AMB Property Corp. (AMB), a leading real estate investment trust (REIT), recently leased approximately 283,200 square feet of its development portfolio in China as the country witnessed increased demand for state-of-the-art distribution facilities due to rise in consumer and business spending.
The company leased 186,200 square feet of industrial space at AMB Guangzhou Development Zone Logistics Center, a multi-story business park located in Guangzhou — the third largest city in China, to an unnamed customer. With the deal, the facility is currently 96% leased.
AMB also leased 66,400 square feet at AMB Jiaxing Distribution Center, a development project in Jiaxing City. The facility offers convenient transportation network in the Jiaxing area and the influencing Yangtze Delta, which further provides a competitive advantage and operational efficiency to the unnamed lessee. At the same time, the company leased 30,600 square feet of space at AMB Dalian Distribution Center, which is in close proximity to the Liaodong Peninsula in Liaoning Province of northeast China.
AMB is a leading industrial real estate company with a strong portfolio of warehouses and distribution facilities in some of the busiest distribution markets of the globe. The company’s properties are located in supply-constrained infill markets in close proximity to airports, seaports, and ground transportation facilities, which enable swift distribution of customers’ products.
AMB operates as a vertically integrated company and enjoys large economies of scale. It possesses an extensive knowledge of domestic and international industrial real estate markets. By the end of the second quarter of 2010, the company had 156.1 million square feet of operating and development facilities across the globe, out of which 16.2 million square feet were located in Asia.
The continued troubles in the residential sector are weighing on commercial property operations. The credit crunch has also widened the bid-ask spread between buyers and sellers of commercial real estate, which has caused deal volumes to fall dramatically. In addition, market vacancy increases will offset AMB’s ability to push through rental rate increases and lease the development pipeline. This has significantly affected the top-line growth of the company. Consequently, we maintain our long-term Underperform rating on AMB, which currently has a Zacks #3 Rank that translates to a short-term ‘Hold’ recommendation.
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