AMB Investing $266M in Japan Industrial

SAN FRANCISCO-AMB Property Corp. is investing $266 million in the development of two distribution facilities totaling about 1.8 million sf. The buildings will be developed on land by the locally based, publicly traded owner and developer acquired in Osaka and Tokyo.In greater Osaka, Japan’s second largest city, AMB has acquired a 12.2-acre (4.9 hectare) parcel of land for development of AMB Amagasaki Distribution Center, a planned one-million-sf (94,300-sm) six-story distribution facility in the heart of the Osaka/Kobe port district. The building is 50% preleased to a prominent Japanese logistics firm. Construction is set to begin immediately and the property is expected to be ready for occupancy in the third quarter of 2005.In Tokyo, AMB has acquired 4.8 acres (1.9 hectares) for development of AMB Ohta Distribution Center, an 840,000-sf (78,000-sm) seven-story multi-tenant logistics center in the Ohta section of western Tokyo, a primary distribution point for the Tokyo/Yokohama metro areas, which sport a vacancy rate of less than 5%. Both facilities are being developed with AMB’s Tokyo-based partner, AMB BlackPine. AMB expects to begin construction on AMB Ohta Distribution Center in September and have the building ready for occupancy in the third quarter of 2005. A source at AMB tells GlobeSt.com that the going capitalization rate for the acquisition of existing leased distribution facilities in Japan is between 5% and 8%. For new development, that cap rate goes up 100 to 200 basis points on an un-leveraged base, says the source, adding that AMB typically puts 50% leverage on its properties.In June, AMB renewed early its senior unsecured $500-million revolving line of credit. The three-year credit facility includes a multi-currency component under which up to $250 million can be drawn in either, yen, euros or pounds sterling. The line of credit, which matures in June 2007, can be increased to $700 million upon certain conditions, and replaces the company’s previous $500-million credit facility that was to mature in December 2005. According to AMB, both the US dollar and multi-currency components will be priced at 60 basis points over the applicable Libor index, with an annual facility fee of 20 basis points, based upon the current credit rating on our long-term debt.