When investors expect a lot from a company, it can be tough to deliver, but it appears as though the fourth-quarter and year-end results from AMB Property
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Funds from operations (FFO) for the quarter and year were $1.15 and $2.75, respectively, for growth of 85.5% and 19.6% versus last year's comparable numbers. The company accomplished its growth by upping its occupancy by 100 basis points to 95.8% and growing same-store operating income by 3.5% for the quarter versus last year (with lease-termination fees removed). The 95.8% occupancy rate is the best for the company since 2001, and the numbers show that the recovery in the industrial space is gaining ground.
To fund further growth, the company continues to sell off certain properties and to purchase properties in new markets, such as Hamburg and Shanghai. But looking at the company's expansion efforts, the primary path appears to be the construction of new locations, including a built-to-suit expansion in Tokyo.
On the dividend front, the company's $1.76 a share is more than well covered by its $2.75 in funds from operations. Based on the strength in the company's business, it seems very likely that the company will raise its dividend again, as it has each year since at least 1999.
At $51 a share, AMB trades near a 52-week high, at a trailing multiple to FFO of 18.5, and carries a dividend yield of 3.5%. None of these metrics reflects a bargain in the REIT area. However, this is a well-run business that looks to be well positioned for the long term and has a solid management team. For investors who follow REITs or have an interest in adding a quality REIT to their portfolios, AMB is a great candidate for the watch list. Eventually, the market's love for REIT shares will wane, and quality REITs like AMB will be available at a fair price.
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