UPDATE 2-AMB second-quarter FFO falls 53 percent

* Q2 FFO down by half

* Net operating income falls

* Stock falls 7 percent (Recasts first sentence, adds stock activity, quarterly performance figures)

NEW YORK, July 28 (Reuters) - AMB Property Corp (AMB.N), which owns, operates and develops warehouses and distribution centers around the world, said quarterly funds from operations (FFO) fell by one-half primarily due to lower development revenue as global trade declined.

AMB said on Tuesday that second-quarter FFO dropped to $50.9 million, or 34 cents per share, from $108.8 million, or $1.05 per share, a year earlier.

The result missed the average analyst view of 35 cents per share, according to Reuters Estimates, and the company's stock fell 7 percent on the New York Stock Exchange.

Excluding charges of 3 cents a share for restructuring, FFO was 37 cents per share. FFO, a performance measure for real estate investment trusts, removes the profit-reducing effect of depreciation, a noncash accounting item.

AMB depends on global trade to drive demand for its buildings, which store goods bound for markets around the world. The company and its chief competitor, ProLogis (PLD.N), have been hit hard by the credit crisis, which has drained the demand for its buildings, especially ones constructed without a tenant. Both companies have severely limited their development pipelines mostly to precommitted projects and build-to-suits.

AMB has fared better because of its lower debt burden and smaller pipeline.

By the end of the second quarter, its property portfolio was 90.5 percent occupied, compared with 95.2 percent at the end of the year-earlier quarter.

For property owned at least one year, net operating income fell 4.1 percent, without the effects of lease termination fees. The decline was driven primarily by lower average occupancies and the effect of foreign currency exchange.

Net operating income (NOI) reflects cash flow that the property generates. A year earlier, NOI rose 3.3. percent.

Rents on new leases was 2.5 percent lower for the quarter than expiring ones.

Since the beginning of the year, San Francisco-based AMB has repurchased, repaid or extended about $1 billion in debt, with about $241 million completed in the second quarter.

By the end of the quarter, its share of total debt to total assets was 44 percent. The company had $1.0 billion in availability on its lines of credit and $209 million of cash.

At the end of the quarter, its development pipeline, including unconsolidated joint ventures, stood at 9.0 million square feet (836,600 square meters) scheduled for delivery through 2010, with an estimated total investment cost of $758 million.

The company's remaining share of cash needed to complete the pipeline, which was 25 percent preleased by the end of the quarter, was $89 million.

AMB lowed the top of its forecast for 2009 FFO to a range of $1.41 to $1.45 per share from a prior outlook of $1.41 to $1.49.

AMB stock was down $1.36 at $18.16 on the New York Stock Exchange. (Reporting by Ilaina Jonas; additional reporting by Nick Zieminski; editing by Jeffrey Benkoe)