UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. )

 

Filed by the Registrant þ

 Filed by a Party other than the Registrant  o

Check the appropriate box:

o  Preliminary Proxy Statement

o  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

þ  Definitive Proxy Statement

o  Definitive Additional Materials

o  Soliciting Material Pursuant to §240.14a-12

 

ProLogis

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MERGER PROPOSED — YOUR VOTE IS VERY IMPORTANT

 

The board of directors of AMB Property Corporation and the board of trustees of ProLogis have each approved an agreement to combine the two companies through a merger of equals. The proposed transaction will create a truly global owner, operator and developer of industrial real estate. The combined company, which will be named “ProLogis, Inc.” and will be organized as an umbrella partnership real estate investment trust, or “UPREIT,” is expected to have a pro forma equity market capitalization of approximately $14 billion, a total market capitalization in excess of $24 billion, and gross assets owned and managed of approximately $46 billion. We believe that the combined company will create a stronger, more liquid enterprise poised to take advantage of changing market conditions to become the leading global provider of industrial real estate.

 

In the proposed transactions, ProLogis shareholders will receive 0.4464 of a newly issued share of AMB common stock for each ProLogis common share that they own. This exchange ratio is fixed and will not be adjusted to reflect stock price changes prior to the closing. AMB common stock and ProLogis common shares are each traded on the New York Stock Exchange, under the ticker symbols “AMB” and “PLD,” respectively. Based on the closing price of AMB common stock on the New York Stock Exchange (which we refer to as the “NYSE”) of $32.86 on January 26, 2011, the last trading day before ProLogis common share and AMB common stock prices may have been affected by market speculation regarding a potential transaction involving the companies, the exchange ratio represented approximately $14.67 in AMB common stock for each ProLogis common share. Based on the closing price of AMB common stock on the NYSE of $32.93 on January 28, 2011, the last trading day before public announcement of the proposed transactions, the exchange ratio represented approximately $14.70 in AMB common stock for each ProLogis common share. Based on the closing price of AMB common stock on the NYSE of $36.52 on April 26, 2011, the latest practicable date before the date of this joint proxy statement/prospectus, the exchange ratio represented approximately $16.30 in AMB common stock for each ProLogis common share. The value of the merger consideration will fluctuate with changes in the market price of AMB common stock. We urge you to obtain current market quotations of AMB common stock and ProLogis common shares.

 

The merger of AMB and ProLogis will be accomplished through a first-step merger of ProLogis and an indirect wholly owned subsidiary of ProLogis and a second-step merger of a parent entity of that subsidiary with AMB. ProLogis will continue its existence as a subsidiary of the combined company. If the merger of AMB and ProLogis is completed, each share of each series of ProLogis preferred shares will be converted into a share of AMB preferred stock of corresponding series having rights, privileges, powers and preferences substantially identical to those of the relevant series of ProLogis preferred shares. Holders of ProLogis preferred shares and AMB preferred stock are not entitled to, and are not being requested to, vote at the special meetings.

 

Based upon the number of outstanding shares on the record date for each special meeting, we anticipate that AMB will issue 254,693,674 shares of common stock and 12,000,000 shares of preferred stock in connection with the mergers described herein, and will reserve approximately 22,227,386 shares of common stock for issuance in respect of ProLogis equity awards, convertible notes and other arrangements that AMB will assume in connection with the merger. Upon completion of the transactions, we estimate that former AMB stockholders will own approximately 40% of the common stock of the combined company and former ProLogis shareholders will own approximately 60% of the common stock of the combined company.

 

Each of the mergers is intended to qualify as a reorganization for U.S. federal income tax purposes, and, accordingly, assuming the transaction so qualifies, ProLogis shareholders generally will not recognize any gain or loss for U.S. federal income tax purposes on the surrender of their ProLogis common shares and receipt of AMB common stock, except with respect to cash received in lieu of any fractional shares of AMB common stock.

 

Your vote is very important, regardless of the number of shares you own.  The combination of AMB and ProLogis cannot be completed without the approval of both the AMB stockholders and the ProLogis shareholders, including the approval by AMB stockholders of certain amendments to the AMB bylaws. Each of AMB and ProLogis is holding a special meeting to vote on the proposals necessary to complete the merger transactions. We urge you to read this joint proxy statement/prospectus carefully. The obligations of AMB and ProLogis to complete the merger are subject to the satisfaction or waiver of several conditions set forth in the merger agreement. More information about AMB, ProLogis, the special meetings and the merger is included in this joint proxy statement/prospectus. You should also consider carefully the risks that are described in the “Risk Factors” section beginning on page 23.

 

Whether or not you plan to attend your company’s special meeting, please submit your proxy as soon as possible to make sure that your shares of AMB common stock or ProLogis common shares are represented at that meeting.

 

The AMB board of directors recommends that AMB stockholders vote “FOR” the proposal to approve the merger with ProLogis, including the issuance of AMB common stock and preferred stock to ProLogis shareholders, the proposed amendments to the AMB bylaws, which approvals are necessary to complete the merger, and the proposed amendments to the AMB charter.

 

The ProLogis board of trustees recommends that ProLogis shareholders vote “FOR” the proposal to approve the merger agreement and the transactions contemplated thereby, which approval is necessary to complete the merger.

 

We join our respective boards in their recommendation, and look forward to the successful combination of AMB and ProLogis.

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this joint proxy statement/prospectus or determined that this joint proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

 

This joint proxy statement/prospectus is dated April 28, 2011 and is first being mailed to the stockholders of AMB and shareholders of ProLogis on or about May 2, 2011.

AMB Property Corporation
Pier 1, Bay 1
San Francisco, CA 94111
(415) 394-9000

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On June 1, 2011

 

Dear Stockholders of AMB Property Corporation:

We are pleased to invite you to attend a special meeting of stockholders of AMB Property Corporation, a Maryland corporation. The meeting will be held at AMB Property Corporation’s global headquarters, which are located at Pier 1, Bay 1, San Francisco, California 94111, on June 1, 2011, at 9:00 a.m., local time, to consider and vote upon the following matters:

The approval by AMB stockholders of both the proposal to approve the merger and the proposal to amend certain provisions of the bylaws is required for the completion of the merger. However, approval of the proposal to amend the AMB charter is not a condition to completion of the merger.

Please refer to the attached joint proxy statement/prospectus for further information with respect to the business to be transacted at the AMB special meeting.

Holders of record of shares of AMB common stock at the close of business on April 21, 2011 are entitled to notice of, and to vote at, the special meeting and any adjournments or postponements of the special meeting.

The proposal to approve the merger, including the issuance of AMB common and preferred stock to ProLogis shareholders in connection therewith, requires the affirmative vote of holders of two-thirds of the outstanding AMB common stock. The proposal to approve the bylaw amendment requires the affirmative vote of the holders of a majority of the outstanding AMB common stock. The proposal to approve the amendment to the AMB charter requires the affirmative vote of holders of two-thirds of the outstanding AMB common stock. A proposal to adjourn the AMB special meeting would require the affirmative vote of holders of a majority of the AMB common stock, represented in person or by proxy, at the AMB special meeting and entitled to vote on the proposal.

Your vote is important. Whether or not you expect to attend the AMB special meeting in person, we urge you to vote your shares as promptly as possible by (1) accessing the Internet website specified on your proxy card; (2) calling the toll-free number specified on your proxy card; or (3) signing and returning the enclosed proxy card in the postage-paid envelope provided, so that your shares may be represented and voted at the AMB special meeting. If your shares are held in the name of a bank, broker or other fiduciary, please follow the instructions on the voting instruction card furnished by the record holder.

 

By Order of the Board of Directors,

 

TAMRA D. BROWNE, ESQ.

Senior Vice President, General Counsel and Secretary

 

April 28, 2011

San Francisco, California

 

 

ProLogis
4545 Airport Way
Denver, CO 80239
(303) 567-5761

 

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To Be Held On June 1, 2011

 

Dear Shareholders of ProLogis:

 

We are pleased to invite you to attend a special meeting of shareholders of ProLogis, a Maryland real estate investment trust. The meeting will be held at ProLogis’ world headquarters, 4545 Airport Way, Denver, Colorado 80239, on June 1, 2011, at 9:00 a.m., local time, to consider and vote upon the following matters:

 

 

Please refer to the attached joint proxy statement/prospectus for further information with respect to the business to be transacted at the ProLogis special meeting.

 

Holders of record of ProLogis common shares at the close of business on April 21, 2011 are entitled to notice of, and to vote at, the special meeting and any adjournments or postponements of the special meeting.

 

The proposal to approve the Merger requires the affirmative vote of holders of a majority of the outstanding ProLogis common shares. A proposal to adjourn the ProLogis special meeting would require the affirmative vote of a majority of the votes cast on the matter by the holders of the ProLogis common shares represented, in person or by proxy, at the ProLogis special meeting.

 

Your vote is important. Whether or not you expect to attend the ProLogis special meeting in person, we urge you to vote your shares as promptly as possible by (1) accessing the Internet website specified on your proxy card; (2) calling the toll-free number specified on your proxy card; or (3) signing and returning the enclosed proxy card in the postage-paid envelope provided, so that your shares may be represented and voted at the ProLogis special meeting. If your shares are held in the name of a bank, broker or other fiduciary, please follow the instructions on the voting instruction card furnished by the record holder.

 

For the Board of Trustees,

 

Edward S. Nekritz

Secretary

 

April 28, 2011

Denver, Colorado

 

ADDITIONAL INFORMATION

 

This joint proxy statement/prospectus incorporates by reference important business and financial information about AMB and ProLogis from other documents that are not included in or delivered with this joint proxy statement/prospectus. This information is available to you without charge upon your request. You can obtain the documents incorporated by reference into this joint proxy statement/prospectus by requesting them in writing or by telephone from the appropriate company at the following addresses and telephone numbers:

 

 

Investors may also consult the websites of AMB or ProLogis for more information concerning the Merger described in this joint proxy statement/prospectus. The website of AMB is www.AMB.com and the website of ProLogis is www.ProLogis.com. Information included on these websites is not incorporated by reference into this joint proxy statement/prospectus.

 

If you would like to request any documents, please do so by May 25, 2011 in order to receive them before the meetings.

 

For more information, see “Where You Can Find More Information.”

 

ABOUT THIS DOCUMENT

 

This joint proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the Securities and Exchange Commission by AMB Property Corporation (File No. 333-172741), constitutes a prospectus of AMB under Section 5 of the U.S. Securities Act of 1933, as amended (which we refer to as the “Securities Act”), with respect to the AMB common stock and AMB preferred stock to be issued to ProLogis shareholders in connection with the Merger. This document also constitutes a joint proxy statement of AMB and ProLogis under Section 14(a) of the U.S. Securities Exchange Act of 1934, as amended (which we refer to as the “Exchange Act”). It also constitutes a notice of meeting with respect to the special meeting of AMB stockholders and a notice of meeting with respect to the special meeting of ProLogis shareholders, at which AMB stockholders and ProLogis shareholders, respectively, will be asked to vote upon certain proposals to approve the Merger and certain related matters.

 

You should rely only on the information contained or incorporated by reference into this joint proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated April 27, 2011. You should not assume that the information contained in, or incorporated by reference into, this joint proxy statement/prospectus is accurate as of any date other than the date on the front cover of those documents. Neither our mailing of this joint proxy statement/prospectus to AMB stockholders or ProLogis shareholders nor the issuance of AMB common stock or preferred stock in connection with the Merger will create any implication to the contrary.

 

 

 

 

This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Information contained in this joint proxy statement/prospectus regarding AMB has been provided by AMB and information contained in this joint proxy statement/prospectus regarding ProLogis has been provided by ProLogis.

 

TABLE OF CONTENTS

 

 

The following are answers to some questions that you, as a stockholder of AMB Property Corporation (which we refer to as “AMB”) or a shareholder of ProLogis, may have regarding the proposed transactions between AMB and ProLogis and the other matters being considered at the stockholder meeting of AMB and at the shareholder meeting of ProLogis. AMB and ProLogis urge you to read carefully the remainder of this joint proxy statement/prospectus because the information in this section does not provide all the information that might be important to you with respect to the Merger and the other matters being considered at the special meetings. Additional important information is also contained in the annexes to and the documents incorporated by reference into this joint proxy statement/prospectus.

 

 

 

 

 

 

 

 

 

 

 

 

 

SUMMARY

 

Information about the Companies

 

Risk Factors (See page 23)

 

The Merger

	•	first, in the ProLogis merger, ProLogis will be reorganized into an UPREIT by merging Pumpkin LLC with and into ProLogis, with ProLogis continuing as the surviving entity and as a wholly owned subsidiary of Upper Pumpkin and an indirect wholly owned subsidiary of New Pumpkin;
	•	following the ProLogis merger, in the Topco merger, New Pumpkin will be merged with and into AMB, with AMB continuing as the surviving corporation under the name of “ProLogis, Inc.”; and
	•	following the Topco merger, the combined company will contribute all of the outstanding equity interests of Upper Pumpkin to AMB LP, which will be renamed “ProLogis, L.P.”, in exchange for the issuance of partnership units to the combined company.

										Equivalent
		AMB Common Stock				ProLogis Common				Per Share
		(Close)				Shares (Close)				Price
January 26, 2011		$	32.86			$	14.70			$	14.67
January 28, 2011		$	32.93			$	15.21			$	14.70
April 26, 2011		$	36.52			$	16.43			$	16.30

	•	each outstanding Series C Cumulative Redeemable Preferred Share of Beneficial Interest of ProLogis (which we refer to as “ProLogis Series C preferred shares”) will be exchanged for one newly issued share of Cumulative Redeemable Preferred Stock, Series Q, of AMB (which we refer to as “AMB Series Q preferred stock”);

	•	each outstanding Series F Cumulative Redeemable Preferred Share of Beneficial Interest of ProLogis (which we refer to as “ProLogis Series F preferred shares”) will be exchanged for one newly issued share of Cumulative Redeemable Preferred Stock, Series R, of AMB (which we refer to as “AMB Series R preferred stock”); and
	•	each outstanding Series G Cumulative Redeemable Preferred Share of Beneficial Interest of ProLogis (which we refer to as “ProLogis Series G preferred shares”) will be exchanged for one newly issued share of Cumulative Redeemable Preferred Stock, Series S, of AMB (which we refer to as “AMB Series S preferred stock”).

	•	receipt of the requisite approvals of AMB stockholders and ProLogis shareholders;
	•	the approval for listing of shares of AMB common stock, AMB Series R preferred stock and AMB Series S preferred stock to be issued or reserved for issuance in connection with the Merger on the NYSE;
	•	the SEC having declared effective the registration statement of which this joint proxy statement/prospectus forms a part;
	•	the absence of any judgment or other legal prohibition or binding order of any court or other governmental entity prohibiting the Merger;
	•	the receipt of regulatory approvals required in connection with the Merger;
	•	the correctness of all representations and warranties made by the parties in the merger agreement and performance by the parties of their obligations under the merger agreement (subject in each case to certain materiality standards);
	•	the receipt of a legal opinion from tax counsel of ProLogis regarding the qualification of the ProLogis merger as a reorganization for U.S. federal income tax purposes; and
	•	the receipt of legal opinions from the respective tax counsels of AMB and ProLogis regarding the qualification of the Topco merger as a reorganization for U.S. federal income tax purposes and the qualification of each of the parties as a REIT.

	•	by mutual written consent of AMB and ProLogis;
	•	by either AMB or ProLogis, if the Merger is not consummated by September 30, 2011;
	•	by either AMB or ProLogis, if a court or other governmental entity issues a final and nonappealable order prohibiting the Merger;
	•	by either AMB or ProLogis, if the required approvals of either the AMB stockholders or the ProLogis shareholders are not obtained;
	•	by either AMB or ProLogis, if there is a breach of the representations or covenants of the other party that would result in the failure of the related closing condition to be satisfied, and such breach is not cured or is not curable by September 30, 2011;
	•	by either AMB or ProLogis, if the board of the other party changes its recommendation in favor of the Topco merger, in the case of the board of AMB, or the ProLogis merger or Topco merger in the case of the board of ProLogis;
	•	by either AMB or ProLogis, if the special meeting of the other party is not called and held as required by the merger agreement; or
	•	by either AMB or ProLogis, upon a material breach of the other party’s non-solicitation obligations under the merger agreement.

 

The AMB Special Meeting (See page 116)

	•	a proposal to approve the Topco merger (including the issuance of AMB common stock and preferred stock to ProLogis shareholders in connection with the Topco merger);
	•	a proposal to approve the bylaw amendment;
	•	a proposal to approve the charter amendment; and
	•	a proposal to adjourn the AMB special meeting, if necessary or appropriate, to solicit additional proxies in favor of the foregoing proposals.

 

The ProLogis Special Meeting (See page 123)

	•	a proposal to approve the Merger; and
	•	a proposal to adjourn the ProLogis special meeting, if necessary or appropriate, to solicit additional proxies in favor of the proposal to approve the Merger.

 

Rights of ProLogis Shareholders Will Change as a Result of the Merger (See page 137)

 

SELECTED HISTORICAL FINANCIAL DATA OF AMB

		Three Months Ended
		March 31,
		2011				2010
		(In millions, except per share amounts)
		(Unaudited)
Operating Data:
Revenues:
Rental revenues		$	158			$	147
Private capital revenues			8				7
Total revenues			166				154
Costs and Expenses:
Property operating costs			52				48
Depreciation and amortization			55				47
General and administrative			31				32
Merger transaction costs and restructuring charges			4				3
Fund costs and other expenses			1				2
Total costs and expenses			143				132
Other Income and Expenses:
Development profits, net of taxes			—				5
Earnings from unconsolidated joint ventures, net			8				4
Interest expense, amortization and other income, net			(34	)			(33	)
Loss from continuing operations			(3	)			(2	)
Income and gains from discontinued operations			17				1
Noncontrolling interests’ share of net income			(2	)			1
Preferred stock dividends & allocation to participating securities			(4	)			(4	)
Net income (loss) available to common stockholders		$	8			$	(4	)
Net income (loss) per share available to common stockholders — Basic		$	0.05			$	(0.03	)
Net income (loss) per share available to common stockholders — Diluted		$	0.05			$	(0.03	)
Weighted average common shares outstanding:
Basic			168				149
Diluted			168				149

		As of March 31, 2011
		(In millions)
		(Unaudited)
Balance Sheet Data:
Investments in real estate (at cost)		$	6,841
Total assets		$	7,421
Total debt		$	3,426
Total liabilities and noncontrolling interests		$	4,118
Preferred stock		$	223
Total stockholders’ equity (excluding preferred stock)		$	3,079
Number of common shares outstanding			170

		Year Ended December 31,
		2010				2009				2008				2007				2006
		(In millions, except per share amounts)
Operating Data:
Total revenues		$	634			$	618			$	678			$	636			$	679
Income (loss) from continuing operations		$	9			$	(124	)		$	(18	)		$	282			$	210
Income from discontinued operations		$	24			$	96			$	11			$	90			$	78
Net income (loss) before cumulative effect of change in accounting principle		$	34			$	(28	)		$	(7	)		$	372			$	289
Net income (loss)		$	34			$	(28	)		$	(7	)		$	372			$	289
Net income (loss) available to common stockholders		$	10			$	(50	)		$	(66	)		$	294			$	208
(Loss) income from continuing operations available to common stockholders per common share:
Basic		$	(0.08	)		$	(1.01	)		$	(0.77	)		$	2.17			$	1.54
Diluted		$	(0.08	)		$	(1.01	)		$	(0.77	)		$	2.12			$	1.49
Income from discontinued operations available to common stockholders per common share:
Basic		$	0.14			$	0.64			$	0.09			$	0.85			$	0.83
Diluted		$	0.14			$	0.64			$	0.09			$	0.83			$	0.80
Net income (loss) available to common stockholders per common share
Basic		$	0.06			$	(0.37	)		$	(0.68	)		$	3.02			$	2.37
Diluted		$	0.06			$	(0.37	)		$	(0.68	)		$	2.95			$	2.29
Cash dividends per common shares		$	1.12			$	1.12			$	1.56			$	2.00			$	1.84
Weighted average common shares outstanding
Basic			162				134				97				97				88
Diluted			162				134				97				100				91

		December 31,
		2010				2009				2008				2007				2006
		(In millions)
Balance Sheet Data:
Investments in real estate (at cost)		$	6,906			$	6,709			$	6,604			$	6,710			$	6,576
Total assets		$	7,373			$	6,842			$	7,302			$	7,262			$	6,714
Total debt		$	3,331			$	3,213			$	3,990			$	3,495			$	3,437
Total liabilities and noncontrolling interests		$	4,052			$	3,902			$	4,787			$	4,498			$	4,547
Preferred stock		$	223			$	223			$	223			$	223			$	223
Total stockholders’ equity (excluding preferred stock)		$	3,097			$	2,717			$	2,292			$	2,541			$	1,943

		For the Years Ended December 31,
		2010				2009				2008				2007				2006
		(In millions)
Funds from operations (FFO), as adjusted(1):
Net income (loss) available to common stockholders		$	10			$	(50	)		$	(66	)		$	294			$	208
Gains from sale or contribution of real estate interests, net			(20	)			(39	)			(23	)			(86	)			(45	)
Total depreciation and amortization			190				174				162				158				176
Adjustments to derive FFO, as defined by NAREIT from consolidated joint ventures			(22	)			(17	)			(19	)			(22	)			(35	)
Adjustments to derive FFO, as defined by NAREIT from unconsolidated joint ventures			43				32				26				20				(7	)
Funds from operations, as defined by NAREIT(1)		$	201			$	100			$	80			$	364			$	297
Adjustments for impairment charges, restructuring charges, preferred unit redemption (discount) premium and debt extinguishment:
Real estate impairment losses(2)			1				182				194				1				6
Pursuit costs and tax reserve			—				—				12				—				—
Restructuring charges			5				6				12				—				—
Loss on early extinguishment of debt			3				12				1				—				—
Preferred unit redemption (discount) premium			—				(10	)			—				3				1
Allocation to participating securities			—				(1	)			(1	)			—				(1	)
FFO, as adjusted(1)		$	210			$	289			$	298			$	368			$	303
AMB’s share of development profits, net of taxes			(7	)			(88	)			(77	)			(168	)			(106	)
Allocation to participating securities			—				—				1				1				1
Core funds from operations (Core FFO), as adjusted(1)		$	203			$	201			$	222			$	201			$	198
Cash flows provided by (used in):
Operating activities		$	253			$	243			$	303			$	241			$	336
Investing activities		$	(587	)		$	84			$	(882	)		$	(632	)		$	(881	)
Financing activities		$	330			$	(298	)		$	580			$	420			$	484

(1)		AMB believes that net income, as defined by GAAP, is the most appropriate earnings measure. However, AMB considers funds from operations, as adjusted (“FFO, as adjusted”), funds from operations, as defined by NAREIT (“FFO, as defined by NAREIT”) and core funds from operations, as adjusted (“Core FFO, as adjusted”, which together with FFO, as adjusted and FFO, as defined by NAREIT, we refer to as the “FFO Measures, as adjusted”) to be useful supplemental measures of its operating performance. AMB calculates FFO, as adjusted, as net income (or loss) available to common stockholders, calculated in accordance with GAAP, less gains (or losses) from dispositions of real estate held for investment purposes and real estate-related depreciation, and adjustments to derive AMB’s pro rata share of FFO, as adjusted, of consolidated and unconsolidated joint ventures. AMB calculates Core FFO, as adjusted, as FFO, as adjusted excluding the share of development profits of AMB. These calculations also include adjustments for items as described below.
		Unless stated otherwise, AMB includes the gains from development, including those from value-added conversion projects, before depreciation recapture, as a component of FFO, as adjusted. AMB believes gains from development should be included in FFO, as adjusted, to more completely reflect the performance of one of our lines of business. AMB believes that value-added conversion dispositions are in substance land sales and as such should be included in FFO, as adjusted, consistent with the real estate investment trust industry’s long standing practice to include gains on the sale of land in funds from operations. However, AMB’s interpretation of FFO, as adjusted, may not be consistent with the views of others in the real estate investment trust industry, who may consider it to be a divergence from the National Association of Real Estate Investment Trusts (“NAREIT”) definition, and may not be comparable to funds from operations or funds from operations per share reported by other real estate investment trusts that interpret the current NAREIT definition differently than AMB does. In connection with the formation of a joint venture, AMB

		may warehouse assets that are acquired with the intent to contribute these assets to the newly formed venture. Some of the properties held for contribution may, under certain circumstances, be required to be depreciated under GAAP. AMB includes in its calculation of FFO, as adjusted, gains or losses related to the contribution of previously depreciated real estate to joint ventures. Although it is a departure from the current NAREIT definition, AMB believes such calculation of FFO, as adjusted, better reflects the value created as a result of the contributions.

		In addition, AMB calculates FFO, as adjusted, to exclude impairment and restructuring charges, debt extinguishment losses and preferred unit redemption discounts/premiums. The impairment charges were principally a result of increases in estimated capitalization rates and deterioration in market conditions that adversely impacted values. The restructuring charges reflected costs associated with the reduction in global headcount and cost structure of AMB. Debt extinguishment losses generally included the costs of repurchasing debt securities. AMB repurchased certain tranches of senior unsecured debt to manage its debt maturities in response to the current financing environment, resulting in greater debt extinguishment costs. The preferred unit redemption discounts/premiums reflect the gain/loss associated with the liquidation preference in the preferred unit redemption price less costs incurred as a result of the redemption. In 2008, AMB also recognized charges to write-off pursuit costs related to development projects it no longer planned to commence and to establish a reserve against tax assets associated with the reduction of its development activities. Although difficult to predict, these items may be recurring given the uncertainty of the current economic climate and its adverse effects on the real estate and financial markets. While not infrequent or unusual in nature, these items result from market fluctuations that can have inconsistent effects on the results of operations of AMB. The economics underlying these items reflect market and financing conditions in the short-term but can obscure the performance of AMB and the value of the long-term investment decisions and strategies of AMB. AMB management believes FFO, as adjusted, is significant and useful to both it and its investors. FFO, as adjusted, more appropriately reflects the value and strength of the business model of AMB and its potential performance isolated from the volatility of the current economic environment and unobscured by costs (or gains) resulting from the management of AMB of its financing profile in response to the tightening of the capital markets. However, in addition to the limitations of the FFO Measures, as adjusted, generally discussed below, FFO, as adjusted, does not present a comprehensive measure of the financial condition and operating performance of AMB. This measure is a modification of the NAREIT definition of funds from operations and should not be used as an alternative to net income or cash flow from operations as defined by GAAP.
		AMB believes that the FFO Measures, as adjusted, are meaningful supplemental measures of its operating performance because historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time, as reflected through depreciation and amortization expenses. However, since real estate values have historically risen or fallen with market and other conditions, many industry investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient. Thus, the FFO Measures, as adjusted, are supplemental measures of operating performance for real estate investment trusts that exclude historical cost depreciation and amortization, among other items, from net income available to common stockholders, as defined by GAAP. AMB believes that the use of the FFO Measures, as adjusted, combined with the required GAAP presentations, has been beneficial in improving the understanding of operating results of real estate investment trusts among the investing public and making comparisons of operating results among such companies more meaningful. AMB considers the FFO Measures, as adjusted, to be useful measures for reviewing comparative operating and financial performance because, by excluding gains or losses related to sales of previously depreciated operating real estate assets and real estate depreciation and amortization, the FFO Measures, as adjusted, can help the investing public compare the operating performance of a company’s real estate between periods or as compared to other companies. While funds from operations is a relevant and widely used measure of operating performance of real estate investment trusts, the FFO Measures, as adjusted, do not represent cash flow from operations or net income as defined by GAAP and should not be considered as alternatives to those measures in evaluating the liquidity or operating performance of AMB. The FFO Measures, as adjusted, also do not consider the costs associated with capital expenditures related to the real estate assets of AMB nor are the FFO Measures, as adjusted, necessarily indicative of cash available to fund the future cash requirements of AMB. AMB management compensates for the limitations of the FFO Measures, as adjusted, by providing investors with financial statements prepared according to GAAP, along with this detailed discussion of the FFO Measures, as adjusted, and a reconciliation of the FFO Measures, as adjusted, to net income available to common stockholders, a GAAP measurement.
(2)		Includes adjustments for AMB’s share of real estate impairment losses from unconsolidated and consolidated joint ventures.

 

SELECTED HISTORICAL FINANCIAL DATA OF PROLOGIS

		Three Months Ended
		March 31,
		2011				2010
		(In millions, except per share amounts)
		(Unaudited)
Operating Data:
Revenues:
Rental income		$	205.3			$	187.5
Property management fees and other income			33.5				29.8
Total revenues			238.8				217.3
Expenses:
Rental expenses			63.3				56.3
Investment management expenses			10.6				10.3
General and administrative			39.2				42.0
Merger integration expenses and reduction in workforce			6.0				—
Depreciation and other			87.3				79.4
Total expenses			206.4				188.0
Operating income			32.4				29.3
Other income (expense):
Earnings from unconsolidated investees, net			13.6				8.0
Loss on early extinguishment of debt			—				(47.6	)
Net gains on dispositions of investments in real estate			3.7				11.8
Interest, income taxes and other income (expenses), net			(98.1	)			(114.8	)
Loss from continuing operations			(48.4	)			(113.3	)
Income from discontinued operations			8.2				28.8
Consolidated net loss		$	(40.2	)		$	(84.5	)
Net loss attributable to common shares		$	(46.6	)		$	(91.1	)
Net loss per share attributable to common shares — Basic		$	(0.08	)		$	(0.19	)
Net loss per share attributable to common shares — Diluted		$	(0.08	)		$	(0.19	)
Weighted average common shares outstanding:
Basic			570.6				475.0
Diluted			570.6				475.0

		As of March 31, 2011
		(In millions)
		(Unaudited)
Financial Position
Real estate properties owned, excluding land held for development, before depreciation		$	11,541.5
Land held for development or targeted for disposition		$	1,600.0
Net investments in properties		$	11,484.7
Investments in and advances to unconsolidated investees		$	2,084.7
Total assets		$	14,935.7
Total debt		$	6,415.0
Total liabilities		$	7,309.3
Noncontrolling interests		$	17.7
ProLogis shareholders’ equity		$	7,608.7
Number of common shares outstanding			570.6

		Years Ended December 31,
		2010				2009				2008				2007				2006
		(In millions, except per share amounts)
Operating Data:
Total revenues(1)		$	909			$	1,055			$	5,396			$	5,944			$	2,209
Total expenses(1)		$	1,503			$	1,089			$	4,897			$	4,922			$	1,556
Operating income (loss)(1)(2)		$	(594	)		$	(35	)		$	500			$	1,022			$	654
Interest expense		$	461			$	373			$	385			$	389			$	294
Earnings (loss) from continuing operations(2)		$	(1,582	)		$	(346	)		$	(359	)		$	853			$	609
Discontinued operations		$	311			$	370			$	(91	)		$	205			$	269
Consolidated net earnings (loss)(2)		$	(1,270	)		$	24			$	(450	)		$	1,058			$	878
Net earnings (loss) attributable to common shares(2)		$	(1,296	)		$	(3	)		$	(479	)		$	1,028			$	849
Net earnings (loss) per share attributable to common shares — Basic:
Continuing operations		$	(3.27	)		$	(0.93	)		$	(1.48	)		$	3.20			$	2.36
Discontinued operations			0.63				0.92				(0.34	)			0.80				1.09
Net earnings (loss) per share attributable to common shares - Basic(2)		$	(2.64	)		$	(0.01	)		$	(1.82	)		$	4.00			$	3.45
Net earnings (loss) per share attributable to common shares - Diluted:
Continuing operations		$	(3.27	)		$	(0.93	)		$	(1.48	)		$	3.09			$	2.27
Discontinued operations			0.63				0.92				(0.34	)			0.77				1.05
Net earnings (loss) per share attributable to common shares — Diluted(2)		$	(2.64	)		$	(0.01	)		$	(1.82	)		$	3.86			$	3.32
Weighted average common shares outstanding:
Basic			492				403				263				257				246
Diluted			492				403				263				267				257
Common Share Distributions:
Common share cash distributions paid		$	281			$	272			$	543			$	473			$	393
Common share distributions paid per share		$	0.56			$	0.70			$	2.07			$	1.84			$	1.60
FFO(3):
Reconciliation of net earnings (loss) to FFO:
Net earnings (loss) attributable to common shares(2)		$	(1,296	)		$	(3	)		$	(479	)		$	1,028			$	849
Total NAREIT defined adjustments			241				213				449				150				149
FFO, as defined by NAREIT			(1,055	)			210				(30	)			1,178				998
Our defined adjustments:
Foreign currency exchange losses (gains), net			11				(58	)			144				16				(19	)
Current income tax expense			—				4				10				3				23
Deferred income tax expense (benefit)			(52	)			(23	)			4				1				(54	)
Our share of reconciling items from unconsolidated investees:
Foreign currency exchange losses (gains), net			(9	)			(2	)			2				2				—
Unrealized losses (gains) on derivative contracts, net			4				(8	)			23				—				—
Deferred income tax expense (benefit)			—				16				(19	)			6				(3	)

		Years Ended December 31,
		2010				2009				2008				2007				2006
		(In millions, except per share amounts)
FFO attributable to common shares as defined by ProLogis, including significant non-cash items			(1,101	)			139				134				1,206				945
Add (deduct) significant non-cash items:
Impairment of real estate properties(2)			824				331				275				—				—
Impairment of goodwill and other assets(2)			413				164				321				—				—
Impairment (net gain) related to China operations			—				(3	)			198				—				—
Loss (gain) on early extinguishment of debt			31				(172	)			(91	)			—				—
Write-off deferred financing fees associated with credit facility restructuring			8				—				—				—				—
Our share of certain losses recognized by the property funds, net			11				9				108				—				—
FFO attributable to common shares as defined by ProLogis, excluding significant non-cash items		$	186			$	468			$	945			$	1,206			$	945
Cash Flow Data:
Net cash provided by operating activities(1)		$	241			$	89			$	888			$	1,230			$	664
Net cash provided by (used in) investing activities		$	733			$	1,235			$	(1,347	)		$	(4,076	)		$	(2,047	)
Net cash provided by (used in) financing activities		$	(970	)		$	(1,463	)		$	358			$	2,742			$	1,645

		As of December 31,
		2010				2009				2008(1)				2007(1)				2006
		(in millions)
Financial Position:
Real estate properties owned, excluding land held for development, before depreciation		$	11,346			$	12,606			$	13,234			$	14,414			$	12,482
Land held for development or targeted for disposition(2)		$	1,534			$	2,574			$	2,483			$	2,153			$	1,397
Net investments in properties		$	11,284			$	13,508			$	14,134			$	15,199			$	12,615
Investments in and advances to unconsolidated investees		$	2,025			$	2,107			$	2,195			$	2,252			$	1,300
Total assets		$	14,903			$	16,797			$	19,210			$	19,652			$	15,827
Total debt		$	6,506			$	7,978			$	10,711			$	10,217			$	8,387
Total liabilities		$	7,382			$	8,790			$	12,452			$	11,848			$	9,376
Noncontrolling interests		$	15			$	20			$	20			$	79			$	52
ProLogis shareholders’ equity		$	7,505			$	7,987			$	6,738			$	7,725			$	6,399
Number of common shares outstanding			570				474				267				258				251

(1)		During 2010 and 2009, ProLogis contributed certain properties with any resulting gain or loss reflected as net gains in the Consolidated Statements of Operations of ProLogis and as cash provided by investing activities. In 2008 and previous years, ProLogis reflected these contributions as gross revenues and expenses as cash provided by operating activities. See the Consolidated Financial Statements of ProLogis contained in Item 8 of ProLogis’ Form 10-K for the year ended December 31, 2010 for more information.
(2)		During 2010, ProLogis recognized impairment charges of $824.3 million on certain of its real estate properties, which includes $87.7 million in Discontinued Operations and $412.7 million related to goodwill and other assets. During 2009, ProLogis recognized impairment charges of $331.6 million on certain of its real estate properties and $163.6 million related to goodwill and other assets. During 2008, ProLogis recognized impairment charges of $274.7 million on certain of its real estate properties and $320.6 million related to goodwill and other assets. In addition, during 2008, ProLogis recognized impairment charges of $198.2 million in Discontinued Operations related to the net assets of ProLogis’ China operations that were reclassified as held for sale and its share of impairment charges recorded by an unconsolidated investee of $108.2 million. See ProLogis’ Consolidated Financial Statements contained in Item 8 of ProLogis’ Form 10-K for the year ended December 31, 2010 in for more information.
(3)		Funds from operations (“FFO”) is a non-GAAP measure that is commonly used in the real estate industry. The most directly comparable GAAP measure to FFO is net earnings. Although the NAREIT has published a definition of FFO, modifications to the NAREIT calculation of FFO are common among REITs, as companies seek to provide financial measures that meaningfully reflect their business. FFO, as ProLogis defines it, is presented as a supplemental financial measure. FFO is not used by ProLogis as, nor should it be considered to be, an alternative to net earnings computed under GAAP as an indicator of the operating performance of ProLogis or as an alternative to cash from operating activities computed under GAAP as an indicator of the ability of ProLogis to fund its cash needs.

		FFO is not meant to represent a comprehensive system of financial reporting and does not present, nor does ProLogis intend it to present, a complete picture of its financial condition and operating performance. ProLogis believes net earnings computed under GAAP remains the primary measure of performance and that FFO is only meaningful when it is used in conjunction with net earnings computed under GAAP. Further, ProLogis believes that its consolidated financial statements, prepared in accordance with GAAP, provide the most meaningful picture of its financial condition and operating performance.
		At the same time that NAREIT created and defined its FFO concept for the REIT industry, it also recognized that “management of each of its member companies has the responsibility and authority to publish financial information that it regards as useful to the financial community.” ProLogis believes that financial analysts, potential investors and shareholders who review the operating results of ProLogis are best served by a defined FFO measure that includes other adjustments to net earnings computed under GAAP in addition to those included in the NAREIT defined measure of FFO. The FFO measures of ProLogis are discussed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Funds From Operations” in its Annual Report on Form 10-K for its fiscal year ended December 31, 2010 which is incorporated into this joint proxy statement/prospectus by reference. See “Where You Can Find More Information.”

 

SUMMARY UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION

		December 31, 2010
		(In millions, except
		per share amounts)
Operating Data:
Total revenues		$	1,536
Operating loss		$	(495	)
Loss from continuing operations		$	(1,575	)
Loss from continuing operations attributable to common shares		$	(1,621	)
Loss from continuing operations per share attributable to common shares:
Basic		$	(3.89	)
Diluted		$	(3.89	)
Balance Sheet Data:
Net investments in real estate		$	23,742
Total assets		$	25,581
Total debt		$	9,906
ProLogis, Inc. shareholders’ equity		$	13,626

 

EQUIVALENT AND COMPARATIVE PER SHARE INFORMATION

		ProLogis								AMB
						Pro Forma								Pro Forma
		Historical				Combined				Historical				Equivalent
Loss from continuing operations available to common share, per common share:
Basic		$	(3.27	)		$	(3.89	)		$	(0.08	)		$	(1.56	)
Diluted		$	(3.27	)		$	(3.89	)		$	(0.08	)		$	(1.56	)
Dividends declared per common share		$	0.56			$	0.56			$	1.12			$	0.22
Book value per common share		$	12.55			$	30.80			$	18.36			$	12.32

		December 31,
		2010				2009				2008				2007				2006
		(Dollars in millions)
Consolidated ratio of earnings to combined fixed charges and preferred stock dividends(1):			—				—				—				1.9				1.5

(1)		The consolidated ratio of earnings to combined fixed charges and preferred stock dividends was less than one-to-one for the years ended December 31, 2010, 2009 and 2008. For the years ended December 31, 2010, 2009 and 2008, earnings were insufficient to cover combined fixed charges and preferred stock dividends by $40.8 million, $183.1 million and $100.4 million, respectively.

 

In addition to the other information included and incorporated by reference into this joint proxy statement/prospectus, including the matters addressed in “Cautionary Statement Regarding Forward-Looking Statements,” you should carefully consider the following risks before deciding how to vote. In addition, you should read and consider the risks associated with each of the businesses of AMB and ProLogis because these risks will also affect the combined company. These risks can be found in the respective Annual Reports on Form 10-K for the year ended December 31, 2010 of AMB and ProLogis, each of which is filed with the SEC and incorporated by reference into this joint proxy statement/prospectus. You should also read and consider the other information in this joint proxy statement/prospectus and the other documents incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information.”

 

The exchange ratio is fixed and will not be adjusted in the event of any change in the stock prices of either AMB or ProLogis.

 

Upon the closing of the Merger, each ProLogis common share will be converted into the right to receive 0.4464 of a newly issued share of AMB common stock, with cash paid in lieu of fractional shares. The exchange ratio was fixed in the merger agreement, and while it will be adjusted in the event of a recapitalization, merger, subdivision, issuer tender or exchange offer or other similar transaction involving AMB or ProLogis, the exchange ratio will not be adjusted for changes in the market price of either AMB common stock or ProLogis common shares. Changes in the price of AMB common stock prior to the Merger will affect the market value of the merger consideration that ProLogis shareholders will receive on the closing date of the Merger. Stock price changes may result from a variety of factors (many of which are beyond our control), including the following factors:

 

 

The price of AMB common stock at the closing of the Merger may vary from its price on the date the merger agreement was executed, on the date of this joint proxy statement/prospectus and on the date of the special meetings of AMB and ProLogis. As a result, the market value of the merger consideration represented by the exchange ratio will also vary. For example, based on the range of trading prices of AMB common stock during the period after January 26, 2011, the last trading day before ProLogis common share and AMB common stock prices may have been affected by market speculation regarding a potential transaction involving the companies, through April 26, 2011, the latest practicable date before the date of this joint proxy statement/prospectus, the exchange ratio of 0.4464 represented a market value ranging from a low of $14.60 to a high of $16.42.

 

Because the Merger will be completed after the date of the special meetings, at the time of your special meeting, you will not know the exact market value of the AMB common stock that ProLogis shareholders will receive upon completion of the Merger. You should consider the following two risks:

 

 

 

Therefore, while the number of shares of AMB common stock to be issued per ProLogis common share is fixed, ProLogis shareholders cannot be sure of the market value of the consideration they will receive upon completion of the Merger.

 

Failure to complete the Merger could negatively affect the stock prices and the future business and financial results of AMB and ProLogis.

 

If the Merger is not completed, the ongoing businesses of AMB or ProLogis may be adversely affected and AMB and ProLogis will be subject to numerous risks, including the following:

 

 

If the Merger is not completed, AMB and ProLogis cannot assure their shareholders that these risks will not materialize and will not materially affect the business, financial results and stock prices of AMB or ProLogis.

 

The merger agreement contains provisions that could discourage a potential acquirer of either AMB or ProLogis or could result in any acquisition proposal being at a lower price than it might otherwise be.

 

The merger agreement contains provisions that, subject to limited exceptions, restrict the ability of each of AMB and ProLogis to solicit, encourage, facilitate or discuss third-party proposals to acquire all or a significant part of AMB or ProLogis. Further, even if the AMB board of directors or ProLogis board of trustees withdraws or modifies its recommendation of the Topco merger or the Merger, respectively, they will still be required to submit the matter to a vote of their respective stockholders or shareholders at the special meetings. In addition, either AMB or ProLogis generally has an opportunity to offer to modify the terms of the proposed merger agreement in response to any acquisition proposal that may be made to the other party before the board of directors or board of trustees, as the case may be, may withdraw or modify its recommendation in response to such acquisition proposal. In some circumstances, on termination of the merger agreement, one of the parties may be required to pay a substantial termination fee to the other party. See “The Merger — Termination of the Merger Agreement.”

 

These provisions could discourage a potential acquirer that might have an interest in acquiring all or a significant part of AMB or ProLogis from considering or proposing such an acquisition, even if it were prepared to pay consideration with a higher per share cash or market value than that market value proposed to be received or realized in the Merger, or might result in a potential acquirer proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances under the merger agreement.

 

The pendency of the Merger could adversely affect the business and operations of AMB and ProLogis.

 

In connection with the pending Merger, some customers or vendors of each of AMB and ProLogis may delay or defer decisions, which could negatively affect the revenues, earnings, cash flows and expenses of AMB and ProLogis, regardless of whether the Merger is completed. Similarly, current and prospective employees of AMB

and ProLogis may experience uncertainty about their future roles with the combined company following the Merger, which may materially adversely affect the ability of each of AMB and ProLogis to attract and retain key personnel during the pendency of the Merger. In addition, due to operating covenants in the merger agreement, each of AMB and ProLogis may be unable, during the pendency of the Merger, to pursue strategic transactions, undertake significant capital projects, undertake certain significant financing transactions and otherwise pursue other actions, even if such actions would prove beneficial.

 

Some of the directors and executive officers of AMB and trustees and executive officers of ProLogis have interests in seeing the Merger completed that are different from, or in addition to, those of the other AMB stockholders and ProLogis shareholders.

 

Some of the directors and executive officers of AMB and trustees and executive officers of ProLogis have arrangements that provide them with interests in the Merger that are different from, or in addition to, those of the stockholders of AMB or the shareholders of ProLogis. These interests include, among other things, the continued service as a director or an executive officer of the combined company and, in the case of AMB directors and executive officers, the opportunity to participate in the new non-qualified deferred compensation plan (which we refer to as the “new NQDC plan”) which is conditioned on the consummation of the Topco merger. These interests, among other things, may influence or may have influenced the directors and executive officers of AMB and trustees and executive officers of ProLogis to support or approve the Topco merger or Merger, respectively.

 

Operational Risks

 

The combined company expects to incur substantial expenses related to the Merger.

 

The combined company expects to incur substantial expenses in connection with completing the Merger and integrating the business, operations, networks, systems, technologies, policies and procedures of the two companies. There are a large number of systems that must be integrated, including billing, management information, purchasing, accounting and finance, sales, payroll and benefits, fixed asset, lease administration and regulatory compliance. Although AMB and ProLogis have assumed that a certain level of transaction and integration expenses would be incurred, there are a number of factors beyond their control that could affect the total amount or the timing of their integration expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. Due to these factors, the transaction and integration expenses associated with the Merger could, particularly in the near term, exceed the savings that the combined company expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the integration of the businesses following the completion of the Merger. As a result of these expenses, both AMB and ProLogis expect to take charges against their earnings before and after the completion of the Merger. The charges taken in connection with the Merger are expected to be significant, although the aggregate amount and timing of such charges are uncertain at present.

 

Following the Merger, the combined company may be unable to integrate the businesses of AMB and ProLogis successfully and realize the anticipated synergies and related benefits of the Merger or do so within the anticipated timeframe.

 

The Merger involves the combination of two companies that currently operate as independent public companies. AMB and ProLogis expect that the transaction will generate $80 million of annual gross savings in general and administrative expenses, based on preliminary estimates of certain personnel and non-personnel reductions. The personnel cost reductions are estimated to be approximately $65 million and relate to anticipated reductions of certain positions at both AMB and ProLogis that are believed to be redundant for the combined company. The non-personnel cost reductions are estimated to be approximately $15 million and relate to duplicative corporate infrastructure and public company operating expenses. AMB and ProLogis expect to realize these savings on an annualized run-rate basis by December 31, 2012.

However, the combined company will be required to devote significant management attention and resources to integrating the business practices and operations of AMB and ProLogis. Potential difficulties the combined company may encounter in the integration process include the following:

 

 

For all these reasons, you should be aware that it is possible that the integration process could result in the distraction of the combined company’s management, the disruption of the combined company’s ongoing business or inconsistencies in the combined company’s products, services, standards, controls, procedures and policies, any of which could adversely affect the ability of the combined company to maintain relationships with customers, vendors and employees or to achieve the anticipated benefits of the Merger, or could otherwise adversely affect the business and financial results of the combined company.

 

Following the Merger, the combined company may be unable to retain key employees.

 

The success of the combined company after the Merger will depend in part upon its ability to retain key AMB and ProLogis employees. Key employees may depart either before or after the Merger because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the combined company following the Merger. Accordingly, no assurance can be given that AMB, ProLogis or, following the Merger, the combined company will be able to retain key employees to the same extent as in the past.

 

The Merger will result in changes to the board of directors and management of the combined company that may affect the strategy of the combined company as compared to that of AMB and ProLogis.

 

If the parties complete the Merger, the composition of the board of directors of the combined company and management team will change from the boards and management teams of AMB and ProLogis. The board of directors of the combined company will consist of 11 members, with five directors selected by the current board of directors of AMB and six directors selected by the current board of trustees of ProLogis. The combined company will also have executive officers from both AMB and ProLogis. This new composition of the board of directors and the management team of the combined company may affect the business strategy and operating decisions of the combined company upon the completion of the Merger.

 

The future results of the combined company will suffer if the combined company does not effectively manage its expanded operations following the Merger.

 

Following the Merger, the combined company may continue to expand its operations through additional acquisitions and other strategic transactions, some of which involve complex challenges. The future success of the combined company will depend, in part, upon the ability of the combined company to manage its expansion opportunities, which pose substantial challenges for the combined company to integrate new operations into its

existing business in an efficient and timely manner, and upon its ability to successfully monitor its operations, costs, regulatory compliance and service quality, and to maintain other necessary internal controls. The combined company cannot assure you that its expansion or acquisition opportunities will be successful, or that the combined company will realize its expected operating efficiencies, cost savings, revenue enhancements, synergies or other benefits.

 

The trading price of shares of the common stock of the combined company may be affected by factors different from those affecting the price of shares of AMB common stock or ProLogis common shares before the Merger.

 

If the Merger is completed, ProLogis shareholders will become holders of approximately 60%, and AMB stockholders will hold approximately 40%, of the outstanding shares of common stock of the combined company. The results of operations of the combined company, as well as the trading price of the common stock of the combined company, after the Merger may be affected by factors different from those currently affecting AMB’s or ProLogis’ results of operations and the trading prices of AMB common stock and ProLogis common shares. These factors include:

 

 

Accordingly, the historical trading prices and financial results of AMB and ProLogis may not be indicative of these matters for the combined company after the Merger. For a discussion of the business of AMB and ProLogis and of certain factors to consider in connection with that business, see the documents incorporated by reference by AMB or ProLogis into this joint proxy statement/prospectus referred to under “Where You Can Find More Information.”

 

Regulatory and Legal Risks

 

Counterparties to certain significant agreements with AMB or ProLogis may exercise contractual rights under such agreements in connection with the Merger.

 

AMB and ProLogis are each party to certain agreements that give the counterparty certain rights following a “change in control,” including in some cases the right to terminate the agreement. Under some such agreements, the Merger will constitute a change in control and therefore the counterparty may exercise certain rights under the agreement upon the closing of the Merger. Certain AMB and ProLogis funds, joint ventures, management and servicing contracts, leases and debt obligations have agreements subject to such provisions. Any such counterparty may request modifications of their respective agreements as a condition to granting a waiver or consent under their agreement. There is no assurance that such counterparties will not exercise their rights under the agreements, including termination rights where available, that the exercise of any such rights will not result in a material adverse effect or that any modifications of such agreements will not result in a material adverse effect.

 

In connection with the announcement of the merger agreement, several lawsuits have been filed and are pending, seeking, among other things, to enjoin the Merger and rescind the merger agreement, and an adverse judgment in any of the lawsuits may prevent the Merger from being effective or from becoming effective within the expected timeframe.

 

ProLogis, the members of the ProLogis board of trustees, New Pumpkin, Upper Pumpkin, Pumpkin LLC, AMB and AMP LP, have each been named as defendants in several lawsuits brought by holders of ProLogis common shares challenging the Merger, and seeking, among other things, to enjoin the Merger, direct the defendants to exercise their fiduciary duties, rescind the merger agreement, and award the plaintiffs damages and expenses. If the plaintiffs are successful in obtaining an injunction prohibiting the parties from completing the Merger on the agreed upon terms, the injunction may prevent the completion of the Merger in the expected timeframe (if at all). For more information about litigation related to the Merger, including the agreements in principle with respect to the proposed settlement of the litigation, see “The Merger — Litigation Relating to the Merger.”

REIT Risks