such entities does not
materially affect the Companys overall ownership interests
in the properties. As the sole general partner of the Operating
Partnership, the Company has full, exclusive and complete
responsibility and discretion in the day-to-day management and
control of the Operating Partnership. Net operating results of
the Operating Partnership are allocated after preferred unit
distributions based on the respective partners ownership
interests.

The Operating Partnership enters into
co-investment joint ventures with institutional investors. These
co-investment joint ventures provide the Operating Partnership
with an additional source of capital and income. As of
December 31, 2002, the Operating Partnership had
investments in five co-investment joint ventures, which are
consolidated for financial reporting purposes.

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

Any references to the number of buildings, square
footage, customers and occupancy data in the financial statement
footnotes are unaudited.

As of December 31, 2002, the Operating
Partnership owned 904 industrial buildings and seven retail
centers, located in 28 markets throughout North America and
France. The Operating Partnerships strategy is

F-6



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

to become a leading provider of distribution
properties in supply-constrained, infill submarkets located near
key international passenger and cargo airports, highway systems
and seaports in major metropolitan areas. As of
December 31, 2002, the industrial buildings, principally
warehouse distribution buildings, encompassed approximately
84.2 million rentable square feet and were 94.6% leased to
over 2,300 customers. As of December 31, 2002, the
retail centers, principally grocer-anchored community shopping
centers, encompassed approximately 1.0 million rentable
square feet and were 88.6% leased to 122 customers.

As of December 31, 2002, through AMB Capital
Partners, the Operating Partnership also managed, but did not
have an ownership interest in, industrial, retail and other
properties, totaling approximately 1.7 million rentable
square feet on behalf of various clients. In addition, the
Operating Partnership has investments in industrial buildings,
totaling approximately 5.5 million rentable square feet,
through unconsolidated joint ventures.

2.     Summary of
Significant Accounting Policies

Basis of Presentation.These consolidated financial
statements have been prepared in accordance with accounting
principles generally accepted in the United States of America
(GAAP). The accompanying consolidated financial
statements include the financial position, results of operations
and cash flows of the Operating Partnership, its wholly-owned
subsidiaries and joint ventures, in which the Operating
Partnership has a controlling interest. Third-party equity
interests in the Operating Partnership and joint ventures are
reflected as minority interests in the consolidated financial
statements. The Operating Partnership also has four
non-controlling limited partnership interests in four separate
unconsolidated real estate joint ventures, which are accounted
for under the equity method. All significant intercompany
amounts have been eliminated.

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

Investments in Real Estate.Investments in real estate are stated
at cost unless circumstances indicate that cost cannot be
recovered, in which case, the carrying value of the property is
reduced to estimated fair value. Carrying values for financial
reporting purposes are reviewed for impairment on a
property-by-property basis whenever events or changes in
circumstances indicate that the carrying value of a property may
not be recoverable. Impairment is recognized when estimated
expected future cash flows (undiscounted and without interest
charges) are less than the carrying value of the property. The
estimation of expected future net cash flows is inherently
uncertain and relies on assumptions regarding current and future
economics and market conditions and the availability of capital.
If impairment analysis assumptions change, then an adjustment to
the carrying value of the Operating Partnerships
long-lived assets could occur in the future period in which the
assumptions change. To the extent that a property is impaired,
the excess of the carrying amount of the property over its
estimated fair value is charged to income and is included with
gains from disposition of real estate, net on the consolidated
statements of operations. The Operating Partnership evaluated
its properties held for divestiture and operating properties for
impairment and reduced their carrying value by
$1.2 million, $18.6 million and $5.9 million in
2002, 2001 and 2000, respectively. The management of the
Operating Partnership believes that there are no additional
impairments of the carrying values of its investments in real
estate as of December 31, 2002.

F-7



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Depreciation and amortization are calculated
using the straight-line method over the estimated useful lives
of the real estate investments. The estimated lives and
components of depreciation and amortization expense for the
years ended December 31, are as follows (dollars in
thousands):

|                                       |                         |                                     |         |      |  |      |        |        |         |   |        |       |         |   |        |       |        | 
|-------------------------------------- | ----------------------- | ----------------------------------- | ------- | ---- |  | ---- | ------ | ------ | ------- | - | ------ | ----- | ------- | - | ------ | ----- | ------ | 
|                                       |                         | Estimated                           |         |      |  |      |        |       
|Depreciation and Amortization Expenses |                         | Lives                               |         | 2002 |  | 2001 |        | 2000  
|                                       |                         |                                     |         |      |  |      |        |       
|Building costs                         |                         |                                     | 40      |      |  | $    | 80,663 |        |         | $ | 73,462 |       |         | $ | 62,097 |      
|Buildings and improvements:            |                         |                                     |         |      |  |      |        |        |         |   |        |       |         |   |        |      
|                                       | Roof/ HVAC/parking lots |                                     |         | 10   |  |      |        | 5,471  |         |   |        | 3,836 |         |   |        | 2,404 |       
|                                       | Plumbing/signage        |                                     |         | 7    |  |      |        | 1,170  |         |   |        | 805   |         |   |        | 484   |       
|                                       | Painting and other      |                                     |         | 5    |  |      |        | 13,370 |         |   |        | 7,664 |         |   |        | 6,345 |       
|Tenant improvements                    |                         |                                     | Various |      |  |      | 14,386 |        |         |   | 12,305 |       |         |   | 9,165  |      
|Lease commissions                      |                         |                                     | Various |      |  |      | 17,076 |        |         |   | 11,311 |       |         |   | 8,641  |      
|                                       |                         |                                     |         |      |  |      |        |        |         |   |        |       |         |   |        |      
|                                       |                         | Total real estate depreciation      |         |      |  |      |        |        | 132,136 |   |        |       | 109,383 |   |        |       | 89,136 | 
|Other depreciation and amortization    |                         |                                     | Various |      |  |      | 2,527  |        |         |   | 2,031  |       |         |   | 1,222  |      
|Discontinued operations depreciation  |                         |                                     | Various |      |  |      | (7,503 | )      |         |   | (6,576 | )     |         |   | (5,398 | )    
|                                       |                         |                                     |         |      |  |      |        |        |         |   |        |       |         |   |        |      
|                                       |                         | Total depreciation and amortization |         |      |  |      |        | $      | 127,160 |   |        | $     | 104,838 |   |        | $     | 84,960 | 
|                                       |                         |                                     |         |      |  |      |        |        |         |   |        |       |         |   |        |      

The cost of buildings and improvements includes
the purchase price of the property or interest in property,
including legal fees and acquisition costs. Project costs
directly associated with the development and construction of a
real estate project, which include interest and property taxes,
are capitalized as construction in progress. Capitalized
interest related to construction projects for the years ended
December 31, 2002, 2001 and 2000, was $6.9 million,
$13.7 million and $15.5 million, respectively.

Expenditures for maintenance and repairs are
charged to operations as incurred. Maintenance expenditures
include painting and repair costs. The Operating Partnership
expenses costs as incurred and does not accrue in advance of
planned major maintenance activities. Significant renovations or
betterments that extend the economic useful life of assets are
capitalized and include parking lot, HVAC and roof replacement
costs.

Business Combinations.In June 2001, the Financial Accounting
Standards Board issued Statement of Financial Accounting
Standard (SFAS) No. 141, Business
Combinations,and SFAS No. 142, Goodwill and Other
Intangible Assets. SFAS No. 141 and No. 142
require the Operating Partnership to record at acquisition an
intangible asset or liability for the value attributable to
above or below-market leases. The requirements are applicable to
all acquisitions subsequent to July 1, 2001. The adoption
of SFAS No. 141 and No. 142 did not have a material
impact on the Operating Partnerships financial position or
results of operations.

Investments in Unconsolidated Joint Ventures.The Operating Partnership has
non-controlling limited partnership interests in four separate
unconsolidated joint ventures. These investments are not
consolidated because the Operating Partnership does not exercise
significant control over major operating decisions such as
approval of budgets, selection of property managers, investment
activity and changes in financing. The Operating Partnership
accounts for the joint ventures using the equity method of
accounting.

Section 1031 Reverse Exchanges.Reverse exchanges represent loan
agreements with third parties, whereby the Operating Partnership
loans substantially all funds to the third party to acquire a
real estate investment that we intend to acquire in a
Section 1031 exchange. The loan is secured by the real
estate investment and title is held by the third party. Upon
acquisition of the property by the third party, the Operating
Partnership records the asset as an investment in real estate
and records the rental income and expenses associated with the
property as the Operating Partnership retains the risk of loss
and the benefits of

F-8



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

the asset. As of December 31, 2002, the
Operating Partnership had one property in a reverse exchange
valued at $13.5 million.

Concentration of Credit Risk.Other real estate companies compete
with the Operating Partnership in its real estate markets. This
results in competition for customers to occupy space. The
existence of competing properties could have a material impact
on the Operating Partnerships ability to lease space and
on the amount of rent received. As of December 31, 2002,
the Operating Partnership did not have any single tenant that
accounted for greater than 2.6% of rental revenues.

Cash and Cash Equivalents.Cash and cash equivalents include cash
held in financial institutions and other highly liquid
short-term investments with original maturities of three months
or less.

Restricted Cash.Restricted cash includes cash held in
escrow in connection with property purchases, Section 1031
exchange accounts and debt and real estate tax payments.

Accounts Receivable.Accounts receivable includes all
current accounts receivable, net of allowances, other accruals
and deferred rent receivable of $46.3 million and
$37.9 million as of December 31, 2002 and 2001,
respectively. The Operating Partnership regularly reviews the
credit worthiness of its tenants and adjusts its allowance for
doubtful accounts, straight-line rent receivable balance and
tenant improvement and leasing costs amortization accordingly.

Mortgage Receivable.Through a wholly-owned subsidiary, the
Operating Partnership holds a mortgage loan receivable on AMB
Pier One, LLC, an unconsolidated joint venture. Based on
borrowing rates available at December 31, 2002, the
estimated fair value of the mortgage receivable was
$15.5 million.

Deferred Financing Costs.Costs incurred in connection with
financings are capitalized and amortized to interest expense
using the effective-interest method over the term of the related
loan. As of December 31, 2002 and 2001, deferred financing
costs were $19.6 million and $17.5 million,
respectively, net of accumulated amortization. Such amounts are
included in other assets on the accompanying consolidated
balance sheets.

Investments in Other Companies.Investments in other companies were
accounted for on a cost basis and realized gains and losses were
included in current earnings. For its investments in private
companies, the Operating Partnership periodically reviewed its
investments and management determined if the value of such
investments had been permanently impaired. During 2001, the
Operating Partnership recognized losses on its investments in
other companies totaling $20.8 million, including its
investment in Webvan Group, Inc. The Operating Partnership had
previously recognized gains and losses on its investment in
Webvan Group, Inc. as a component of other comprehensive income.
As of December 31, 2001, the Operating Partnership had
realized losses on 100% of its investments in such other
companies. The Operating Partnership recognized no gains or
losses in 2002.

Debt.The Operating
Partnerships debt includes both fixed and variable rate
secured debt, unsecured fixed rate debt and unsecured variable
rate credit facilities. Based on borrowing rates available to
the Operating Partnership at December 31, 2002, the book
value and the estimated fair value of the fixed rate secured and
unsecured debt were $2,019.4 million and
$2,152.6 million, respectively. The carrying value of the
variable rate debt approximates fair value.

Debt Premiums.Debt
premiums represent the excess of the fair value of debt over the
principal value of debt assumed in connection with the
Companys initial public offering and subsequent property
acquisitions. The debt premiums are being amortized into
interest expense over the term of the related debt instrument
using the effective interest method. As of December 31,
2002 and 2001, the net unamortized debt premium was
$9.8 million and $14.9 million, respectively, and are
included as a component of secured debt on the accompanying
consolidated balance sheets.

F-9



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Rental Revenues.The
Operating Partnership, as a lessor, retains substantially all of
the benefits and risks of ownership of the properties and
accounts for its leases as operating leases. Rental income is
recognized on a straight-line basis over the term of the leases.
Reimbursements from customers for real estate taxes and other
recoverable operating expenses are recognized as revenue in the
period the applicable expenses are incurred. In addition, the
Operating Partnership nets its bad debt expense against rental
income for financial reporting purposes. Such amounts totaled
$1.8 million, $5.2 million and $1.8 million for
the years ended December 31, 2002, 2001 and 2000,
respectively.

Private Capital Income.Private capital income consists
primarily of asset management fees and acquisition and
disposition fees earned by AMB Capital Partners from joint
ventures and clients. Private capital income also includes
priority distributions from the Operating Partnerships
co-investment joint ventures.

Interest and Other Income.Interest and other income consists
primarily of interest income from mortgages receivable and on
cash and cash equivalents.

Stock-based compensation expense.In 2002, the Operating Partnership
adopted the expense recognition provisions of SFAS No. 123,
Accounting for Stock-Based Compensation. The Operating
Partnership values stock options issued by the Company, its
general partner, using the Black-Scholes option-pricing model
and recognizes this value as an expense over the period in which
the options vest. Under this standard, recognition of expense
for stock options is applied to all options granted after the
beginning of the year of adoption. Prior to 2002, the Operating
Partnership followed the intrinsic method set forth in APB
Opinion 25, Accounting for Stock Issued to
Employees. During 2002, the Company awarded 2.0 million
stock options to employees. In accordance with SFAS
No. 123, the Operating Partnership will recognize the
associated expense over the three to five-year vesting periods.
Related stock-based compensation expense was $0.9 million
for the year ended December 31, 2002. The expense is
included in general and administrative expenses in the
accompanying consolidated statements of operations. The adoption
of SFAS No. 123 is prospective and the 2002 expense relates
only to stock options granted in 2002. Had compensation cost for
the Operating Partnerships stock-based compensation plans
been determined based on the fair value at the grant dates for
awards prior to 2002 consistent with the method of SFAS
No. 123, the Operating Partnerships pro forma net
income available to common unitholders would have been reduced
by $2.4 million, $3.9 million and $2.7 million
and pro forma basic and diluted earnings per share would have
been reduced to $1.37 and $1.34; $1.44 and $1.42; and $1.32 and
$1.31, respectively, for the years ended December 31, 2002,
2001 and 2000.

Discontinued operations.In August 2001, the Financial
Accounting Standards Board issued SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets. SFAS No. 144 retains SFAS No. 121s,
Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of, fundamental provisions
for the: (1) recognition and measurement of impairment of
long-lived assets to be held and used; and (2) measurement
of long-lived assets to be disposed of by sale. Beginning in
2002, the Operating Partnership reported operating results
attributable to discontinued operations and the applicable gain
on disposition of real estate separately as prescribed under the
provisions of SFAS No. 144. The consolidated statements of
operations for the years ended December 31, 2001 and 2000
were also revised to conform with this change.

Financial Instruments.For its lease denominated in Mexican
pesos, the Operating Partnership used derivative financial
instruments to manage foreign currency exchange rate risk. The
Operating Partnership adopted SFAS No. 133, Accounting
for Derivative Instruments and for Hedging Activities, as
amended, on January 1, 2001. SFAS No. 133 provides
comprehensive guidelines for the recognition and measurement of
derivatives and hedging activities and, specifically, requires
all derivatives to be recorded on the balance sheet at fair
value as an asset or liability, with an offset to accumulated
other comprehensive income or income. The Operating
Partnerships only derivative financial instruments in
effect at December 31, 2002, were a combination of foreign
currency option contracts. These derivative instruments were
marked to market

F-10



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

through accumulated other comprehensive income
because they qualified for hedge accounting treatment. In
assessing the fair value of its financial instruments, the
Operating Partnership uses a variety of methods and assumptions
that are based on market conditions and risks existing at each
balance sheet date. The Operating Partnership uses quoted market
prices or quotes from brokers or dealers for the same or similar
instruments. These values represent a general approximation of
possible value and may never actually be realized.

Comprehensive Income.Comprehensive income consists of net
income, unrealized gains and losses on certain investments in
equity securities and foreign currency translation adjustments
and is presented in the consolidated statements of
partners capital.

Reclassifications.Certain items in the consolidated
financial statements for prior periods have been reclassified to
conform with current classifications with no effect on net
income or partners capital.

3.     Transactions
with Affiliates

AMB Capital Partners provides real estate
investment services to clients on a fee basis. Headlands Realty
Corporation, a Maryland corporation, conducts a variety of
businesses that include incremental income programs, such as the
Operating Partnerships CustomerAssist Program, and
development projects available for sale to third parties. IMD
Holding Corporation, a Delaware corporation, also conducts a
variety of businesses that include development projects
available for sale to third parties. On December 31, 2001,
AMB Investment Management was reorganized through a series of
related transactions into AMB Capital Partners. The Operating
Partnership is the managing member of AMB Capital Partners. On
May 31, 2001, the Operating Partnership acquired 100% of
the common stock of AMB Investment Management and Headlands
Realty Corporation from current and former executive officers of
the Company, a former executive officer of AMB Investment
Management, and a director of Headlands Realty Corporation,
thereby acquiring 100% of both entities capital stock. The
Operating Partnership began consolidating its investments in AMB
Investment Management (predecessor-in-interest to AMB Capital
Partners) and Headlands Realty Corporation on May 31, 2001.
Prior to May 31, 2001, the Operating Partnership reflected
its investment using the equity method and did not include
expenses incurred by these two unconsolidated preferred stock
subsidiaries in general and administrative expenses, they were
netted with private capital income. The net impact of
consolidating AMB Investment Management and Headlands Realty
Corporation was not material. General and administrative
expenses for the twelve months ended December 31, 2001,
would have been $39.4 million had the subsidiaries been
consolidated beginning January 1, 2001.

4.     Real Estate
Acquisition and Development Activity

During 2002, the Operating Partnership invested
$403.3 million in operating properties, consisting of
43 industrial buildings, aggregating approximately
5.4 million square feet, and a parking lot adjacent to Los
Angeles International Airport. The Operating Partnerships
acquisitions included the investment of $166.5 million in
31 industrial buildings, aggregating approximately
3.1 million square feet through three of the Operating
Partnerships co-investment joint ventures.

During 2002, the Operating Partnership completed
industrial developments valued at $135.4 million,
aggregating approximately 3.1 million square feet. The
Operating Partnership also initiated new industrial development
projects in North America, France and Singapore valued at
$90.6 million, aggregating approximately 1.8 million
square feet.

As of December 31, 2002, the Operating
Partnership had in its development pipeline: (1) 10
industrial projects, which will total approximately
1.7 million square feet and have an aggregate estimated
investment of $106.8 million upon completion; and
(2) three development projects available for sale, which
will total approximately 0.6 million square feet and have
an aggregate estimated investment of $49.1 million upon
completion. As of December 31, 2002, the Operating
Partnership and its Development Alliance Partners®

F-11



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

have funded an aggregate of $92.8 million
and will need to fund an estimated additional $63.1 million
in order to complete current and planned projects during 2003
and 2004.

During 2001, the Operating Partnership invested
$428.3 million in operating properties, consisting of
65 industrial buildings, aggregating approximately
6.8 million square feet, which included the investment of
$219.5 million in 36 industrial buildings, aggregating
approximately 3.8 million square feet through three of the
Operating Partnerships co-investment joint ventures.

During 2001, the Operating Partnership completed
industrial and retail developments valued at $148.0 million
and $73.9 million, respectively, aggregating approximately
2.3 million and 0.4 million square feet, respectively.
The Operating Partnership also initiated new industrial
development projects valued at $9.7 million, aggregating
approximately 0.2 million square feet.

5.     Property
Divestitures and Properties Held for Divestiture

Property Divestitures.During 2002, the Operating Partnership
divested itself of 58 industrial buildings, two retail
properties and one undeveloped retail land parcel, aggregating
approximately 5.7 million square feet, for an aggregate
price of $244.0 million, with a resulting net gain of
$9.6 million, which is net of minority interests
share. During 2002, we also completed and sold six buildings
developed as part of our development-for-sale program for a net
gain of $1.0 million. As of December 31, 2002, we were
developing three projects for sale to third parties.

In June 2002, the Operating Partnership also sold
operating properties valued at $76.9 million, consisting of
15 industrial buildings, aggregating approximately
1.9 million square feet, to one of its co-investment joint
ventures. The properties sold to the co-investment joint venture
were reflected at the Operating Partnerships historical
cost because the Operating Partnership controls these joint
ventures and, therefore, they were under common control. The
Operating Partnership recognized a gain of $3.3 million
related to these sales representing the portion of the
properties acquired by the third-party co-investors. In November
2002, the Operating Partnerships joint venture partner in
AMB Partners II, L.P. (Partners II)
increased its ownership in Partners II from 50% to 80% by
acquiring 30% of the Operating Partnerships partnership
interest. The Operating Partnership recognized a gain of
$6.3 million on the sale of its interest.

During 2001, the Operating Partnership divested
itself of 24 industrial and two retail buildings,
aggregating approximately 3.2 million square feet, for an
aggregate price of $193.4 million, with a resulting net
gain of $24.1 million, which is net of minority
interests share. The resulting net gain is before
impairment charges of $18.6 million and the gain on the
Operating Partnerships contributed properties of
$17.8 million.

During 2001, the Operating Partnership also
contributed operating properties valued at $539.2 million,
consisting of 111 industrial buildings, aggregating
approximately 10.8 million square feet, to three of its
co-investment joint ventures. The properties contributed to the
co-investment joint ventures were reflected at the Operating
Partnerships historical cost because the Operating
Partnership controls these joint ventures and, therefore, they
were under common control. The Operating Partnership recognized
a gain of $17.8 million related to these contributions
representing the portion of the contributed properties acquired
by the third-party co-investors.

During 2000, the Operating Partnership divested
itself of 25 industrial buildings and one retail center,
aggregating approximately 2.5 million square feet, for an
aggregate price of $175.7 million, with a resulting net
gain of $7.0 million. The resulting net gain is before
impairment charges of $5.9 million.

Properties Held for Divestiture.As of December 31, 2002, the
Operating Partnership had decided to divest itself of four
industrial properties, one development property and two retail
properties with a net book value of $107.9 million. The
properties are not in the Operating Partnerships core
markets and do not meet its current strategic objectives. The
divestitures of the properties are subject to negotiation of
acceptable terms

F-12



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

and other customary conditions. Properties held
for divestiture are stated at the lower of cost or estimated
fair value less costs to sell. The following summarizes the
condensed results of operations of the properties held for
divestiture and sold under SFAS No. 144 for the years
ended December 31, (dollars in thousands):

|                                 |                                                |      |        |        |  |      |        |        |  |   |        |        | 
|-------------------------------- | ---------------------------------------------- | ---- | ------ | ------ |  | ---- | ------ | ------ |  | - | ------ | ------ | 
|                                 |                                                | 2002 |        | 2001   |  | 2000
|                                 |                                                |      |        |        |  |     
|Rental revenues                  |                                                | $    | 38,809 |        |  | $    | 37,952 |        |  | $ | 31,951 |       
|Straight-line rents              |                                                |      | 1,522  |        |  |      | 73     |        |  |   | 1,091  |       
|Interest and other income        |                                                |      | 6      |        |  |      | 43     |        |  |   | 67     |       
|Property operating expenses      |                                                |      | (4,876 | )      |  |      | (4,564 | )      |  |   | (4,147 | )     
|Real estate taxes                |                                                |      | (5,512 | )      |  |      | (5,879 | )      |  |   | (5,168 | )     
|Interest, including amortization |                                                |      | (3,926 | )      |  |      | (4,725 | )      |  |   | (4,436 | )     
|Depreciation and amortization    |                                                |      | (7,503 | )      |  |      | (6,576 | )      |  |   | (5,398 | )     
|Minority interests share        |                                                |      | (26    | )      |  |      | (24    | )      |  |   | (25    | )     
|                                 |                                                |      |        |        |  |      |        |        |  |   |        |       
|                                 | Income attributable to discontinued operations |      | $      | 18,494 |  |      | $      | 16,300 |  |   | $      | 13,935 | 
|                                 |                                                |      |        |        |  |      |        |        |  |   |        |       

As of December 31, 2002 and 2001, assets and
liabilities of properties held for divestiture consisted of the
following (dollars in thousands):

|                                       |  |      |       |      |  |   |        | 
|-------------------------------------- |  | ---- | ----- | ---- |  | - | ------ | 
|                                       |  | 2002 |       | 2001
|                                       |  |      |       |     
|Accounts receivable, net               |  | $    | 3,986 |      |  | $ | 3,065  | 
|Other assets                           |  | $    | 82    |      |  | $ | 174    | 
|Secured debt                           |  | $    | 9,544 |      |  | $ | 32,024 | 
|Accounts payable and other liabilities |  | $    | 1,912 |      |  | $ | 2,257  | 

6.     Mortgages
Receivable

In September 2000, the Operating Partnership sold
a retail center located in Southern California. The Operating
Partnership carried a 9.5% mortgage note secured by the retail
center in the principal amount of $74.0 million, due
September 30, 2002. The Operating Partnership received full
repayment of this mortgage on July 3, 2002.

Through a wholly-owned subsidiary, the Operating
Partnership holds a mortgage loan receivable on AMB Pier One,
LLC, an unconsolidated joint venture. The note bears interest at
13.0% and matures in May 2026. As of December 30, 2002, the
outstanding balance on the note was $13.1 million.

F-13



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

7.     Debt

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

|                                                                                                                                                                                                                  |                       |                         |         |              |           |   |         |           |           | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | ----------------------- | ------- | ------------ | --------- | - | ------- | --------- | --------- | 
|                                                                                                                                                                                                                  |                       | December 31,            |         | December 31,
|                                                                                                                                                                                                                  |                       | 2002                    |         | 2001        
|                                                                                                                                                                                                                  |                       |                         |         |             
|Operating Partnership secured debt, varying
    interest rates from 4.0% to 10.4%, due January 2003 to January
    2014 (weighted average interest rate of 8.1% at
    December 31, 2002 and 2001)                |                       | $                       | 381,764 |              |           | $ | 453,954 |          
|Joint venture secured debt, varying interest
    rates from 3.0% to 12.0%, due April 2004 to April 2023 (weighted
    average interest rate of 7.0% and 7.1% at December 31, 2002
    and 2001, respectively)     |                       |                         | 893,093 |              |           |   | 759,374 |          
|Unsecured senior debt securities, varying
    interest rates from 5.9% to 8.0%, (weighted average interest
    rate of 7.2% and 7.3% at December 31, 2002 and 2001,
    respectively) due June 2005 to June 2018. |                       |                         | 800,000 |              |           |   | 780,000 |          
|Unsecured debt, interest rate of 7.5%, due June
    2013 and November 2015.                                                                                                                                       |                       |                         | 10,186  |              |           |   |        |          
|Unsecured credit facility, variable interest at
    LIBOR plus 60 basis points (interest rate of 2.0% and 2.8% at
    December 31, 2002 and 2001, respectively), due December
    2005.                           |                       |                         | 95,000  |              |           |   | 12,000  |          
|Alliance Fund II credit facility, variable
    interest at LIBOR plus 87.5 basis points (interest rate of 2.3%
    at December 31, 2002), due August 2003.                                                        |                       |                         | 45,500  |              |           |   | 123,500 |          
|                                                                                                                                                                                                                  |                       |                         |         |              |           |   |         |          
|                                                                                                                                                                                                                  | Total before premiums |                         |         | 2,225,543    |           |   |         | 2,128,828 |          
|                                                                                                                                                                                                                  | Unamortized premiums  |                         |         | 9,818        |           |   |         | 14,886    |          
|                                                                                                                                                                                                                  |                       |                         |         |              |           |   |         |          
|                                                                                                                                                                                                                  |                       | Total consolidated debt |         | $            | 2,235,361 |   |         | $         | 2,143,714 | 
|                                                                                                                                                                                                                  |                       |                         |         |              |           |   |         |          

Secured debt generally requires monthly principal
and interest payments. The secured debt is secured by deeds of
trust on certain properties and is generally non-recourse. As of
December 31, 2002 and 2001, the total gross investment book
value of those properties securing the debt was
$2.6 billion and $2.3 billion, respectively, including
$1.6 billion and $1.2 billion, respectively, in
consolidated joint ventures. All of the secured debt bears
interest at fixed rates, except for seven loans with an
aggregate principal amount of $65.6 million as of
December 31, 2002, which bear interest at variable rates
(weighted average interest rate of 3.5% as of December 31,
2002). The secured debt has various covenants. Management
believes that the Operating Partnership was in compliance with
its financial covenants as of December 31, 2002. As of
December 31, 2002, the Operating Partnership had
26 non-recourse secured loans, which are
cross-collateralized by 60 properties, totaling
$711.7 million (not including unamortized debt premiums).

Interest on the unsecured senior debt securities
is payable semi-annually. The 2015 notes are putable and
callable in September 2005. The senior debt securities are
subject to various covenants. Management believes that the
Operating Partnership was in compliance with its financial
covenants as of December 31, 2002.

In May 2002, the Operating Partnership commenced
a medium-term note program for the issuance of up to
$400.0 million in principal amount of medium-term notes
(unsecured senior debt securities), which will be guaranteed by
the Company. As of December 31, 2002, the Operating
Partnership had issued no medium-term notes under this program.

In August 2000, the Operating Partnership
commenced a medium-term note program for the issuance of up to
$400.0 million in principal amount of medium-term notes,
which are guaranteed by the Company. On January 14, 2002,
the Operating Partnership completed this program when it issued
and sold the remaining

F-14



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

$20.0 million of the notes to Lehman
Brothers, Inc., as principal. The Company has guaranteed the
notes, which mature on January 17, 2007, and bear interest
at 5.90% per annum. The Operating Partnership used the net
proceeds of $19.9 million for general corporate purposes,
to partially repay indebtedness and to acquire and develop
additional properties.

In December 2002, the Operating Partnership
renewed its $500.0 million unsecured revolving line of
credit. The Company guarantees the Operating Partnerships
obligations under the credit facility. The credit facility
matures in December 2005, has a one-year extension option and is
subject to a 20 basis point annual facility fee. Borrowings
under the credit facility currently bear interest at LIBOR plus
60 basis points. Both the facility fee and the interest rate are
based on the Operating Partnerships credit rating, which
is currently investment grade. The credit facility includes a
multi-currency component under which up to $150.0 million
may be drawn in either British pounds sterling, euros or yen,
provided that such currency is readily available and freely
transferable and convertible to U.S. dollars. The Reuters
Monitor Money Rates Service reports LIBOR for such currency in
interest periods of 1, 2, 3 or 6 months. The Operating
Partnership has the ability to increase available borrowings to
$700.0 million by adding additional banks to the facility
or obtaining the agreement of existing banks to increase their
commitments. The Operating Partnership uses its unsecured credit
facility principally for acquisitions and for general working
capital requirements. Monthly debt service payments on the
credit facility are interest only. The total amount available
under the credit facility fluctuates based upon the borrowing
base, as defined in the agreement governing the credit facility,
generally the value of the Operating Partnerships
unencumbered properties. As of December 31, 2002, the
outstanding balance on the credit facility was
$95.0 million and the remaining amount available was
$379.0 million, net of outstanding letters of credit
(excluding the additional $200.0 million of potential
additional capacity). The credit facility has various covenants.
Management believes that the Operating Partnership was in
compliance with its financial covenants at December 31,
2002.

In July 2001, AMB Institutional Alliance
Fund II, L.P. (Alliance Fund II) obtained
a $150.0 million credit facility secured by the unfunded
capital commitments of the investors in AMB Institutional
Alliance REIT II, Inc. (Alliance REIT II)
and the Alliance Fund II. Borrowings currently bear
interest at LIBOR plus 87.5 basis points. As of
December 31, 2002, the outstanding balance was
$45.5 million and the remaining amount available was
$31.2 million, net of outstanding letters of credit and
capital contributions from third-party investors. The credit
facility has various covenants. Management believes that the
Alliance Fund II and the Alliance REIT II were in
compliance with their financial covenants as of
December 31, 2002.

F-15



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

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

|           |  |             |         |              |  |            |         |           |  |            |         |       |  |   |        |  |  |   |         |  |  |   |           | 
|---------- |  | ----------- | ------- | ------------ |  | ---------- | ------- | --------- |  | ---------- | ------- | ----- |  | - | ------ |  |  | - | ------- |  |  | - | --------- | 
|           |  | Operating   |         | Consolidated |  | Unsecured  |         |           |  |            |         |      
|           |  | Partnership |         | Joint        |  | Senior     |         |           |  |            |         |      
|           |  | Secured     |         | Venture      |  | Debt       |         | Unsecured |  | Credit     |         |      
|           |  | Debt        |         | Debt         |  | Securities |         | Debt      |  | Facilities |         | Total
|           |  |             |         |              |  |            |         |           |  |            |         |      
|2003       |  | $           | 74,631  |              |  | $          | 19,678  |           |  | $          |        |       |  | $ | 558    |  |  | $ | 45,500  |  |  | $ | 140,367   | 
|2004       |  |             | 63,465  |              |  |            | 64,928  |           |  |            |        |       |  |   | 601    |  |  |   |        |  |  |   | 128,994   | 
|2005       |  |             | 45,511  |              |  |            | 59,326  |           |  |            | 250,000 |       |  |   | 647    |  |  |   | 95,000  |  |  |   | 450,484   | 
|2006       |  |             | 85,023  |              |  |            | 65,676  |           |  |            | 25,000  |       |  |   | 698    |  |  |   |        |  |  |   | 176,397   | 
|2007       |  |             | 24,073  |              |  |            | 43,163  |           |  |            | 75,000  |       |  |   | 752    |  |  |   |        |  |  |   | 142,988   | 
|2008       |  |             | 32,669  |              |  |            | 154,684 |           |  |            | 175,000 |       |  |   | 810    |  |  |   |        |  |  |   | 363,163   | 
|2009       |  |             | 4,147   |              |  |            | 76,826  |           |  |            |        |       |  |   | 873    |  |  |   |        |  |  |   | 81,846    | 
|2010       |  |             | 50,948  |              |  |            | 105,854 |           |  |            | 75,000  |       |  |   | 941    |  |  |   |        |  |  |   | 232,743   | 
|2011       |  |             | 409     |              |  |            | 179,295 |           |  |            | 75,000  |       |  |   | 1,014  |  |  |   |        |  |  |   | 255,718   | 
|2012       |  |             | 407     |              |  |            | 101,399 |           |  |            |        |       |  |   | 1,092  |  |  |   |        |  |  |   | 102,898   | 
|Thereafter |  |             | 481     |              |  |            | 22,264  |           |  |            | 125,000 |       |  |   | 2,200  |  |  |   |        |  |  |   | 149,945   | 
|           |  |             |         |              |  |            |         |           |  |            |         |       |  |   |        |  |  |   |         |  |  |   |           | 
|           |  | $           | 381,764 |              |  | $          | 893,093 |           |  | $          | 800,000 |       |  | $ | 10,186 |  |  | $ | 140,500 |  |  | $ | 2,225,543 | 
|           |  |             |         |              |  |            |         |           |  |            |         |       |  |   |        |  |  |   |         |  |  |   |           | 

8.     Leasing
Activity

Future minimum base rental income due under
non-cancelable leases with customers in effect as of
December 31, 2002, was as follows (dollars in thousands):

|           |       |   |         |           | 
|---------- | ----- | - | ------- | --------- | 
|2003       |       | $ | 546,267 |          
|2004       |       |   | 454,176 |          
|2005       |       |   | 356,236 |          
|2006       |       |   | 274,783 |          
|2007       |       |   | 203,883 |          
|Thereafter |       |   | 506,035 |          
|           |       |   |         |          
|           | Total |   | $       | 2,341,380 | 
|           |       |   |         |          

The schedule does not reflect future rental
revenues from the renewal or replacement of existing leases and
excludes property operating expense reimbursements.

In addition to minimum rental payments, certain
customers pay reimbursements for their pro rata share of
specified operating expenses, which amounted to
$127.6 million, $116.7 million and $77.9 million
for the years ended December 31, 2002, 2001 and 2000,
respectively. These amounts are included as rental income and
operating expenses in the accompanying consolidated statements
of operations. Some leases contain options to renew.

9.     Income
Taxes

As a partnership, the allocated share of income
of the Operating Partnership is included in the income tax
returns of the partners. Accordingly, no accounting for income
taxes is required in the accompanying consolidated financial
statements. The Operating Partnership may be subject to certain
state, local and foreign taxes on its income and property. In
addition, the Operating Partnership is required to pay federal
and state

F-16



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

income tax on its net taxable income, if any,
from the activities conducted through IMD Holding Corporation
and Headlands Realty Corporation.

The following reconciles net income available to
common unitholders attributable to the general partner to
taxable income available to common unitholders for the years
ended December 31, (dollars in thousands):

|                                                                                   |                                                |      |          |         |  |      |          |         |  |   |         |         | 
|---------------------------------------------------------------------------------- | ---------------------------------------------- | ---- | -------- | ------- |  | ---- | -------- | ------- |  | - | ------- | ------- | 
|                                                                                   |                                                | 2002 |          | 2001    |  | 2000
|                                                                                   |                                                |      |          |         |  |     
|Net income available to common unitholders
    attributable to the general partner |                                                | $    | 116,153  |         |  | $    | 125,053  |         |  | $ | 113,282 |        
|Book depreciation and amortization                                                 |                                                |      | 127,160  |         |  |      | 104,838  |         |  |   | 84,960  |        
|Book depreciation discontinued operations                                          |                                                |      | 7,503    |         |  |      | 6,576    |         |  |   | 5,398   |        
|Tax depreciation and amortization                                                  |                                                |      | (125,888 | )       |  |      | (117,400 | )       |  |   | (87,338 | )      
|Book/tax difference on gain on divestiture of
    real estate                      |                                                |      | 26,328   |         |  |      | (7,563   | )       |  |   | 24,688  |        
|Other book/tax differences, net(1)                                                 |                                                |      | (39,621  | )       |  |      | 15,943   |         |  |   | (5,723  | )      
|                                                                                   |                                                |      |          |         |  |      |          |         |  |   |         |        
|                                                                                   | Taxable income available to common unitholders |      | $        | 111,635 |  |      | $        | 127,447 |  |   | $       | 135,267 | 
|                                                                                   |                                                |      |          |         |  |      |          |         |  |   |         |        



---



|    |                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------
|(1) | Primarily due to straight-line rent, prepaid
    rent, joint venture accounting and debt premium amortization
    timing differences.

10.     Minority
Interests in Consolidated Joint Ventures and Preferred
Units

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

The Operating Partnership enters into
co-investment joint ventures with institutional investors. As of
December 31, 2002, the Operating Partnership had
investments in five co-investment joint ventures with a gross
book value of $1.6 billion, which are consolidated for
financial reporting purposes and which are discussed below. The
Operating Partnerships five co-investment joint ventures
are engaged in the acquisition, ownership, operation, management
and, in some cases, the renovation, expansion and development of
industrial buildings in target markets nationwide.

Our co-investment joint ventures at
December 31, 2002 (dollars in thousands):

|                                            |  |                                                                   |  |               |     |                |  |   |         | 
|------------------------------------------- |  | ----------------------------------------------------------------- |  | ------------- | --- | -------------- |  | - | ------- | 
|                                            |  |                                                                   |  | Operating     |     |               
|                                            |  |                                                                   |  | Partnerships |     |               
|                                            |  |                                                                   |  | Ownership     |     | Total         
|Co-investment Joint Venture                 |  | Joint Venture Partner                                             |  | Percentage    |     | Capitalization
|                                            |  |                                                                   |  |               |     |               
|AMB/ Erie, L.P.                             |  | Erie Insurance Company and affiliates                             |  |               | 50% |                |  | $ | 170,084 | 
|AMB Institutional Alliance Fund I,
    L.P. |  | AMB Institutional Alliance REIT I, Inc.(1)                        |  |               | 21% |                |  | $ | 393,007 | 
|AMB Partners II, L.P.                       |  | City and County of San Francisco Employees
    Retirement System |  |               | 20% | (4)            |  | $ | 248,306 | 
|AMB-SGP, L.P.                               |  | Industrial JV Pte Ltd. GIC Real Estate Pte
    Ltd.(2)            |  |               | 50% |                |  | $ | 367,082 | 
|AMB Institutional Alliance Fund II, L.P.    |  | AMB Institutional Alliance REIT II, Inc.(3)                       |  |               | 20% |                |  | $ | 350,416 | 



---



|    |                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------
|(1) | Included 15 institutional investors as
    stockholders as of December 31, 2002.                                
|   
|(2) | A subsidiary of the real estate investment
    subsidiary of the Government of Singapore Investment Corporation.

F-17



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)



|    |                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | Included 14 institutional investors as
    stockholders as of December 31, 2002.                                                                                                                                                                                                             
|   
|(4) | In November 2002, the City and County of San
    Francisco Employees Retirement System increased its
    ownership in Partners II from 50% to 80% by acquiring 30% of the
    Operating Partnerships partnership interest. The Operating
    Partnership recognized a gain of $6.3 million.

On July 31, 2002, AMB Property II, L.P., one
of the Operating Partnerships subsidiaries, repurchased
130,000 of its 7.95% Series F Cumulative Redeemable
Preferred Limited Partnership Units and all 20,000 of its
outstanding 7.95% Series G Cumulative Redeemable Preferred
Limited Partnership Units from a single institutional investor.
AMB Property II, L.P. redeemed the units for an aggregate cost
of $7.1 million, including accrued and unpaid dividends and
a redemption discount of $0.4 million.

On April 17, 2002, the Operating Partnership
issued and sold 800,000 7.95% Series K Cumulative
Redeemable Partnership Units at a price of $50.00 per unit in a
private placement. Distributions are cumulative from the date of
issuance and payable quarterly in arrears. The Series K
preferred units are redeemable by the Operating Partnership on
or after April 17, 2007, subject to certain conditions, for
cash at a redemption price equal to $50.00 per unit, plus
accumulated and unpaid distributions thereon, if any, to the
redemption date. The Series K preferred units are
exchangeable, at specified times and subject to certain
conditions, on a one-for-one basis, for shares of the
Companys Series K preferred stock. The Operating
Partnership used the net proceeds of $39.0 million for
general corporate purposes, which included the partial repayment
of indebtedness and the acquisition and development of
additional properties.

The following table distinguishes the minority
interest liability as of December 31, 2002 and 2001
(dollars in thousands):

|                                    |                                                                  |                          |         |                   |         |   |         |        |         | 
|----------------------------------- | ---------------------------------------------------------------- | ------------------------ | ------- | ----------------- | ------- | - | ------- | ------ | ------- | 
|                                    |                                                                  | December 31, 2002        |         | December 31, 2001
|                                    |                                                                  |                          |         |                  
|Joint venture partners              |                                                                  | $                        | 488,524 |                   |         | $ | 359,514 |       
|Held through AMB Property II, L.P.: |                                                                  |                          |         |                   |         |   |         |       
|                                    | Series D preferred units (liquidation
    preference of $79,767) |                          |         | 77,684            |         |   |         | 77,687 |        
|                                    | Series E preferred units (liquidation
    preference of $11,022) |                          |         | 10,788            |         |   |         | 10,788 |        
|                                    | Series F preferred units (liquidation
    preference of $13,372) |                          |         | 13,082            |         |   |         | 19,597 |        
|                                    | Series G preferred units (repurchased in
    July 2002)          |                          |         |                  |         |   |         | 954    |        
|                                    | Series H preferred units (liquidation
    preference of $42,000) |                          |         | 40,912            |         |   |         | 40,915 |        
|                                    | Series I preferred units (liquidation
    preference of $25,500) |                          |         | 24,800            |         |   |         | 24,821 |        
|                                    |                                                                  |                          |         |                   |         |   |         |       
|                                    |                                                                  | Total minority interests |         | $                 | 655,790 |   |         | $      | 534,276 | 
|                                    |                                                                  |                          |         |                   |         |   |         |       

F-18



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

The following table distinguishes the minority
interests share of net income for the years ended
December 31, (dollars in thousands):

|                                    |                                                                  |                                               |        |       |        |      |        |       |        |   |        |       |        | 
|----------------------------------- | ---------------------------------------------------------------- | --------------------------------------------- | ------ | ----- | ------ | ---- | ------ | ----- | ------ | - | ------ | ----- | ------ | 
|                                    |                                                                  | 2002                                          |        | 2001  |        | 2000
|                                    |                                                                  |                                               |        |       |        |     
|Joint venture partners              |                                                                  | $                                             | 30,963 |       |        | $    | 27,132 |       |        | $ | 12,281 |      
|Held through AMB Property II, L.P.: |                                                                  |                                               |        |       |        |      |        |       |        |   |        |      
|                                    | Series C preferred units (repurchased in
    December 2001)      |                                               |        |      |        |      |        | 8,540 |        |   |        | 9,624 |       
|                                    | Series D preferred units (liquidation
    preference of $79,767) |                                               |        | 6,182 |        |      |        | 6,180 |        |   |        | 6,180 |       
|                                    | Series E preferred units (liquidation
    preference of $11,022) |                                               |        | 854   |        |      |        | 856   |        |   |        | 856   |       
|                                    | Series F preferred units (liquidation
    preference of $13,372) |                                               |        | 1,342 |        |      |        | 1,580 |        |   |        | 1,228 |       
|                                    | Series G preferred units (repurchased in
    July 2002)          |                                               |        | 43    |        |      |        | 80    |        |   |        | 27    |       
|                                    | Series H preferred units (liquidation
    preference of $42,000) |                                               |        | 3,412 |        |      |        | 3,412 |        |   |        | 1,090 |       
|                                    | Series I preferred units (liquidation
    preference of $25,500) |                                               |        | 2,040 |        |      |        | 1,553 |        |   |        |      |       
|                                    |                                                                  |                                               |        |       |        |      |        |       |        |   |        |      
|                                    |                                                                  | Total minority interests share of net income |        | $     | 44,836 |      |        | $     | 49,333 |   |        | $     | 31,286 | 
|                                    |                                                                  |                                               |        |       |        |      |        |       |        |   |        |      

11.     Investments
in Unconsolidated Joint Ventures

The Operating Partnership has a 56.1% interest in
a joint venture, which owns an aggregate of 36 industrial
buildings totaling approximately 4.0 million square feet.
The Operating Partnership has a 50% interest in two other
operating joint ventures, which own an aggregate of
7 industrial buildings totaling approximately
1.4 million square feet. The Operating Partnership also has
a 50% interest in a development alliance joint venture. The
Operating Partnerships net equity investment in these
joint ventures is shown as investments in unconsolidated joint
ventures on the accompanying consolidated balance sheets.

Under the agreements governing the joint
ventures, the Operating Partnership and the other parties to the
joint venture may be required to make additional capital
contributions and, subject to certain limitations, the joint
ventures may incur additional debt. As of December 31,
2002, the Operating Partnerships share of unconsolidated
joint venture debt was $39.3 million.

The Operating Partnership also has a 0.1%
unconsolidated equity interest (with an approximate 33% economic
interest) in AMB Pier One, LLC, a joint venture to redevelop the
Operating Partnerships office space in San Francisco. The
investment is not consolidated because the Operating Partnership
does not own a majority interest and does not exercise
significant control over major operating decisions such as
approval of budgets, selection of property managers, investment
activity and changes in financing. The Operating Partnership has
an option to purchase the remaining equity interest beginning
January 1, 2007, and expiring December 31, 2009, based
on the fair market value as stipulated in the operating
agreement.

12.     Partners
Capital

During 2002, the Operating Partnership redeemed
122,640 of its common limited partnership units for shares of
the Companys common stock. Holders of common limited
partnership units of the Operating Partnership have the right,
commencing generally on or after the first anniversary of the
holder becoming a limited partner of the Operating Partnership
(or such other date agreed to by the Operating Partnership and
the applicable unit holders), to require the Operating
Partnership to redeem part or all of their common units for cash
(based upon the fair market value of an equivalent number of
shares of common stock at the time of redemption) or the
Operating Partnership may, in its sole and absolute discretion
(subject to the limits on ownership and transfer of common stock
set forth in the Companys charter), elect to have the
Company exchange those common units for shares of the
Companys common stock on a one-for-one basis, subject to
adjustment in the event of stock splits, stock dividends,
issuance of certain rights, certain extraordinary distributions
and similar events. The Operating Partnership presently
anticipates that it will generally elect to

F-19



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

have the Company issue shares of its common stock
in exchange for common units in connection with a redemption
request; however, the Operating Partnership has paid cash, and
may in the future pay cash, for a redemption of common units.
With each redemption or exchange, the Companys percentage
ownership in the Operating Partnership will increase. Common
limited partners may exercise this redemption right from time to
time, in whole or in part, subject to the limitations that
limited partners may not exercise this right if such exercise
would result in any person actually or constructively owning
shares of common stock in excess of the ownership limit or any
other amount specified by the board of directors, assuming
common stock was issued in the exchange.

In December 2001, the Companys board of
directors approved a new stock repurchase program for the
repurchase of up to $100.0 million worth of common and
preferred stock. In December 2002, the Companys board of
directors increased the repurchase program to
$200.0 million. The new stock repurchase program expires in
December 2003. During 2002, the Company repurchased 2,651,600
shares of its common stock for $69.4 million, including
commissions, and the Operating Partnership retired the same
number of common general partnership units.

As of December 31, 2002, the Operating
Partnership had outstanding 84,012,282 common general
partnership units, 4,846,387 common limited partnership units,
3,995,800 8 1/2% Series A Cumulative Redeemable
Partnership Units, 1,300,000 8 5/8% Series B
Cumulative Redeemable Partnership Units, 800,000 7.95%
Series J Cumulative Redeemable Partnership Units, and
800,000 7.95% Series K Cumulative Redeemable Partnership
Units.

In July 2002, the Company repurchased 4,200
shares of its Series A Preferred Stock for an aggregate
cost of $0.1 million, including accrued and unpaid
dividends and the Operating Partnership retired the same number
of preferred units.

The following table sets forth the distributions
paid or payable per unit for the years ended December 31:

|                      |  |                                  |  |       |  |       |  |      
|--------------------- |  | -------------------------------- |  | ----- |  | ----- |  | -----
|Paying Entity         |  | Security                         |  | 2002  |  | 2001  |  | 2000 
|                      |  |                                  |  |       |  |       |  |      
|Operating Partnership |  | Common limited partnership units |  | $1.64 |  | $1.58 |  | $1.48
|Operating Partnership |  | Series A preferred units         |  | $2.13 |  | $2.13 |  | $2.13
|Operating Partnership |  | Series B preferred units         |  | $4.31 |  | $4.31 |  | $4.31
|Operating Partnership |  | Series J preferred units         |  | $3.98 |  | $1.24 |  | n/a  
|Operating Partnership |  | Series K preferred units         |  | $2.96 |  | n/a   |  | n/a  
|AMB Property II, L.P. |  | Series C preferred units         |  | n/a   |  | $3.88 |  | $4.38
|AMB Property II, L.P. |  | Series D preferred units         |  | $3.88 |  | $3.88 |  | $3.88
|AMB Property II, L.P. |  | Series E preferred units         |  | $3.88 |  | $3.88 |  | $3.88
|AMB Property II, L.P. |  | Series F preferred units(1)      |  | $3.38 |  | $3.98 |  | $3.09
|AMB Property II, L.P. |  | Series G preferred units(1)      |  | $2.14 |  | $3.98 |  | $1.35
|AMB Property II, L.P. |  | Series H preferred units         |  | $4.06 |  | $4.06 |  | $1.30
|AMB Property II, L.P. |  | Series I preferred units         |  | $4.00 |  | $3.04 |  | n/a  



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | On July 31, 2002, AMB Property II, L.P., one
    of the Operating Partnerships subsidiaries, repurchased
    130,000 of its 7.95% Series F Cumulative Redeemable
    Preferred Limited Partnership Units and all 20,000 of its
    outstanding 7.95% Series G Cumulative Redeemable Preferred
    Limited Partnership Units from a single institutional investor.
    On July, 31, 2002, AMB Property II, L.P. paid a distribution,
    which accrued during the period from July 15, 2002, to
    July 31, 2002, of $0.155 per unit on the 130,000
    Series F preferred units that were redeemed.

F-20



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

13.     Stock
Incentive Plan, 401(k) Plan and Deferred Compensation
Plan

Stock Incentive Plan.The Company has Stock Option and
Incentive Plans (Stock Incentive Plans) for the
purpose of attracting and retaining eligible officers, directors
and employees. The Company has reserved for issuance 18,950,000
shares of common stock under its Stock Incentive Plans. As of
December 31, 2002, the Company had 8,764,912 non-qualified
options outstanding granted to certain directors, officers and
employees. Each option is exchangeable for one share of the
Companys common stock. The options have a weighted average
exercise price of $23.16 and the exercise prices range from
$18.94 to $30.83. Each options exercise price is equal to
the Companys market price on the date of grant. The
options had an original ten-year term and generally vest pro
rata in annual installments over a three- to five-year period
from the date of grant.

In 2002, the Operating Partnership adopted the
expense recognition provisions of SFAS No. 123,
Accounting for Stock-Based Compensation. The Operating
Partnership values stock options issued using the Black-Scholes
option-pricing model and recognizes this value as an expense
over the period in which the options vest. Under this standard,
recognition of expense for stock options is applied to all
options granted after the beginning of the year of adoption.
Prior to 2002, the Operating Partnership followed the intrinsic
method set forth in APB Opinion 25, Accounting for Stock
Issued to Employees. In accordance with SFAS No. 123,
the Operating Partnership will recognize the associated expense
over the three to five-year vesting periods. Related stock-based
compensation expense was $0.9 million for the twelve month
period ended December 31, 2002. The expense is included in
general and administrative expenses in the accompanying
consolidated statements of operations. The adoption of SFAS
No. 123 is prospective and the 2002 expense relates only to
stock options granted in 2002. Prior to January 1, 2002,
the Operating Partnership applied APB Opinion No. 25,
Accounting for Stock Issued to Employees and related
interpretations in accounting for its Stock Incentive Plan.
Opinion 25 measures compensation cost using the intrinsic
value based method of accounting. Under this method,
compensation cost is the excess, if any, of the quoted market
price of the stock at the date of grant over the amount an
employee must pay to acquire the stock. Accordingly, no
compensation cost had been recognized for the Companys
Stock Incentive Plan as of December 31, 2001.

As permitted by SFAS No. 148, Accounting
for Stock-based Compensation  Transition and
Disclosure  an amendment of FASB Statement
No. 123, the Operating Partnership has changed its
method of accounting for stock options beginning January 1,
2002. The Operating Partnership has not retroactively changed
its method of accounting for stock options but has provided
additional required disclosures. Had compensation cost for the
Companys stock-based compensation plans been determined
based on the fair value at the grant dates for awards prior to
2002 consistent with the method of SFAS No. 123, the
Operating Partnerships pro forma net income available to
common unitholders would have been reduced by $2.4 million,
$3.9 million and $2.7 million and pro forma basic and
diluted earnings per unit would have been reduced to $1.37 and
$1.34; $1.44 and $1.42; and $1.32 and $1.31, respectively, for
the years ended December 31, 2002, 2001 and 2000.

The fair value of each option grant was estimated
at the date of grant using the Black-Scholes option-pricing
model with the following assumptions used for grants in 2002,
2001 and 2000, respectively: dividend yields of 5.9%, 6.4% and
6.5%; expected volatility of 13.3%, 14.9% and 13.3%; risk-free
interest rates of 4.0%, 5.2% and 6.1%; and expected lives of
10 years for each year.

F-21



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

Following is a summary of the option activity for
the years ended December 31 (options in thousands):

|                                              |           |              |           |                |   |             |       |       |  |  |       |  | 
|--------------------------------------------- | --------- | ------------ | --------- | -------------- | - | ----------- | ----- | ----- |  |  | ----- |  | 
|                                              |           |              |           | Weighted       |   | Options    
|                                              |           | Shares Under |           | Average        |   | Exercisable
|                                              |           | Option       |           | Exercise Price |   | At Year End
|                                              |           |              |           |                |   |            
|Outstanding as of December 31, 1999           |           |              | 4,510     |                |   | $           | 21.44 |       |  |  | 1,832 | 
|                                              |           |              |           |                |   |             |       |       |  |  |       | 
|                                              | Granted   |              |           | 1,565          |   |             |       | 20.86 |  |  |       |  | 
|                                              | Exercised |              |           | (103           | ) |             |       | 21.11 |  |  |       |  | 
|                                              | Forfeited |              |           | (205           | ) |             |       | 21.21 |  |  |       |  | 
|                                              |           |              |           |                |   |             |       |       |  |  |       | 
|Outstanding as of December 31, 2000           |           |              | 5,767     |                |   |             | 20.83 |       |  |  | 3,326 | 
|                                              |           |              |           |                |   |             |       |       |  |  |       | 
|                                              | Granted   |              |           | 1,924          |   |             |       | 24.61 |  |  |       |  | 
|                                              | Exercised |              |           | (202           | ) |             |       | 21.15 |  |  |       |  | 
|                                              | Forfeited |              |           | (52            | ) |             |       | 22.45 |  |  |       |  | 
|                                              |           |              |           |                |   |             |       |       |  |  |       | 
|Outstanding as of December 31, 2001           |           |              | 7,437     |                |   |             | 22.16 |       |  |  | 4,623 | 
|                                              |           |              |           |                |   |             |       |       |  |  |       | 
|                                              | Granted   |              |           | 1,990          |   |             |       | 26.48 |  |  |       |  | 
|                                              | Exercised |              |           | (566           | ) |             |       | 21.41 |  |  |       |  | 
|                                              | Forfeited |              |           | (96            | ) |             |       | 24.48 |  |  |       |  | 
|                                              |           |              |           |                |   |             |       |       |  |  |       | 
|Outstanding as of December 31, 2002           |           |              | 8,765     |                |   | $           | 23.16 |       |  |  | 5,526 | 
|                                              |           |              |           |                |   |             |       |       |  |  |       | 
|Remaining average contractual life            |           |              | 7.1 years |                |   |             |       |       |  |  |       | 
|                                              |           |              |           |                |   |             |       |       |  |  |       | 
|Fair value of options granted during the year |           |              | $1.56     |                |   |             |       |       |  |  |       | 
|                                              |           |              |           |                |   |             |       |       |  |  |       | 

In 2002, 2001 and 2000, the Company issued
204,072, 238,790 and 162,229 restricted shares, respectively, to
certain officers of the Company as part of the performance pay
program and in connection with employment with the Company. As
of December 31, 2002, 36,200 shares of restricted stock
have been forfeited. The 717,611 outstanding restricted shares
are subject to repurchase rights, which generally lapse over a
period from three to five years.

401(k) Plan.In
November 1997, the Company established a Section 401(k)
Savings/ Retirement Plan (401(k) Plan), which is a
continuation of the 401(k) Plan of the predecessor, to cover
eligible employees of the Operating Partnership and any
designated affiliates. During 2002 and 2001, the 401(k) Plan
permitted eligible employees of the Operating Partnership to
defer up to 20% of their annual compensation, subject to certain
limitations imposed by the Code. The employees elective
deferrals are immediately vested and non-forfeitable upon
contribution to the 401(k) Plan. During 2002 and 2001, the
Operating Partnership matched the employee contributions to the
401(k) Plan in an amount equal to 50% of the first 5.5% of
annual compensation deferred by each employee. The Operating
Partnership may also make discretionary contributions to the
401(k) Plan. In 2002 and 2001, the Operating Partnership paid
$0.4 million and $0.3 million, respectively, for its
401(k) match.

Deferred Compensation Plan.Effective September 1, 1999, the
Company established a non-qualified deferred compensation plan
for officers of the Company and certain of its affiliates. As of
January 1, 2002, the plan enables participants to defer
income up to 100% of annual base pay and up to 100% of annual
bonuses on a pre-tax basis. The Operating Partnership may make
discretionary matching contributions to participant accounts at
any time. The Operating Partnership made no such discretionary
matching contributions in 2002, 2001 or 2000. The
participants elective deferrals and any matching
contributions are immediately 100% vested. As of
December 31, 2002 and 2001, the total amount of
compensation deferred was $2.9 million and
$1.7 million, respectively.

F-22



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

14.     Income Per
Unit

The Operating Partnerships only dilutive
securities outstanding for the years ended December 31,
2002, 2001 and 2000 were stock options and restricted stock
granted under the Companys Stock Incentive Plans. The
effect on income per unit was to increase weighted average units
outstanding. Such dilution was computed using the treasury stock
method.

|                              |                                    |                                       |  |            |            |      |  |            |            |  |  |            |            | 
|----------------------------- | ---------------------------------- | ------------------------------------- |  | ---------- | ---------- | ---- |  | ---------- | ---------- |  |  | ---------- | ---------- | 
|                              |                                    | 2002                                  |  | 2001       |            | 2000
|                              |                                    |                                       |  |            |            |     
|WEIGHTED AVERAGE COMMON UNITS |                                    |                                       |  |            |            |      |  |            |            |  |  |           
|                              | Basic                              |                                       |  | 88,204,208 |            |      |  | 89,286,379 |            |  |  | 89,566,375 |           
|                              | Stock options and restricted stock |                                       |  | 1,485,102  |            |      |  | 1,039,422  |            |  |  | 458,136    |           
|                              |                                    |                                       |  |            |            |      |  |            |            |  |  |           
|                              |                                    | Diluted weighted average common units |  |            | 89,689,310 |      |  |            | 90,325,801 |  |  |            | 90,024,511 | 
|                              |                                    |                                       |  |            |            |      |  |            |            |  |  |           

15.     Commitments
and Contingencies

Commitments

Lease Commitments.The Operating Partnership has entered
into operating ground leases on certain land parcels, primarily
on-tarmac facilities, and office space with remaining lease
terms from one to 38 years. Future minimum rental payments
required under non-cancelable operating leases in effect as of
December 31, 2002, were as follows (dollars in thousands):

|           |                         |   |         |         | 
|---------- | ----------------------- | - | ------- | ------- | 
|2003       |                         | $ | 19,921  |        
|2004       |                         |   | 19,753  |        
|2005       |                         |   | 19,819  |        
|2006       |                         |   | 20,553  |        
|2007       |                         |   | 20,772  |        
|Thereafter |                         |   | 283,574 |        
|           |                         |   |         |        
|           | Total lease commitments |   | $       | 384,392 | 
|           |                         |   |         |        

These operating lease payments are being
amortized ratably over the terms of the related leases.

Contingencies

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

Environmental Matters.The Operating Partnership monitors its
properties for the presence of hazardous or toxic substances.
The Operating Partnership is not aware of any environmental
liability with respect to the properties that would have a
material adverse effect on the Operating Partnerships
business, assets or results of operations. However, there can be
no assurance that such a material environmental liability does
not exist. The existence of any such material environmental
liability would have an adverse effect on the Operating
Partnerships results of operations and cash flow.

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

F-23



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

properties are located in areas that are subject
to earthquake activity; therefore, the Operating Partnership has
obtained limited earthquake insurance on those properties. There
are, however, certain types of extraordinary losses, such as
those due to acts of war that may be either uninsurable or not
economically insurable. Although we have obtained coverage for
certain acts of terrorism, with policy specifications and
insured limits that we believe are commercially reasonable, it
is not certain that we will be able to collect under such
policies. Should an uninsured loss occur, the Operating
Partnership could lose its investment in, and anticipated
profits and cash flows from, a property.

Captive Insurance Company.The Operating Partnership has
responded to recent trends towards increasing costs and
decreasing coverage availability in the insurance markets by
obtaining higher-deductible property insurance from third party
insurers and by forming a wholly-owned captive insurance
company, Arcata National Insurance Ltd. (Arcata) in
December 2001. Arcata provides insurance coverage for all or a
portion of losses below the increased deductible under the third
party policies. The Operating Partnership capitalized Arcata in
accordance with regulatory requirements. Arcata established
annual premiums based on projections derived from the past loss
experience at the Operating Partnerships properties.
Annually, the Operating Partnership engages an independent third
party to perform an actuarial estimate of future projected
claims and projected expenses necessary to fund associated risk
management programs. Premiums paid to Arcata may be adjusted
based on this estimate. Premiums paid to Arcata have a
retrospective component, so that if expenses, including losses,
are less than premiums collected, the excess will be returned to
the property owners (and, in turn, as appropriate, to the
customers) and conversely, subject to certain limitations, if
expenses, including losses, are greater than premiums collected,
an additional premium will be charged. As with all recoverable
expenses, differences between estimated and actual insurance
premiums will be recognized in the subsequent year. Through this
structure, the Operating Partnership believes that it will be
able to obtain insurance for its portfolio with more
comprehensive coverage at a projected overall lower cost than
would otherwise be available in the market.

F-24



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

16.     Quarterly
Financial Data (Unaudited)

Selected quarterly financial results for 2002 and
2001 were as follows (dollars in thousands):

|                                                                            |            |                                            |         |            |        |              |         |             |        |      |         |            |        |   |         |            |        |   |         |            |         | 
|--------------------------------------------------------------------------- | ---------- | ------------------------------------------ | ------- | ---------- | ------ | ------------ | ------- | ----------- | ------ | ---- | ------- | ---------- | ------ | - | ------- | ---------- | ------ | - | ------- | ---------- | ------- | 
|                                                                            |            |                                            |         |           
|                                                                            |            | Quarter (unaudited)(1)                     |         |           
|                                                                            |            |                                            |         |           
|2002                                                                        |            | March 31                                   |         | June 30    |        | September 30 |         | December 31 |        | Year
|                                                                            |            |                                            |         |            |        |              |         |             |        |     
|Total revenues and other income                                             |            | $                                          | 149,807 |            |        | $            | 148,933 |             |        | $    | 155,346 |            |        | $ | 161,757 |            |        | $ | 615,843 |           
|Income before minority interests and gains                                  |            |                                            | 41,212  |            |        |              | 36,883  |             |        |      | 35,545  |            |        |   | 34,865  |            |        |   | 148,505 |           
|Total minority interests share of income                                   |            |                                            | (11,499 | )          |        |              | (10,954 | )           |        |      | (12,880 | )          |        |   | (9,503  | )          |        |   | (44,836 | )         
|Total gains on developments and dispositions, net
    of minority interests |            |                                            | (288    | )          |        |              | 2,768   |             |        |      | 618     |            |        |   | 5,723   |            |        |   | 8,821   |           
|Income from continuing operations                                           |            |                                            | 29,425  |            |        |              | 28,697  |             |        |      | 23,283  |            |        |   | 31,085  |            |        |   | 112,490 |           
|Discontinued operations                                                     |            |                                            | 4,998   |            |        |              | 4,566   |             |        |      | 8,177   |            |        |   | 12,125  |            |        |   | 29,866  |           
|                                                                            |            |                                            |         |            |        |              |         |             |        |      |         |            |        |   |         |            |        |   |         |           
|                                                                            | Net income |                                            |         | 34,423     |        |              |         | 33,263      |        |      |         | 31,460     |        |   |         | 43,210     |        |   |         | 142,356    |        
|Series A preferred unit distributions                                       |            |                                            | (2,125  | )          |        |              | (2,125  | )           |        |      | (2,123  | )          |        |   | (2,123  | )          |        |   | (8,496  | )         
|Series B preferred unit distributions                                       |            |                                            | (1,402  | )          |        |              | (1,401  | )           |        |      | (1,402  | )          |        |   | (1,401  | )          |        |   | (5,606  | )         
|Series J preferred unit distributions                                       |            |                                            | (918    | )          |        |              | (795    | )           |        |      | (795    | )          |        |   | (795    | )          |        |   | (3,303  | )         
|Series K preferred unit distributions                                       |            |                                            |        |            |        |              | (777    | )           |        |      | (795    | )          |        |   | (795    | )          |        |   | (2,367  | )         
|Preferred unit redemption discount                                          |            |                                            |        |            |        |              |        |             |        |      | 412     |            |        |   |        |            |        |   | 412     |           
|                                                                            |            |                                            |         |            |        |              |         |             |        |      |         |            |        |   |         |            |        |   |         |           
|                                                                            |            | Net income available to common unitholders |         | $          | 29,978 |              |         | $           | 28,165 |      |         | $          | 26,757 |   |         | $          | 38,096 |   |         | $          | 122,996 | 
|                                                                            |            |                                            |         |            |        |              |         |             |        |      |         |            |        |   |         |            |        |   |         |           
|INCOME FROM CONTINUING OPERATIONS PER COMMON
    UNIT(2)                    |            |                                            |         |            |        |              |         |             |        |      |         |            |        |   |         |            |        |   |         |           
|                                                                            | Basic      |                                            | $       | 0.28       |        |              | $       | 0.26        |        |      | $       | 0.20       |        |   | $       | 0.29       |        |   | $       | 1.03       |        
|                                                                            |            |                                            |         |            |        |              |         |             |        |      |         |            |        |   |         |            |        |   |         |           
|                                                                            | Diluted    |                                            | $       | 0.27       |        |              | $       | 0.26        |        |      | $       | 0.20       |        |   | $       | 0.28       |        |   | $       | 1.02       |        
|                                                                            |            |                                            |         |            |        |              |         |             |        |      |         |            |        |   |         |            |        |   |         |           
|NET INCOME PER COMMON UNIT(2)                                               |            |                                            |         |            |        |              |         |             |        |      |         |            |        |   |         |            |        |   |         |           
|                                                                            | Basic      |                                            | $       | 0.34       |        |              | $       | 0.32        |        |      | $       | 0.30       |        |   | $       | 0.44       |        |   | $       | 1.39       |        
|                                                                            |            |                                            |         |            |        |              |         |             |        |      |         |            |        |   |         |            |        |   |         |           
|                                                                            | Diluted    |                                            | $       | 0.33       |        |              | $       | 0.31        |        |      | $       | 0.30       |        |   | $       | 0.43       |        |   | $       | 1.37       |        
|                                                                            |            |                                            |         |            |        |              |         |             |        |      |         |            |        |   |         |            |        |   |         |           
|WEIGHTED AVERAGE COMMON UNITS OUTSTANDING                                   |            |                                            |         |            |        |              |         |             |        |      |         |            |        |   |         |            |        |   |         |           
|                                                                            | Basic      |                                            |         | 88,262,128 |        |              |         | 88,643,124  |        |      |         | 88,575,091 |        |   |         | 87,136,382 |        |   |         | 88,204,208 |        
|                                                                            |            |                                            |         |            |        |              |         |             |        |      |         |            |        |   |         |            |        |   |         |           
|                                                                            | Diluted    |                                            |         | 89,724,953 |        |              |         | 90,462,332  |        |      |         | 90,379,023 |        |   |         | 88,495,159 |        |   |         | 89,689,310 |        
|                                                                            |            |                                            |         |            |        |              |         |             |        |      |         |            |        |   |         |            |        |   |         |           

F-25



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

|                                                                              |            |                         |                                            |            |      |              |         |             |      |        |         |            |      |        |         |            |      |        |         |            |      |         | 
|----------------------------------------------------------------------------- | ---------- | ----------------------- | ------------------------------------------ | ---------- | ---- | ------------ | ------- | ----------- | ---- | ------ | ------- | ---------- | ---- | ------ | ------- | ---------- | ---- | ------ | ------- | ---------- | ---- | ------- | 
|                                                                              |            |                         |                                            |           
|                                                                              |            | Quarter (unaudited) (1) |                                            |           
|                                                                              |            |                         |                                            |           
|2001                                                                          |            | March 31                |                                            | June 30    |      | September 30 |         | December 31 |      | Year  
|                                                                              |            |                         |                                            |            |      |              |         |             |      |       
|Total revenues and other income                                               |            | $                       | 137,343                                    |            |      | $            | 136,084 |             |      | $      | 144,891 |            |      | $      | 144,459 |            |      | $      | 562,777 |           
|Income before minority interests and gains                                    |            |                         | 38,303                                     |            |      |              | 24,426  |             |      |        | 44,307  |            |      |        | 41,706  |            |      |        | 148,742 |           
|Total minority interests share of income                                     |            |                         | (9,815                                     | )          |      |              | (12,983 | )           |      |        | (14,695 | )          |      |        | (11,840 | )          |      |        | (49,333 | )         
|Total gains from developments and Dispositions,
    net of minority interests |            |                         | 16,767                                     |            |      |              | 17,792  |             |      |        | 114     |            |      |        | 1,755   |            |      |        | 36,428  |           
|Income from continuing operations                                             |            |                         | 45,255                                     |            |      |              | 29,235  |             |      |        | 29,726  |            |      |        | 31,621  |            |      |        | 135,837 |           
|Discontinued operations                                                       |            |                         | 2,362                                      |            |      |              | 4,683   |             |      |        | 5,131   |            |      |        | 4,124   |            |      |        | 16,300  |           
|                                                                              |            |                         |                                            |            |      |              |         |             |      |        |         |            |      |        |         |            |      |        |         |           
|                                                                              | Net income |                         |                                            | 47,617     |      |              |         | 33,918      |      |        |         | 34,857     |      |        |         | 35,745     |      |        |         | 152,137    |     
|Series A preferred unit distributions                                         |            |                         | (2,125                                     | )          |      |              | (2,125  | )           |      |        | (2,125  | )          |      |        | (2,125  | )          |      |        | (8,500  | )         
|Series B preferred unit distributions                                         |            |                         | (1,402                                     | )          |      |              | (1,402  | )           |      |        | (1,402  | )          |      |        | (1,402  | )          |      |        | (5,608  | )         
|Series J preferred unit distributions                                         |            |                         |                                           |            |      |              |        |             |      |        | (78     | )          |      |        | (795    | )          |      |        | (873    | )         
|Preferred unit redemption premium                                             |            |                         |                                           |            |      |              |        |             |      |        |        |            |      |        | (4,400  | )          |      |        | (4,400  | )         
|                                                                              |            |                         |                                            |            |      |              |         |             |      |        |         |            |      |        |         |            |      |        |         |           
|                                                                              |            |                         | Net income available to common unitholders |            | $    | 44,090       |         |             | $    | 30,391 |         |            | $    | 31,252 |         |            | $    | 27,023 |         |            | $    | 132,756 | 
|                                                                              |            |                         |                                            |            |      |              |         |             |      |        |         |            |      |        |         |            |      |        |         |           
|INCOME FROM CONTINUING OPERATIONS PER COMMON
    UNIT(2)                      |            |                         |                                            |            |      |              |         |             |      |        |         |            |      |        |         |            |      |        |         |           
|                                                                              |            | Basic                   |                                            | $          | 0.48 |              |         | $           | 0.27 |        |         | $          | 0.29 |        |         | $          | 0.26 |        |         | $          | 1.29 |        
|                                                                              |            |                         |                                            |            |      |              |         |             |      |        |         |            |      |        |         |            |      |        |         |           
|                                                                              |            | Diluted                 |                                            | $          | 0.47 |              |         | $           | 0.27 |        |         | $          | 0.28 |        |         | $          | 0.25 |        |         | $          | 1.28 |        
|                                                                              |            |                         |                                            |            |      |              |         |             |      |        |         |            |      |        |         |            |      |        |         |           
|NET INCOME PER COMMON UNIT(2)                                                 |            |                         |                                            |            |      |              |         |             |      |        |         |            |      |        |         |            |      |        |         |           
|                                                                              |            | Basic                   |                                            | $          | 0.50 |              |         | $           | 0.33 |        |         | $          | 0.35 |        |         | $          | 0.31 |        |         | $          | 1.49 |        
|                                                                              |            |                         |                                            |            |      |              |         |             |      |        |         |            |      |        |         |            |      |        |         |           
|                                                                              |            | Diluted                 |                                            | $          | 0.50 |              |         | $           | 0.33 |        |         | $          | 0.34 |        |         | $          | 0.30 |        |         | $          | 1.47 |        
|                                                                              |            |                         |                                            |            |      |              |         |             |      |        |         |            |      |        |         |            |      |        |         |           
|WEIGHTED AVERAGE COMMON UNITS OUTSTANDING                                     |            |                         |                                            |            |      |              |         |             |      |        |         |            |      |        |         |            |      |        |         |           
|                                                                              | Basic      |                         |                                            | 89,669,950 |      |              |         | 89,691,164  |      |        |         | 89,550,154 |      |        |         | 88,243,249 |      |        |         | 89,286,379 |     
|                                                                              |            |                         |                                            |            |      |              |         |             |      |        |         |            |      |        |         |            |      |        |         |           
|                                                                              | Diluted    |                         |                                            | 90,494,874 |      |              |         | 90,608,347  |      |        |         | 90,799,887 |      |        |         | 89,317,086 |      |        |         | 90,325,801 |     
|                                                                              |            |                         |                                            |            |      |              |         |             |      |        |         |            |      |        |         |            |      |        |         |           



---



|    |                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Certain reclassifications have been made to the
    quarterly data to conform with the annual presentation with no
    net effect to net income or per unit amounts.
|   
|(2) | The sum of quarterly financial data may vary from
    the annual data due to rounding.                                                                              

17.     Segment
Information

The Operating Partnership operates industrial and
retail properties in North America and France and manages its
business both by property type and by market. Industrial
properties represent more than 98% of the Operating
Partnerships portfolio by rentable square feet and consist
primarily of warehouse distribution facilities suitable for
single or multiple customers and are typically comprised of
multiple buildings that are leased to customers engaged in
various types of businesses. As of December 31, 2002, the
Operating Partnership operated industrial properties in eight
hub and gateway markets in addition to 20 other markets
throughout North America and France. The Operating
Partnerships geographic markets for industrial properties
are managed separately because each market requires different
operating, pricing and leasing

F-26



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

strategies. As of December 31, 2002, the
Operating Partnership operated retail properties in Southeast
Florida, Atlanta, Chicago, the San Francisco Bay Area, Boston
and Baltimore. The Operating Partnership does not separately
manage its retail operations by market. Retail properties are
generally leased to one or more anchor customers, such as
grocery and drug stores and various retail businesses. The
accounting policies of the segments are the same as those
described in the summary of significant accounting policies. The
Operating Partnership evaluates performance based upon property
net operating income of the combined properties in each segment.

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

|                                    |                               |                               |         |                 |         |      |         |         |         |      |         |        |         |  |         |         |         |  |         |        |         |  |         |        |         | 
|----------------------------------- | ----------------------------- | ----------------------------- | ------- | --------------- | ------- | ---- | ------- | ------- | ------- | ---- | ------- | ------ | ------- |  | ------- | ------- | ------- |  | ------- | ------ | ------- |  | ------- | ------ | ------- | 
|                                    |                               |                               |         |                
|                                    |                               | Rental Revenues               |         | Property NOI(1)
|                                    |                               |                               |         |                
|Segments                            |                               | 2002                          |         | 2001            |         | 2000 |         | 2002    |         | 2001 |         | 2000  
|                                    |                               |                               |         |                 |         |      |         |         |         |      |         |       
|Industrial hub and gateway markets: |                               |                               |         |                 |         |      |         |         |         |      |         |        |         |  |         |         |         |  |         |        |         |  |         |       
|                                    | Atlanta                       |                               | $       | 30,444          |         |      | $       | 28,264  |         |      | $       | 23,458 |         |  | $       | 23,970  |         |  | $       | 22,722 |         |  | $       | 19,368 |        
|                                    | Chicago                       |                               |         | 45,109          |         |      |         | 40,990  |         |      |         | 38,228 |         |  |         | 31,441  |         |  |         | 28,197 |         |  |         | 26,447 |        
|                                    | Dallas/ Fort Worth            |                               |         | 26,693          |         |      |         | 25,180  |         |      |         | 24,081 |         |  |         | 18,911  |         |  |         | 17,610 |         |  |         | 16,984 |        
|                                    | Los Angeles                   |                               |         | 77,751          |         |      |         | 61,628  |         |      |         | 37,187 |         |  |         | 61,301  |         |  |         | 49,103 |         |  |         | 30,366 |        
|                                    | Northern New Jersey/ New York |                               |         | 47,393          |         |      |         | 44,897  |         |      |         | 34,618 |         |  |         | 31,817  |         |  |         | 31,622 |         |  |         | 26,444 |        
|                                    | San Francisco Bay Area        |                               |         | 129,858         |         |      |         | 106,202 |         |      |         | 79,155 |         |  |         | 109,000 |         |  |         | 88,898 |         |  |         | 64,972 |        
|                                    | Miami                         |                               |         | 35,069          |         |      |         | 33,176  |         |      |         | 22,853 |         |  |         | 25,421  |         |  |         | 24,366 |         |  |         | 16,775 |        
|                                    | Seattle                       |                               |         | 25,656          |         |      |         | 23,215  |         |      |         | 22,081 |         |  |         | 20,394  |         |  |         | 18,620 |         |  |         | 18,048 |        
|                                    |                               |                               |         |                 |         |      |         |         |         |      |         |        |         |  |         |         |         |  |         |        |         |  |         |       
|                                    |                               | Total hub and gateway markets |         |                 | 417,973 |      |         |         | 363,552 |      |         |        | 281,661 |  |         |         | 322,255 |  |         |        | 281,138 |  |         |        | 219,404 | 
|Total other industrial markets      |                               |                               | 182,971 |                 |         |      | 170,100 |         |         |      | 145,516 |        |         |  | 128,730 |         |         |  | 122,962 |        |         |  | 107,568 |       
|Straight-line rents                 |                               |                               | 11,013  |                 |         |      | 10,093  |         |         |      | 10,203  |        |         |  | 11,013  |         |         |  | 10,093  |        |         |  | 10,203  |       
|Total retail markets                |                               |                               | 16,896  |                 |         |      | 24,321  |         |         |      | 26,784  |        |         |  | 10,597  |         |         |  | 15,677  |        |         |  | 19,259  |       
|Discontinued operations             |                               |                               | (40,331 | )               |         |      | (38,025 | )       |         |      | (33,042 | )      |         |  | (29,943 | )       |         |  | (27,582 | )      |         |  | (23,727 | )     
|                                    |                               |                               |         |                 |         |      |         |         |         |      |         |        |         |  |         |         |         |  |         |        |         |  |         |       
|                                    |                               | Total properties              |         | $               | 588,522 |      |         | $       | 530,041 |      |         | $      | 431,122 |  |         | $       | 442,652 |  |         | $      | 402,288 |  |         | $      | 332,707 | 
|                                    |                               |                               |         |                 |         |      |         |         |         |      |         |        |         |  |         |         |         |  |         |        |         |  |         |       



---



|    |                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Property net operating income (NOI) is
    defined as rental revenue, including reimbursements, less
    property operating expenses, which excludes depreciation,
    amortization, general and administrative expenses and interest
    expense.

F-27



---



##### 



AMB PROPERTY, L.P.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)

|                                    |                               |                                          |           |         |           |  |           |         |           | 
|----------------------------------- | ----------------------------- | ---------------------------------------- | --------- | ------- | --------- |  | --------- | ------- | --------- | 
|                                    |                               |                                         
|                                    |                               | Total Gross Investment(1)               
|                                    |                               | As of December 31,                      
|                                    |                               |                                         
|                                    |                               | 2002                                     |           | 2001   
|                                    |                               |                                          |           |        
|Industrial hub and gateway markets: |                               |                                          |           |         |           |  |           |        
|                                    | Atlanta                       |                                          | $         | 289,398 |           |  | $         | 271,663 |          
|                                    | Chicago                       |                                          |           | 370,139 |           |  |           | 345,446 |          
|                                    | Dallas/ Fort Worth            |                                          |           | 140,616 |           |  |           | 179,157 |          
|                                    | Los Angeles                   |                                          |           | 760,640 |           |  |           | 694,602 |          
|                                    | Northern New Jersey/ New York |                                          |           | 486,644 |           |  |           | 406,077 |          
|                                    | San Francisco Bay Area        |                                          |           | 828,975 |           |  |           | 806,528 |          
|                                    | Miami                         |                                          |           | 305,399 |           |  |           | 288,046 |          
|                                    | Seattle                       |                                          |           | 249,500 |           |  |           | 193,154 |          
|                                    |                               |                                          |           |         |           |  |           |        
|                                    |                               | Total industrial hub and gateway markets |           |         | 3,431,311 |  |           |         | 3,184,673 | 
|Total other industrial markets      |                               |                                          | 1,489,431 |         |           |  | 1,321,959 |        
|Properties held for divestiture     |                               |                                          | (115,175  | )       |           |  | (164,831  | )      
|Total retail markets                |                               |                                          | 120,415   |         |           |  | 188,910   |        
|                                    |                               |                                          |           |         |           |  |           |        
|                                    |                               | Total properties                         |           | $       | 4,925,982 |  |           | $       | 4,530,711 | 
|                                    |                               |                                          |           |         |           |  |           |        



---



|    |                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes construction in progress of
    $132.5 million and $181.2 million as of
    December 31, 2002 and 2001, respectively.

F-28



---



##### 



REPORT OF INDEPENDENT ACCOUNTANTS

ON FINANCIAL STATEMENT SCHEDULES


To the General Partner

of AMB Property, L.P.:


Our audits of the consolidated financial
statements referred to in our report dated January 14,
2003, appearing on page F-1 in this Annual Report on
Form 10-K of AMB Property, L.P., also included an audit of
the financial statement schedules listed in Item 14(a)(2)
of this Form 10-K. In our opinion, these financial
statement schedules present fairly, in all material respects,
the information set forth therein when read in conjunction with
the related consolidated financial statements.



| |                           
| | --------------------------
| | PRICEWATERHOUSECOOPERS LLP

San Francisco, California

January 14, 2003


S-1



---



##### 



AMB PROPERTY, L.P.

SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED
DEPRECIATION

As of December 31, 2002


|                                     |  |                                                    |    |          |  |      |    |              |  |                         |     |              |  |   |        |  |  |   |        |  |  |   |        | 
|------------------------------------ |  | -------------------------------------------------- | -- | -------- |  | ---- | -- | ------------ |  | ----------------------- | --- | ------------ |  | - | ------ |  |  | - | ------ |  |  | - | ------ | 
|                                     |  |                                                    |    |          |  |      |    |              |  |                        
|                                     |  |                                                    |    |          |  |      |    |              |  | Initial Cost to Company
|                                     |  |                                                    |    |          |  |      |    |              |  |                        
|                                     |  | No. of                                             |    |          |  |      |    |              |  |                         |     | Building &  
|Property                             |  | Bldgs./ Ctrs.                                      |    | Location |  | Type |    | Encumbrances |  | Land                    |     | Improvements
|                                     |  |                                                    |    |          |  |      |    |              |  |                         |     |             
|                                     |  |                                                   
|                                     |  | (In thousands, except number of buildings/centers)
|Acer Distribution Center             |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  | $ |       |  |  | $ | 3,146  |  |  | $ | 9,479  | 
|Activity Distribution Center         |  |                                                    | 4  |          |  |      | CA |              |  |                         | IND |              |  |   |       |  |  |   | 3,736  |  |  |   | 11,248 | 
|Addison Business Center              |  |                                                    | 1  |          |  |      | IL |              |  |                         | IND |              |  |   |       |  |  |   | 1,060  |  |  |   | 3,228  | 
|Airport South Business Park          |  |                                                    | 7  |          |  |      | GA |              |  |                         | IND |              |  |   | 17,362 |  |  |   | 10,019 |  |  |   | 16,528 | 
|Albrae Business Center               |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |   | 7,780  |  |  |   | 6,299  |  |  |   | 6,227  | 
|Alsip Industrial                     |  |                                                    | 1  |          |  |      | IL |              |  |                         | IND |              |  |   |       |  |  |   | 1,200  |  |  |   | 3,744  | 
|Alvarado Business Center             |  |                                                    | 5  |          |  |      | CA |              |  |                         | IND |              |  |   | 24,195 |  |  |   | 4,915  |  |  |   | 26,671 | 
|AMB Meadowlands Park                 |  |                                                    | 9  |          |  |      | NJ |              |  |                         | IND |              |  |   |       |  |  |   | 5,838  |  |  |   | 17,923 | 
|AMB OHare Rosemont                  |  |                                                    | 14 |          |  |      | IL |              |  |                         | IND |              |  |   | 8,000  |  |  |   | 3,131  |  |  |   | 8,995  | 
|AMB Port OHare                      |  |                                                    | 2  |          |  |      | IL |              |  |                         | IND |              |  |   | 6,150  |  |  |   | 4,913  |  |  |   | 5,761  | 
|Amwiler-Gwinnett Industial Portfolio |  |                                                    | 9  |          |  |      | GA |              |  |                         | IND |              |  |   | 7,247  |  |  |   | 6,641  |  |  |   | 19,964 | 
|Anaheim Industrial                   |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |   |       |  |  |   | 1,457  |  |  |   | 4,341  | 
|Artesia Industrial Portfolio         |  |                                                    | 25 |          |  |      | CA |              |  |                         | IND |              |  |   | 50,001 |  |  |   | 22,758 |  |  |   | 68,254 | 
|Around Lenox                         |  |                                                    | 1  |          |  |      | GA |              |  |                         | RET |              |  |   | 9,424  |  |  |   | 3,462  |  |  |   | 13,848 | 
|Arthur Distribution Center           |  |                                                    | 1  |          |  |      | IL |              |  |                         | IND |              |  |   | 4,950  |  |  |   | 2,726  |  |  |   | 5,216  | 
|Atlanta South Business Park          |  |                                                    | 9  |          |  |      | GA |              |  |                         | IND |              |  |   |       |  |  |   | 8,047  |  |  |   | 24,180 | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                     |  |                                                    |       |                                  |  |              |        |          |  |              |        |               |  |         |        |  |  |   |        |  |  |  |      |  |  |  |      | 
|------------------------------------ |  | -------------------------------------------------- | ----- | -------------------------------- |  | ------------ | ------ | -------- |  | ------------ | ------ | ------------- |  | ------- | ------ |  |  | - | ------ |  |  |  | ---- |  |  |  | ---- | 
|                                     |  |                                                    |       |                                  |  |              |        |          |  |             
|                                     |  |                                                    |       | Gross Amount Carried at 12/31/02 |  |              |        |          |  |             
|                                     |  | Costs                                              |       |                                  |  |              |        |          |  |             
|                                     |  | Capitalized                                        |       |                                  |  | Total        |        |          |  | Year of      |        | Depreciable  
|                                     |  | Subsequent to                                      |       |                                  |  | Building &   |        | Costs(1) |  | Accumulated  |        | Construction/ |  | Life   
|Property                             |  | Acquisition                                        |       | Land                             |  | Improvements |        | (2)      |  | Depreciation |        | Acquisition   |  | (Years)
|                                     |  |                                                    |       |                                  |  |              |        |          |  |              |        |               |  |        
|                                     |  |                                                   
|                                     |  | (In thousands, except number of buildings/centers)
|Acer Distribution Center             |  | $                                                  | 1,397 |                                  |  | $            | 3,146  |          |  | $            | 10,876 |               |  | $       | 14,023 |  |  | $ | 2,037  |  |  |  | 1997 |  |  |  | 5-40 | 
|Activity Distribution Center         |  |                                                    | 1,460 |                                  |  |              | 3,736  |          |  |              | 12,708 |               |  |         | 16,444 |  |  |   | 3,976  |  |  |  | 1997 |  |  |  | 5-40 | 
|Addison Business Center              |  |                                                    | 79    |                                  |  |              | 1,060  |          |  |              | 3,307  |               |  |         | 4,366  |  |  |   | 187    |  |  |  | 2000 |  |  |  | 5-40 | 
|Airport South Business Park          |  |                                                    | 5,892 |                                  |  |              | 10,255 |          |  |              | 22,183 |               |  |         | 32,439 |  |  |   | 800    |  |  |  | 2001 |  |  |  | 5-40 | 
|Albrae Business Center               |  |                                                    | 89    |                                  |  |              | 6,299  |          |  |              | 6,317  |               |  |         | 12,615 |  |  |   | 227    |  |  |  | 2001 |  |  |  | 5-40 | 
|Alsip Industrial                     |  |                                                    | 259   |                                  |  |              | 1,200  |          |  |              | 4,003  |               |  |         | 5,203  |  |  |   | 501    |  |  |  | 1998 |  |  |  | 5-40 | 
|Alvarado Business Center             |  |                                                    | 728   |                                  |  |              | 4,915  |          |  |              | 27,399 |               |  |         | 32,314 |  |  |   | 1,266  |  |  |  | 1997 |  |  |  | 5-40 | 
|AMB Meadowlands Park                 |  |                                                    | 1,641 |                                  |  |              | 5,838  |          |  |              | 19,564 |               |  |         | 25,402 |  |  |   | 1,425  |  |  |  | 2000 |  |  |  | 5-40 | 
|AMB OHare Rosemont                  |  |                                                    | 979   |                                  |  |              | 3,131  |          |  |              | 9,975  |               |  |         | 13,106 |  |  |   | 622    |  |  |  | 1999 |  |  |  | 5-40 | 
|AMB Port OHare                      |  |                                                    | 252   |                                  |  |              | 4,913  |          |  |              | 6,013  |               |  |         | 10,926 |  |  |   | 151    |  |  |  | 2001 |  |  |  | 5-40 | 
|Amwiler-Gwinnett Industial Portfolio |  |                                                    | 2,541 |                                  |  |              | 6,641  |          |  |              | 22,504 |               |  |         | 29,146 |  |  |   | 3,813  |  |  |  | 1997 |  |  |  | 5-40 | 
|Anaheim Industrial                   |  |                                                    | 334   |                                  |  |              | 1,457  |          |  |              | 4,675  |               |  |         | 6,131  |  |  |   | 771    |  |  |  | 1997 |  |  |  | 5-40 | 
|Artesia Industrial Portfolio         |  |                                                    | 7,008 |                                  |  |              | 22,758 |          |  |              | 75,262 |               |  |         | 98,020 |  |  |   | 11,751 |  |  |  | 1997 |  |  |  | 5-40 | 
|Around Lenox                         |  |                                                    | 4,098 |                                  |  |              | 3,462  |          |  |              | 17,946 |               |  |         | 21,408 |  |  |   | 2,164  |  |  |  | 1998 |  |  |  | 5-40 | 
|Arthur Distribution Center           |  |                                                    | 171   |                                  |  |              | 2,726  |          |  |              | 5,387  |               |  |         | 8,113  |  |  |   | 258    |  |  |  | 2001 |  |  |  | 5-40 | 
|Atlanta South Business Park          |  |                                                    | 1,692 |                                  |  |              | 8,047  |          |  |              | 25,872 |               |  |         | 33,919 |  |  |   | 3,997  |  |  |  | 1997 |  |  |  | 5-40 | 

S-2



---



##### 



AMB PROPERTY, L.P.


SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED
DEPRECIATION  (Continued)

|                                                             |  |                                                    |    |          |  |      |    |              |  |                         |     |              |  |  |        |  |  |  |        |  |  |  |        | 
|------------------------------------------------------------ |  | -------------------------------------------------- | -- | -------- |  | ---- | -- | ------------ |  | ----------------------- | --- | ------------ |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|                                                             |  |                                                    |    |          |  |      |    |              |  |                        
|                                                             |  |                                                    |    |          |  |      |    |              |  | Initial Cost to Company
|                                                             |  |                                                    |    |          |  |      |    |              |  |                        
|                                                             |  | No. of                                             |    |          |  |      |    |              |  |                         |     | Building &  
|Property                                                     |  | Bldgs./ Ctrs.                                      |    | Location |  | Type |    | Encumbrances |  | Land                    |     | Improvements
|                                                             |  |                                                    |    |          |  |      |    |              |  |                         |     |             
|                                                             |  |                                                   
|                                                             |  | (In thousands, except number of buildings/centers)
|Atlantic Business Center (Formerly Peachtree
    North East) |  |                                                    | 3  |          |  |      | GA |              |  |                         | IND |              |  |  |       |  |  |  | 2,197  |  |  |  | 6,592  | 
|Atlantic Distribution Center                                 |  |                                                    | 1  |          |  |      | GA |              |  |                         | IND |              |  |  | 3,886  |  |  |  | 1,519  |  |  |  | 4,679  | 
|Beacon Centre  OP                                           |  |                                                    | 18 |          |  |      | FL |              |  |                         | IND |              |  |  | 68,703 |  |  |  | 31,704 |  |  |  | 96,681 | 
|Beacon Centre  AF I                                         |  |                                                    | 4  |          |  |      | FL |              |  |                         | IND |              |  |  | 17,355 |  |  |  | 7,229  |  |  |  | 22,238 | 
|Beacon Centre  Headlands                                    |  |                                                    | 1  |          |  |      | FL |              |  |                         | RET |              |  |  |       |  |  |  | 2,523  |  |  |  | 7,669  | 
|Beacon Industrial Park                                       |  |                                                    | 8  |          |  |      | FL |              |  |                         | IND |              |  |  | 16,712 |  |  |  | 10,466 |  |  |  | 31,437 | 
|Bedford Warehouse                                            |  |                                                    | 1  |          |  |      | IL |              |  |                         | IND |              |  |  | 2,827  |  |  |  | 1,354  |  |  |  | 3,225  | 
|Belden Avenue                                                |  |                                                    | 3  |          |  |      | IL |              |  |                         | IND |              |  |  | 10,173 |  |  |  | 5,822  |  |  |  | 13,655 | 
|Bell Ranch Distribution                                      |  |                                                    | 5  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 6,904  |  |  |  | 12,915 | 
|Beltway Distribution                                         |  |                                                    | 1  |          |  |      | VA |              |  |                         | IND |              |  |  |       |  |  |  | 4,800  |  |  |  | 15,159 | 
|Bennington Corporate Center                                  |  |                                                    | 2  |          |  |      | MD |              |  |                         | IND |              |  |  | 5,958  |  |  |  | 2,671  |  |  |  | 8,181  | 
|Bensenville Industrial Park                                  |  |                                                    | 13 |          |  |      | IL |              |  |                         | IND |              |  |  | 37,731 |  |  |  | 20,799 |  |  |  | 62,438 | 
|Black River                                                  |  |                                                    | 1  |          |  |      | WA |              |  |                         | IND |              |  |  |       |  |  |  | 1,845  |  |  |  | 3,559  | 
|Blue Lagoon Business Park                                    |  |                                                    | 2  |          |  |      | FL |              |  |                         | IND |              |  |  | 10,748 |  |  |  | 4,945  |  |  |  | 14,875 | 
|Boston Industrial Portfolio                                  |  |                                                    | 20 |          |  |      | MA |              |  |                         | IND |              |  |  | 11,009 |  |  |  | 16,707 |  |  |  | 52,013 | 
|Braemar Business Center                                      |  |                                                    | 2  |          |  |      | MA |              |  |                         | IND |              |  |  |       |  |  |  | 1,566  |  |  |  | 4,613  | 
|Brennan Distribution                                         |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  | 4,600  |  |  |  | 3,683  |  |  |  | 3,022  | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                             |  |                                                    |        |                                  |  |              |        |          |  |              |         |               |  |         |         |  |  |  |        |  |  |  |      |  |  |  |      | 
|------------------------------------------------------------ |  | -------------------------------------------------- | ------ | -------------------------------- |  | ------------ | ------ | -------- |  | ------------ | ------- | ------------- |  | ------- | ------- |  |  |  | ------ |  |  |  | ---- |  |  |  | ---- | 
|                                                             |  |                                                    |        |                                  |  |              |        |          |  |             
|                                                             |  |                                                    |        | Gross Amount Carried at 12/31/02 |  |              |        |          |  |             
|                                                             |  | Costs                                              |        |                                  |  |              |        |          |  |             
|                                                             |  | Capitalized                                        |        |                                  |  | Total        |        |          |  | Year of      |         | Depreciable  
|                                                             |  | Subsequent to                                      |        |                                  |  | Building &   |        | Costs(1) |  | Accumulated  |         | Construction/ |  | Life   
|Property                                                     |  | Acquisition                                        |        | Land                             |  | Improvements |        | (2)      |  | Depreciation |         | Acquisition   |  | (Years)
|                                                             |  |                                                    |        |                                  |  |              |        |          |  |              |         |               |  |        
|                                                             |  |                                                   
|                                                             |  | (In thousands, except number of buildings/centers)
|Atlantic Business Center (Formerly Peachtree
    North East) |  |                                                    | 1,823  |                                  |  |              | 2,197  |          |  |              | 8,415   |               |  |         | 10,612  |  |  |  | 1,566  |  |  |  | 1998 |  |  |  | 5-40 | 
|Atlantic Distribution Center                                 |  |                                                    | 155    |                                  |  |              | 1,519  |          |  |              | 4,834   |               |  |         | 6,353   |  |  |  | 282    |  |  |  | 2000 |  |  |  | 5-40 | 
|Beacon Centre  OP                                           |  |                                                    | 11,271 |                                  |  |              | 31,704 |          |  |              | 107,952 |               |  |         | 139,656 |  |  |  | 7,600  |  |  |  | 2000 |  |  |  | 5-40 | 
|Beacon Centre  AF I                                         |  |                                                    | 755    |                                  |  |              | 7,229  |          |  |              | 22,993  |               |  |         | 30,222  |  |  |  | 1,414  |  |  |  | 2000 |  |  |  | 5-40 | 
|Beacon Centre  Headlands                                    |  |                                                    | 236    |                                  |  |              | 2,523  |          |  |              | 7,905   |               |  |         | 10,428  |  |  |  | 449    |  |  |  | 2000 |  |  |  | 5-40 | 
|Beacon Industrial Park                                       |  |                                                    | 4,960  |                                  |  |              | 10,466 |          |  |              | 36,398  |               |  |         | 46,864  |  |  |  | 5,262  |  |  |  | 1997 |  |  |  | 5-40 | 
|Bedford Warehouse                                            |  |                                                    | 7      |                                  |  |              | 1,354  |          |  |              | 3,232   |               |  |         | 4,586   |  |  |  | 95     |  |  |  | 2001 |  |  |  | 5-40 | 
|Belden Avenue                                                |  |                                                    | 1,526  |                                  |  |              | 5,822  |          |  |              | 15,181  |               |  |         | 21,002  |  |  |  | 935    |  |  |  | 1997 |  |  |  | 5-40 | 
|Bell Ranch Distribution                                      |  |                                                    | 158    |                                  |  |              | 6,904  |          |  |              | 13,073  |               |  |         | 19,976  |  |  |  | 529    |  |  |  | 2001 |  |  |  | 5-40 | 
|Beltway Distribution                                         |  |                                                    | 5,496  |                                  |  |              | 4,800  |          |  |              | 20,655  |               |  |         | 25,455  |  |  |  | 1,933  |  |  |  | 1999 |  |  |  | 5-40 | 
|Bennington Corporate Center                                  |  |                                                    | 962    |                                  |  |              | 2,671  |          |  |              | 9,144   |               |  |         | 11,815  |  |  |  | 844    |  |  |  | 2000 |  |  |  | 5-40 | 
|Bensenville Industrial Park                                  |  |                                                    | 8,806  |                                  |  |              | 20,799 |          |  |              | 71,244  |               |  |         | 92,043  |  |  |  | 11,464 |  |  |  | 1997 |  |  |  | 5-40 | 
|Black River                                                  |  |                                                    | 159    |                                  |  |              | 1,845  |          |  |              | 3,718   |               |  |         | 5,563   |  |  |  | 205    |  |  |  | 2001 |  |  |  | 5-40 | 
|Blue Lagoon Business Park                                    |  |                                                    | 1,174  |                                  |  |              | 4,945  |          |  |              | 16,048  |               |  |         | 20,993  |  |  |  | 2,263  |  |  |  | 1997 |  |  |  | 5-40 | 
|Boston Industrial Portfolio                                  |  |                                                    | 15,084 |                                  |  |              | 16,707 |          |  |              | 67,098  |               |  |         | 83,805  |  |  |  | 9,046  |  |  |  | 1998 |  |  |  | 5-40 | 
|Braemar Business Center                                      |  |                                                    | 934    |                                  |  |              | 1,566  |          |  |              | 5,546   |               |  |         | 7,113   |  |  |  | 858    |  |  |  | 1998 |  |  |  | 5-40 | 
|Brennan Distribution                                         |  |                                                    | 1,557  |                                  |  |              | 3,683  |          |  |              | 4,578   |               |  |         | 8,261   |  |  |  | 138    |  |  |  | 2001 |  |  |  | 5-40 | 

S-3



---



##### 



AMB PROPERTY, L.P.


SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED
DEPRECIATION  (Continued)

|                                                              |  |                                                    |    |          |  |      |    |              |  |                         |     |              |  |  |        |  |  |  |        |  |  |  |        | 
|------------------------------------------------------------- |  | -------------------------------------------------- | -- | -------- |  | ---- | -- | ------------ |  | ----------------------- | --- | ------------ |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|                                                              |  |                                                    |    |          |  |      |    |              |  |                        
|                                                              |  |                                                    |    |          |  |      |    |              |  | Initial Cost to Company
|                                                              |  |                                                    |    |          |  |      |    |              |  |                        
|                                                              |  | No. of                                             |    |          |  |      |    |              |  |                         |     | Building &  
|Property                                                      |  | Bldgs./ Ctrs.                                      |    | Location |  | Type |    | Encumbrances |  | Land                    |     | Improvements
|                                                              |  |                                                    |    |          |  |      |    |              |  |                         |     |             
|                                                              |  |                                                   
|                                                              |  | (In thousands, except number of buildings/centers)
|Bridgeview Industrial (Formerly Lake Michigan
    Industrial) |  |                                                    | 1  |          |  |      | IL |              |  |                         | IND |              |  |  |       |  |  |  | 1,332  |  |  |  | 3,996  | 
|Burnsville Business Center                                    |  |                                                    | 1  |          |  |      | MN |              |  |                         | IND |              |  |  |       |  |  |  | 932    |  |  |  | 2,796  | 
|BWI Air Cargo Centre                                          |  |                                                    | 1  |          |  |      | MD |              |  |                         | IND |              |  |  | 2,899  |  |  |  |       |  |  |  | 6,367  | 
|B.W.I.P                                                       |  |                                                    | 2  |          |  |      | MD |              |  |                         | IND |              |  |  | 3,521  |  |  |  | 2,258  |  |  |  | 5,149  | 
|Cabrillo Distribution Center                                  |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 7,563  |  |  |  | 11,177 | 
|Cabot Business Park                                           |  |                                                    | 13 |          |  |      | MA |              |  |                         | IND |              |  |  |       |  |  |  | 15,283 |  |  |  | 46,433 | 
|Cabot Business Park (KYKJ)                                    |  |                                                    | 3  |          |  |      | MA |              |  |                         | IND |              |  |  |       |  |  |  | 1,474  |  |  |  | 14,353 | 
|Cabot Business Park SGP                                       |  |                                                    | 3  |          |  |      | MA |              |  |                         | IND |              |  |  | 16,682 |  |  |  | 5,499  |  |  |  | 16,969 | 
|Carson Industrial                                             |  |                                                    | 12 |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 4,231  |  |  |  | 10,418 | 
|Cascade Business Center                                       |  |                                                    | 4  |          |  |      | OR |              |  |                         | IND |              |  |  |       |  |  |  | 2,825  |  |  |  | 7,860  | 
|Central Bay                                                   |  |                                                    | 2  |          |  |      | CA |              |  |                         | IND |              |  |  | 7,400  |  |  |  | 3,896  |  |  |  | 7,400  | 
|Chancellor                                                    |  |                                                    | 1  |          |  |      | FL |              |  |                         | IND |              |  |  | 2,634  |  |  |  | 1,587  |  |  |  | 4,802  | 
|Chancellor Square                                             |  |                                                    | 3  |          |  |      | FL |              |  |                         | IND |              |  |  | 15,346 |  |  |  | 2,009  |  |  |  | 6,106  | 
|Charles and Chase                                             |  |                                                    | 1  |          |  |      | MD |              |  |                         | RET |              |  |  |       |  |  |  | 751    |  |  |  | 2,287  | 
|Chancellory Warehouse                                         |  |                                                    | 1  |          |  |      | IL |              |  |                         | IND |              |  |  |       |  |  |  | 1,566  |  |  |  | 2,006  | 
|Chartwell Distribution Center                                 |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 2,711  |  |  |  | 8,191  | 
|Chemway Industrial Portfolio                                  |  |                                                    | 5  |          |  |      | NC |              |  |                         | IND |              |  |  |       |  |  |  | 2,875  |  |  |  | 8,625  | 
|Chicago Industrial Portfolio                                  |  |                                                    | 1  |          |  |      | IL |              |  |                         | IND |              |  |  | 1,593  |  |  |  | 762    |  |  |  | 2,285  | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                              |  |                                                    |        |                                  |  |              |        |          |  |              |        |               |  |         |        |  |  |  |       |  |  |  |      |  |  |  |      | 
|------------------------------------------------------------- |  | -------------------------------------------------- | ------ | -------------------------------- |  | ------------ | ------ | -------- |  | ------------ | ------ | ------------- |  | ------- | ------ |  |  |  | ----- |  |  |  | ---- |  |  |  | ---- | 
|                                                              |  |                                                    |        |                                  |  |              |        |          |  |             
|                                                              |  |                                                    |        | Gross Amount Carried at 12/31/02 |  |              |        |          |  |             
|                                                              |  | Costs                                              |        |                                  |  |              |        |          |  |             
|                                                              |  | Capitalized                                        |        |                                  |  | Total        |        |          |  | Year of      |        | Depreciable  
|                                                              |  | Subsequent to                                      |        |                                  |  | Building &   |        | Costs(1) |  | Accumulated  |        | Construction/ |  | Life   
|Property                                                      |  | Acquisition                                        |        | Land                             |  | Improvements |        | (2)      |  | Depreciation |        | Acquisition   |  | (Years)
|                                                              |  |                                                    |        |                                  |  |              |        |          |  |              |        |               |  |        
|                                                              |  |                                                   
|                                                              |  | (In thousands, except number of buildings/centers)
|Bridgeview Industrial (Formerly Lake Michigan
    Industrial) |  |                                                    | 81     |                                  |  |              | 1,332  |          |  |              | 4,077  |               |  |         | 5,409  |  |  |  | 516   |  |  |  | 1997 |  |  |  | 5-40 | 
|Burnsville Business Center                                    |  |                                                    | 1,048  |                                  |  |              | 932    |          |  |              | 3,844  |               |  |         | 4,776  |  |  |  | 695   |  |  |  | 1998 |  |  |  | 5-40 | 
|BWI Air Cargo Centre                                          |  |                                                    | 87     |                                  |  |              |       |          |  |              | 6,454  |               |  |         | 6,454  |  |  |  | 370   |  |  |  | 2000 |  |  |  | 5-40 | 
|B.W.I.P                                                       |  |                                                    | 79     |                                  |  |              | 2,258  |          |  |              | 5,228  |               |  |         | 7,486  |  |  |  | 119   |  |  |  | 2002 |  |  |  | 5-40 | 
|Cabrillo Distribution Center                                  |  |                                                    |       |                                  |  |              | 7,563  |          |  |              | 11,177 |               |  |         | 18,740 |  |  |  |      |  |  |  | 2002 |  |  |  | 5-40 | 
|Cabot Business Park                                           |  |                                                    | 4,542  |                                  |  |              | 15,283 |          |  |              | 50,975 |               |  |         | 66,258 |  |  |  | 7,758 |  |  |  | 1998 |  |  |  | 5-40 | 
|Cabot Business Park (KYKJ)                                    |  |                                                    | 17,851 |                                  |  |              | 2,920  |          |  |              | 30,759 |               |  |         | 33,679 |  |  |  | 2,486 |  |  |  | 1998 |  |  |  | 5-40 | 
|Cabot Business Park SGP                                       |  |                                                    | 57     |                                  |  |              | 5,499  |          |  |              | 17,027 |               |  |         | 22,526 |  |  |  | 212   |  |  |  | 2002 |  |  |  | 5-40 | 
|Carson Industrial                                             |  |                                                    | 3,734  |                                  |  |              | 4,231  |          |  |              | 14,153 |               |  |         | 18,384 |  |  |  | 1,293 |  |  |  | 1999 |  |  |  | 5-40 | 
|Cascade Business Center                                       |  |                                                    | 2,062  |                                  |  |              | 2,825  |          |  |              | 9,922  |               |  |         | 12,748 |  |  |  | 1,480 |  |  |  | 1998 |  |  |  | 5-40 | 
|Central Bay                                                   |  |                                                    | 801    |                                  |  |              | 3,896  |          |  |              | 8,202  |               |  |         | 12,097 |  |  |  | 444   |  |  |  | 2001 |  |  |  | 5-40 | 
|Chancellor                                                    |  |                                                    | 270    |                                  |  |              | 1,587  |          |  |              | 5,072  |               |  |         | 6,660  |  |  |  | 693   |  |  |  | 1997 |  |  |  | 5-40 | 
|Chancellor Square                                             |  |                                                    | 2,691  |                                  |  |              | 2,009  |          |  |              | 8,797  |               |  |         | 10,807 |  |  |  | 1,832 |  |  |  | 1998 |  |  |  | 5-40 | 
|Charles and Chase                                             |  |                                                    | 7      |                                  |  |              | 751    |          |  |              | 2,294  |               |  |         | 3,044  |  |  |  | 228   |  |  |  | 1998 |  |  |  | 5-40 | 
|Chancellory Warehouse                                         |  |                                                    | 676    |                                  |  |              | 1,566  |          |  |              | 2,681  |               |  |         | 4,248  |  |  |  | 57    |  |  |  | 2002 |  |  |  | 5-40 | 
|Chartwell Distribution Center                                 |  |                                                    | 70     |                                  |  |              | 2,711  |          |  |              | 8,261  |               |  |         | 10,972 |  |  |  | 552   |  |  |  | 2000 |  |  |  | 5-40 | 
|Chemway Industrial Portfolio                                  |  |                                                    | 949    |                                  |  |              | 2,875  |          |  |              | 9,574  |               |  |         | 12,449 |  |  |  | 1,370 |  |  |  | 1998 |  |  |  | 5-40 | 
|Chicago Industrial Portfolio                                  |  |                                                    | 242    |                                  |  |              | 762    |          |  |              | 2,527  |               |  |         | 3,289  |  |  |  | 337   |  |  |  | 1997 |  |  |  | 5-40 | 

S-4



---



##### 



AMB PROPERTY, L.P.


SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED
DEPRECIATION  (Continued)

|                                                            |  |                                                    |    |          |  |      |    |              |  |                         |     |              |  |  |        |  |  |  |        |  |  |  |        | 
|----------------------------------------------------------- |  | -------------------------------------------------- | -- | -------- |  | ---- | -- | ------------ |  | ----------------------- | --- | ------------ |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|                                                            |  |                                                    |    |          |  |      |    |              |  |                        
|                                                            |  |                                                    |    |          |  |      |    |              |  | Initial Cost to Company
|                                                            |  |                                                    |    |          |  |      |    |              |  |                        
|                                                            |  | No. of                                             |    |          |  |      |    |              |  |                         |     | Building &  
|Property                                                    |  | Bldgs./ Ctrs.                                      |    | Location |  | Type |    | Encumbrances |  | Land                    |     | Improvements
|                                                            |  |                                                    |    |          |  |      |    |              |  |                         |     |             
|                                                            |  |                                                   
|                                                            |  | (In thousands, except number of buildings/centers)
|Chicago Ridge Freight Terminal                              |  |                                                    | 1  |          |  |      | IL |              |  |                         | IND |              |  |  |       |  |  |  | 3,705  |  |  |  | 3,576  | 
|Chicago/ OHare Industrial Portfolio                        |  |                                                    | 5  |          |  |      | IL |              |  |                         | IND |              |  |  | 9,090  |  |  |  | 4,816  |  |  |  | 9,603  | 
|Circle Freeway                                              |  |                                                    | 1  |          |  |      | OH |              |  |                         | IND |              |  |  |       |  |  |  | 530    |  |  |  | 1,591  | 
|Columbia Business Center                                    |  |                                                    | 9  |          |  |      | MD |              |  |                         | IND |              |  |  | 3,988  |  |  |  | 3,856  |  |  |  | 11,736 | 
|Component Drive Ind Port                                    |  |                                                    | 3  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 12,688 |  |  |  | 6,974  | 
|Concord Industrial Portfolio                                |  |                                                    | 10 |          |  |      | CA |              |  |                         | IND |              |  |  | 9,615  |  |  |  | 3,872  |  |  |  | 11,647 | 
|Corporate Park/ Hickory Hill                                |  |                                                    | 7  |          |  |      | TN |              |  |                         | IND |              |  |  | 15,937 |  |  |  | 6,789  |  |  |  | 20,366 | 
|Corporate Square Industrial                                 |  |                                                    | 6  |          |  |      | MN |              |  |                         | IND |              |  |  |       |  |  |  | 4,024  |  |  |  | 12,113 | 
|Corridor Industrial                                         |  |                                                    | 1  |          |  |      | MD |              |  |                         | IND |              |  |  | 2,403  |  |  |  | 996    |  |  |  | 3,019  | 
|Crysen Industrial                                           |  |                                                    | 1  |          |  |      | DC |              |  |                         | IND |              |  |  | 2,623  |  |  |  | 1,425  |  |  |  | 4,275  | 
|D/ FW Intl Air Cargo  AF I                                |  |                                                    | 1  |          |  |      | TX |              |  |                         | IND |              |  |  | 4,700  |  |  |  |       |  |  |  | 19,683 | 
|D/ FW Air Cargo 2                                           |  |                                                    | 1  |          |  |      | TX |              |  |                         | IND |              |  |  |       |  |  |  |       |  |  |  | 4,286  | 
|Dado Distribution                                           |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 7,221  |  |  |  | 3,739  | 
|Dallas Industrial (Formerly Taxas Industrial
    Fortfolio) |  |                                                    | 8  |          |  |      | TX |              |  |                         | IND |              |  |  |       |  |  |  | 3,715  |  |  |  | 11,143 | 
|Dayton Air Cargo Centre                                     |  |                                                    | 5  |          |  |      | OH |              |  |                         | IND |              |  |  | 6,720  |  |  |  |       |  |  |  | 7,163  | 
|Del Amo Industrial Center                                   |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 2,529  |  |  |  | 7,651  | 
|Dellamor                                                    |  |                                                    | 8  |          |  |      | NJ |              |  |                         | IND |              |  |  | 14,500 |  |  |  | 12,061 |  |  |  | 11,577 | 
|DFW Air Cargo Centre                                        |  |                                                    | 3  |          |  |      | TX |              |  |                         | IND |              |  |  | 6,142  |  |  |  |       |  |  |  | 20,632 | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                            |  |                                                    |        |                                  |  |              |        |          |  |              |        |               |  |         |        |  |  |  |       |  |  |  |      |  |  |  |      | 
|----------------------------------------------------------- |  | -------------------------------------------------- | ------ | -------------------------------- |  | ------------ | ------ | -------- |  | ------------ | ------ | ------------- |  | ------- | ------ |  |  |  | ----- |  |  |  | ---- |  |  |  | ---- | 
|                                                            |  |                                                    |        |                                  |  |              |        |          |  |             
|                                                            |  |                                                    |        | Gross Amount Carried at 12/31/02 |  |              |        |          |  |             
|                                                            |  | Costs                                              |        |                                  |  |              |        |          |  |             
|                                                            |  | Capitalized                                        |        |                                  |  | Total        |        |          |  | Year of      |        | Depreciable  
|                                                            |  | Subsequent to                                      |        |                                  |  | Building &   |        | Costs(1) |  | Accumulated  |        | Construction/ |  | Life   
|Property                                                    |  | Acquisition                                        |        | Land                             |  | Improvements |        | (2)      |  | Depreciation |        | Acquisition   |  | (Years)
|                                                            |  |                                                    |        |                                  |  |              |        |          |  |              |        |               |  |        
|                                                            |  |                                                   
|                                                            |  | (In thousands, except number of buildings/centers)
|Chicago Ridge Freight Terminal                              |  |                                                    | 12     |                                  |  |              | 3,705  |          |  |              | 3,588  |               |  |         | 7,294  |  |  |  | 120   |  |  |  | 2001 |  |  |  | 5-40 | 
|Chicago/ OHare Industrial Portfolio                        |  |                                                    | 468    |                                  |  |              | 4,816  |          |  |              | 10,071 |               |  |         | 14,887 |  |  |  | 402   |  |  |  | 2001 |  |  |  | 5-40 | 
|Circle Freeway                                              |  |                                                    | 613    |                                  |  |              | 530    |          |  |              | 2,204  |               |  |         | 2,735  |  |  |  | 540   |  |  |  | 1998 |  |  |  | 5-40 | 
|Columbia Business Center                                    |  |                                                    | 1,886  |                                  |  |              | 3,856  |          |  |              | 13,622 |               |  |         | 17,478 |  |  |  | 1,753 |  |  |  | 1999 |  |  |  | 5-40 | 
|Component Drive Ind Port                                    |  |                                                    | 550    |                                  |  |              | 12,688 |          |  |              | 7,524  |               |  |         | 20,212 |  |  |  | 372   |  |  |  | 2001 |  |  |  | 5-40 | 
|Concord Industrial Portfolio                                |  |                                                    | 2,206  |                                  |  |              | 3,872  |          |  |              | 13,853 |               |  |         | 17,724 |  |  |  | 1,791 |  |  |  | 1999 |  |  |  | 5-40 | 
|Corporate Park/ Hickory Hill                                |  |                                                    | 1,075  |                                  |  |              | 6,789  |          |  |              | 21,441 |               |  |         | 28,230 |  |  |  | 2,852 |  |  |  | 1998 |  |  |  | 5-40 | 
|Corporate Square Industrial                                 |  |                                                    | 1,854  |                                  |  |              | 4,024  |          |  |              | 13,967 |               |  |         | 17,992 |  |  |  | 2,244 |  |  |  | 1997 |  |  |  | 5-40 | 
|Corridor Industrial                                         |  |                                                    | 270    |                                  |  |              | 996    |          |  |              | 3,289  |               |  |         | 4,285  |  |  |  | 329   |  |  |  | 1999 |  |  |  | 5-40 | 
|Crysen Industrial                                           |  |                                                    | 931    |                                  |  |              | 1,425  |          |  |              | 5,206  |               |  |         | 6,631  |  |  |  | 780   |  |  |  | 1998 |  |  |  | 5-40 | 
|D/ FW Intl Air Cargo  AF I                                |  |                                                    | 3,060  |                                  |  |              |       |          |  |              | 22,743 |               |  |         | 22,743 |  |  |  | 1,935 |  |  |  | 1999 |  |  |  | 5-40 | 
|D/ FW Air Cargo 2                                           |  |                                                    | 13,900 |                                  |  |              |       |          |  |              | 18,186 |               |  |         | 18,186 |  |  |  | 1,375 |  |  |  | 1999 |  |  |  | 5-40 | 
|Dado Distribution                                           |  |                                                    | 56     |                                  |  |              | 7,221  |          |  |              | 3,795  |               |  |         | 11,016 |  |  |  | 120   |  |  |  | 2001 |  |  |  | 5-40 | 
|Dallas Industrial (Formerly Taxas Industrial
    Fortfolio) |  |                                                    | 2,486  |                                  |  |              | 3,715  |          |  |              | 13,629 |               |  |         | 17,344 |  |  |  | 2,496 |  |  |  | 1997 |  |  |  | 5-40 | 
|Dayton Air Cargo Centre                                     |  |                                                    | 346    |                                  |  |              |       |          |  |              | 7,509  |               |  |         | 7,509  |  |  |  | 510   |  |  |  | 2000 |  |  |  | 5-40 | 
|Del Amo Industrial Center                                   |  |                                                    | 31     |                                  |  |              | 2,529  |          |  |              | 7,682  |               |  |         | 10,211 |  |  |  | 433   |  |  |  | 2000 |  |  |  | 5-40 | 
|Dellamor                                                    |  |                                                    | 65     |                                  |  |              | 12,061 |          |  |              | 11,642 |               |  |         | 23,703 |  |  |  | 196   |  |  |  | 2002 |  |  |  | 5-40 | 
|DFW Air Cargo Centre                                        |  |                                                    | 165    |                                  |  |              |       |          |  |              | 20,797 |               |  |         | 20,797 |  |  |  | 1,221 |  |  |  | 2000 |  |  |  | 5-40 | 

S-5



---



##### 



AMB PROPERTY, L.P.


SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED
DEPRECIATION  (Continued)

|                              |  |                                                    |    |          |  |      |    |              |  |                         |     |              |  |  |        |  |  |  |        |  |  |  |        | 
|----------------------------- |  | -------------------------------------------------- | -- | -------- |  | ---- | -- | ------------ |  | ----------------------- | --- | ------------ |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|                              |  |                                                    |    |          |  |      |    |              |  |                        
|                              |  |                                                    |    |          |  |      |    |              |  | Initial Cost to Company
|                              |  |                                                    |    |          |  |      |    |              |  |                        
|                              |  | No. of                                             |    |          |  |      |    |              |  |                         |     | Building &  
|Property                      |  | Bldgs./ Ctrs.                                      |    | Location |  | Type |    | Encumbrances |  | Land                    |     | Improvements
|                              |  |                                                    |    |          |  |      |    |              |  |                         |     |             
|                              |  |                                                   
|                              |  | (In thousands, except number of buildings/centers)
|DFW Airfreight Portfolio      |  |                                                    | 6  |          |  |      | TX |              |  |                         | IND |              |  |  | 6,800  |  |  |  | 950    |  |  |  | 8,492  | 
|Diablo Industrial Park        |  |                                                    | 13 |          |  |      | CA |              |  |                         | IND |              |  |  | 9,134  |  |  |  | 3,496  |  |  |  | 10,852 | 
|Dixie Highway                 |  |                                                    | 2  |          |  |      | KY |              |  |                         | IND |              |  |  |       |  |  |  | 1,700  |  |  |  | 5,149  | 
|Docks Corner                 |  |                                                    | 1  |          |  |      | NJ |              |  |                         | IND |              |  |  | 36,328 |  |  |  | 5,125  |  |  |  | 22,516 | 
|Docks Corner II              |  |                                                    | 1  |          |  |      | NJ |              |  |                         | IND |              |  |  |       |  |  |  | 2,272  |  |  |  | 6,917  | 
|Doolittle Distribution Center |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 2,644  |  |  |  | 8,014  | 
|Dowe Industrial Center        |  |                                                    | 2  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 2,665  |  |  |  | 8,034  | 
|Dublin Industrial Portfolio   |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 2,980  |  |  |  | 9,042  | 
|Dulles Airport  Alliance     |  |                                                    | 3  |          |  |      | VA |              |  |                         | IND |              |  |  | 9,748  |  |  |  | 2,301  |  |  |  | 6,884  | 
|Earlington Business Park      |  |                                                    | 1  |          |  |      | WA |              |  |                         | IND |              |  |  |       |  |  |  | 2,766  |  |  |  | 3,234  | 
|East Bay Doolittle            |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 7,128  |  |  |  | 11,023 | 
|East Bay Whipple              |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  | 7,000  |  |  |  | 5,333  |  |  |  | 8,126  | 
|East Valley Warehouse         |  |                                                    | 1  |          |  |      | WA |              |  |                         | IND |              |  |  |       |  |  |  | 6,813  |  |  |  | 20,511 | 
|Eaves Distribution Center     |  |                                                    | 3  |          |  |      | CA |              |  |                         | IND |              |  |  | 15,220 |  |  |  | 11,893 |  |  |  | 12,708 | 
|Edenvale Business Center      |  |                                                    | 1  |          |  |      | MN |              |  |                         | IND |              |  |  |       |  |  |  | 775    |  |  |  | 2,412  | 
|Edgewater Industrial Center   |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 4,038  |  |  |  | 15,113 | 
|Elk Grove Village Industrial  |  |                                                    | 10 |          |  |      | IL |              |  |                         | IND |              |  |  | 17,103 |  |  |  | 6,589  |  |  |  | 21,739 | 
|Elmwood Business Park         |  |                                                    | 5  |          |  |      | LA |              |  |                         | IND |              |  |  |       |  |  |  | 4,163  |  |  |  | 12,488 | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                              |  |                                                    |        |                                  |  |              |        |          |  |              |        |               |  |         |        |  |  |  |       |  |  |  |      |  |  |  |      | 
|----------------------------- |  | -------------------------------------------------- | ------ | -------------------------------- |  | ------------ | ------ | -------- |  | ------------ | ------ | ------------- |  | ------- | ------ |  |  |  | ----- |  |  |  | ---- |  |  |  | ---- | 
|                              |  |                                                    |        |                                  |  |              |        |          |  |             
|                              |  |                                                    |        | Gross Amount Carried at 12/31/02 |  |              |        |          |  |             
|                              |  | Costs                                              |        |                                  |  |              |        |          |  |             
|                              |  | Capitalized                                        |        |                                  |  | Total        |        |          |  | Year of      |        | Depreciable  
|                              |  | Subsequent to                                      |        |                                  |  | Building &   |        | Costs(1) |  | Accumulated  |        | Construction/ |  | Life   
|Property                      |  | Acquisition                                        |        | Land                             |  | Improvements |        | (2)      |  | Depreciation |        | Acquisition   |  | (Years)
|                              |  |                                                    |        |                                  |  |              |        |          |  |              |        |               |  |        
|                              |  |                                                   
|                              |  | (In thousands, except number of buildings/centers)
|DFW Airfreight Portfolio      |  |                                                    | 762    |                                  |  |              | 950    |          |  |              | 9,254  |               |  |         | 10,204 |  |  |  | 767   |  |  |  | 2000 |  |  |  | 5-40 | 
|Diablo Industrial Park        |  |                                                    | 513    |                                  |  |              | 3,496  |          |  |              | 11,365 |               |  |         | 14,861 |  |  |  | 1,097 |  |  |  | 1999 |  |  |  | 5-40 | 
|Dixie Highway                 |  |                                                    | 210    |                                  |  |              | 1,700  |          |  |              | 5,358  |               |  |         | 7,059  |  |  |  | 746   |  |  |  | 1997 |  |  |  | 5-40 | 
|Docks Corner                 |  |                                                    | 29,628 |                                  |  |              | 13,672 |          |  |              | 43,597 |               |  |         | 57,269 |  |  |  | 2,057 |  |  |  | 1997 |  |  |  | 5-40 | 
|Docks Corner II              |  |                                                    | 349    |                                  |  |              | 2,272  |          |  |              | 7,267  |               |  |         | 9,539  |  |  |  | 1,513 |  |  |  | 1997 |  |  |  | 5-40 | 
|Doolittle Distribution Center |  |                                                    | 333    |                                  |  |              | 2,644  |          |  |              | 8,347  |               |  |         | 10,991 |  |  |  | 638   |  |  |  | 2000 |  |  |  | 5-40 | 
|Dowe Industrial Center        |  |                                                    | 1,294  |                                  |  |              | 2,665  |          |  |              | 9,328  |               |  |         | 11,993 |  |  |  | 1,417 |  |  |  | 1997 |  |  |  | 5-40 | 
|Dublin Industrial Portfolio   |  |                                                    | 432    |                                  |  |              | 2,980  |          |  |              | 9,473  |               |  |         | 12,453 |  |  |  | 520   |  |  |  | 2000 |  |  |  | 5-40 | 
|Dulles Airport  Alliance     |  |                                                    | 7,680  |                                  |  |              | 2,301  |          |  |              | 14,563 |               |  |         | 16,864 |  |  |  | 221   |  |  |  | 2000 |  |  |  | 5-40 | 
|Earlington Business Park      |  |                                                    | 148    |                                  |  |              | 2,766  |          |  |              | 3,382  |               |  |         | 6,149  |  |  |  | 58    |  |  |  | 2002 |  |  |  | 5-40 | 
|East Bay Doolittle            |  |                                                    | 1,264  |                                  |  |              | 7,128  |          |  |              | 12,288 |               |  |         | 19,416 |  |  |  | 544   |  |  |  | 2001 |  |  |  | 5-40 | 
|East Bay Whipple              |  |                                                    | 701    |                                  |  |              | 5,333  |          |  |              | 8,827  |               |  |         | 14,160 |  |  |  | 322   |  |  |  | 2001 |  |  |  | 5-40 | 
|East Valley Warehouse         |  |                                                    | 5,655  |                                  |  |              | 6,813  |          |  |              | 26,166 |               |  |         | 32,978 |  |  |  | 2,492 |  |  |  | 1999 |  |  |  | 5-40 | 
|Eaves Distribution Center     |  |                                                    | 1,390  |                                  |  |              | 11,893 |          |  |              | 14,097 |               |  |         | 25,991 |  |  |  | 406   |  |  |  | 2001 |  |  |  | 5-40 | 
|Edenvale Business Center      |  |                                                    | 721    |                                  |  |              | 775    |          |  |              | 3,132  |               |  |         | 3,907  |  |  |  | 593   |  |  |  | 1998 |  |  |  | 5-40 | 
|Edgewater Industrial Center   |  |                                                    | 3,375  |                                  |  |              | 4,038  |          |  |              | 18,487 |               |  |         | 22,525 |  |  |  | 1,210 |  |  |  | 2000 |  |  |  | 5-40 | 
|Elk Grove Village Industrial  |  |                                                    | 2,054  |                                  |  |              | 6,589  |          |  |              | 23,793 |               |  |         | 30,383 |  |  |  | 1,234 |  |  |  | 1997 |  |  |  | 5-40 | 
|Elmwood Business Park         |  |                                                    | 1,567  |                                  |  |              | 4,163  |          |  |              | 14,054 |               |  |         | 18,217 |  |  |  | 1,865 |  |  |  | 1998 |  |  |  | 5-40 | 

S-6



---



##### 



AMB PROPERTY, L.P.


SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED
DEPRECIATION  (Continued)

|                                                         |  |                                                    |    |          |  |      |    |              |  |                         |     |              |  |  |        |  |  |  |        |  |  |  |        | 
|-------------------------------------------------------- |  | -------------------------------------------------- | -- | -------- |  | ---- | -- | ------------ |  | ----------------------- | --- | ------------ |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|                                                         |  |                                                    |    |          |  |      |    |              |  |                        
|                                                         |  |                                                    |    |          |  |      |    |              |  | Initial Cost to Company
|                                                         |  |                                                    |    |          |  |      |    |              |  |                        
|                                                         |  | No. of                                             |    |          |  |      |    |              |  |                         |     | Building &  
|Property                                                 |  | Bldgs./ Ctrs.                                      |    | Location |  | Type |    | Encumbrances |  | Land                    |     | Improvements
|                                                         |  |                                                    |    |          |  |      |    |              |  |                         |     |             
|                                                         |  |                                                   
|                                                         |  | (In thousands, except number of buildings/centers)
|Empire Drive                                             |  |                                                    | 1  |          |  |      | KY |              |  |                         | IND |              |  |  |       |  |  |  | 1,590  |  |  |  | 4,815  | 
|Executive Drive                                          |  |                                                    | 1  |          |  |      | IL |              |  |                         | IND |              |  |  |       |  |  |  | 1,399  |  |  |  | 4,236  | 
|Fairway Drive Industrial                                 |  |                                                    | 4  |          |  |      | CA |              |  |                         | IND |              |  |  | 12,383 |  |  |  | 3,228  |  |  |  | 13,949 | 
|Ford Distribution Cntr                                   |  |                                                    | 8  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 25,443 |  |  |  | 23,529 | 
|Fordyce Distribution Center                              |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  | 7,600  |  |  |  | 4,340  |  |  |  | 8,335  | 
|Gateway 58                                               |  |                                                    | 3  |          |  |      | MD |              |  |                         | IND |              |  |  |       |  |  |  | 3,256  |  |  |  | 9,940  | 
|Gateway Commerce Center                                  |  |                                                    | 5  |          |  |      | MD |              |  |                         | IND |              |  |  |       |  |  |  | 4,083  |  |  |  | 12,336 | 
|Gateway Corporate Center                                 |  |                                                    | 9  |          |  |      | WA |              |  |                         | IND |              |  |  | 27,000 |  |  |  | 10,643 |  |  |  | 32,908 | 
|Gateway North                                            |  |                                                    | 6  |          |  |      | WA |              |  |                         | IND |              |  |  | 14,000 |  |  |  | 5,270  |  |  |  | 16,296 | 
|Greater Dallas Industrial Portfolio                      |  |                                                    | 5  |          |  |      | TX |              |  |                         | IND |              |  |  |       |  |  |  | 5,633  |  |  |  | 18,414 | 
|Greenwood Industrial                                     |  |                                                    | 3  |          |  |      | MD |              |  |                         | IND |              |  |  |       |  |  |  | 4,729  |  |  |  | 14,188 | 
|Hamilton Parkway (Formerly Lake Michigan
    Industrial) |  |                                                    | 1  |          |  |      | IL |              |  |                         | IND |              |  |  |       |  |  |  | 1,554  |  |  |  | 4,703  | 
|Harris Business Center  AF I                            |  |                                                    | 10 |          |  |      | CA |              |  |                         | IND |              |  |  | 27,254 |  |  |  | 19,194 |  |  |  | 26,368 | 
|Harris Business Center  AF II                           |  |                                                    | 10 |          |  |      | CA |              |  |                         | IND |              |  |  | 33,500 |  |  |  | 21,414 |  |  |  | 33,182 | 
|Harvest Business Park                                    |  |                                                    | 3  |          |  |      | WA |              |  |                         | IND |              |  |  |       |  |  |  | 2,371  |  |  |  | 7,153  | 
|Hawthorne LAX Cargo Center                               |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  | 6,550  |  |  |  | 2,775  |  |  |  | 8,377  | 
|Hayward Industrial  Hathaway                            |  |                                                    | 2  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 4,473  |  |  |  | 13,546 | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                         |  |                                                    |       |                                  |  |              |        |          |  |              |        |               |  |         |        |  |  |  |       |  |  |  |      |  |  |  |      | 
|-------------------------------------------------------- |  | -------------------------------------------------- | ----- | -------------------------------- |  | ------------ | ------ | -------- |  | ------------ | ------ | ------------- |  | ------- | ------ |  |  |  | ----- |  |  |  | ---- |  |  |  | ---- | 
|                                                         |  |                                                    |       |                                  |  |              |        |          |  |             
|                                                         |  |                                                    |       | Gross Amount Carried at 12/31/02 |  |              |        |          |  |             
|                                                         |  | Costs                                              |       |                                  |  |              |        |          |  |             
|                                                         |  | Capitalized                                        |       |                                  |  | Total        |        |          |  | Year of      |        | Depreciable  
|                                                         |  | Subsequent to                                      |       |                                  |  | Building &   |        | Costs(1) |  | Accumulated  |        | Construction/ |  | Life   
|Property                                                 |  | Acquisition                                        |       | Land                             |  | Improvements |        | (2)      |  | Depreciation |        | Acquisition   |  | (Years)
|                                                         |  |                                                    |       |                                  |  |              |        |          |  |              |        |               |  |        
|                                                         |  |                                                   
|                                                         |  | (In thousands, except number of buildings/centers)
|Empire Drive                                             |  |                                                    | 277   |                                  |  |              | 1,590  |          |  |              | 5,091  |               |  |         | 6,682  |  |  |  | 786   |  |  |  | 1997 |  |  |  | 5-40 | 
|Executive Drive                                          |  |                                                    | 806   |                                  |  |              | 1,399  |          |  |              | 5,042  |               |  |         | 6,441  |  |  |  | 821   |  |  |  | 1997 |  |  |  | 5-40 | 
|Fairway Drive Industrial                                 |  |                                                    | 669   |                                  |  |              | 3,228  |          |  |              | 14,618 |               |  |         | 17,846 |  |  |  | 651   |  |  |  | 1997 |  |  |  | 5-40 | 
|Ford Distribution Cntr                                   |  |                                                    | 1,811 |                                  |  |              | 25,443 |          |  |              | 25,340 |               |  |         | 50,782 |  |  |  | 797   |  |  |  | 2001 |  |  |  | 5-40 | 
|Fordyce Distribution Center                              |  |                                                    | 232   |                                  |  |              | 4,340  |          |  |              | 8,568  |               |  |         | 12,908 |  |  |  | 454   |  |  |  | 2001 |  |  |  | 5-40 | 
|Gateway 58                                               |  |                                                    | 110   |                                  |  |              | 3,256  |          |  |              | 10,050 |               |  |         | 13,306 |  |  |  | 648   |  |  |  | 2000 |  |  |  | 5-40 | 
|Gateway Commerce Center                                  |  |                                                    | 1,180 |                                  |  |              | 4,083  |          |  |              | 13,516 |               |  |         | 17,600 |  |  |  | 1,669 |  |  |  | 1999 |  |  |  | 5-40 | 
|Gateway Corporate Center                                 |  |                                                    | 2,747 |                                  |  |              | 10,643 |          |  |              | 35,655 |               |  |         | 46,298 |  |  |  | 3,407 |  |  |  | 1999 |  |  |  | 5-40 | 
|Gateway North                                            |  |                                                    | 1,048 |                                  |  |              | 5,270  |          |  |              | 17,344 |               |  |         | 22,614 |  |  |  | 1,478 |  |  |  | 1999 |  |  |  | 5-40 | 
|Greater Dallas Industrial Portfolio                      |  |                                                    | 1,231 |                                  |  |              | 5,633  |          |  |              | 19,645 |               |  |         | 25,277 |  |  |  | 3,369 |  |  |  | 1997 |  |  |  | 5-40 | 
|Greenwood Industrial                                     |  |                                                    | 1,511 |                                  |  |              | 4,729  |          |  |              | 15,698 |               |  |         | 20,427 |  |  |  | 2,166 |  |  |  | 1998 |  |  |  | 5-40 | 
|Hamilton Parkway (Formerly Lake Michigan
    Industrial) |  |                                                    | 134   |                                  |  |              | 1,554  |          |  |              | 4,837  |               |  |         | 6,391  |  |  |  | 669   |  |  |  | 1997 |  |  |  | 5-40 | 
|Harris Business Center  AF I                            |  |                                                    | 1,129 |                                  |  |              | 19,194 |          |  |              | 27,496 |               |  |         | 46,690 |  |  |  | 1,725 |  |  |  | 2000 |  |  |  | 5-40 | 
|Harris Business Center  AF II                           |  |                                                    | 2,791 |                                  |  |              | 21,414 |          |  |              | 35,973 |               |  |         | 57,386 |  |  |  | 2,343 |  |  |  | 2000 |  |  |  | 5-40 | 
|Harvest Business Park                                    |  |                                                    | 1,040 |                                  |  |              | 2,371  |          |  |              | 8,193  |               |  |         | 10,564 |  |  |  | 1,307 |  |  |  | 1997 |  |  |  | 5-40 | 
|Hawthorne LAX Cargo Center                               |  |                                                    | 263   |                                  |  |              | 2,775  |          |  |              | 8,640  |               |  |         | 11,415 |  |  |  | 436   |  |  |  | 2000 |  |  |  | 5-40 | 
|Hayward Industrial  Hathaway                            |  |                                                    | 177   |                                  |  |              | 4,473  |          |  |              | 13,723 |               |  |         | 18,196 |  |  |  | 713   |  |  |  | 2000 |  |  |  | 5-40 | 

S-7



---



##### 



AMB PROPERTY, L.P.


SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED
DEPRECIATION  (Continued)

|                              |  |                                                    |    |          |  |      |    |              |  |                         |     |              |  |  |        |  |  |  |        |  |  |  |        | 
|----------------------------- |  | -------------------------------------------------- | -- | -------- |  | ---- | -- | ------------ |  | ----------------------- | --- | ------------ |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|                              |  |                                                    |    |          |  |      |    |              |  |                        
|                              |  |                                                    |    |          |  |      |    |              |  | Initial Cost to Company
|                              |  |                                                    |    |          |  |      |    |              |  |                        
|                              |  | No. of                                             |    |          |  |      |    |              |  |                         |     | Building &  
|Property                      |  | Bldgs./ Ctrs.                                      |    | Location |  | Type |    | Encumbrances |  | Land                    |     | Improvements
|                              |  |                                                    |    |          |  |      |    |              |  |                         |     |             
|                              |  |                                                   
|                              |  | (In thousands, except number of buildings/centers)
|Hayward Industrial  Wiegman  |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  | 6,525  |  |  |  | 2,773  |  |  |  | 8,393  | 
|Highway 17                    |  |                                                    | 2  |          |  |      | NJ |              |  |                         | IND |              |  |  |       |  |  |  | 8,185  |  |  |  | 6,516  | 
|Hintz Building                |  |                                                    | 1  |          |  |      | TX |              |  |                         | IND |              |  |  |       |  |  |  | 420    |  |  |  | 1,259  | 
|Holton Drive                  |  |                                                    | 1  |          |  |      | KY |              |  |                         | IND |              |  |  |       |  |  |  | 2,633  |  |  |  | 7,899  | 
|IAD Cargo Building 5          |  |                                                    | 1  |          |  |      | VA |              |  |                         | IND |              |  |  | 14,205 |  |  |  |       |  |  |  | 39,050 | 
|International Multifoods      |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 1,613  |  |  |  | 4,879  | 
|Interstate Crossdock          |  |                                                    | 1  |          |  |      | NJ |              |  |                         | IND |              |  |  |       |  |  |  | 12,712 |  |  |  | 19,295 | 
|Itasca Industrial Portfolio   |  |                                                    | 6  |          |  |      | IL |              |  |                         | IND |              |  |  |       |  |  |  | 6,416  |  |  |  | 19,289 | 
|Jacksonville Air Cargo Centre |  |                                                    | 1  |          |  |      | FL |              |  |                         | IND |              |  |  | 3,100  |  |  |  |       |  |  |  | 3,028  | 
|Jamesburg                     |  |                                                    | 3  |          |  |      | NJ |              |  |                         | IND |              |  |  | 22,571 |  |  |  | 11,700 |  |  |  | 35,101 | 
|Janitrol                      |  |                                                    | 1  |          |  |      | OH |              |  |                         | IND |              |  |  |       |  |  |  | 1,797  |  |  |  | 5,390  | 
|JFK Air Cargo  OP            |  |                                                    | 15 |          |  |      | NY |              |  |                         | IND |              |  |  |       |  |  |  | 15,434 |  |  |  | 45,660 | 
|JFK Air Cargo  AF I          |  |                                                    | 15 |          |  |      | NY |              |  |                         | IND |              |  |  | 19,120 |  |  |  | 10,260 |  |  |  | 30,128 | 
|JFK Airport Park              |  |                                                    | 1  |          |  |      | NY |              |  |                         | IND |              |  |  |       |  |  |  | 2,350  |  |  |  | 7,251  | 
|JFK International Cargo 75&77 |  |                                                    | 2  |          |  |      | NJ |              |  |                         | IND |              |  |  |       |  |  |  |       |  |  |  | 30,965 | 
|Junction Industrial Park      |  |                                                    | 4  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 7,875  |  |  |  | 23,975 | 
|Kent Centre Corporate Park    |  |                                                    | 4  |          |  |      | WA |              |  |                         | IND |              |  |  |       |  |  |  | 3,042  |  |  |  | 9,165  | 
|Kingsport Industrial Park     |  |                                                    | 7  |          |  |      | WA |              |  |                         | IND |              |  |  | 16,232 |  |  |  | 7,919  |  |  |  | 23,798 | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                              |  |                                                    |       |                                  |  |              |        |          |  |              |        |               |  |         |        |  |  |  |       |  |  |  |      |  |  |  |      | 
|----------------------------- |  | -------------------------------------------------- | ----- | -------------------------------- |  | ------------ | ------ | -------- |  | ------------ | ------ | ------------- |  | ------- | ------ |  |  |  | ----- |  |  |  | ---- |  |  |  | ---- | 
|                              |  |                                                    |       |                                  |  |              |        |          |  |             
|                              |  |                                                    |       | Gross Amount Carried at 12/31/02 |  |              |        |          |  |             
|                              |  | Costs                                              |       |                                  |  |              |        |          |  |             
|                              |  | Capitalized                                        |       |                                  |  | Total        |        |          |  | Year of      |        | Depreciable  
|                              |  | Subsequent to                                      |       |                                  |  | Building &   |        | Costs(1) |  | Accumulated  |        | Construction/ |  | Life   
|Property                      |  | Acquisition                                        |       | Land                             |  | Improvements |        | (2)      |  | Depreciation |        | Acquisition   |  | (Years)
|                              |  |                                                    |       |                                  |  |              |        |          |  |              |        |               |  |        
|                              |  |                                                   
|                              |  | (In thousands, except number of buildings/centers)
|Hayward Industrial  Wiegman  |  |                                                    | 406   |                                  |  |              | 2,773  |          |  |              | 8,799  |               |  |         | 11,571 |  |  |  | 453   |  |  |  | 2000 |  |  |  | 5-40 | 
|Highway 17                    |  |                                                    |      |                                  |  |              | 8,185  |          |  |              | 6,516  |               |  |         | 14,701 |  |  |  | 35    |  |  |  | 2002 |  |  |  | 5-40 | 
|Hintz Building                |  |                                                    | 271   |                                  |  |              | 420    |          |  |              | 1,530  |               |  |         | 1,950  |  |  |  | 205   |  |  |  | 1998 |  |  |  | 5-40 | 
|Holton Drive                  |  |                                                    | 368   |                                  |  |              | 2,633  |          |  |              | 8,267  |               |  |         | 10,900 |  |  |  | 1,435 |  |  |  | 1997 |  |  |  | 5-40 | 
|IAD Cargo Building 5          |  |                                                    | 14    |                                  |  |              |       |          |  |              | 39,064 |               |  |         | 39,064 |  |  |  | 489   |  |  |  | 2002 |  |  |  | 5-40 | 
|International Multifoods      |  |                                                    | 1,059 |                                  |  |              | 1,613  |          |  |              | 5,938  |               |  |         | 7,551  |  |  |  | 783   |  |  |  | 1997 |  |  |  | 5-40 | 
|Interstate Crossdock          |  |                                                    | 67    |                                  |  |              | 12,712 |          |  |              | 19,362 |               |  |         | 32,074 |  |  |  | 201   |  |  |  | 2002 |  |  |  | 5-40 | 
|Itasca Industrial Portfolio   |  |                                                    | 2,744 |                                  |  |              | 6,416  |          |  |              | 22,033 |               |  |         | 28,449 |  |  |  | 3,651 |  |  |  | 1997 |  |  |  | 5-40 | 
|Jacksonville Air Cargo Centre |  |                                                    |      |                                  |  |              |       |          |  |              | 3,028  |               |  |         | 3,028  |  |  |  | 169   |  |  |  | 2000 |  |  |  | 5-40 | 
|Jamesburg                     |  |                                                    | 1,561 |                                  |  |              | 11,700 |          |  |              | 36,662 |               |  |         | 48,363 |  |  |  | 4,948 |  |  |  | 1998 |  |  |  | 5-40 | 
|Janitrol                      |  |                                                    | 313   |                                  |  |              | 1,797  |          |  |              | 5,703  |               |  |         | 7,499  |  |  |  | 775   |  |  |  | 1997 |  |  |  | 5-40 | 
|JFK Air Cargo  OP            |  |                                                    | 3,097 |                                  |  |              | 15,434 |          |  |              | 48,757 |               |  |         | 64,190 |  |  |  | 3,696 |  |  |  | 2000 |  |  |  | 5-40 | 
|JFK Air Cargo  AF I          |  |                                                    | 2,827 |                                  |  |              | 10,260 |          |  |              | 32,955 |               |  |         | 43,215 |  |  |  | 2,713 |  |  |  | 2000 |  |  |  | 5-40 | 
|JFK Airport Park              |  |                                                    | 507   |                                  |  |              | 2,350  |          |  |              | 7,757  |               |  |         | 10,107 |  |  |  | 582   |  |  |  | 2000 |  |  |  | 5-40 | 
|JFK International Cargo 75&77 |  |                                                    | 1,052 |                                  |  |              |       |          |  |              | 32,017 |               |  |         | 32,017 |  |  |  | 384   |  |  |  | 2002 |  |  |  | 5-40 | 
|Junction Industrial Park      |  |                                                    | 1,457 |                                  |  |              | 7,875  |          |  |              | 25,432 |               |  |         | 33,307 |  |  |  | 2,795 |  |  |  | 1999 |  |  |  | 5-40 | 
|Kent Centre Corporate Park    |  |                                                    | 954   |                                  |  |              | 3,042  |          |  |              | 10,120 |               |  |         | 13,161 |  |  |  | 1,660 |  |  |  | 1997 |  |  |  | 5-40 | 
|Kingsport Industrial Park     |  |                                                    | 2,658 |                                  |  |              | 7,919  |          |  |              | 26,457 |               |  |         | 34,376 |  |  |  | 3,964 |  |  |  | 1997 |  |  |  | 5-40 | 

S-8



---



##### 



AMB PROPERTY, L.P.


SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED
DEPRECIATION  (Continued)

|                                 |  |                                                    |   |          |  |      |    |              |  |                         |     |              |  |  |        |  |  |  |        |  |  |  |        | 
|-------------------------------- |  | -------------------------------------------------- | - | -------- |  | ---- | -- | ------------ |  | ----------------------- | --- | ------------ |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|                                 |  |                                                    |   |          |  |      |    |              |  |                        
|                                 |  |                                                    |   |          |  |      |    |              |  | Initial Cost to Company
|                                 |  |                                                    |   |          |  |      |    |              |  |                        
|                                 |  | No. of                                             |   |          |  |      |    |              |  |                         |     | Building &  
|Property                         |  | Bldgs./ Ctrs.                                      |   | Location |  | Type |    | Encumbrances |  | Land                    |     | Improvements
|                                 |  |                                                    |   |          |  |      |    |              |  |                         |     |             
|                                 |  |                                                   
|                                 |  | (In thousands, except number of buildings/centers)
|L.A. County Industrial Portfolio |  |                                                    | 6 |          |  |      | CA |              |  |                         | IND |              |  |  | 23,161 |  |  |  | 8,226  |  |  |  | 29,242 | 
|LA Media Tech Center             |  |                                                    | 7 |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 12,810 |  |  |  | 12,531 | 
|Laurelwood Drive                 |  |                                                    | 2 |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 2,750  |  |  |  | 8,538  | 
|Lawrence SSF                     |  |                                                    | 1 |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 2,870  |  |  |  | 5,521  | 
|LAX Air Cargo Centre             |  |                                                    | 3 |          |  |      | CA |              |  |                         | IND |              |  |  | 7,590  |  |  |  |       |  |  |  | 13,445 | 
|Lincoln Industrial Center        |  |                                                    | 1 |          |  |      | TX |              |  |                         | IND |              |  |  |       |  |  |  | 671    |  |  |  | 2,052  | 
|Linden Industrial                |  |                                                    | 1 |          |  |      | NJ |              |  |                         | IND |              |  |  |       |  |  |  | 900    |  |  |  | 2,753  | 
|Locke Drive                      |  |                                                    | 1 |          |  |      | MA |              |  |                         | IND |              |  |  |       |  |  |  | 1,074  |  |  |  | 3,227  | 
|Lonestar                         |  |                                                    | 7 |          |  |      | TX |              |  |                         | IND |              |  |  | 16,665 |  |  |  | 6,878  |  |  |  | 21,154 | 
|Los Nietos                       |  |                                                    | 4 |          |  |      | CA |              |  |                         | IND |              |  |  | 8,109  |  |  |  | 2,459  |  |  |  | 7,751  | 
|MCI I Air Cargo Centre           |  |                                                    | 1 |          |  |      | MO |              |  |                         | IND |              |  |  | 5,255  |  |  |  |       |  |  |  | 5,793  | 
|MCI II Air Cargo Centre          |  |                                                    | 1 |          |  |      | MO |              |  |                         | IND |              |  |  | 9,350  |  |  |  |       |  |  |  | 8,134  | 
|Mahwah Corporate Center          |  |                                                    | 5 |          |  |      | NJ |              |  |                         | IND |              |  |  |       |  |  |  | 9,003  |  |  |  | 27,573 | 
|Marietta Industrial              |  |                                                    | 3 |          |  |      | GA |              |  |                         | IND |              |  |  |       |  |  |  | 1,830  |  |  |  | 5,489  | 
|Marina Business Park             |  |                                                    | 2 |          |  |      | CA |              |  |                         | IND |              |  |  | 4,387  |  |  |  | 3,280  |  |  |  | 4,316  | 
|Martin/ Scott Ind Port           |  |                                                    | 2 |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 9,052  |  |  |  | 5,309  | 
|Mazzeo                           |  |                                                    | 1 |          |  |      | MA |              |  |                         | RET |              |  |  | 3,372  |  |  |  | 1,477  |  |  |  | 4,432  | 
|Meadow Lane 495                  |  |                                                    | 1 |          |  |      | NJ |              |  |                         | IND |              |  |  |       |  |  |  | 838    |  |  |  | 2,594  | 
|Meadowlands AF II                |  |                                                    | 4 |          |  |      | NJ |              |  |                         | IND |              |  |  | 12,400 |  |  |  | 6,755  |  |  |  | 13,093 | 
|Meadowlands Cross Dock           |  |                                                    | 1 |          |  |      | NJ |              |  |                         | IND |              |  |  |       |  |  |  | 1,110  |  |  |  | 3,485  | 
|Meadowridge                      |  |                                                    | 3 |          |  |      | MD |              |  |                         | IND |              |  |  |       |  |  |  | 3,716  |  |  |  | 11,147 | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                 |  |                                                    |        |                                  |  |              |        |          |  |              |        |               |  |         |        |  |  |  |       |  |  |  |      |  |  |  |      | 
|-------------------------------- |  | -------------------------------------------------- | ------ | -------------------------------- |  | ------------ | ------ | -------- |  | ------------ | ------ | ------------- |  | ------- | ------ |  |  |  | ----- |  |  |  | ---- |  |  |  | ---- | 
|                                 |  |                                                    |        |                                  |  |              |        |          |  |             
|                                 |  |                                                    |        | Gross Amount Carried at 12/31/02 |  |              |        |          |  |             
|                                 |  | Costs                                              |        |                                  |  |              |        |          |  |             
|                                 |  | Capitalized                                        |        |                                  |  | Total        |        |          |  | Year of      |        | Depreciable  
|                                 |  | Subsequent to                                      |        |                                  |  | Building &   |        | Costs(1) |  | Accumulated  |        | Construction/ |  | Life   
|Property                         |  | Acquisition                                        |        | Land                             |  | Improvements |        | (2)      |  | Depreciation |        | Acquisition   |  | (Years)
|                                 |  |                                                    |        |                                  |  |              |        |          |  |              |        |               |  |        
|                                 |  |                                                   
|                                 |  | (In thousands, except number of buildings/centers)
|L.A. County Industrial Portfolio |  |                                                    | 685    |                                  |  |              | 8,226  |          |  |              | 29,927 |               |  |         | 38,153 |  |  |  | 1,420 |  |  |  | 1997 |  |  |  | 5-40 | 
|LA Media Tech Center             |  |                                                    | 27,341 |                                  |  |              | 12,810 |          |  |              | 39,872 |               |  |         | 52,682 |  |  |  | 2,216 |  |  |  | 1998 |  |  |  | 5-40 | 
|Laurelwood Drive                 |  |                                                    | 123    |                                  |  |              | 2,750  |          |  |              | 8,661  |               |  |         | 11,411 |  |  |  | 1,174 |  |  |  | 1997 |  |  |  | 5-40 | 
|Lawrence SSF                     |  |                                                    | 1,124  |                                  |  |              | 2,870  |          |  |              | 6,644  |               |  |         | 9,514  |  |  |  | 391   |  |  |  | 2001 |  |  |  | 5-40 | 
|LAX Air Cargo Centre             |  |                                                    | 123    |                                  |  |              |       |          |  |              | 13,568 |               |  |         | 13,568 |  |  |  | 766   |  |  |  | 2000 |  |  |  | 5-40 | 
|Lincoln Industrial Center        |  |                                                    | 211    |                                  |  |              | 671    |          |  |              | 2,262  |               |  |         | 2,933  |  |  |  | 399   |  |  |  | 1997 |  |  |  | 5-40 | 
|Linden Industrial                |  |                                                    | 449    |                                  |  |              | 900    |          |  |              | 3,201  |               |  |         | 4,101  |  |  |  | 264   |  |  |  | 1999 |  |  |  | 5-40 | 
|Locke Drive                      |  |                                                    | 113    |                                  |  |              | 1,074  |          |  |              | 3,339  |               |  |         | 4,413  |  |  |  | 399   |  |  |  | 1998 |  |  |  | 5-40 | 
|Lonestar                         |  |                                                    | 503    |                                  |  |              | 6,878  |          |  |              | 21,657 |               |  |         | 28,536 |  |  |  | 289   |  |  |  | 1997 |  |  |  | 5-40 | 
|Los Nietos                       |  |                                                    | 134    |                                  |  |              | 2,459  |          |  |              | 7,884  |               |  |         | 10,344 |  |  |  | 382   |  |  |  | 1999 |  |  |  | 5-40 | 
|MCI I Air Cargo Centre           |  |                                                    | 88     |                                  |  |              |       |          |  |              | 5,882  |               |  |         | 5,882  |  |  |  | 368   |  |  |  | 2000 |  |  |  | 5-40 | 
|MCI II Air Cargo Centre          |  |                                                    |       |                                  |  |              |       |          |  |              | 8,134  |               |  |         | 8,134  |  |  |  | 441   |  |  |  | 2000 |  |  |  | 5-40 | 
|Mahwah Corporate Center          |  |                                                    | 485    |                                  |  |              | 9,003  |          |  |              | 28,058 |               |  |         | 37,061 |  |  |  | 3,010 |  |  |  | 1998 |  |  |  | 5-40 | 
|Marietta Industrial              |  |                                                    | 1,493  |                                  |  |              | 1,830  |          |  |              | 6,983  |               |  |         | 8,812  |  |  |  | 1,278 |  |  |  | 1998 |  |  |  | 5-40 | 
|Marina Business Park             |  |                                                    |       |                                  |  |              | 3,280  |          |  |              | 4,316  |               |  |         | 7,596  |  |  |  | 36    |  |  |  | 2002 |  |  |  | 5-40 | 
|Martin/ Scott Ind Port           |  |                                                    | 296    |                                  |  |              | 9,052  |          |  |              | 5,605  |               |  |         | 14,657 |  |  |  | 216   |  |  |  | 2001 |  |  |  | 5-40 | 
|Mazzeo                           |  |                                                    | 218    |                                  |  |              | 1,477  |          |  |              | 4,650  |               |  |         | 6,127  |  |  |  | 539   |  |  |  | 1998 |  |  |  | 5-40 | 
|Meadow Lane 495                  |  |                                                    | 279    |                                  |  |              | 838    |          |  |              | 2,874  |               |  |         | 3,711  |  |  |  | 265   |  |  |  | 1999 |  |  |  | 5-40 | 
|Meadowlands AF II                |  |                                                    | 990    |                                  |  |              | 6,755  |          |  |              | 14,082 |               |  |         | 20,837 |  |  |  | 644   |  |  |  | 2001 |  |  |  | 5-40 | 
|Meadowlands Cross Dock           |  |                                                    | 935    |                                  |  |              | 1,110  |          |  |              | 4,420  |               |  |         | 5,530  |  |  |  | 443   |  |  |  | 2000 |  |  |  | 5-40 | 
|Meadowridge                      |  |                                                    | 339    |                                  |  |              | 3,716  |          |  |              | 11,487 |               |  |         | 15,202 |  |  |  | 1,429 |  |  |  | 1998 |  |  |  | 5-40 | 

S-9



---



##### 



AMB PROPERTY, L.P.


SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED
DEPRECIATION  (Continued)

|                                                          |  |                                                    |    |          |  |      |    |              |  |                         |     |              |  |  |        |  |  |  |        |  |  |  |        | 
|--------------------------------------------------------- |  | -------------------------------------------------- | -- | -------- |  | ---- | -- | ------------ |  | ----------------------- | --- | ------------ |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|                                                          |  |                                                    |    |          |  |      |    |              |  |                        
|                                                          |  |                                                    |    |          |  |      |    |              |  | Initial Cost to Company
|                                                          |  |                                                    |    |          |  |      |    |              |  |                        
|                                                          |  | No. of                                             |    |          |  |      |    |              |  |                         |     | Building &  
|Property                                                  |  | Bldgs./ Ctrs.                                      |    | Location |  | Type |    | Encumbrances |  | Land                    |     | Improvements
|                                                          |  |                                                    |    |          |  |      |    |              |  |                         |     |             
|                                                          |  |                                                   
|                                                          |  | (In thousands, except number of buildings/centers)
|Melrose Park                                              |  |                                                    | 1  |          |  |      | IL |              |  |                         | IND |              |  |  |       |  |  |  | 2,936  |  |  |  | 9,190  | 
|Mendota Heights                                           |  |                                                    | 1  |          |  |      | MN |              |  |                         | IND |              |  |  |       |  |  |  | 1,367  |  |  |  | 4,565  | 
|Metric Center                                             |  |                                                    | 5  |          |  |      | TX |              |  |                         | IND |              |  |  |       |  |  |  | 10,968 |  |  |  | 32,944 | 
|Miami Airport Business Center                             |  |                                                    | 6  |          |  |      | FL |              |  |                         | IND |              |  |  |       |  |  |  | 6,400  |  |  |  | 19,634 | 
|Milmont Page Business Center                              |  |                                                    | 3  |          |  |      | CA |              |  |                         | IND |              |  |  | 11,561 |  |  |  | 1,836  |  |  |  | 10,600 | 
|Minneapolis Distribution Portfolio                        |  |                                                    | 4  |          |  |      | MN |              |  |                         | IND |              |  |  |       |  |  |  | 6,227  |  |  |  | 18,692 | 
|Minneapolis Industrial Portfolio IV                       |  |                                                    | 4  |          |  |      | MN |              |  |                         | IND |              |  |  | 7,420  |  |  |  | 4,938  |  |  |  | 14,854 | 
|Minneapolis Industrial V                                  |  |                                                    | 7  |          |  |      | MN |              |  |                         | IND |              |  |  | 4,885  |  |  |  | 4,426  |  |  |  | 13,317 | 
|Minnetonka                                                |  |                                                    | 10 |          |  |      | MN |              |  |                         | IND |              |  |  | 11,259 |  |  |  | 6,690  |  |  |  | 20,380 | 
|Moffett Business Center (MBC Industrial)                  |  |                                                    | 4  |          |  |      | CA |              |  |                         | IND |              |  |  | 11,605 |  |  |  | 5,892  |  |  |  | 17,716 | 
|Moffett Distribution                                      |  |                                                    | 7  |          |  |      | CA |              |  |                         | IND |              |  |  | 21,130 |  |  |  | 26,916 |  |  |  | 11,277 | 
|Moffett Park R&D Portfolio                                |  |                                                    | 14 |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 14,805 |  |  |  | 44,462 | 
|Moonachie Industrial                                      |  |                                                    | 2  |          |  |      | NJ |              |  |                         | IND |              |  |  | 4,825  |  |  |  | 2,731  |  |  |  | 5,228  | 
|Murray Hill Parkway                                       |  |                                                    | 2  |          |  |      | NJ |              |  |                         | IND |              |  |  |       |  |  |  | 1,670  |  |  |  | 2,568  | 
|NDP  Chicago (Formerly Glen Ellyn
    Rd. & Mitel Drive) |  |                                                    | 3  |          |  |      | IL |              |  |                         | IND |              |  |  |       |  |  |  | 1,496  |  |  |  | 4,487  | 
|NDP  Los Angeles                                         |  |                                                    | 6  |          |  |      | CA |              |  |                         | IND |              |  |  | 9,313  |  |  |  | 5,948  |  |  |  | 17,844 | 
|NDP  Seattle                                             |  |                                                    | 4  |          |  |      | WA |              |  |                         | IND |              |  |  | 12,041 |  |  |  | 3,758  |  |  |  | 11,773 | 
|Newark Airport I& II                                      |  |                                                    | 2  |          |  |      | NJ |              |  |                         | IND |              |  |  | 3,694  |  |  |  | 1,755  |  |  |  | 5,400  | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                          |  |                                                    |       |                                  |  |              |        |          |  |              |        |               |  |         |        |  |  |  |        |  |  |  |      |  |  |  |      | 
|--------------------------------------------------------- |  | -------------------------------------------------- | ----- | -------------------------------- |  | ------------ | ------ | -------- |  | ------------ | ------ | ------------- |  | ------- | ------ |  |  |  | ------ |  |  |  | ---- |  |  |  | ---- | 
|                                                          |  |                                                    |       |                                  |  |              |        |          |  |             
|                                                          |  |                                                    |       | Gross Amount Carried at 12/31/02 |  |              |        |          |  |             
|                                                          |  | Costs                                              |       |                                  |  |              |        |          |  |             
|                                                          |  | Capitalized                                        |       |                                  |  | Total        |        |          |  | Year of      |        | Depreciable  
|                                                          |  | Subsequent to                                      |       |                                  |  | Building &   |        | Costs(1) |  | Accumulated  |        | Construction/ |  | Life   
|Property                                                  |  | Acquisition                                        |       | Land                             |  | Improvements |        | (2)      |  | Depreciation |        | Acquisition   |  | (Years)
|                                                          |  |                                                    |       |                                  |  |              |        |          |  |              |        |               |  |        
|                                                          |  |                                                   
|                                                          |  | (In thousands, except number of buildings/centers)
|Melrose Park                                              |  |                                                    | 1,737 |                                  |  |              | 2,936  |          |  |              | 10,927 |               |  |         | 13,863 |  |  |  | 1,654  |  |  |  | 1997 |  |  |  | 5-40 | 
|Mendota Heights                                           |  |                                                    | 2,051 |                                  |  |              | 1,367  |          |  |              | 6,616  |               |  |         | 7,983  |  |  |  | 2,379  |  |  |  | 1998 |  |  |  | 5-40 | 
|Metric Center                                             |  |                                                    | 979   |                                  |  |              | 10,968 |          |  |              | 33,923 |               |  |         | 44,891 |  |  |  | 4,573  |  |  |  | 1997 |  |  |  | 5-40 | 
|Miami Airport Business Center                             |  |                                                    | 1,781 |                                  |  |              | 6,400  |          |  |              | 21,415 |               |  |         | 27,815 |  |  |  | 2,269  |  |  |  | 1999 |  |  |  | 5-40 | 
|Milmont Page Business Center                              |  |                                                    | 317   |                                  |  |              | 1,836  |          |  |              | 10,917 |               |  |         | 12,752 |  |  |  | 498    |  |  |  | 1997 |  |  |  | 5-40 | 
|Minneapolis Distribution Portfolio                        |  |                                                    | 4,083 |                                  |  |              | 6,227  |          |  |              | 22,775 |               |  |         | 29,001 |  |  |  | 3,238  |  |  |  | 1997 |  |  |  | 5-40 | 
|Minneapolis Industrial Portfolio IV                       |  |                                                    | 1,979 |                                  |  |              | 4,938  |          |  |              | 16,833 |               |  |         | 21,771 |  |  |  | 2,750  |  |  |  | 1997 |  |  |  | 5-40 | 
|Minneapolis Industrial V                                  |  |                                                    | 2,319 |                                  |  |              | 4,426  |          |  |              | 15,635 |               |  |         | 20,061 |  |  |  | 2,585  |  |  |  | 1997 |  |  |  | 5-40 | 
|Minnetonka                                                |  |                                                    | 2,896 |                                  |  |              | 6,690  |          |  |              | 23,277 |               |  |         | 29,967 |  |  |  | 3,323  |  |  |  | 1998 |  |  |  | 5-40 | 
|Moffett Business Center (MBC Industrial)                  |  |                                                    | 3,211 |                                  |  |              | 5,892  |          |  |              | 20,927 |               |  |         | 26,820 |  |  |  | 2,948  |  |  |  | 1997 |  |  |  | 5-40 | 
|Moffett Distribution                                      |  |                                                    | 933   |                                  |  |              | 26,916 |          |  |              | 12,211 |               |  |         | 39,127 |  |  |  | 355    |  |  |  | 2001 |  |  |  | 5-40 | 
|Moffett Park R&D Portfolio                                |  |                                                    | 9,081 |                                  |  |              | 14,805 |          |  |              | 53,543 |               |  |         | 68,348 |  |  |  | 10,072 |  |  |  | 1997 |  |  |  | 5-40 | 
|Moonachie Industrial                                      |  |                                                    | 258   |                                  |  |              | 2,731  |          |  |              | 5,486  |               |  |         | 8,217  |  |  |  | 274    |  |  |  | 2001 |  |  |  | 5-40 | 
|Murray Hill Parkway                                       |  |                                                    | 5,195 |                                  |  |              | 1,670  |          |  |              | 7,763  |               |  |         | 9,433  |  |  |  | 1,053  |  |  |  | 1999 |  |  |  | 5-40 | 
|NDP  Chicago (Formerly Glen Ellyn
    Rd. & Mitel Drive) |  |                                                    | 694   |                                  |  |              | 1,496  |          |  |              | 5,181  |               |  |         | 6,677  |  |  |  | 783    |  |  |  | 1998 |  |  |  | 5-40 | 
|NDP  Los Angeles                                         |  |                                                    | 1,226 |                                  |  |              | 5,948  |          |  |              | 19,069 |               |  |         | 25,017 |  |  |  | 2,442  |  |  |  | 1998 |  |  |  | 5-40 | 
|NDP  Seattle                                             |  |                                                    | 97    |                                  |  |              | 3,758  |          |  |              | 11,870 |               |  |         | 15,629 |  |  |  | 151    |  |  |  | 1998 |  |  |  | 5-40 | 
|Newark Airport I& II                                      |  |                                                    | 395   |                                  |  |              | 1,755  |          |  |              | 5,794  |               |  |         | 7,549  |  |  |  | 465    |  |  |  | 2000 |  |  |  | 5-40 | 

S-10



---



##### 



AMB PROPERTY, L.P.


SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED
DEPRECIATION  (Continued)

|                                |  |                                                    |    |          |  |      |    |              |  |                         |     |              |  |  |        |  |  |  |        |  |  |  |        | 
|------------------------------- |  | -------------------------------------------------- | -- | -------- |  | ---- | -- | ------------ |  | ----------------------- | --- | ------------ |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|                                |  |                                                    |    |          |  |      |    |              |  |                        
|                                |  |                                                    |    |          |  |      |    |              |  | Initial Cost to Company
|                                |  |                                                    |    |          |  |      |    |              |  |                        
|                                |  | No. of                                             |    |          |  |      |    |              |  |                         |     | Building &  
|Property                        |  | Bldgs./ Ctrs.                                      |    | Location |  | Type |    | Encumbrances |  | Land                    |     | Improvements
|                                |  |                                                    |    |          |  |      |    |              |  |                         |     |             
|                                |  |                                                   
|                                |  | (In thousands, except number of buildings/centers)
|Nicholas Warehouse              |  |                                                    | 1  |          |  |      | IL |              |  |                         | IND |              |  |  |       |  |  |  | 2,599  |  |  |  | 1,883  | 
|Norcross/ Brookhollow Portfolio |  |                                                    | 4  |          |  |      | GA |              |  |                         | IND |              |  |  |       |  |  |  | 3,721  |  |  |  | 11,180 | 
|Northfield Distribution Center  |  |                                                    | 4  |          |  |      | TX |              |  |                         | IND |              |  |  | 12,401 |  |  |  | 3,944  |  |  |  | 16,033 | 
|Normandie Industrial            |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 2,398  |  |  |  | 7,491  | 
|Northbrook Distribution Center  |  |                                                    | 1  |          |  |      | GA |              |  |                         | IND |              |  |  |       |  |  |  | 1,039  |  |  |  | 3,481  | 
|Northpointe Commerce            |  |                                                    | 2  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 1,773  |  |  |  | 5,358  | 
|Northwest Distribution Center   |  |                                                    | 3  |          |  |      | WA |              |  |                         | IND |              |  |  |       |  |  |  | 3,533  |  |  |  | 10,751 | 
|Novato Fair Shopping Center     |  |                                                    | 1  |          |  |      | CA |              |  |                         | RET |              |  |  | 7,806  |  |  |  | 4,393  |  |  |  | 8,424  | 
|Oakland Ridge Industrial Center |  |                                                    | 12 |          |  |      | MD |              |  |                         | IND |              |  |  | 4,293  |  |  |  | 5,571  |  |  |  | 16,933 | 
|OHare Industrial Portfolio     |  |                                                    | 15 |          |  |      | IL |              |  |                         | IND |              |  |  |       |  |  |  | 7,357  |  |  |  | 22,112 | 
|Orlando Central Park            |  |                                                    | 2  |          |  |      | FL |              |  |                         | IND |              |  |  |       |  |  |  | 1,779  |  |  |  | 979    | 
|Orchard Hill                    |  |                                                    | 1  |          |  |      | NJ |              |  |                         | IND |              |  |  |       |  |  |  | 1,212  |  |  |  | 1,411  | 
|Pacific Business Center         |  |                                                    | 2  |          |  |      | CA |              |  |                         | IND |              |  |  | 8,890  |  |  |  | 5,417  |  |  |  | 16,291 | 
|Pacific Service Center          |  |                                                    | 1  |          |  |      | GA |              |  |                         | IND |              |  |  |       |  |  |  | 504    |  |  |  | 1,511  | 
|Palm Aire                       |  |                                                    | 1  |          |  |      | FL |              |  |                         | RET |              |  |  |       |  |  |  | 2,279  |  |  |  | 9,720  | 
|Pardee Drive                    |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  | 1,559  |  |  |  | 619    |  |  |  | 1,880  | 
|Park One at LAX, LLC            |  |                                                    | 0  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 75,000 |  |  |  | 431    | 
|Parkway Business Center         |  |                                                    | 1  |          |  |      | MN |              |  |                         | IND |              |  |  |       |  |  |  | 475    |  |  |  | 1,425  | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                |  |                                                    |       |                                  |  |              |        |          |  |              |        |               |  |         |        |  |  |  |       |  |  |  |      |  |  |  |      | 
|------------------------------- |  | -------------------------------------------------- | ----- | -------------------------------- |  | ------------ | ------ | -------- |  | ------------ | ------ | ------------- |  | ------- | ------ |  |  |  | ----- |  |  |  | ---- |  |  |  | ---- | 
|                                |  |                                                    |       |                                  |  |              |        |          |  |             
|                                |  |                                                    |       | Gross Amount Carried at 12/31/02 |  |              |        |          |  |             
|                                |  | Costs                                              |       |                                  |  |              |        |          |  |             
|                                |  | Capitalized                                        |       |                                  |  | Total        |        |          |  | Year of      |        | Depreciable  
|                                |  | Subsequent to                                      |       |                                  |  | Building &   |        | Costs(1) |  | Accumulated  |        | Construction/ |  | Life   
|Property                        |  | Acquisition                                        |       | Land                             |  | Improvements |        | (2)      |  | Depreciation |        | Acquisition   |  | (Years)
|                                |  |                                                    |       |                                  |  |              |        |          |  |              |        |               |  |        
|                                |  |                                                   
|                                |  | (In thousands, except number of buildings/centers)
|Nicholas Warehouse              |  |                                                    | 199   |                                  |  |              | 2,599  |          |  |              | 2,081  |               |  |         | 4,681  |  |  |  | 92    |  |  |  | 2001 |  |  |  | 5-40 | 
|Norcross/ Brookhollow Portfolio |  |                                                    | 1,094 |                                  |  |              | 3,721  |          |  |              | 12,274 |               |  |         | 15,995 |  |  |  | 1,896 |  |  |  | 1997 |  |  |  | 5-40 | 
|Northfield Distribution Center  |  |                                                    | 24    |                                  |  |              | 3,944  |          |  |              | 16,056 |               |  |         | 20,001 |  |  |  | 403   |  |  |  | 2002 |  |  |  | 5-40 | 
|Normandie Industrial            |  |                                                    | 1,018 |                                  |  |              | 2,398  |          |  |              | 8,508  |               |  |         | 10,906 |  |  |  | 613   |  |  |  | 2000 |  |  |  | 5-40 | 
|Northbrook Distribution Center  |  |                                                    | 964   |                                  |  |              | 1,039  |          |  |              | 4,445  |               |  |         | 5,484  |  |  |  | 804   |  |  |  | 2000 |  |  |  | 5-40 | 
|Northpointe Commerce            |  |                                                    | 332   |                                  |  |              | 1,773  |          |  |              | 5,691  |               |  |         | 7,464  |  |  |  | 880   |  |  |  | 1997 |  |  |  | 5-40 | 
|Northwest Distribution Center   |  |                                                    | 997   |                                  |  |              | 3,533  |          |  |              | 11,748 |               |  |         | 15,281 |  |  |  | 1,897 |  |  |  | 1997 |  |  |  | 5-40 | 
|Novato Fair Shopping Center     |  |                                                    | 2,505 |                                  |  |              | 4,393  |          |  |              | 10,929 |               |  |         | 15,322 |  |  |  | 550   |  |  |  | 2001 |  |  |  | 5-40 | 
|Oakland Ridge Industrial Center |  |                                                    | 6,116 |                                  |  |              | 5,571  |          |  |              | 23,049 |               |  |         | 28,620 |  |  |  | 3,127 |  |  |  | 1999 |  |  |  | 5-40 | 
|OHare Industrial Portfolio     |  |                                                    | 2,551 |                                  |  |              | 7,357  |          |  |              | 24,663 |               |  |         | 32,020 |  |  |  | 3,930 |  |  |  | 1997 |  |  |  | 5-40 | 
|Orlando Central Park            |  |                                                    | 9,914 |                                  |  |              | 1,779  |          |  |              | 10,892 |               |  |         | 12,671 |  |  |  | 1,453 |  |  |  | 1998 |  |  |  | 5-40 | 
|Orchard Hill                    |  |                                                    |      |                                  |  |              | 1,212  |          |  |              | 1,411  |               |  |         | 2,622  |  |  |  | 12    |  |  |  | 2002 |  |  |  | 5-40 | 
|Pacific Business Center         |  |                                                    | 962   |                                  |  |              | 5,417  |          |  |              | 17,253 |               |  |         | 22,670 |  |  |  | 2,553 |  |  |  | 1997 |  |  |  | 5-40 | 
|Pacific Service Center          |  |                                                    | 659   |                                  |  |              | 504    |          |  |              | 2,170  |               |  |         | 2,674  |  |  |  | 708   |  |  |  | 1998 |  |  |  | 5-40 | 
|Palm Aire                       |  |                                                    | 6,789 |                                  |  |              | 2,452  |          |  |              | 16,335 |               |  |         | 18,787 |  |  |  | 1,649 |  |  |  | 1996 |  |  |  | 5-40 | 
|Pardee Drive                    |  |                                                    | 64    |                                  |  |              | 619    |          |  |              | 1,944  |               |  |         | 2,563  |  |  |  | 92    |  |  |  | 1999 |  |  |  | 5-40 | 
|Park One at LAX, LLC            |  |                                                    |      |                                  |  |              | 75,000 |          |  |              | 431    |               |  |         | 75,431 |  |  |  |      |  |  |  | 2002 |  |  |  | 5-40 | 
|Parkway Business Center         |  |                                                    | 528   |                                  |  |              | 475    |          |  |              | 1,953  |               |  |         | 2,428  |  |  |  | 341   |  |  |  | 1998 |  |  |  | 5-40 | 

S-11



---



##### 



AMB PROPERTY, L.P.


SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED
DEPRECIATION  (Continued)

|                              |  |                                                    |   |          |  |      |    |              |  |                         |     |              |  |  |        |  |  |  |        |  |  |  |        | 
|----------------------------- |  | -------------------------------------------------- | - | -------- |  | ---- | -- | ------------ |  | ----------------------- | --- | ------------ |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|                              |  |                                                    |   |          |  |      |    |              |  |                        
|                              |  |                                                    |   |          |  |      |    |              |  | Initial Cost to Company
|                              |  |                                                    |   |          |  |      |    |              |  |                        
|                              |  | No. of                                             |   |          |  |      |    |              |  |                         |     | Building &  
|Property                      |  | Bldgs./ Ctrs.                                      |   | Location |  | Type |    | Encumbrances |  | Land                    |     | Improvements
|                              |  |                                                    |   |          |  |      |    |              |  |                         |     |             
|                              |  |                                                   
|                              |  | (In thousands, except number of buildings/centers)
|Patuxent Range Road           |  |                                                    | 2 |          |  |      | MD |              |  |                         | IND |              |  |  |       |  |  |  | 1,696  |  |  |  | 5,127  | 
|Patuxent Alliance 8280        |  |                                                    | 1 |          |  |      | MD |              |  |                         | IND |              |  |  |       |  |  |  | 887    |  |  |  | 1,706  | 
|Peninsula Business Center III |  |                                                    | 1 |          |  |      | VA |              |  |                         | IND |              |  |  |       |  |  |  | 992    |  |  |  | 2,976  | 
|Penn James Office Warehouse   |  |                                                    | 2 |          |  |      | MN |              |  |                         | IND |              |  |  |       |  |  |  | 1,991  |  |  |  | 6,013  | 
|Pioneer Alburtis              |  |                                                    | 5 |          |  |      | CA |              |  |                         | IND |              |  |  | 7,150  |  |  |  | 2,433  |  |  |  | 7,166  | 
|Poplar Gateway Truck Terminal |  |                                                    | 1 |          |  |      | IL |              |  |                         | IND |              |  |  |       |  |  |  | 4,551  |  |  |  | 3,152  | 
|Porete Avenue Warehouse       |  |                                                    | 1 |          |  |      | NJ |              |  |                         | IND |              |  |  |       |  |  |  | 4,067  |  |  |  | 12,202 | 
|Portland Air Cargo Center     |  |                                                    | 2 |          |  |      | OR |              |  |                         | IND |              |  |  |       |  |  |  |       |  |  |  | 26     | 
|Presidents Drive              |  |                                                    | 6 |          |  |      | FL |              |  |                         | IND |              |  |  |       |  |  |  | 5,770  |  |  |  | 17,655 | 
|Preston Court                 |  |                                                    | 1 |          |  |      | MD |              |  |                         | IND |              |  |  |       |  |  |  | 2,313  |  |  |  | 7,192  | 
|Production Drive              |  |                                                    | 1 |          |  |      | KY |              |  |                         | IND |              |  |  |       |  |  |  | 425    |  |  |  | 1,286  | 
|Puget Sound Airfreight        |  |                                                    | 1 |          |  |      | WA |              |  |                         | IND |              |  |  |       |  |  |  | 1,329  |  |  |  | 1,830  | 
|Renton Northwest Corp. Park   |  |                                                    | 6 |          |  |      | WA |              |  |                         | IND |              |  |  | 24,400 |  |  |  | 25,959 |  |  |  | 14,792 | 
|Richardson Tech Center        |  |                                                    | 2 |          |  |      | TX |              |  |                         | IND |              |  |  | 5,183  |  |  |  | 1,320  |  |  |  | 5,887  | 
|The Rotunda                   |  |                                                    | 2 |          |  |      | MD |              |  |                         | IND |              |  |  | 12,669 |  |  |  | 4,400  |  |  |  | 17,736 | 
|Round Lake Business Center    |  |                                                    | 1 |          |  |      | MN |              |  |                         | IND |              |  |  |       |  |  |  | 875    |  |  |  | 2,625  | 
|Sand Lake Service Center      |  |                                                    | 6 |          |  |      | FL |              |  |                         | IND |              |  |  |       |  |  |  | 3,483  |  |  |  | 10,585 | 
|Santa Barbara Court           |  |                                                    | 1 |          |  |      | MD |              |  |                         | IND |              |  |  |       |  |  |  | 1,617  |  |  |  | 5,029  | 
|Scripps Sorrento              |  |                                                    | 1 |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 1,110  |  |  |  | 3,330  | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                              |  |                                                    |        |                                  |  |              |        |          |  |              |        |               |  |         |        |  |  |  |       |  |  |  |      |  |  |  |      | 
|----------------------------- |  | -------------------------------------------------- | ------ | -------------------------------- |  | ------------ | ------ | -------- |  | ------------ | ------ | ------------- |  | ------- | ------ |  |  |  | ----- |  |  |  | ---- |  |  |  | ---- | 
|                              |  |                                                    |        |                                  |  |              |        |          |  |             
|                              |  |                                                    |        | Gross Amount Carried at 12/31/02 |  |              |        |          |  |             
|                              |  | Costs                                              |        |                                  |  |              |        |          |  |             
|                              |  | Capitalized                                        |        |                                  |  | Total        |        |          |  | Year of      |        | Depreciable  
|                              |  | Subsequent to                                      |        |                                  |  | Building &   |        | Costs(1) |  | Accumulated  |        | Construction/ |  | Life   
|Property                      |  | Acquisition                                        |        | Land                             |  | Improvements |        | (2)      |  | Depreciation |        | Acquisition   |  | (Years)
|                              |  |                                                    |        |                                  |  |              |        |          |  |              |        |               |  |        
|                              |  |                                                   
|                              |  | (In thousands, except number of buildings/centers)
|Patuxent Range Road           |  |                                                    | 431    |                                  |  |              | 1,696  |          |  |              | 5,558  |               |  |         | 7,254  |  |  |  | 879   |  |  |  | 1997 |  |  |  | 5-40 | 
|Patuxent Alliance 8280        |  |                                                    | 43     |                                  |  |              | 887    |          |  |              | 1,749  |               |  |         | 2,636  |  |  |  | 79    |  |  |  | 2001 |  |  |  | 5-40 | 
|Peninsula Business Center III |  |                                                    | 195    |                                  |  |              | 992    |          |  |              | 3,171  |               |  |         | 4,162  |  |  |  | 350   |  |  |  | 1998 |  |  |  | 5-40 | 
|Penn James Office Warehouse   |  |                                                    | 1,028  |                                  |  |              | 1,991  |          |  |              | 7,041  |               |  |         | 9,032  |  |  |  | 1,170 |  |  |  | 1997 |  |  |  | 5-40 | 
|Pioneer Alburtis              |  |                                                    | 357    |                                  |  |              | 2,433  |          |  |              | 7,523  |               |  |         | 9,956  |  |  |  | 421   |  |  |  | 1999 |  |  |  | 5-40 | 
|Poplar Gateway Truck Terminal |  |                                                    |       |                                  |  |              | 4,551  |          |  |              | 3,152  |               |  |         | 7,703  |  |  |  |      |  |  |  | 2002 |  |  |  | 5-40 | 
|Porete Avenue Warehouse       |  |                                                    | 10,667 |                                  |  |              | 4,067  |          |  |              | 22,869 |               |  |         | 26,936 |  |  |  | 3,670 |  |  |  | 1998 |  |  |  | 5-40 | 
|Portland Air Cargo Center     |  |                                                    | 9,588  |                                  |  |              |       |          |  |              | 9,614  |               |  |         | 9,614  |  |  |  | 235   |  |  |  | 2002 |  |  |  | 5-40 | 
|Presidents Drive              |  |                                                    | 1,724  |                                  |  |              | 5,770  |          |  |              | 19,379 |               |  |         | 25,149 |  |  |  | 2,970 |  |  |  | 1997 |  |  |  | 5-40 | 
|Preston Court                 |  |                                                    | 323    |                                  |  |              | 2,313  |          |  |              | 7,515  |               |  |         | 9,827  |  |  |  | 1,089 |  |  |  | 1997 |  |  |  | 5-40 | 
|Production Drive              |  |                                                    | 344    |                                  |  |              | 425    |          |  |              | 1,630  |               |  |         | 2,055  |  |  |  | 375   |  |  |  | 1997 |  |  |  | 5-40 | 
|Puget Sound Airfreight        |  |                                                    | 139    |                                  |  |              | 1,329  |          |  |              | 1,969  |               |  |         | 3,298  |  |  |  | 37    |  |  |  | 2002 |  |  |  | 5-40 | 
|Renton Northwest Corp. Park   |  |                                                    | 123    |                                  |  |              | 25,959 |          |  |              | 14,915 |               |  |         | 40,874 |  |  |  | 220   |  |  |  | 2002 |  |  |  | 5-40 | 
|Richardson Tech Center        |  |                                                    |       |                                  |  |              | 1,320  |          |  |              | 5,887  |               |  |         | 7,206  |  |  |  | 124   |  |  |  | 1997 |  |  |  | 5-40 | 
|The Rotunda                   |  |                                                    | 3,006  |                                  |  |              | 4,400  |          |  |              | 20,742 |               |  |         | 25,142 |  |  |  | 2,660 |  |  |  | 1999 |  |  |  | 5-40 | 
|Round Lake Business Center    |  |                                                    | 477    |                                  |  |              | 875    |          |  |              | 3,102  |               |  |         | 3,977  |  |  |  | 498   |  |  |  | 1998 |  |  |  | 5-40 | 
|Sand Lake Service Center      |  |                                                    | 2,351  |                                  |  |              | 3,483  |          |  |              | 12,936 |               |  |         | 16,419 |  |  |  | 2,145 |  |  |  | 1998 |  |  |  | 5-40 | 
|Santa Barbara Court           |  |                                                    | 881    |                                  |  |              | 1,617  |          |  |              | 5,910  |               |  |         | 7,527  |  |  |  | 1,027 |  |  |  | 1997 |  |  |  | 5-40 | 
|Scripps Sorrento              |  |                                                    | 101    |                                  |  |              | 1,110  |          |  |              | 3,432  |               |  |         | 4,542  |  |  |  | 392   |  |  |  | 1998 |  |  |  | 5-40 | 

S-12



---



##### 



AMB PROPERTY, L.P.


SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED
DEPRECIATION  (Continued)

|                                |  |                                                    |    |          |  |      |    |              |  |                         |     |              |  |  |        |  |  |  |        |  |  |  |        | 
|------------------------------- |  | -------------------------------------------------- | -- | -------- |  | ---- | -- | ------------ |  | ----------------------- | --- | ------------ |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|                                |  |                                                    |    |          |  |      |    |              |  |                        
|                                |  |                                                    |    |          |  |      |    |              |  | Initial Cost to Company
|                                |  |                                                    |    |          |  |      |    |              |  |                        
|                                |  | No. of                                             |    |          |  |      |    |              |  |                         |     | Building &  
|Property                        |  | Bldgs./ Ctrs.                                      |    | Location |  | Type |    | Encumbrances |  | Land                    |     | Improvements
|                                |  |                                                    |    |          |  |      |    |              |  |                         |     |             
|                                |  |                                                   
|                                |  | (In thousands, except number of buildings/centers)
|Sea Tac I Air Cargo Centre      |  |                                                    | 2  |          |  |      | WA |              |  |                         | IND |              |  |  | 4,855  |  |  |  |       |  |  |  | 15,594 | 
|Sea Tac II Air Cargo Centre     |  |                                                    | 1  |          |  |      | WA |              |  |                         | IND |              |  |  |       |  |  |  |       |  |  |  | 3,056  | 
|Seattle Airport Industrial      |  |                                                    | 1  |          |  |      | WA |              |  |                         | IND |              |  |  |       |  |  |  | 619    |  |  |  | 1,923  | 
|Shawnee Industrial              |  |                                                    | 1  |          |  |      | GA |              |  |                         | IND |              |  |  |       |  |  |  | 2,481  |  |  |  | 7,531  | 
|Silicon Valley R&D Portfolio*   |  |                                                    | 6  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 8,024  |  |  |  | 24,205 | 
|Skyland Crossdock               |  |                                                    | 1  |          |  |      | NJ |              |  |                         | IND |              |  |  |       |  |  |  |       |  |  |  | 7,250  | 
|Slauson Distribution Center     |  |                                                    | 8  |          |  |      | CA |              |  |                         | IND |              |  |  | 20,499 |  |  |  | 7,806  |  |  |  | 23,552 | 
|South Bay Industrial            |  |                                                    | 8  |          |  |      | CA |              |  |                         | IND |              |  |  | 18,064 |  |  |  | 14,992 |  |  |  | 45,016 | 
|South Point Business Park       |  |                                                    | 5  |          |  |      | NC |              |  |                         | IND |              |  |  | 8,481  |  |  |  | 3,130  |  |  |  | 10,452 | 
|South Ridge at Hartsfield       |  |                                                    | 1  |          |  |      | GA |              |  |                         | IND |              |  |  | 4,132  |  |  |  | 2,096  |  |  |  | 4,008  | 
|Southfield Industrial Portfolio |  |                                                    | 13 |          |  |      | GA |              |  |                         | IND |              |  |  | 34,641 |  |  |  | 12,533 |  |  |  | 35,730 | 
|Southfield Logistics Center     |  |                                                    | 2  |          |  |      | GA |              |  |                         | IND |              |  |  |       |  |  |  | 3,200  |  |  |  | 10,012 | 
|Southside Distribution Center   |  |                                                    | 1  |          |  |      | GA |              |  |                         | IND |              |  |  | 1,274  |  |  |  | 766    |  |  |  | 2,480  | 
|Stadium Business Park           |  |                                                    | 9  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 3,768  |  |  |  | 11,345 | 
|Sunrise Industrial              |  |                                                    | 4  |          |  |      | FL |              |  |                         | IND |              |  |  | 12,349 |  |  |  | 6,266  |  |  |  | 18,798 | 
|Sunset Distribution Center      |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 3,126  |  |  |  | 1,284  | 
|Suwanee Creek Distribution      |  |                                                    | 3  |          |  |      | GA |              |  |                         | IND |              |  |  | 13,799 |  |  |  | 5,186  |  |  |  | 23,330 | 
|Sylvan                          |  |                                                    | 1  |          |  |      | GA |              |  |                         | IND |              |  |  |       |  |  |  | 1,946  |  |  |  | 5,905  | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                |  |                                                    |       |                                  |  |              |        |          |  |              |        |               |  |         |        |  |  |  |       |  |  |  |      |  |  |  |      | 
|------------------------------- |  | -------------------------------------------------- | ----- | -------------------------------- |  | ------------ | ------ | -------- |  | ------------ | ------ | ------------- |  | ------- | ------ |  |  |  | ----- |  |  |  | ---- |  |  |  | ---- | 
|                                |  |                                                    |       |                                  |  |              |        |          |  |             
|                                |  |                                                    |       | Gross Amount Carried at 12/31/02 |  |              |        |          |  |             
|                                |  | Costs                                              |       |                                  |  |              |        |          |  |             
|                                |  | Capitalized                                        |       |                                  |  | Total        |        |          |  | Year of      |        | Depreciable  
|                                |  | Subsequent to                                      |       |                                  |  | Building &   |        | Costs(1) |  | Accumulated  |        | Construction/ |  | Life   
|Property                        |  | Acquisition                                        |       | Land                             |  | Improvements |        | (2)      |  | Depreciation |        | Acquisition   |  | (Years)
|                                |  |                                                    |       |                                  |  |              |        |          |  |              |        |               |  |        
|                                |  |                                                   
|                                |  | (In thousands, except number of buildings/centers)
|Sea Tac I Air Cargo Centre      |  |                                                    | 75    |                                  |  |              |       |          |  |              | 15,668 |               |  |         | 15,668 |  |  |  | 861   |  |  |  | 2000 |  |  |  | 5-40 | 
|Sea Tac II Air Cargo Centre     |  |                                                    | 130   |                                  |  |              |       |          |  |              | 3,185  |               |  |         | 3,185  |  |  |  | 211   |  |  |  | 2000 |  |  |  | 5-40 | 
|Seattle Airport Industrial      |  |                                                    | 173   |                                  |  |              | 619    |          |  |              | 2,097  |               |  |         | 2,715  |  |  |  | 156   |  |  |  | 2000 |  |  |  | 5-40 | 
|Shawnee Industrial              |  |                                                    | 4,825 |                                  |  |              | 2,481  |          |  |              | 12,356 |               |  |         | 14,837 |  |  |  | 1,684 |  |  |  | 1999 |  |  |  | 5-40 | 
|Silicon Valley R&D Portfolio*   |  |                                                    | 5,631 |                                  |  |              | 8,024  |          |  |              | 29,836 |               |  |         | 37,860 |  |  |  | 5,168 |  |  |  | 1997 |  |  |  | 5-40 | 
|Skyland Crossdock               |  |                                                    | 249   |                                  |  |              |       |          |  |              | 7,499  |               |  |         | 7,499  |  |  |  | 38    |  |  |  | 2002 |  |  |  | 5-40 | 
|Slauson Distribution Center     |  |                                                    | 2,161 |                                  |  |              | 7,806  |          |  |              | 25,712 |               |  |         | 33,519 |  |  |  | 1,365 |  |  |  | 2000 |  |  |  | 5-40 | 
|South Bay Industrial            |  |                                                    | 5,057 |                                  |  |              | 14,992 |          |  |              | 50,074 |               |  |         | 65,066 |  |  |  | 7,600 |  |  |  | 1997 |  |  |  | 5-40 | 
|South Point Business Park       |  |                                                    | 1,231 |                                  |  |              | 3,130  |          |  |              | 11,684 |               |  |         | 14,814 |  |  |  | 1,428 |  |  |  | 1998 |  |  |  | 5-40 | 
|South Ridge at Hartsfield       |  |                                                    | 33    |                                  |  |              | 2,096  |          |  |              | 4,041  |               |  |         | 6,137  |  |  |  | 195   |  |  |  | 2001 |  |  |  | 5-40 | 
|Southfield Industrial Portfolio |  |                                                    | 5,826 |                                  |  |              | 12,533 |          |  |              | 41,555 |               |  |         | 54,088 |  |  |  | 1,972 |  |  |  | 1997 |  |  |  | 5-40 | 
|Southfield Logistics Center     |  |                                                    | 5,195 |                                  |  |              | 3,200  |          |  |              | 15,206 |               |  |         | 18,406 |  |  |  | 709   |  |  |  | 2002 |  |  |  | 5-40 | 
|Southside Distribution Center   |  |                                                    |      |                                  |  |              | 766    |          |  |              | 2,480  |               |  |         | 3,246  |  |  |  | 62    |  |  |  | 2001 |  |  |  | 5-40 | 
|Stadium Business Park           |  |                                                    | 831   |                                  |  |              | 3,768  |          |  |              | 12,176 |               |  |         | 15,945 |  |  |  | 1,825 |  |  |  | 1997 |  |  |  | 5-40 | 
|Sunrise Industrial              |  |                                                    | 1,649 |                                  |  |              | 6,266  |          |  |              | 20,447 |               |  |         | 26,713 |  |  |  | 2,196 |  |  |  | 1998 |  |  |  | 5-40 | 
|Sunset Distribution Center      |  |                                                    | 47    |                                  |  |              | 3,126  |          |  |              | 1,331  |               |  |         | 4,457  |  |  |  | 3     |  |  |  | 2002 |  |  |  | 5-40 | 
|Suwanee Creek Distribution      |  |                                                    | 3,402 |                                  |  |              | 5,186  |          |  |              | 26,732 |               |  |         | 31,918 |  |  |  | 1,711 |  |  |  | 1998 |  |  |  | 5-40 | 
|Sylvan                          |  |                                                    | 89    |                                  |  |              | 1,946  |          |  |              | 5,993  |               |  |         | 7,940  |  |  |  | 549   |  |  |  | 1999 |  |  |  | 5-40 | 

S-13



---



##### 



AMB PROPERTY, L.P.


SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED
DEPRECIATION  (Continued)

|                                          |  |                                                    |    |          |  |      |    |              |  |                         |     |              |  |  |        |  |  |  |        |  |  |  |        | 
|----------------------------------------- |  | -------------------------------------------------- | -- | -------- |  | ---- | -- | ------------ |  | ----------------------- | --- | ------------ |  |  | ------ |  |  |  | ------ |  |  |  | ------ | 
|                                          |  |                                                    |    |          |  |      |    |              |  |                        
|                                          |  |                                                    |    |          |  |      |    |              |  | Initial Cost to Company
|                                          |  |                                                    |    |          |  |      |    |              |  |                        
|                                          |  | No. of                                             |    |          |  |      |    |              |  |                         |     | Building &  
|Property                                  |  | Bldgs./ Ctrs.                                      |    | Location |  | Type |    | Encumbrances |  | Land                    |     | Improvements
|                                          |  |                                                    |    |          |  |      |    |              |  |                         |     |             
|                                          |  |                                                   
|                                          |  | (In thousands, except number of buildings/centers)
|Systematics                               |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 911    |  |  |  | 2,773  | 
|Technology I                              |  |                                                    | 2  |          |  |      | MD |              |  |                         | IND |              |  |  |       |  |  |  | 1,657  |  |  |  | 5,049  | 
|Technology II                             |  |                                                    | 9  |          |  |      | MD |              |  |                         | IND |              |  |  |       |  |  |  | 10,206 |  |  |  | 3,761  | 
|TechRidge Phase IA                        |  |                                                    | 3  |          |  |      | TX |              |  |                         | IND |              |  |  | 15,074 |  |  |  | 7,132  |  |  |  | 21,396 | 
|TechRidge Phase II                        |  |                                                    | 1  |          |  |      | TX |              |  |                         | IND |              |  |  | 11,476 |  |  |  | 7,261  |  |  |  | 13,484 | 
|Teterboro Meadowlands 15                  |  |                                                    | 1  |          |  |      | NJ |              |  |                         | IND |              |  |  | 9,900  |  |  |  | 4,961  |  |  |  | 9,618  | 
|Thorndale Distribution                    |  |                                                    | 1  |          |  |      | IL |              |  |                         | IND |              |  |  |       |  |  |  | 4,130  |  |  |  | 4,216  | 
|Torrance Commerce Center                  |  |                                                    | 6  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 2,045  |  |  |  | 6,136  | 
|Twin Cities                               |  |                                                    | 2  |          |  |      | MN |              |  |                         | IND |              |  |  |       |  |  |  | 4,873  |  |  |  | 14,638 | 
|Two South Middlesex                       |  |                                                    | 1  |          |  |      | NJ |              |  |                         | IND |              |  |  |       |  |  |  | 2,247  |  |  |  | 6,781  | 
|Valwood                                   |  |                                                    | 2  |          |  |      | TX |              |  |                         | IND |              |  |  | 3,625  |  |  |  | 1,983  |  |  |  | 5,989  | 
|Van Nuys Airport Industrial               |  |                                                    | 4  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 9,393  |  |  |  | 9,399  | 
|Viscount                                  |  |                                                    | 1  |          |  |      | FL |              |  |                         | IND |              |  |  |       |  |  |  | 984    |  |  |  | 3,016  | 
|Walnut Drive (Formerly East Walnut Drive) |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 964    |  |  |  | 2,918  | 
|Watson Industrial Center                  |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  | 4,600  |  |  |  | 2,417  |  |  |  | 4,617  | 
|Weigman Road                              |  |                                                    | 1  |          |  |      | CA |              |  |                         | IND |              |  |  |       |  |  |  | 1,563  |  |  |  | 4,688  | 
|West North Carrier                        |  |                                                    | 1  |          |  |      | TX |              |  |                         | IND |              |  |  | 2,935  |  |  |  | 1,375  |  |  |  | 4,165  | 
|West Pac Air Cargo Centre                 |  |                                                    | 1  |          |  |      | PA |              |  |                         | IND |              |  |  |       |  |  |  |       |  |  |  | 9,716  | 
|Williams & Bouroughs                      |  |                                                    | 4  |          |  |      | CA |              |  |                         | IND |              |  |  | 6,650  |  |  |  | 2,337  |  |  |  | 6,981  | 
|Willow Lake Industrial Park               |  |                                                    | 10 |          |  |      | TN |              |  |                         | IND |              |  |  | 19,988 |  |  |  | 12,415 |  |  |  | 35,990 | 

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                          |  |                                                    |        |                                  |  |              |        |          |  |              |        |               |  |         |        |  |  |  |        |  |  |  |      |  |  |  |      | 
|----------------------------------------- |  | -------------------------------------------------- | ------ | -------------------------------- |  | ------------ | ------ | -------- |  | ------------ | ------ | ------------- |  | ------- | ------ |  |  |  | ------ |  |  |  | ---- |  |  |  | ---- | 
|                                          |  |                                                    |        |                                  |  |              |        |          |  |             
|                                          |  |                                                    |        | Gross Amount Carried at 12/31/02 |  |              |        |          |  |             
|                                          |  | Costs                                              |        |                                  |  |              |        |          |  |             
|                                          |  | Capitalized                                        |        |                                  |  | Total        |        |          |  | Year of      |        | Depreciable  
|                                          |  | Subsequent to                                      |        |                                  |  | Building &   |        | Costs(1) |  | Accumulated  |        | Construction/ |  | Life   
|Property                                  |  | Acquisition                                        |        | Land                             |  | Improvements |        | (2)      |  | Depreciation |        | Acquisition   |  | (Years)
|                                          |  |                                                    |        |                                  |  |              |        |          |  |              |        |               |  |        
|                                          |  |                                                   
|                                          |  | (In thousands, except number of buildings/centers)
|Systematics                               |  |                                                    | 620    |                                  |  |              | 911    |          |  |              | 3,393  |               |  |         | 4,304  |  |  |  | 459    |  |  |  | 1997 |  |  |  | 5-40 | 
|Technology I                              |  |                                                    | 343    |                                  |  |              | 1,657  |          |  |              | 5,392  |               |  |         | 7,049  |  |  |  | 557    |  |  |  | 1999 |  |  |  | 5-40 | 
|Technology II                             |  |                                                    | 29,037 |                                  |  |              | 10,206 |          |  |              | 32,798 |               |  |         | 43,004 |  |  |  | 3,374  |  |  |  | 1999 |  |  |  | 5-40 | 
|TechRidge Phase IA                        |  |                                                    | 269    |                                  |  |              | 7,132  |          |  |              | 21,664 |               |  |         | 28,796 |  |  |  | 1,329  |  |  |  | 2000 |  |  |  | 5-40 | 
|TechRidge Phase II                        |  |                                                    | 229    |                                  |  |              | 7,261  |          |  |              | 13,714 |               |  |         | 20,975 |  |  |  | 600    |  |  |  | 2001 |  |  |  | 5-40 | 
|Teterboro Meadowlands 15                  |  |                                                    | 1,277  |                                  |  |              | 4,961  |          |  |              | 10,895 |               |  |         | 15,856 |  |  |  | 689    |  |  |  | 2001 |  |  |  | 5-40 | 
|Thorndale Distribution                    |  |                                                    | 19     |                                  |  |              | 4,130  |          |  |              | 4,235  |               |  |         | 8,365  |  |  |  | 71     |  |  |  | 2002 |  |  |  | 5-40 | 
|Torrance Commerce Center                  |  |                                                    | 792    |                                  |  |              | 2,045  |          |  |              | 6,928  |               |  |         | 8,974  |  |  |  | 1,013  |  |  |  | 1998 |  |  |  | 5-40 | 
|Twin Cities                               |  |                                                    | 5,327  |                                  |  |              | 4,873  |          |  |              | 19,965 |               |  |         | 24,838 |  |  |  | 3,173  |  |  |  | 1997 |  |  |  | 5-40 | 
|Two South Middlesex                       |  |                                                    | 842    |                                  |  |              | 2,247  |          |  |              | 7,623  |               |  |         | 9,870  |  |  |  | 1,158  |  |  |  | 1997 |  |  |  | 5-40 | 
|Valwood                                   |  |                                                    | 1,220  |                                  |  |              | 1,983  |          |  |              | 7,209  |               |  |         | 9,192  |  |  |  | 1,254  |  |  |  | 1997 |  |  |  | 5-40 | 
|Van Nuys Airport Industrial               |  |                                                    | 13,235 |                                  |  |              | 9,393  |          |  |              | 22,635 |               |  |         | 32,027 |  |  |  | 1,486  |  |  |  | 2000 |  |  |  | 5-40 | 
|Viscount                                  |  |                                                    | 440    |                                  |  |              | 984    |          |  |              | 3,457  |               |  |         | 4,440  |  |  |  | 537    |  |  |  | 1997 |  |  |  | 5-40 | 
|Walnut Drive (Formerly East Walnut Drive) |  |                                                    | 614    |                                  |  |              | 964    |          |  |              | 3,532  |               |  |         | 4,496  |  |  |  | 435    |  |  |  | 1997 |  |  |  | 5-40 | 
|Watson Industrial Center                  |  |                                                    | 347    |                                  |  |              | 2,417  |          |  |              | 4,963  |               |  |         | 7,380  |  |  |  | 244    |  |  |  | 2001 |  |  |  | 5-40 | 
|Weigman Road                              |  |                                                    | 1,621  |                                  |  |              | 1,563  |          |  |              | 6,310  |               |  |         | 7,872  |  |  |  | 679    |  |  |  | 1997 |  |  |  | 5-40 | 
|West North Carrier                        |  |                                                    | 239    |                                  |  |              | 1,375  |          |  |              | 4,403  |               |  |         | 5,778  |  |  |  | 585    |  |  |  | 1997 |  |  |  | 5-40 | 
|West Pac Air Cargo Centre                 |  |                                                    | 218    |                                  |  |              |       |          |  |              | 9,934  |               |  |         | 9,934  |  |  |  | 617    |  |  |  | 2000 |  |  |  | 5-40 | 
|Williams & Bouroughs                      |  |                                                    | 2,624  |                                  |  |              | 2,337  |          |  |              | 9,606  |               |  |         | 11,943 |  |  |  | 702    |  |  |  | 1999 |  |  |  | 5-40 | 
|Willow Lake Industrial Park               |  |                                                    | 14,368 |                                  |  |              | 12,415 |          |  |              | 50,358 |               |  |         | 62,773 |  |  |  | 10,008 |  |  |  | 1998 |  |  |  | 5-40 | 

S-14



---



##### 



AMB PROPERTY, L.P.


SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED
DEPRECIATION  (Continued)

|                                                       |       |                                                    |    |          |  |      |        |              |  |                         |     |              |  |  |        |           |  |  |        |           |  |  |        |           | 
|------------------------------------------------------ | ----- | -------------------------------------------------- | -- | -------- |  | ---- | ------ | ------------ |  | ----------------------- | --- | ------------ |  |  | ------ | --------- |  |  | ------ | --------- |  |  | ------ | --------- | 
|                                                       |       |                                                    |    |          |  |      |        |              |  |                        
|                                                       |       |                                                    |    |          |  |      |        |              |  | Initial Cost to Company
|                                                       |       |                                                    |    |          |  |      |        |              |  |                        
|                                                       |       | No. of                                             |    |          |  |      |        |              |  |                         |     | Building &  
|Property                                               |       | Bldgs./ Ctrs.                                      |    | Location |  | Type |        | Encumbrances |  | Land                    |     | Improvements
|                                                       |       |                                                    |    |          |  |      |        |              |  |                         |     |             
|                                                       |       |                                                   
|                                                       |       | (In thousands, except number of buildings/centers)
|Willow Park Industrial Portfolio                       |       |                                                    | 21 |          |  |      | CA     |              |  |                         | IND |              |  |  | 4,967  |           |  |  | 25,590 |           |  |  | 76,771 |          
|Wilmington Avenue Wharehouse                           |       |                                                    | 2  |          |  |      | CA     |              |  |                         | IND |              |  |  |       |           |  |  | 3,849  |           |  |  | 11,605 |          
|Wilsonville                                            |       |                                                    | 1  |          |  |      | OR     |              |  |                         | IND |              |  |  |       |           |  |  | 3,407  |           |  |  | 13,493 |          
|Windsor Court                                          |       |                                                    | 1  |          |  |      | IL     |              |  |                         | IND |              |  |  |       |           |  |  | 766    |           |  |  | 2,338  |          
|Wood Dale Industrial (Includes Bonnie Lane)            |       |                                                    | 5  |          |  |      | IL     |              |  |                         | IND |              |  |  | 8,890  |           |  |  | 2,904  |           |  |  | 9,166  |          
|Yosemite Drive                                         |       |                                                    | 1  |          |  |      | CA     |              |  |                         | IND |              |  |  |       |           |  |  | 2,350  |           |  |  | 7,051  |          
|Zanker/ Charcot Industrial                             |       |                                                    | 5  |          |  |      | CA     |              |  |                         | IND |              |  |  |       |           |  |  | 5,282  |           |  |  | 15,887 |          
|Bodega San Martin (Mexico City)                        |       |                                                    | 1  |          |  |      | Mexico |              |  |                         | IND |              |  |  |       |           |  |  | 7,234  |           |  |  | 10,889 |          
|AMB-Accion Centro Logistico Parque I
    (Guadalajara) |       |                                                    | 4  |          |  |      | Mexico |              |  |                         | IND |              |  |  | 17,500 |           |  |  | 9,555  |           |  |  | 22,386 |          
|Paris Nord Distribution I                              |       |                                                    | 1  |          |  |      | France |              |  |                         | IND |              |  |  |       |           |  |  | 2,975  |           |  |  | 5,112  |          
|                                                       |       |                                                    |    |          |  |      |        |              |  |                         |     |              |  |  |        |           |  |  |        |           |  |  |        |          
|                                                       | Total |                                                    |    | 900      |  |      |        |              |  |                         |     |              |  |  | $      | 1,258,049 |  |  | $      | 1,226,003 |  |  | $      | 3,040,740 | 
|                                                       |       |                                                    |    |          |  |      |        |              |  |                         |     |              |  |  |        |           |  |  |        |           |  |  |        |          

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                                                       |       |                                                    |        |                                  |  |              |        |           |  |              |        |               |  |         |         |           |  |  |        |         |  |  |      |  |  |  |      |  | 
|------------------------------------------------------ | ----- | -------------------------------------------------- | ------ | -------------------------------- |  | ------------ | ------ | --------- |  | ------------ | ------ | ------------- |  | ------- | ------- | --------- |  |  | ------ | ------- |  |  | ---- |  |  |  | ---- |  | 
|                                                       |       |                                                    |        |                                  |  |              |        |           |  |             
|                                                       |       |                                                    |        | Gross Amount Carried at 12/31/02 |  |              |        |           |  |             
|                                                       |       | Costs                                              |        |                                  |  |              |        |           |  |             
|                                                       |       | Capitalized                                        |        |                                  |  | Total        |        |           |  | Year of      |        | Depreciable  
|                                                       |       | Subsequent to                                      |        |                                  |  | Building &   |        | Costs(1)  |  | Accumulated  |        | Construction/ |  | Life   
|Property                                               |       | Acquisition                                        |        | Land                             |  | Improvements |        | (2)       |  | Depreciation |        | Acquisition   |  | (Years)
|                                                       |       |                                                    |        |                                  |  |              |        |           |  |              |        |               |  |        
|                                                       |       |                                                   
|                                                       |       | (In thousands, except number of buildings/centers)
|Willow Park Industrial Portfolio                       |       |                                                    | 10,468 |                                  |  |              | 25,590 |           |  |              | 87,239 |               |  |         | 112,829 |           |  |  | 11,430 |         |  |  | 1998 |  |  |  | 5-40 | 
|Wilmington Avenue Wharehouse                           |       |                                                    | 2,640  |                                  |  |              | 3,849  |           |  |              | 14,245 |               |  |         | 18,094  |           |  |  | 1,777  |         |  |  | 1999 |  |  |  | 5-40 | 
|Wilsonville                                            |       |                                                    | 58     |                                  |  |              | 3,407  |           |  |              | 13,551 |               |  |         | 16,958  |           |  |  | 1,668  |         |  |  | 1998 |  |  |  | 5-40 | 
|Windsor Court                                          |       |                                                    | 98     |                                  |  |              | 766    |           |  |              | 2,436  |               |  |         | 3,202   |           |  |  | 327    |         |  |  | 1997 |  |  |  | 5-40 | 
|Wood Dale Industrial (Includes Bonnie Lane)            |       |                                                    | 260    |                                  |  |              | 2,904  |           |  |              | 9,426  |               |  |         | 12,330  |           |  |  | 451    |         |  |  | 1999 |  |  |  | 5-40 | 
|Yosemite Drive                                         |       |                                                    | 505    |                                  |  |              | 2,350  |           |  |              | 7,556  |               |  |         | 9,907   |           |  |  | 1,007  |         |  |  | 1997 |  |  |  | 5-40 | 
|Zanker/ Charcot Industrial                             |       |                                                    | 1,712  |                                  |  |              | 5,282  |           |  |              | 17,600 |               |  |         | 22,882  |           |  |  | 2,602  |         |  |  | 1997 |  |  |  | 5-40 | 
|Bodega San Martin (Mexico City)                        |       |                                                    | 15,577 |                                  |  |              | 7,234  |           |  |              | 26,466 |               |  |         | 33,700  |           |  |  | 195    |         |  |  | 2002 |  |  |  | 5-40 | 
|AMB-Accion Centro Logistico Parque I
    (Guadalajara) |       |                                                    |       |                                  |  |              | 9,555  |           |  |              | 22,386 |               |  |         | 31,941  |           |  |  | 20     |         |  |  | 2002 |  |  |  | 5-40 | 
|Paris Nord Distribution I                              |       |                                                    |       |                                  |  |              | 2,975  |           |  |              | 5,112  |               |  |         | 8,087   |           |  |  | 20     |         |  |  | 2002 |  |  |  | 5-40 | 
|                                                       |       |                                                    |        |                                  |  |              |        |           |  |              |        |               |  |         |         |           |  |  |        |         |  |  |      |  |  |  |      | 
|                                                       | Total |                                                    |        | 526,750                          |  |              | $      | 1,236,406 |  |              | $      | 3,557,086     |  |         | $       | 4,793,492 |  |  | $      | 362,540 |  |  |      |  |  |  |      |  | 
|                                                       |       |                                                    |        |                                  |  |              |        |           |  |              |        |               |  |         |         |           |  |  |        |         |  |  |      |  |  |  |      | 

S-15



---



##### 



AMB PROPERTY, L.P.


SCHEDULE III

CONSOLIDATED REAL ESTATE AND ACCUMULATED
DEPRECIATION  (Continued)



---



|    |                                                                                                
|--- | -----------------------------------------------------------------------------------------------
|(1) | Reconciliation of total cost to consolidated
    balance sheet caption as of December 31, 2002:

|                           |                                 |   |           |           | 
|-------------------------- | ------------------------------- | - | --------- | --------- | 
|Total per Schedule III(3)  |                                 | $ | 4,793,492 |          
|Construction in process(4) |                                 |   | 132,490   |          
|                           |                                 |   |           |          
|                           | Total investments in properties |   | $         | 4,925,982 | 
|                           |                                 |   |           |          



|    |                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------
|(2) | As of December 31, 2002, the aggregate cost
    for federal income tax purposes of investments in real estate
    was $4,449,171.
|   
|(3) | A summary of activity for real estate and
    accumulated depreciation for the year ended December 31,
    2002, is as follows:  

|                           |                                                                        |  |   |           |  
|-------------------------- | ---------------------------------------------------------------------- |  | - | --------- | -
|Investments in Properties: |                                                                        |  |   |          
|                           | Balance at beginning of year                                           |  | $ | 4,530,711 |  
|                           | Acquisition of properties                                              |  |   | 395,651   |  
|                           | Improvements, including properties under
    development/redevelopment |  |   | 213,875   |  
|                           | Divestiture of properties                                              |  |   | (263,911  | )
|                           | Adjustment for properties held for divestiture                         |  |   | 49,656    |  
|                           |                                                                        |  |   |          
|                           | Balance at end of year                                                 |  | $ | 4,925,982 |  
|                           |                                                                        |  |   |          
|Accumulated Depreciation:  |                                                                        |  |   |          
|                           | Balance at beginning of year                                           |  | $ | 265,653   |  
|                           | Depreciation expense, including discontinued
    operations            |  |   | 132,136   |  
|                           | Adjustment for properties divested and held for
    divestiture        |  |   | (36,399   | )
|                           | Asset impairment                                                       |  |   | 1,150     |  
|                           |                                                                        |  |   |          
|                           | Balance at end of year                                                 |  | $ | 362,540   |  
|                           |                                                                        |  |   |          



|    |                                                                                         
|--- | ----------------------------------------------------------------------------------------
|(4) | Includes $92.8 million of fundings for
    development projects as of December 31, 2002.

S-16