##### 





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      FORM 10-K/A
  Amendment #1
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from            to   Commission File Number 1-12846
      PROLOGIS
 (Exact name of registrant as
    specified in its charter)
  Maryland

74-2604728(State or other jurisdiction
    of incorporation or organization)

(I.R.S. employer
    identification no.)  4545 Airport Way
 Denver, CO 80239
 (Address of principal executive
    offices and zip code)
  (303) 567-5000
 (Registrants telephone
    number, including area code)
 Securities registered pursuant to
    Section 12(b) of the Act:
  Name of each exchangeTitle of Each Class

on which registeredCommon Shares of Beneficial Interest, par value $0.01 per share


New York Stock ExchangeSeries F Cumulative Redeemable Preferred Shares of
    Beneficial Interest, par
    value $0.01 per share


New York Stock ExchangeSeries G Cumulative Redeemable Preferred Shares of
    Beneficial Interest par
    value $0.01 per share


New York Stock Exchange   Securities registered pursuant to
    Section 12(g) of the Act:  NONE
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K.  Yes o þ
  Rule 12b-2
  Large accelerated filer
    þ

Accelerated filer
    o

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2  o þ
  non-affiliates
    DOCUMENTS INCORPORATED BY
    REFERENCE




---



##### 



Explanatory Note:
   PART II
  ITEM 8.
    Financial
    Statements and Supplementary Data   PART IV  ITEM 15.
    Exhibits,
    Financial Statement Schedules  (a)
    
    Financial Statements and Schedules:
      (b)
    
    Exhibits: See the exhibit index on page 94 of this amendment, which is
incorporated herein by reference.
 (c)
    
    Financial Statements: See Index to Consolidated Financial Statements and Schedule III
below, which is incorporated by reference.
  
 PageFinancial Statements of ProLogis:Reports of Independent Registered Public Accounting Firm


3Consolidated Statements of Earnings


5Consolidated Balance Sheets


6Consolidated Statements of Shareholders Equity and Comprehensive Income


7Consolidated Statements of Cash Flows


8Notes to Consolidated Financial Statements


9Report of Independent Registered Public Accounting Firm


58Schedule III  Real Estate and Accumulated Depreciation


59Financial Statements of ProLogis North American Industrial Fund, LPIndependent Auditors Report
    
    
    77Consolidated Balance Sheets
    
    
    78Consolidated Statements of Earnings
    
    
    79Consolidated
Statements of Partners Capital and Comprehensive loss
    
    
    80Consolidated
Statements of Cash Flows
    
    
    81Notes to Consolidated Financial Statements
    
    
    82   2




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##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Internal Control  Integrated Framework
      3




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     Internal Control  Integrated
    Framework issued by the Committee of Sponsoring Organizations of
    the Treadway Commission (COSO)
        Internal Control  Integrated Framework
        4




---



##### 



PROLOGIS
 CONSOLIDATED STATEMENTS OF EARNINGS

Years Ended December 31, 2007, 2006 and 2005 (In thousands, except per share data)
  2007


2006


2005Revenues:Rental income

$
1,067,865


$
910,202


$
584,352CDFS disposition proceeds:Developed and repositioned properties


2,530,377



1,286,841



1,140,457Acquired property portfolios


2,475,035







Property management and other fees and incentives


104,719



211,929



66,934Development management and other income


26,670



37,420



25,464Total revenues


6,204,666



2,446,392



1,817,207Expenses:Rental expenses


288,569



239,221



162,245Cost of CDFS dispositions:Developed and repositioned properties


1,835,274



993,926



917,782Acquired property portfolios


2,406,426







General and administrative


204,558



153,516



118,166Depreciation and amortization


308,971



286,807



186,605Other expenses


24,963



13,013



8,633Total expenses


5,068,761



1,686,483



1,393,431Operating income


1,135,905



759,909



423,776Other income (expense):Earnings from unconsolidated property funds


94,453



93,055



46,078Earnings from CDFS joint ventures and other unconsolidated
    investees


11,165



50,703



6,421Interest expense


(368,065
)


(294,403
)


(177,562
)Interest income on notes receivable


8,066



16,730



6,781Interest and other income, net


25,935



18,248



10,724Total other income (expense)


(228,446
)


(115,667
)


(107,558
)Earnings before minority interest


907,459



644,242



316,218Minority interest


(6,003
)


(3,457
)


(5,243
)Earnings before certain net gains


901,456



640,785



310,975Gains recognized on dispositions of certain non-CDFS business
    assets


146,667



81,470



Foreign currency exchange gains, net


7,915



21,086



15,979Earnings before income taxes


1,056,038



743,341



326,954Income taxes:Current income tax expense


68,349



84,250



14,847Deferred income tax expense (benefit)


550



(53,722
)


12,045Total income taxes


68,899



30,528



26,892Earnings from continuing operations


987,139



712,813



300,062Discontinued operations:Income attributable to disposed properties and assets held for
    sale


5,704



24,311



24,191Losses related to temperature-controlled distribution assets










(25,150
)Gains recognized on dispositions:Non-CDFS business assets


52,776



103,729



86,444CDFS business assets


28,721



33,514



10,616Total discontinued operations


87,201



161,554



96,101Net earnings


1,074,340



874,367



396,163Less preferred share dividends


25,423



25,416



25,416Net earnings attributable to common shares

$
1,048,917


$
848,951


$
370,747Weighted average common shares outstanding  Basic


256,873



245,952



203,337Weighted average common shares outstanding  Diluted


267,226



256,852



213,713Net earnings per share attributable to common shares 
    Basic:Continuing operations

$
3.74


$
2.79


$
1.35Discontinued operations


0.34



0.66



0.47Net earnings per share attributable to common shares 
    Basic

$
4.08


$
3.45


$
1.82Net earnings per share attributable to common shares 
    Diluted:Continuing operations

$
3.61


$
2.69


$
1.31Discontinued operations


0.33



0.63



0.45Net earnings per share attributable to common shares 
    Diluted

$
3.94


$
3.32


$
1.76Distributions per common share

$
1.84


$
1.60


$
1.48    5




---



##### 



PROLOGIS
  CONSOLIDATED BALANCE SHEETS
 (In thousands, except per share data)
  December 31,2007


2006ASSETSReal estate

$
16,578,845


$
13,897,091Less accumulated depreciation


1,368,458



1,264,22715,210,387



12,632,864Investments in and advances to unconsolidated investees


2,345,277



1,299,697Cash and cash equivalents


418,991



475,791Accounts and notes receivable


340,039



439,791Other assets


1,389,733



998,224Discontinued operations  assets held for sale


19,607



57,158Total assets

$
19,724,034


$
15,903,525LIABILITIES AND SHAREHOLDERS EQUITYLiabilities:Debt

$
10,506,068


$
8,386,886Accounts payable and accrued expenses


933,075



518,651Other liabilities


769,408



546,129Discontinued operations  assets held for sale


424



1,012Total liabilities


12,208,975



9,452,678Minority interest


78,661



52,268Shareholders equity:Series C preferred shares at stated liquidation preference
    of $50 per share; $0.01 par value; 2,000 shares issued
    and outstanding at December 31, 2007 and 2006


100,000



100,000Series F preferred shares at stated liquidation preference
    of $25 per share; $0.01 par value; 5,000 shares issued
    and outstanding at December 31, 2007 and 2006


125,000



125,000Series G preferred shares at stated liquidation preference
    of $25 per share; $0.01 par value; 5,000 shares issued
    and outstanding at December 31, 2007 and 2006


125,000



125,000Common shares; $0.01 par value; 257,712 shares issued
    and outstanding at December 31, 2007 and
    250,912 shares issued and outstanding at December 31,
    2006


2,577



2,509Additional paid-in capital


6,412,473



6,000,119Accumulated other comprehensive income:Unrealized (losses) gains on derivative contracts


(27,091
)


4,524Foreign currency translation gains


302,413



212,398Retained earnings (distributions in excess of net earnings)


396,026



(170,971
)Total shareholders equity


7,436,398



6,398,579Total liabilities and shareholders equity

$
19,724,034


$
15,903,525    6




---



##### 



PROLOGIS
  CONSOLIDATED STATEMENTS OF SHAREHOLDERS
    EQUITY
 AND COMPREHENSIVE INCOME
 Years Ended December 31, 2007, 2006 and 2005
 (In thousands)
  2007


2006


2005Common shares  number of shares at beginning of year


250,912



243,781



185,789Issuance of common shares in connection with mergers and
    acquisitions


4,781







55,889Issuances of common shares under common share plans


1,891



6,951



2,092Conversions of limited partnership units


128



180



11Common shares  number of shares at end of year


257,712



250,912



243,781Common shares  par value at beginning of year

$
2,509


$
2,438


$
1,858Issuance of common shares in connection with mergers and
    acquisitions


48







559Issuances of common shares under common share plans


19



69



21Conversions of limited partnership units


1



2



Common shares  par value at end of year

$
2,577


$
2,509


$
2,438Preferred shares at stated liquidation preference at beginning
    and end of year

$
350,000


$
350,000


$
350,000Additional paid-in capital at beginning of year

$
6,000,119


$
5,606,017


$
3,249,576Issuance of common shares in connection with mergers and
    acquisitions


339,449







2,285,029Issuances of common shares under common share plans


37,417



357,448



43,126Conversions of limited partnership units


4,444



6,475



150Cost of issuing common shares


(106
)


(76
)


(1,395
)Change in receivable from timing differences on equity
    transactions


247



244



2,494Cost of share-based compensation awards


30,903



30,011



27,037Additional paid-in capital at end of year

$
6,412,473


$
6,000,119


$
5,606,017Accumulated other comprehensive income at beginning of year

$
216,922


$
149,586


$
194,445Foreign currency translation gains (losses), net


90,015



70,777



(70,076
)Unrealized (losses) gains on derivative contracts, net


(31,615
)


(3,441
)


25,217Accumulated other comprehensive income at end of year

$
275,322


$
216,922


$
149,586Distributions in excess of net earnings at beginning of year

$
(170,971
)

$
(620,018
)

$
(693,386
)Net earnings


1,074,340



874,367



396,163FIN 48 adoption


(9,272
)






Preferred share dividends


(25,423
)


(25,416
)


(25,416
)Common share distributions


(472,648
)


(399,904
)


(297,379
)Retained earnings (distributions in excess of net earnings) at
    end of year

$
396,026


$
(170,971
)

$
(620,018
)Total shareholders equity at end of year

$
7,436,398


$
6,398,579


$
5,488,023Comprehensive income attributable to common shares:Net earnings

$
1,074,340


$
874,367


$
396,163Preferred share dividends


(25,423
)


(25,416
)


(25,416
)Foreign currency translation gains (losses), net


90,015



70,777



(70,076
)(Losses) gains on derivative contracts, net


(31,615
)


(3,441
)


25,217Comprehensive income attributable to common shares

$
1,107,317


$
916,287


$
325,888    7




---



##### 



PROLOGIS
  CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2007, 2006 and
    2005
 (In thousands)
  2007


2006


2005Operating activities:Net earnings

$
1,074,340


$
874,367


$
396,163Minority interest share in earnings


6,003



3,457



5,243Adjustments to reconcile net earnings to net cash provided by
    operating activities:Straight-lined rents


(44,403
)


(36,418
)


(11,411
)Cost of share-based compensation awards


23,934



21,567



22,615Depreciation and amortization


311,867



298,342



204,378Equity in earnings from unconsolidated investees


(105,618
)


(143,758
)


(52,499
)Distributions from unconsolidated investees


74,348



99,062



47,514Amortization of deferred loan costs


10,555



7,673



5,595Amortization of debt premium, net


(7,797
)


(13,861
)


(3,980
)Gains recognized on dispositions of non-CDFS business assets


(199,443
)


(185,199
)


(86,444
)Gains recognized on dispositions of CDFS business assets
    included in discontinued operations


(28,721
)


(33,514
)


(10,616
)Cumulative translation losses and impairment charge on disposed
    properties










26,864Unrealized foreign currency exchange losses (gains)


16,229



(18,774
)


(10,288
)Deferred income tax expense (benefit)


550



(53,722
)


12,045Impairment charges


13,259







Increase in accounts and notes receivable and other assets


(136,405
)


(204,096
)


(54,091
)Increase (decrease) in accounts payable and accrued expenses and
    other liabilities


216,338



72,201



(2,986
)Net cash provided by operating activities


1,225,036



687,327



488,102Investing activities:Real estate investments


(5,213,870
)


(3,695,799
)


(2,457,780
)Purchase of ownership interests in property funds






(259,248
)


Tenant improvements and lease commissions on previously leased
    space


(67,317
)


(66,787
)


(53,919
)Recurring capital expenditures


(37,948
)


(29,437
)


(26,989
)Cash consideration paid in Parkridge acquisition in 2007 and
    Catellus Merger in 2005, net of cash acquired


(700,812
)






(1,292,644
)Purchase of Macquarie ProLogis Trust (MPR), net of
    cash acquired


(1,137,028
)






Proceeds from dispositions of real estate assets


3,618,622



2,095,231



1,516,614Advances on notes receivable


(18,270
)


(115,417
)


Proceeds from repayments of notes receivable


115,620



73,723



59,991Increase in restricted cash for potential investment






(42,174
)


Investments in and advances to unconsolidated investees


(661,796
)


(175,677
)


(16,726
)Return of investment from unconsolidated investees


50,243



146,206



48,652Net cash used in investing activities


(4,052,556
)


(2,069,379
)


(2,222,801
)Financing activities:Proceeds from sales and issuances of common shares under various
    common share plans


46,855



358,038



45,641Distributions paid on common shares


(472,645
)


(393,317
)


(297,379
)Minority interest distributions


(9,341
)


(11,576
)


(13,953
)Dividends paid on preferred shares


(31,781
)


(19,062
)


(25,416
)Debt and equity issuance costs paid


(15,830
)


(13,840
)


(8,112
)Repayment of debt assumed in Catellus Merger










(106,356
)Net (payments) proceeds from lines of credit and short-term
    borrowings


(431,506
)


368,158



1,348,023Proceeds from issuance of debt to finance MPR and Parkridge
    acquisitions


1,719,453







Proceeds from issuance of senior convertible notes


2,329,016







Proceeds from issuance of senior notes, secured and unsecured
    debt


781,802



1,945,325



890,011Payments on senior notes, secured debt, unsecured debt and
    assessment bonds


(1,174,335
)


(588,844
)


(119,067
)Net cash provided by financing activities


2,741,688



1,644,882



1,713,392Effect of exchange rate changes on cash


29,032



9,161



(11,422
)Net (decrease) increase in cash and cash equivalents


(56,800
)


271,991



(32,729
)Cash and cash equivalents, beginning of year


475,791



203,800



236,529Cash and cash equivalents, end of year

$
418,991


$
475,791


$
203,800      8




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##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
      1.
    Description
    of Business:    2.
    Summary
    of Significant Accounting Policies:  Basis of Presentation and
    Consolidation.
    (i)
    
    the form of our ownership interest and legal structure;(ii)
    
    our representation on the entitys governing body;(iii)
    
    the size of our investment (including loans);(iv)
    
    estimates of future cash flows;(v)
    
    our ability to participate in policy making decisions, including
    but not limited to, the acquisition or disposition of investment
    properties and the incurrence or refinancing of debt;(vi)
    
    the rights of other investors to participate in the decision
    making process; and(vii)
    
    the ability for other partners or owners to replace us as
    manager
    and/or
    liquidate the venture, if applicable.  Use of Estimates.
  Foreign Operations.
 9




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##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
          Revenue
    Recognition.
  Rental and other income.
  Gains on Disposition of Real Estate.
     10




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##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      Rental Expenses. on-site
  Share-Based Compensation. Share Based Payment
  Accounting and Disclosure of Stock Based
    Compensation Accounting for Stock Issued to
    Employees
    2005Net earnings attributable to common shares:As reported

$
370,747Pro forma

$
373,074Net earnings per share attributable to common shares:As reported  Basic

$
1.82As reported  Diluted

$
1.76Pro forma  Basic

$
1.83Pro forma  Diluted

$
1.77     Income Taxes.
 11




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##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
        Accounting for Uncertainty in Income Taxes 
    An Interpretation of FASB Statement No. 109 Accounting for Income
    Taxes
    Long-Lived
    Assets
  Real Estate Assets.
   12




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##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
        Business Combinations, Goodwill and Intangible Assets. ,
  
    the fair value of the buildings on an as-if-vacant basis. The
    fair value allocated to land is generally based on relevant
    market data;
    the market value of above and below market leases based upon our
    best estimate of current market rents. The value of each lease
    is recorded in either other assets or other liabilities, as
    appropriate;
    the value of costs to obtain tenants, primarily leasing
    commissions. These costs are recorded in other assets;
    the value of debt based on quoted market rates for the same or
    similar issues, or by discounting future cash flows using rates
    currently available for debt with similar terms and maturities.
    Any discount or premium is included in the principal amount;
    the value of any management contracts by discounting future
    expected cash flows under these contracts; and
    the value of all other assumed assets and liabilities based on
    the best information available.    
    Above and below market leases are charged to rental income over
    the average remaining estimated life of the lease.
    Leasing commissions are charged to amortization expense over the
    average remaining estimated life of the lease.
    Debt discount or premium is charged to interest expense using
    the effective interest method over the remaining term of the
    related debt.
    Management contracts are charged against income over the
    remaining term of the contract.    Investments in Unconsolidated Investees.
 13




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##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      Impairment of Long-Lived Assets.
  Assets Held for Sale and Discontinued Operations.
    Cash and Cash Equivalents.
  Notes Receivable.
  Minority Interest.
 14




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
        Costs of Raising Capital.
  Financial Instruments.
      Environmental costs.
  Recent Accounting Pronouncements. Fair Value Measurements No. FAS 157-2, FAS 157-2), FAS 157-2
 15




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##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      The Fair Value Option for Financial Assets and
    Financial Liabilities including an Amendment of FASB Statement
    No. 115
  Business Combinations Noncontrolling Interests in Consolidated Financial
    Statements  An Amendment of ARB No. 51
  Proposed Accounting Pronouncements. No. APB-14a, Accounting for Convertible Debt Instruments That May Be
    Settled in Cash upon Conversion (Including Partial Cash
    Settlement)
  Reclassifications.
  3.
    Mergers
    and Acquisitions:  Parkridge
    Holdings Limited
   16




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
          Catellus
    Development Corporation
      ProLogis
    North American Properties Fund XII
     17




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    4.
    Unconsolidated
    Investees:  Summary
    of Investments and Income
    December 31,2007


2006Property funds

$
1,755,113


$
981,840CDFS joint ventures and other unconsolidated investees


590,164



317,857Totals

$
2,345,277


$
1,299,697   Property
    Funds
    Years Ended December 31,2007


2006


2005Earnings from unconsolidated property funds:North America

$
17,161


$
59,732


$
24,224Europe


60,913



21,605



13,938Asia


16,379



11,718



7,916Total earnings from unconsolidated property funds

$
94,453


$
93,055


$
46,078Property management and other fees and incentives:North America

$
47,164


$
57,800


$
32,124Europe


43,752



145,622



30,064Asia


13,803



8,507



4,746Total property management and other fees and incentives

$
104,719


$
211,929


$
66,934    18




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      SquareNumber of

feetproperties

(in

Ownership


Investment inowned

millions)

Percentage


and advances toFund Names

2007

2007

2007


2006


2007

2006ProLogis California (ProLogis California I LLC ) (1)


80


14.2


50.0
%


50.0
%

$
106,630

$
112,915ProLogis North American Properties Fund I ( ProLogis North
    American Properties Fund I LLC) (1)


36


9.4


41.3
%


41.3
%


27,135


30,902ProLogis North American Properties Fund V (2)












11.3
%





53,331ProLogis North American Properties Fund VI (Allagash
    Property Trust) (1)


22


8.6


20.0
%


20.0
%


37,218


39,149ProLogis North American Properties Fund VII (Brazos
    Property Trust) (1)


29


6.1


20.0
%


20.0
%


31,321


31,816ProLogis North American Properties Fund VIII (Cimmaron
    Property Trust) (1)


24


3.1


20.0
%


20.0
%


14,982


15,397ProLogis North American Properties Fund IX (Deerfield
    Property Trust) (1)


20


3.4


20.0
%


20.0
%


13,986


14,076ProLogis North American Properties Fund X (Elkhorn Property
    Trust) (1)


29


4.2


20.0
%


20.0
%


15,721


15,399ProLogis North American Properties Fund XI (KPJV, LLP) (1)


13


4.1


20.0
%


20.0
%


30,712


31,871ProLogis North American Industrial Fund (3)


217


37.2


23.2
%


20.0
%


104,277


72,053ProLogis North American Industrial Fund II (ProLogis NA2
    LP) (1)(2)


153


36.1


36.9
%






274,238


ProLogis North American Industrial Fund III (ProLogis NA3
    LP) (1)(4)


122


24.7


20.0
%






123,720


ProLogis Mexico Industrial Fund (ProLogis MX Fund LP) (5)


32


4.2


20.0
%






38,085


PEPR (ProLogis European Properties) (6)


247


56.4


24.9
%


24.0
%


494,593


430,761PEPF II (ProLogis European Properties II) (7)


41


10.4


24.3
%






158,483


ProLogis Japan Properties Fund I (PLD/RECO Japan TMK
    Property Trust) (1)


16


7.1


20.0
%


20.0
%


87,663


87,705ProLogis Japan Properties Fund II (ProLogis Japan
    Properties Trust) (1)(8)


44


14.6


20.0
%


20.0
%


189,584


46,465ProLogis Korea Fund (ProLogis Korea Properties Trust) (1)(9)


6


0.4


20.0
%






6,765


Totals


1,131


244.2









$
1,755,113

$
981,840    (1)
    
    We have one fund partner in each of these property funds.(2)
    
    We referred to the combined entities in which we had ownership
    interests (ProLogis-Macquarie Fund and the management company)
    as one property fund named ProLogis North American Properties
    Fund V. During 2006, we contributed 20 properties for
    aggregate proceeds of $132.4 million to ProLogis North
    American Properties Fund V.On July 11, 2007, we completed the acquisition of all of
    the units in Macquarie ProLogis Trust, an Australian listed
    property trust (MPR). At the time of acquisition,
    MPR owned approximately 89% of ProLogis North American
    Properties Fund V and certain other assets. The total
    consideration was approximately $2.0 billion, consisting of
    cash of $1.2 billion and assumed liabilities of
    $0.8 billion. The cash portion of the acquisition was
    financed primarily with borrowings under a credit agreement with
    an affiliate of Citigroup USA, Inc. (Citigroup),
    consisting of a $473.1 million term loan and a
    $646.2 million convertible loan. Prior to the acquisition,
    we entered into foreign currency forward contracts to
    economically hedge the purchase price of MPR (see Note 16
    for additional information regarding these derivatives). As a
    result of the MPR transaction, on July 11, 2007, we owned
    100% of, and began consolidating, ProLogis North American
    Properties Fund V.On August 27, 2007, Citigroup converted $546.2 million
    of the convertible loan into equity of a newly formed property
    fund, which owns all of the real estate assets and debt
    obligations that were acquired or issued in connection with the
    MPR acquisition. We refer to the combined entities in which we
    have ownership interests as one property fund named ProLogis
    North American Industrial Fund II. Our ownership percentage
    is based on our levels of ownership interest in these different
    entities. In addition, we made an equity contribution of
    $100.0 million into the fund, which was used to repay the
    remaining balance on the convertible loan. The conversion
    resulted in Citigroup owning 63.1% and us owning 36.9% of the
    equity of ProLogis North American Industrial Fund II. We
    account for our investment under the equity method of
    accounting. Upon conversion, we recognized net gains of
    $68.6 million (including $16.6 million of previously
    deferred gains from the initial contribution of the assets to
    ProLogis North American Properties 19




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    Fund V) that are reflected in CDFS Acquired Property
    Portfolios in our Consolidated Statements of Earnings.(3)
    
    In February 2006, we formed the North American Industrial Fund,
    with ten institutional investors. We refer to the combined
    entities in which we have ownership interests as one property
    fund named ProLogis North American Industrial Fund. Our
    ownership percentage is based on our levels of ownership
    interest in these different entities. We are committed to offer
    to contribute substantially all of the properties we develop and
    stabilize in Canada and the United States to the North American
    Industrial Fund, subject to the property meeting certain leasing
    and other criteria. ProLogis North American Industrial Fund has
    equity commitments, which expire in February 2009, aggregating
    approximately $1.4 billion from third party investors, of
    which $729.7 million was unfunded at December 31,
    2007. In connection with the acquisition of MPR, discussed
    above, we acquired an additional 3% ownership interest in
    ProLogis North American Industrial Fund and are committed to
    fund $25.5 million in cash through February 2009 for our
    equity share in future acquisitions of properties, generally
    from us. During 2007 and 2006, we contributed 92 properties
    (26 CDFS and 66 non-CDFS) and 49 properties (22 CDFS and 27
    non-CDFS) for aggregate proceeds of $907.5 million and
    $451.8 million, respectively, to ProLogis North American
    Industrial Fund in addition to the assets that were acquired
    from ProLogis North American Properties Funds II, III
    and IV (collectively Funds II-IV), as discussed
    below.(4)
    
    In July 2007, we formed a new property fund, ProLogis North
    American Industrial Fund III, to acquire a portfolio of 122
    industrial properties from a third party. We refer to the
    combined entities in which we have ownership interests as one
    property fund named ProLogis North American Industrial
    Fund III. The total consideration for the acquisition was
    approximately $1.8 billion, including transaction costs.
    Our investment was made in cash and represents a 20% ownership
    interest in this newly formed property fund. The remaining 80%
    of the property fund is owned by an affiliate of Lehman
    Brothers, Inc., who provided interim debt financing to the
    property fund.(5)
    
    On September 11, 2007, we contributed properties to a new
    property fund formed with several institutional investors,
    ProLogis Mexico Industrial Fund. We refer to the combined
    entities in which we have ownership interests as one property
    fund named ProLogis Mexico Industrial Fund. We are committed to
    offer to contribute substantially all of the properties we
    develop and stabilize in Mexico, and in certain circumstances
    properties we acquire, to ProLogis Mexico Industrial Fund
    subject to the property meeting certain leasing and other
    criteria. ProLogis Mexico Industrial Fund has equity commitments
    of $500.0 million from third party investors that expire in
    August 2010 and of which $411.5 million was unfunded at
    December 31, 2007. In 2007, we contributed 35 properties
    (24 CDFS and 11 non-CDFS) to this property fund for aggregate
    proceeds of $251.8 million. This includes nine stabilized
    properties that were part of a portfolio of properties we had
    previously acquired with the intent to contribute to a new
    property fund at, or slightly above, our cost. The proceeds and
    costs related to these nine properties are reflected in CDFS
    Acquired Property Portfolios in our Consolidated Statements of
    Earnings. The proceeds and costs for the remaining 15 CDFS
    contributed properties are included in CDFS Developed and
    Repositioned Properties in our Consolidated Statements of
    Earnings.(6)
    
    In September 2006, ProLogis European Properties
    (PEPR) completed an initial public offering
    (IPO) on the Euronext Amsterdam stock exchange in
    which the selling unitholders offered 49.8 million ordinary
    units. As the manager of the property fund, we were entitled to
    an incentive return based on the internal rate of return that
    the pre-IPO unitholders earned. The final incentive return of
    $109.2 million was determined and recognized in the fourth
    quarter of 2006. The return was paid to us by an initial
    allocation of 3.9 million ordinary units, which increased
    our investment by $68.6 million and our ownership interest
    at that time to 24.0%, with the balance received in cash. In
    connection with PEPRs IPO, we entered into a property
    contribution agreement under which we were committed to offer to
    contribute certain stabilized properties to PEPR having an
    aggregate contribution value of 200 million. During
    2007, we fulfilled our commitment by contributing 16 CDFS
    properties to PEPR for aggregate proceeds of
    $287.6 million. As a 20




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    result of these contributions, our ownership interest increased
    to 24.9% at December 31, 2007. In July 2007, PEPR sold a
    portfolio of 47 properties, which resulted in a net gain of
    $155.8 million to PEPR and $38.2 million to us as our
    proportionate share. In 2006, prior to PEPRs IPO, we
    contributed 19 properties to the fund for aggregate proceeds of
    $419.6 million.(7)
    
    In July 2007, we formed a new European property fund, ProLogis
    European Properties Fund II (PEPF II) with
    several third party investors. Our ownership interest in PEPF II
    is 24.3%, including a 16.85% direct interest in PEPF II, along
    with a 7.45% indirect interest through our 24.9% investment in
    PEPR, which owns approximately 30% of PEPF II. We are committed
    to offer to contribute substantially all of the properties we
    develop and stabilize in Europe and, in certain circumstances
    properties we acquire, to PEPF II, subject to the property
    meeting certain leasing and other criteria. PEPF II has equity
    commitments from PEPR and third party investors of
    2.5 billion ($3.6 billion as of
    December 31, 2007), which expire in August 2010, and of
    which 2.1 billion ($3.1 billion as of
    December 31, 2007) was unfunded at December 31,
    2007. In 2007, we contributed 38 properties for aggregate
    proceeds of $1.3 billion. This includes 13 stabilized
    properties that were part of a portfolio of properties we
    acquired in February 2007 as part of the Parkridge acquisition
    discussed in Note 3, with the intent to contribute to a new
    property fund at, or slightly above, our cost. The proceeds and
    costs related to these 13 properties are reflected in CDFS
    Acquired Property Portfolios in our Consolidated Statements of
    Earnings. The proceeds and costs for the remaining 25 CDFS
    properties are included in CDFS Developed and Repositioned
    Properties in our Consolidated Statements of Earnings. In
    connection with these contributions, we advanced PEPF II
    £25.2 million ($51.9 million as of
    December 31, 2007), which bears interest at LIBOR plus a
    margin and matures on February 26, 2008.(8)
    
    We are committed to offer to contribute all of the properties
    that we develop and stabilize in Japan through September 2010 to
    ProLogis Japan Properties Fund II, subject to the property
    meeting certain leasing and other criteria. In 2007 and 2006, we
    contributed five properties and six properties, all CDFS
    properties, to this property fund for aggregate proceeds of
    $642.9 and $405.5 million, respectively. In addition in
    2007, the property fund acquired nine properties from a third
    party and its investors acquired a portfolio of 17 properties
    for an aggregate purchase price of $735 million, through a
    joint venture in which we own 20% and our current partner in
    ProLogis Japan Properties Fund II owns the remaining 80%.
    ProLogis Japan Properties Fund II has an equity commitment
    of $600.0 million from our fund partner, which expires in
    August 2008, of which $28.2 million was unfunded at
    December 31, 2007. In February 2008, ProLogis Japan
    Properties Fund II received an additional equity commitment
    of $400.0 million from our fund partner that expires in
    September 2010.(9)
    
    The ProLogis Korea Fund, which was formed in 2006, acquired six
    properties from a third party in 2007. We are committed to offer
    to contribute substantially all of the properties we develop and
    stabilize in South Korea and, in certain circumstances
    properties we acquire, to ProLogis Korea Fund, subject to the
    property meeting certain leasing and other criteria. ProLogis
    Korea Fund has an equity commitment from our fund partner of
    $200.0 million, which expires in June 2010, of which
    $179.4 million was unfunded at December 31, 2007. 21




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
       2007NorthAmerica


Europe


Asia


TotalRevenues

$
634.1


$
493.2


$
180.4


$
1,307.7Net earnings (1)

$
27.6


$
234.1


$
64.4


$
326.1Total assets

$
9,034.7


$
6,526.4


$
3,810.5


$
19,371.6Amounts due to us

$
24.8


$
70.0


$
109.1


$
203.9Third party debt (2)

$
5,305.2


$
3,456.2


$
1,889.5


$
10,650.9Total liabilities

$
5,678.5


$
4,057.7


$
2,550.7


$
12,286.9Minority interest

$
17.4


$
10.8


$



$
28.2Equity

$
3,338.8


$
2,457.8


$
1,259.9


$
7,056.5Our weighted average ownership at end of period (3)


27.9%



24.8%



20.0%



25.5%Our investment balance (4)

$
818.0


$
653.1


$
284.0


$
1,755.1Deferred proceeds, net of amortization (5)

$
216.4


$
193.9


$
127.0


$
537.3   2006NorthAmerica


Europe


Asia


TotalRevenues

$
494.6


$
414.4


$
120.9


$
1,029.9Net earnings (6)

$
266.2


$
88.2


$
47.7


$
402.1Total assets

$
6,420.7


$
4,856.0


$
1,958.3


$
13,235.0Amounts due to us

$
6.7


$
14.0


$
75.2


$
95.9Third party debt (2)

$
3,113.8


$
2,615.6


$
904.2


$
6,633.6Total liabilities

$
4,360.8


$
2,968.0


$
1,054.2


$
8,383.0Minority interest

$
5.7


$
6.6


$



$
12.3Equity

$
2,054.2


$
1,881.4


$
904.1


$
4,839.7Our weighted average ownership at end of period (3)


23.1%



24.0%



20.0%



23.0%Our investment balance (4)

$
416.8


$
430.8


$
134.2


$
981.8Deferred proceeds, net of amortization (5)

$
112.8


$
123.7


$
66.2


$
302.7    (1)
    
    Included in net earnings for Europe is a net gain of
    $155.8 million from the disposition of 47 properties by
    PEPR.(2)
    
    As of December 31, 2007, we had not guaranteed any of the
    debt of the property funds. As of December 31, 2006, we had
    guaranteed $15.0 million of borrowings of ProLogis North
    American Properties Fund V.(3)
    
    Represents the weighted average of our ownership interests in
    all property funds at December 31, based on each
    entitys contribution to total assets, before depreciation,
    net of other liabilities.(4)
    
    The difference between our percentage ownership interest of the
    property funds equity and our investment balance results
    principally from three types of transactions: (i) deferring
    a portion of the proceeds we receive from a contribution of one
    of our properties to a property fund as a result of our
    continuing ownership in the property (see below);
    (ii) additional costs we incur associated with our
    investment in the property fund; and (iii) advances to the
    property funds.(5)
    
    This amount is recorded as a reduction to our investment and
    represents the proceeds that we defer when we contribute a
    property to a property fund due to our continuing ownership in
    the property. 22




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     (6)
    
    Included in net earnings for Europe are expenses of
    approximately $43.3 million related to the costs to
    complete PEPRs IPO, as this was an offering of existing
    units and no new capital was raised by PEPR. Included in net
    earnings for North America is $185.7 million representing
    the net gain recognized by Funds II-IV upon termination in the
    first quarter of 2006 (see below).    Our


Notional


SwapEntity

Ownership


Amounts


Rate

Maturity

Fair ValueProLogis North American Industrial Fund II


36.9
%

$
1,005,900


5.31 - 5.83%

2009 - 2018

($
68,757
)ProLogis North American Industrial Fund III


20.0
%

$
642,000


5.79%

2017

($
58,577
)ProLogis Mexico Industrial Fund


20.0
%

$
137,000


5.24 - 5.56%

2017

($
8,650
)       CDFS
    joint ventures and other unconsolidated investees
      Years Ended December 31,2007


2006


2005North America

$
7,428


$
45,651


$
4,178Europe


(2,856
)


2,097



1,186Asia


6,593



2,955



1,057Total earnings from CDFS joint ventures and other unconsolidated
    investees

$
11,165


$
50,703


$
6,421  23




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
        2007


2006CDFS joint ventures:United States (1)

$
60,502


$
75,197Europe(2)


228,396



8,499Asia (3)


194,583



119,614Total CDFS joint ventures

$
483,481


$
203,310Other investees:Operating joint ventures (4)

$
85,720


$
88,104Other


20,963



26,443Total other investees

$
106,683


$
114,547Total

$
590,164


$
317,857    (1)
    
    Includes a 50% interest in three mixed-use development entities
    and three entities that own or are developing distribution
    properties.(2)
    
    Includes investments in joint ventures that own land for current
    and future development of distribution, retail and other
    mixed-use properties. In February 2007, in connection with the
    Parkridge acquisition, we made a 25% investment in Parkridge
    Holdings Limited, which is primarily a retail and mixed-use
    development business for $146.9 million (see Note 3).
    Also included in this amount is £42.5 million
    ($91.8 million at December 31, 2007), which represents
    a loan we made to this entity during 2007. The loan bears
    interest at London Interbank Offered Rate (LIBOR) or
    Euro Interbank Offered Rate (EURIBOR) (depending on
    currency borrowed) plus a margin, matures February 2012 and
    provides for additional borrowing of either euro or pound
    sterling up to 25% of the approved budget for development
    projects inside the venture, representing our ownership
    interest, up to a maximum of 50 million pound sterling.(3)
    
    Includes investments in three joint ventures that own
    distribution properties that were acquired from third parties or
    developed by the joint venture. Also includes our investment in
    an entity in China that we present on a consolidated basis. This
    entity holds an investment interest ($70.3 million at
    December 31, 2007) in an entity that primarily
    develops retail properties and invests in joint ventures that
    own and operate retail properties in China that is accounted for
    under the equity method of accounting. As part of this
    investment, we may be required to invest an additional
    $42 million based primarily on the attainment of certain
    performance criteria, which we deposited in escrow in 2006. In
    2007, we advanced $24 million of these escrowed funds to
    this entity to fund development activities. The advance bears
    interest at 7% and matures December 2008.(4)
    
    Principally includes a 25.16% interest in an entity that owns
    and operates a hotel property, a 38.75% interest in an entity
    that owns and operates the parking lot adjacent to the hotel
    property and a 66.67% interest in an entity that owns and
    operates office properties. 24




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     5.
    Long-Term
    Compensation:    Share
    Options
      WeightedAverageNumber of



Expiration

Remaining LifeOptions

Exercise Price

Date

(in years)Outside Trustees Plan


102,500


$19.75 - $43.80

2009-2015


4.6Incentive Plan:1998 grants


539,947


$20.94 - $21.09

2008


0.91999 grants


594,498


$17.19 - $18.63

2009


1.72000 grants


586,022


$21.75 - $24.25

2010


2.72001 grants


391,561


$20.67 - $22.02

2011


3.72002 grants


703,092


$22.98 - $24.76

2012


4.72003 grants


946,591


$24.90 - $31.26

2013


5.72004 grants


1,394,342


$29.41 - $41.50

2014


6.72005 grants


936,225


$40.86 - $45.46

2015


7.92006 grants


820,454


$53.07 - $59.92

2016


9.02007 grants


983,178


$60.60 - $64.82

2017


10.0Total


7,998,410







6.0  25




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      Options Outstanding

Options ExercisableWeighted



Weighted

WeightedAverage



Average

AverageNumber of


Exercise

Number of

Exercise

LifeOptions


Price

Options

Price

(in years)Balance at January 1, 2007


8,464,053


$
32.50Granted


983,178



60.62Exercised


(1,342,912
)


27.29Forfeited


(105,909
)


47.32Balance at December 31, 2007


7,998,410


$
36.63


5,504,282

$
29.14


4.7       Weighted-AverageNumber of


Grant-DateShares


Fair ValueBalance at January 1, 2007


2,940,973


$
7.14Granted


983,178



11.42Vested


(1,324,114
)


6.14Forfeited


(105,909
)


7.73Balance at December 31, 2007


2,494,128


$
9.33   Full
    Value Awards
         26




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                  Shares OutstandingNumber of


Weighted Average

Number ofShares


Original Value

Vested SharesBalance at January 1, 2007


2,264,876


$
44.08


808,544Granted


707,443



64.91Exercised


(389,476
)


38.83Forfeited


(28,057
)


57.77Balance at December 31, 2007


2,554,786


$
50.50


829,689    27




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      Weighted-AverageNumber of


Grant-DateShares


Fair ValueBalance at January 1, 2007


1,456,332


$
50.31Granted


707,443



64.91Vested


(410,621
)


44.52Forfeited


(28,057
)


57.77Balance at December 31, 2007


1,725,097


$
57.55   Compensation
    Expense
      Years Ended December 31,2007

2006

2005Risk-free interest rate

3.78%

4.51%

4.33%Dividend yield

3.44%

3.40%

3.92%Volatility

23.43%

19.46%

20.33%Weighted average option life

5.8 years

5.8 years

5.9 years     Other
    Plans
     28




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      6.
    Minority
    Interest:    2007


2006# of








# ofContinent

Entities


Balance


Minority Interest


Entities


Balance


Minority InterestNorth America (1)(2)(3)


3


$
31,192



4-31
%


5


$
37,614



1-31
%North America  other


3



537



1-25
%


1



498



25
%China


6



40,646



20-49
%


4



14,156



20-40
%Europe


1



6,286



50
%










$
78,661










$
52,268     (1)
    
    At December 31, 2007 and 2006, an aggregate of 5,052,197
    and 5,138,809, respectively, limited partnership units held by
    minority interest holders are convertible into 5,053,187 and
    5,139,799, respectively, common shares.(2)
    
    As of December 31, 2007 and 2006, there were 4,530,435 and
    4,658,700, respectively, of outstanding limited partnership
    units that were entitled to receive cumulative preferential
    quarterly cash distributions equal to the quarterly
    distributions paid on common shares.(3)
    
    Certain properties owned by one of these partnerships cannot be
    sold, other than in tax-deferred exchanges, prior to the
    occurrence of certain events and without the consent of the
    limited partners. The partnership agreement provides that a
    minimum level of debt must be maintained within the partnership,
    which can include intercompany debt to us.  7.
    Income
    Taxes:     29




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      Balance at January 1, 2007

$
172.7Additions based on tax positions related to the current year


8.5Additions for tax positions of prior years


16.0Reductions for tax positions of prior years


(2.3
)Reductions due to lapse of applicable statute of limitations


(2.5
)Balance at December 31, 2007

$
192.4     2007

2006

2005Domestic

$
274,528

$
348,532

$
85,175International


781,510


394,809


241,779Total

$
1,056,038

$
743,341

$
326,954   
  2007


2006


2005Current income tax expenseFederal

$
28,264


$
49,900


$
3,379Non-U.S.


37,433



20,254



10,547State and local


2,652



14,096



921Total Current


68,349



84,250



14,847Deferred income tax (benefit) expenseFederal


(16,197
)


(26,382
)


5,726Non-U.S.


16,747



(27,340
)


6,319Total Deferred


550



(53,722
)


12,045Total income tax expense

$
68,899


$
30,528


$
26,892   Current
    Income Taxes
    Deferred
    Income Taxes
   30




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
        2007


2006Deferred income tax assets:Net operating loss carryforwards(1)

$
22,139


$
13,759Basis difference  real estate properties


8,060



8,132AMT credit carryforward


786



796Other  temporary differences


15,007



16,371Total deferred income tax assets


45,992



39,058Valuation allowance


(675
)


(1,711
)Net deferred income tax assets


45,317



37,347Deferred income tax liabilities:Basis difference  real estate properties


(50,698
)


(7,944
)Built-in gains  real estate properties


(29,802
)


(47,621
)Basis difference  equity investees


(11,554
)


(9,246
)Built-in gains  equity investees


(26,597
)


(22,781
)Indemnification liabilities


(15,451
)


(5,916
)Other  temporary differences


(18,835
)


(25,527
)Total deferred income tax liabilities


(152,937
)


(119,035
)Net deferred income tax liabilities

$
(107,620
)

$
(81,688
)     (1)
    
    At December 31, 2007, we had net operating loss
    (NOL) carryforwards for U.S. federal income tax
    purposes of $53.4 million and various international
    jurisdictions of $0.7 million. If not utilized, the U.S.
    NOLs expire between 2022 and 2027 and the international NOLs
    expire in 2012.  Indemnification
    Agreements
   31




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
          8.
    Discontinued
    Operations:      2007


2006


2005Rental income

$
12,095


$
62,860


$
65,178Rental expenses


(3,495
)


(26,140
)


(23,171
)Depreciation and amortization


(2,896
)


(11,535
)


(16,739
)Interest expense






(874
)


(1,077
)Income attributable to disposed properties and assets held for
    sale

$
5,704


$
24,311


$
24,191  32




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      2007


2006


2005Non-CDFS business assets:Number of properties


75



74



64Net proceeds from dispositions

$
221,063


$
531,969


$
335,610Net gains from dispositions

$
52,776



103,729


$
86,444CDFS business assets:Number of properties


5



15



8Net proceeds from dispositions

$
205,775


$
245,500


$
100,494Net gains from dispositions

$
28,721


$
33,514


$
10,616    33




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    9.
    Distributions
    and Dividends:    Years Ended December 31,2007


2006


2005Per common share:Ordinary income

$
0.89


$
0.95


$
0.99Qualified dividend






0.04



0.07Capital gains


0.64







0.15Return of capital


0.31



0.61



0.27Total distribution

$
1.84


$
1.60


$
1.48Per preferred share  Series C:Ordinary income

$
2.47


$
4.10


$
3.49Qualified dividend






0.17



0.24Capital gains


1.80







0.54Total dividend

$
4.27


$
4.27


$
4.27Per preferred share  Series F:Ordinary income

$
0.98


$
1.62


$
1.38Qualified dividend






0.07



0.09Capital gains


0.71







0.22Total dividend

$
1.69


$
1.69


$
1.69Per preferred share  Series G:Ordinary income

$
0.98


$
1.62


$
1.38Qualified dividend






0.07



0.09Capital gains


0.71







0.22Total dividend

$
1.69


$
1.69


$
1.69        34




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
          10.
    Earnings
    Per Common Share:      Years Ended December 31,2007


2006


2005Net earnings attributable to common shares

$
1,048,917


$
848,951


$
370,747Minority interest(1)


4,813



3,457



5,243Adjusted net earnings attributable to common shares

$
1,053,730


$
852,408


$
375,990Weighted average common shares outstanding  Basic


256,873



245,952



203,337Incremental weighted average effect of conversion of limited
    partnership units


5,078



5,198



5,540Incremental weighted average effect of share options and
    awards(2)


5,275



5,702



4,836Weighted average common shares outstanding  Diluted


267,226



256,852



213,713Net earnings per share attributable to common shares 
    Basic

$
4.08


$
3.45


$
1.82Net earnings per share attributable to common shares 
    Diluted

$
3.94


$
3.32


$
1.76     (1)
    
    Includes only the minority interest related to the convertible
    limited partnership units, which are included in incremental
    shares.(2)
    
    Total weighted average potentially dilutive instruments
    outstanding (in thousands) were 10,098, 10,909 and 10,783 for
    2007, 2006 and 2005, respectively. The majority of these were
    dilutive in all periods. 35




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     11.
    Real
    Estate:  Real
    Estate Assets
    December 31,2007


2006Industrial distribution operating properties (1):Improved land

$
2,200,761


$
2,207,318Buildings and improvements


8,799,318



8,138,387Retail operating properties (2):Improved land


77,536



77,808Buildings and improvements


250,884



227,380Land subject to ground leases and other (3)


458,782



472,412Properties under development, including cost of land (4)


1,986,285



964,842Land held for development (5)


2,152,960



1,397,081Other investments (6)


652,319



411,863Total real estate assets


16,578,845



13,897,091Less accumulated depreciation


1,368,458



1,264,227Net real estate assets

$
15,210,387


$
12,632,864     (1)
    
    At December 31, 2007 and 2006, we had 1,378 and 1,446
    distribution operating properties consisting of
    207.3 million square feet and 203.6 million square
    feet, respectively.(2)
    
    At December 31, 2007 and 2006, we had 31 and 27 retail
    operating properties consisting of 1.2 million square feet
    and 1.1 million square feet, respectively.(3)
    
    At December 31, 2007 and 2006, amount represents
    investments of $414.7 million and $422.7 million in
    land we own and lease to our customers under long-term ground
    leases, $7.9 million and $20.0 million in office
    properties and an investment of $36.2 million and
    $29.7 million in railway depots, respectively.(4)
    
    Properties under development consisted of 180 properties
    aggregating 48.8 million square feet at December 31,
    2007 and 114 properties aggregating 30.0 million square
    feet at December 31, 2006. At December 31, 2007, our
    total expected investment upon completion of the properties
    under development is approximately $3.9 billion, of which
    $2.0 billion was incurred.(5)
    
    Land held for future development consisted of 9,351 and
    6,204 acres of land or land use rights at December 31,
    2007 and 2006, respectively.(6)
    
    Other investments primarily include: (i) restricted funds
    that are held in escrow pending the completion of tax-deferred
    exchange transactions involving operating properties
    ($94.5 million and $91.9 million at December 31,
    2007 and 2006, respectively.); (ii) earnest money deposits
    associated with potential acquisitions; (iii) costs
    incurred during the pre-acquisition due diligence process;
    (iv) costs incurred during the pre-construction phase
    related to future development projects, including purchase
    options on land and certain infrastructure costs; (v) cost
    of land use rights on operating properties in China; and
    (vi) costs related to our corporate office buildings.   36




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      Number of


Aggregate


AggregateProperties


Square Feet


Purchase Price


Debt Assumed2007


41



7,347


$
351,639


$
30,1412006


74



13,529


$
735,427


$
87,9192005


13



3,783


$
170,744


$
19,919       Operating
    Lease Agreements
    2008

$
733,7232009


626,3732010


520,1162011


405,3152012


291,631Thereafter


1,390,902$
3,968,060    37




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    12.
    Other
    Assets and Other Liabilities:    2007


2006Goodwill

$
530,760


$
254,192Value added taxes receivable


287,659



215,712Leasing commissions


135,662



139,225Rent leveling assets and above market leases


100,263



105,478Fixed assets


72,509



28,623Non-qualified savings plan assets


53,113



48,579Loan fees


40,954



35,715Other


168,813



170,700Totals

$
1,389,733


$
998,224     2007


2006Income tax liabilities

$
192,403


$
160,929Deferred income taxes


107,620



81,688Tenant security deposits


94,483



79,378Accrued disposition costs


90,998



33,009Value added taxes payable


73,896



34,896Unearned rents


55,073



40,788Non-qualified savings plan liabilities


41,558



37,180Below market leases


12,015



18,155Other


101,362



60,106Totals

$
769,408


$
546,129     Amortization


Net Charge toExpense


Rental Income2008

$
48,477


$
12,3392009


26,798



9,2872010


21,614



13,4702011


17,422



12,3902012


11,616



9,945Thereafter


9,735



30,817Total

$
135,662


$
88,248  38




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    13.
    Debt:    2007


2006Unsecured lines of credit

$
1,955,138


$
2,462,796Senior and other unsecured debt


4,891,106



4,445,092Convertible notes


2,332,905



Secured debt


1,294,809



1,445,021Assessment bonds


32,110



33,977Totals

$
10,506,068


$
8,386,886   Unsecured
    Lines of Credit
      Years Ended December 31,2007


2006


2005Weighted average daily interest rate


3.43%



3.03%



2.77%Borrowings outstanding at December 31

$
1,955.1


$
2,462.8


$
1,850.1Weighted average daily borrowings

$
2,519.9


$
2,294.7


$
1,278.2Maximum borrowings outstanding at any month end

$
2,994.2


$
2,760.8


$
1,850.1Aggregate borrowing capacity of all lines of credit at December
    31

$
3,745.7


$
3,529.3


$
2,589.9Outstanding letters of credit under the lines of credit

$
148.2


$
129.1


$
98.0Aggregate remaining capacity available to us on all lines of
    credit at December 31

$
1,642.4


$
937.4


$
641.8  39




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    Senior
    and Other Unsecured Debt
  
  Principal


CouponMaturity Date

Balance


RateSenior unsecured debt:April 15, 2008 (1)

$
250,000



7.10%May 15, 2008 (1)


25,000



7.95%March 1, 2009 (2)


37,500



8.72%May 15, 2009 (2)


18,750



7.88%August 24, 2009 (1)(3)


250,000



floatingNovember 15, 2010 (1)


500,000



5.25%April 1, 2012 (1)(4)


450,000



5.50%March 1, 2013 (1)


300,000



5.50%February 1, 2015 (5)


100,000



7.81%March 1, 2015 (6)


50,000



9.34%November 15, 2015 (1)


400,000



5.63%April 1, 2016 (1)(4)


400,000



5.75%May 15, 2016 (7)


50,000



8.65%November 15, 2016 (1)(8)


550,000



5.63%July 1, 2017 (1)


100,000



7.63%Total senior unsecured debt


3,481,250Other unsecured debt:July 31, 2008 (1)(9)


17,387



floatingDecember 19, 2008 (1)(10)


264,191



floatingOctober 6, 2009 (1)(11)


609,223



floatingNovember 20, 2009 (1)


25,000



7.30%April 13, 2011 (1)(12)


504,560



4.38%Total other unsecured debt


1,420,361Total par value

$
4,901,611Less: discount, net


10,505Total principal balance, net

$
4,891,106     (1)
    
    Principal due at maturity.(2)
    
    Annual principal payments ranging from $9.4 million to
    $18.8 million are due through 2009.(3)
    
    On August 24, 2006, we issued $250.0 million of senior
    notes that bear interest at a variable rate based on LIBOR plus
    a margin (5.28% at December 31, 2007).(4)
    
    On March 27, 2006, we issued $450.0 million of
    5.5% senior notes and $400.0 million of
    5.75% senior notes.(5)
    
    Beginning on February 1, 2010, and through February 1,
    2015, requires annual principal payments ranging from
    $10.0 million to $20.0 million. 40




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     (6)
    
    Beginning on March 1, 2010, and through March 1, 2015,
    requires annual principal payments ranging from
    $5.0 million to $12.5 million.(7)
    
    Beginning on May 15, 2010, and through May 15, 2016,
    requires annual principal payments ranging from
    $5.0 million to $12.5 million.(8)
    
    On November 14, 2006, we issued $550.0 million of
    5.625% senior notes.(9)
    
    In July 2007, we entered into a new senior credit facility based
    in renminbi. Borrowings under this facility bear interest at the
    rate established by the Chinese government. As of
    December 31, 2007, we had available capacity to borrow
    87.0 million renminbi ($11.9 million) under this
    facility.(10)
    
    In December 2007, we issued ¥29.6 billion in TMK bonds
    that bear interest at a variable rate based upon the Tokyo
    interbank offered rate plus a margin (1.205% at
    December 31, 2007). TMK bonds are a financing vehicle in
    Japan for special purpose companies known as TMKs. TMK bonds are
    not secured by properties, but do contain negative pledge
    security restrictions on the TMKs ability to incur
    additional debt or to use property associated with the loan as
    security for another loan. The net proceeds were used to repay
    borrowings under our Global Line. These bonds will be assumed by
    ProLogis Japan Properties Fund II when we contribute the
    related properties to the property fund.(11)
    
    In February 2007 in connection with the Parkridge acquisition,
    as discussed in Note 3, we entered into a new
    multi-currency senior credit facility. This facility fluctuates
    in U.S. dollars based on the underlying currencies and the funds
    may be drawn in U.S. dollar, euro, Japanese yen and British
    pound sterling. Borrowings under this facility bear interest at
    a variable rate based upon the interbank offered rate in each
    respective jurisdiction issued in Europe plus a margin (5.22% at
    December 31, 2007). The facility provides us the ability to
    re-borrow, within a specified period of time, any amounts repaid
    on the facility. As of December 31, 2007, we had no
    available capacity to borrow under this facility.(12)
    
    Represents 350.0 million senior notes.        Convertible
    Notes
   41




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
        No. 00-19 Accounting for Derivative Financial Instruments Indexed
    to, and Potentially Settled in, a Companys own Common
    Stock
  Secured
    Debt
    BalloonPeriodic





PaymentInterest


Payment


Principal


Due atMaturity Date

Rate(1)


Date


Balance


MaturityNovember 11, 2008


5.96%



(2
)

$
63,090


$
60,646November 11, 2008


6.01%



(2
)


287,694


$
276,065April 1, 2012


7.05%



(2
)


244,460


$
196,462August 1, 2015


5.47%



(2
)


133,484


$
111,690April 12, 2016


7.25%



(2
)


208,083


$
149,917April 1, 2024


7.58%



(2
)


195,019


$
127,187Various


(3)



(3
)


162,979



(3)Total secured debt (4)









$
1,294,809     (1)
    
    The weighted average annual interest rate for total secured debt
    was 6.59% for the year ended December 31, 2007. 42




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     (2)
    
    Monthly amortization with a balloon payment due at maturity.(3)
    
    Includes 16 mortgage notes with interest rates ranging from
    4.12% to 7.23%, maturing from 2008 to 2025, primarily requiring
    monthly amortization with a balloon payment at maturity. The
    combined balloon payment for all of the notes is $144,418,000.(4)
    
    Debt is secured by 254 real estate properties with an aggregate
    undepreciated cost of $2.9 billion at December 31,
    2007.  Assessment
    Bonds
    Debt
    Covenants
    Long-Term
    Debt Maturities
    2008

$
963,5352009


962,4002010


559,3642011


554,2042012


3,081,266Thereafter


2,428,762Total principal due


8,549,531Add: premium, net


1,399Total carrying value

$
8,550,930  43




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    Interest
    Expense
    Years Ended December 31,2007


2006


2005Gross interest expense

$
490,689


$
397,888


$
239,832Amortization of (premium) discount, net


(7,797
)


(13,861
)


(3,980
)Amortization of deferred loan costs


10,555



7,673



5,595493,447



391,700



241,447Less: capitalized amounts


125,382



97,297



63,885Net interest expense

$
368,065


$
294,403


$
177,562     14.
    Shareholders
    Equity:  Shares Authorized
    Common
    Shares
    and/or
  
    1999 Dividend Reinvestment and Share Purchase Plan, as
    amended (the 1999 Dividend Reinvestment Plan):Allows holders of common shares to automatically reinvest
    distributions and certain holders and persons who are not
    holders of common shares to purchase a limited number of
    additional common shares by making optional cash payments,
    without payment of any brokerage commission or service charge.
    Common shares that are acquired under the 1999 Dividend
    Reinvestment Plan through reinvestment of distributions are
    acquired at a price ranging from 98% to 100% of the market price
    of such common shares, as we determine.
    Controlled Equity Offering Program: Allows us to
    sell up to 15 million common shares through one designated
    agent who earns a fee up to 2.25% of the gross proceeds, as
    agreed on a
    transaction-by-transaction
    basis. No shares were issued under this plan in 2007.
    The Incentive Plan and Outside Trustees
    Plan: Certain of our employees and outside trustees
    participate in these share-based compensation plans that provide
    compensation, generally in the form of common shares. See
    Note 5 for additional information on these plans.
    ProLogis Trust Employee Share Purchase Plan (the
    Employee Share Plan):Certain of our employees
    may purchase common shares, through payroll deductions only, at
    a discounted price of 44




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    85% of the market price of the common shares. The aggregate fair
    value of common shares that an individual employee can acquire
    in a calendar year under the Employee Share Plan is $25,000.
    Subject to certain provisions, the aggregate number of common
    shares that may be issued under the Employee Share Plan may not
    exceed 5.0 million common shares. As of December 31,
    2007, we have approximately 4.8 million shares available
    under this plan.    2007

2006

2005Shares

Proceeds

Shares

Proceeds

Shares

Proceeds1999 Dividend Reinvestment Plan


66

$
4,145


69

$
3,738


412

$
16,197Controlled Equity Offering Program








5,383


320,786


225


8,267Incentive Plan and Outside Trustees Plan


1,781


31,151


1,460


31,350


1,425


17,664Employee Share Plan


44


2,140


39


1,643


30


1,019Total


1,891

$
37,436


6,951

$
357,517


2,092

$
43,147       Preferred
    Shares
      DividendEquivalent Based


OptionalDividend


on Liquidation


RedemptionRate


Preference


DateSeries C Preferred Shares


8.54
%

$
4.27 per share



11/13/26Series F Preferred Shares


6.75
%

$
1.69 per share



11/28/08Series G Preferred Shares


6.75
%

$
1.69 per share



12/30/08   Ownership
    Restrictions
   45




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
        15.
    Related
    Party Transactions:    16.
    Financial
    Instruments:  Derivative
    Financial Instruments
       46




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      Foreign Currency


Foreign Currency


InterestPut Options (1)


Forwards (2)


Rate Swaps (3)Notional amounts at January 1, 2005

$



$



$
50.0New contracts


98.0



669.5



650.0Matured or expired contracts


(98.0
)


(669.5
)


(700.0
)Notional amounts at December 31, 2005










New contracts


169.3



900.3



350.0Matured or expired contracts


(114.6
)


(239.3
)


(350.0
)Notional amounts at December 31, 2006


54.7



661.0



New contracts






2,637.2



959.2Matured or expired contracts


(54.7
)


(2,937.5
)


(959.2
)Notional amounts at December 31, 2007

$



$
360.7


$
     (1)
    
    The foreign currency put option contracts are paid in full at
    execution and are related to our operations in Europe and Japan.
    The put option contracts provide us with the option to exchange
    euros, pounds sterling and yen for U.S. dollars at a fixed
    exchange rate such that, if the euro, pound sterling or yen were
    to depreciate against the U.S. dollar to predetermined levels as
    set by the contracts, we could exercise our options and mitigate
    our foreign currency exchange losses.These contracts generally do not qualify for hedge accounting
    treatment and are
    marked-to-market
    through earnings at the end of each period. On various put
    option contracts, we recognized no expense in 2007, net expense
    of $1.5 million in 2006 and net gains of $3.6 million
    in 2005, which includes
    mark-to-market
    gains or losses.(2)
    
    The forward currency forward contracts were designed to manage
    the foreign currency fluctuations of intercompany loans
    denominated in a currency other than the entitys
    functional currency and not deemed to be a long-term investment.
    The foreign currency forward contracts allowed us to sell pounds
    sterling and euros at a fixed exchange rate to the U.S. dollar.
    These contracts were not designated as hedges, were
    marked-to-market
    through earnings and were substantially offset by the
    remeasurement gains and losses recognized on the intercompany
    loans. We recognized net losses of $95.9 million and
    $13.3 million in 2007 and 2006, respectively and a net gain
    of $6.1 million in 2005, including
    mark-to-market
    gains or losses. These losses/gains were substantially offset by
    the net gains recognized on the remeasurement and settlement of
    the related intercompany loans of $73.8 million,
    $34.9 million and $10.0 million for the years ended
    December 31, 2007, 2006 and 2005, respectively.During the second quarter of 2007, we purchased several foreign
    currency forward contracts to manage the foreign currency
    fluctuations of the purchase price of MPR (see Note 4).
    These contracts allowed us to buy Australian dollars at a fixed
    exchange rate to the U.S. dollar. Derivative instruments used to
    manage the foreign currency fluctuations of an anticipated
    business combination do not qualify for hedge accounting
    treatment and are
    marked-to-market
    through earnings in Foreign Currency Exchange Gains, Net. The
    contracts settled in July 2007 in connection with the completed
    acquisition and resulted in the recognition of a net gain of
    $26.6 million in earnings for the year ended
    December 31, 2007. 47




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     (3)
    
    During 2007, 2006 and 2005, we entered into several contracts
    with total notional amounts of $959.2 million,
    $350.0 million, and $650.0 million, respectively,
    associated with an anticipated debt issuance.  
    In 2006 and 2005, all of these contracts were designated as cash
    flow hedges and qualified for hedge accounting treatment, which
    allowed us to fix a portion of the interest rate associated with
    the issuance of senior notes (see Note 13). All of the
    contracts were settled as of December 31, 2006 and we
    recognized a decrease in value of $13.1 million and an
    increase in value of $20.7 million associated with these
    contracts in other comprehensive income as of December 31,
    2006 and 2005, respectively. The amount in other comprehensive
    income related to these contracts is being amortized as an
    increase to interest expense as interest payments are made on
    the senior notes.
    In February 2007, we entered into contracts with an aggregate
    notional amount of $500.0 million associated with a future
    debt issuance. All of these contracts were designated as cash
    flow hedges, qualified for hedge accounting treatment and
    allowed us to fix a portion of the interest rate associated with
    the anticipated issuance of senior notes. In March 2007, in
    connection with the issuance of the convertible notes (see Note
    13), we unwound the contracts, recognized a decrease in value of
    $1.4 million associated with these contracts in other
    comprehensive income in shareholders equity and began
    amortizing as an increase to interest expense as interest
    payments are made on the senior notes.
    In June 2007, we entered into a contract with a notional amount
    of $188.0 million, which represented our share of future
    debt issuances of a new property fund we formed in July 2007,
    the ProLogis North American Industrial Fund III. This
    contract was transferred into the fund at formation, qualifies
    for hedge accounting treatment by the fund and any future
    changes in value will be recognized in other comprehensive
    income within equity of the fund. We guarantee the property
    funds performance on this contract. See Note 4 for
    additional information on these contracts.
    In June 2007, we entered into contracts with an aggregate
    notional amount of $271.2 million associated with future
    debt issuances of a new property fund we formed in July 2007,
    the ProLogis North American Industrial Fund II. These
    contracts did not qualify for hedge accounting treatment by us
    and were
    marked-to-market
    resulting in additional interest expense of $0.8 million
    for the year ended December 31, 2007. These contracts were
    transferred to ProLogis North American Industrial Fund II
    following the establishment of the fund, at which time the
    contracts qualified for hedge accounting treatment by the fund
    and any future changes in value will be recognized in other
    comprehensive income within equity of the fund. See Note 4
    for additional information on these contracts.    Fair
    Value of Financial Instruments
     48




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
        
  December 31,2007


2006Carrying





CarryingValue


Fair Value


Value


Fair ValueSenior and other unsecured debt

$
4,891,106


$
4,834,053


$
4,445,092


$
4,507,182Convertible notes


2,332,905



2,249,341







Secured debt


1,294,809



1,283,779



1,445,021



1,497,790Assessment bonds


32,110



31,473



33,977



34,495Total debt

$
8,550,930


$
8,398,646


$
5,924,090


$
6,039,467Derivative financial instruments:Foreign currency forwards

$
773


$
773


$
(15,664
)

$
(15,664
)Foreign currency put options










249



249Total derivative financial instruments

$
773


$
773


$
(15,415
)

$
(15,415
)  49




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    17.
    Commitments
    and Contingencies:  Environmental
    Matters
    Off-Balance
    Sheet Liabilities
        dollar-for-dollar
 50




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      18.
    Business
    Segments:    
    Property operations  representing the direct
    long-term ownership of industrial distribution and retail
    properties. Each operating property is considered to be an
    individual operating segment having similar economic
    characteristics that are combined within the reportable segment
    based upon geographic location. Included in this segment are
    properties we developed and properties we acquired and
    rehabilitated or repositioned within the CDFS business segment
    with the intention of contributing the property to a property
    fund or selling to a third party. The costs of our property
    management function for both our direct-owned portfolio and the
    properties owned by the property funds and managed by us are all
    reported in rental expenses in the property operations segment.
    Our operations in the property operations business segment are
    in North America (Canada, Mexico and the United States), Europe
    (the Czech Republic, France, Germany, Hungary, Italy, the
    Netherlands, Poland, Romania, Slovakia, Sweden and the United
    Kingdom) and Asia (China, Japan, and South Korea).
    Investment management  representing the long-term
    investment management of property funds and the properties they
    own. We recognize our proportionate share of the earnings or
    losses from our investments in unconsolidated property funds
    operating in North America, Europe and Asia. Along with the
    income recognized under the equity method, we include fees and
    incentives earned for services performed on behalf of the
    property funds and interest earned on advances to the property
    funds, if any. We utilize our leasing and property management
    expertise to efficiently manage the properties and the funds,
    and we report the costs as part of rental expenses in the
    property operations segment. Each investment in a property fund
    is considered to be an individual operating segment having
    similar economic characteristics that are combined within the
    reportable segment based upon geographic location. Our
    operations in the investment management segment are in North
    America (Mexico and the United States), Europe (Belgium, the
    Czech Republic, France, Germany, Hungary, Italy, the
    Netherlands, Poland, Slovakia, Spain, Sweden, and the United
    Kingdom), and Asia (Japan and South Korea).
    CDFS business  primarily encompasses our development
    of real estate properties that are subsequently contributed to a
    property fund in which we have an ownership interest and act as
    manager, or sold to third parties. Additionally, we acquire
    properties with the intent to rehabilitate
    and/or
    reposition the property in the CDFS business segment prior to
    contributing to a property fund. The proceeds and related costs
    of these dispositions are presented as Developed and
    Repositioned Properties in the Consolidated Statements of
    Earnings and Comprehensive Income. In addition, we occasionally
    acquire a portfolio of properties with the intent of
    contributing the portfolio to an existing or future property
    fund. The proceeds and related costs of these dispositions are
    presented as Acquired Property Portfolios in the Consolidated
    Statements of Earnings. We also have investments in several
    unconsolidated entities that perform development activities and
    we include our proportionate share of their earnings or losses
    in this segment. Additionally, we include fees earned for
    development activities performed on behalf of customers or third
    parties, interest income earned on notes receivable related to
    asset sales and gains on the disposition of land parcels,
    including land subject to ground leases. The separate activities
    in this segment are considered to be individual operating
    segments having similar economic characteristics that are
    combined within the reportable 51




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    segment based upon geographic location. Our CDFS business
    segment operations are in North America (Canada, Mexico and the
    United States), in Europe (Belgium, the Czech Republic, France,
    Germany, Hungary, Italy, the Netherlands, Poland, Romania,
    Slovakia, Spain, Sweden and the United Kingdom) and in Asia
    (China, Japan and South Korea).       52




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      Years Ended December 31,2007


2006


2005Revenues (1):Property operations (2):North America

$
860,795


$
805,871


$
551,350Europe


114,218



35,619



10,334Asia


48,627



31,903



12,904Total property operations segment


1,023,640



873,393



574,588Investment management (3):North America


64,325



117,532



56,348Europe


104,665



167,227



44,002Asia


30,182



20,225



12,662Total investment management segment


199,172



304,984



113,012CDFS business (4):North America


2,887,183



549,181



291,750Europe


1,494,320



451,154



383,179Asia


662,016



385,630



503,444Total CDFS business segment


5,043,519



1,385,965



1,178,373Total segment revenue


6,266,331



2,564,342



1,865,973Other  North America


44,225



36,809



9,764Reconciling item (5)


(105,890
)


(154,759
)


(58,530
)Total revenues

$
6,204,666


$
2,446,392


$
1,817,207Net operating income:Property operations (6):North America

$
623,675


$
601,266


$
403,290Europe


74,950



18,865



561Asia


38,663



28,315



10,696Total property operations segment


737,288



648,446



414,547Investment management (3):North America


64,325



117,532



56,348Europe


104,665



167,227



44,002Asia


30,182



20,225



12,662Total investment management segment


199,172



304,984



113,012CDFS business (7)(8):North America


257,162



176,699



70,250Europe


284,423



108,079



71,329Asia


248,329



94,707



111,029Total CDFS business segment


789,914



379,485



252,608Total segment net operating income


1,726,374



1,332,915



780,167Other  North America


29,393



22,535



7,560Reconciling items:Earnings from other unconsolidated investees


7,794



5,729



750General and administrative expenses


(204,558
)


(153,516
)


(118,166
)Depreciation and amortization expense


(308,971
)


(286,807
)


(186,605
)Other expenses


(443
)


(459
)


(650
)Interest expense


(368,065
)


(294,403
)


(177,562
)Interest and other income, net


25,935



18,248



10,724Total reconciling items


(848,308
)


(711,208
)


(471,509
)Total earnings before minority interest

$
907,459


$
644,242


$
316,218   53




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    December 31,2007


2006Assets (9):Property operations (10):North America (11)

$
7,971,582


$
7,953,685Europe


1,900,327



1,295,207Asia


898,375



633,623Total property operations segment


10,770,284



9,882,515Investment management (12):North America


818,025



416,909Europe


653,076



430,761Asia


284,012



134,170Total investment management segment


1,755,113



981,840CDFS business (13):North America


1,596,659



1,312,883Europe (11)


2,977,334



1,456,064Asia


1,143,062



802,464Total CDFS business segment


5,717,055



3,571,411Total segment assets


18,242,452



14,435,766Other  North America


636,073



488,987Reconciling items:Investments in and advances to other unconsolidated investees


106,683



114,547Cash and cash equivalents


418,991



475,791Accounts and notes receivable


100,956



129,880Other assets


199,272



201,396Discontinued operations  assets held for sale


19,607



57,158Total reconciling items


845,509



978,772Total assets

$
19,724,034


$
15,903,525     (1)
    
    Includes revenues attributable to the United States for the
    years ended December 31, 2007, 2006 and 2005 of
    $3,574.2 million, $1,421.9 million and
    $845.3 million, respectively.(2)
    
    Includes rental income of our distribution and retail properties.(3)
    
    Includes investment management fees and incentive returns and
    our share of the earnings or losses recognized under the equity
    method from our investment in unconsolidated property funds
    along with interest earned on advances to the property funds, if
    any.(4)
    
    Includes proceeds received on CDFS property dispositions, fees
    earned from customers and third parties for development
    activities, interest income on notes receivable related to asset
    dispositions and our share of earnings or losses recognized
    under the equity method from our investment in CDFS joint
    ventures.(5)
    
    Amount represents the earnings or losses recognized under the
    equity method from our investments in unconsolidated property
    funds and CDFS joint ventures and interest income on notes
    receivable related to asset dispositions. These items are not
    presented as a component of revenues in our Consolidated
    Statements of Earnings.(6)
    
    Includes rental income less rental expenses of our distribution
    and retail properties. Included in rental expenses are the costs
    of managing the properties owned by the property funds.(7)
    
    Includes net gains on CDFS property dispositions, fees earned
    from customers and third parties for development activities,
    interest income on notes receivable related to asset
    dispositions, and our share of earnings or losses recognized
    under the equity method from our investment in CDFS joint
    ventures, offset 54




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    partially by land holding costs and the write-off of previously
    capitalized pursuit costs associated with potential CDFS
    business assets when it becomes likely the assets will not be
    acquired.(8)
    
    Excludes a net gain of $28.7 million, $33.5 million
    and $10.6 million for the years ended December 31,
    2007, 2006 and 2005, respectively, associated with CDFS
    properties sold to third parties and presented as discontinued
    operations in our Consolidated Statements of Earnings. See
    Note 8.(9)
    
    Includes long-lived assets attributable to the United States as
    of December 31, 2007 and 2006 of $9.2 billion and
    $8.8 billion, respectively.(10)
    
    Includes properties that were developed or acquired in the CDFS
    business segment and are pending contribution to a property fund
    or sale to a third party, as follows (in thousands):  December 31, 2007

December 31, 2006Number of



Number ofProperties

Investment

Properties

InvestmentNorth America


90

$
996,384


114

$
1,190,706Europe


100


1,815,431


69


1,273,314Asia


59


790,046


22


596,981Total


249

$
3,601,861


205

$
3,061,001   (11)
    
    Goodwill of $177.4 million and $193.7 million as of
    December 31, 2007 and 2006, respectively, was attributable
    to the property operations segment and $345.8 million and
    $53.8 million as of December 31, 2007 and 2006,
    respectively, was attributable to the CDFS business segment.(12)
    
    Represents our investments in and advances to the property funds.(13)
    
    Primarily includes land held for development, properties under
    development, other real estate investments, investments in CDFS
    joint ventures, and notes receivable related to asset
    dispositions.  19.
    Supplemental
    Cash Flow Information:    
    We received $351.3 million, $128.0 million and
    $74.5 million of equity interests in property funds from
    the contribution of properties to these property funds during
    2007, 2006 and 2005, respectively. In 2007, in connection with
    these contributions, we recognized $51.6 million in
    liabilities for remaining obligations we may have associated
    with the contributed properties.
    In connection with the acquisition of all of the units in MPR in
    July 2007 (see Note 4), we assumed $828.3 million of
    debt and reallocated our equity investment of $47.7 million
    to assets acquired.
    As a result of the conversion by Citigroup of its convertible
    loan into equity of ProLogis North American Industrial
    Fund II in August 2007, we now own 36.9% of the equity of
    the property fund and account for our investment under the
    equity method of accounting. This was accounted for as a
    disposition of $2.0 billion of real estate assets and
    $1.9 billion of associated debt in exchange for an equity
    investment of $219.1 million and the recognition of a gain.
    We capitalized portions of the total cost of our share-based
    compensation awards of $10.8 million, $8.4 million and
    $4.6 million to the investment basis of our real estate and
    other assets during the years ended December 31, 2007,
    2006, and 2005, respectively.
    We assumed $27.3 million, $141.6 million, and
    $35.0 million of secured debt in 2007, 2006 and 2005,
    respectively, and operating receivables and liabilities of
    $19.0 million and $22.6 million, respectively, in 2006
    in connection with the acquisition of properties. 55




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     
    During the year ended December 31, 2007, we recorded
    $27.8 million of minority interest liabilities associated
    with investments made during this period in entities, which we
    consolidate and own less that 100%.
    We settled $4.4 million, $6.5 million and
    $0.1 million of minority interest liabilities with the
    conversion of limited partnership units into 128,000 common
    shares, 180,000 common shares and 11,000 common shares in 2007,
    2006 and 2005, respectively.
    We recognized $18.8 million and $115.8 million in
    gains and $67.8 million in losses in our Accumulated Other
    Comprehensive Income related to foreign currency translation and
    derivative activity in 2007, 2006 and 2005, respectively.
    In 2006 we received 3.9 million ordinary units in PEPR,
    valued at $68.6 million, representing the initial
    allocation of an incentive return we earned as manager of the
    property fund. See Note 4 for further discussion of this
    transaction.
    As partial consideration for properties we contributed in 2006
    to the North American Industrial Fund, we received ownership
    interests of $62.1 million, representing a 20% ownership
    interest, and the property fund assumed $677.2 million of
    secured debt and short-term borrowings. See Note 4 for
    further discussion of this transaction.
    In connection with the purchase in 2006 of the 80% ownership
    interests held by our fund partner in Funds II-IV, we assumed
    $418.0 million of secured debt (which was later assumed by
    the North American Industrial Fund). See Note 4 for further
    discussion of this transaction.
    As partial consideration for certain property contributions, we
    received: (i) $1.9 million and $32.6 million in
    the form of notes receivable from ProLogis North American
    Properties Fund V in 2006 and 2005, respectively, (all of
    which has been repaid); (ii) a $50.9 million note from
    a third party in 2005 (which was repaid during 2006); and
    (iii) the assumption of an outstanding mortgage note in the
    amount of $14.5 million from ProLogis North American
    Properties Fund VII in 2005.
    As partial consideration for the sale of a property, a third
    party assumed an outstanding mortgage note in the amount of
    $42.9 million in 2006.   56




---



##### 



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    20.
    Selected
    Quarterly Financial Data (Unaudited):    Three Months Ended,March 31,

June 30,

September 30,

December 31,2007:Total revenues

$
955,860

$
988,105

$
3,460,828

$
799,873Operating income

$
319,969

$
298,146

$
348,610

$
169,180Earnings from continuing operations

$
226,854

$
363,744

$
297,955

$
98,586Net earnings attributable to common shares

$
236,091

$
400,104

$
299,444

$
113,278Net earnings per share attributable to common shares 
    Basic (1)

$
.93

$
1.56

$
1.16

$
.44Net earnings per share attributable to common shares 
    Diluted (1)

$
.89

$
1.50

$
1.12

$
.432006:Total revenues

$
571,575

$
680,353

$
575,000

$
619,464Operating income

$
165,729

$
168,474

$
172,177

$
253,529Earnings from continuing operations

$
162,344

$
124,092

$
120,967

$
305,410Net earnings attributable to common shares

$
183,159

$
168,397

$
166,305

$
331,090Net earnings per share attributable to common shares 
    Basic (1)

$
.75

$
.69

$
.68

$
1.33Net earnings per share attributable to common shares 
    Diluted (1)

$
.72

$
.66

$
.65

$
1.28     (1)
    
    Quarterly earnings per common share amounts may not total to the
    annual amounts due to rounding and to the change in the number
    of common shares outstanding. 57




---



##### 



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM         KPMG LLP
    58




---



##### 





PROLOGISSCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATIONDecember 31, 2007
    (In thousands of dollars, as applicable)
  Initial Cost to





Gross Amounts At Which CarriedProLogis


Costs Capitalized


as of December 31, 2007


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionIndustrial Operating Properties (d)North American Markets:United States:Atlanta, GeorgiaAtlanta NE Distribution Center

8

(e)


5,582



3,047



26,259



6,275



28,613



34,888



(11,428
)

1996, 1997Atlanta West Distribution Center

18

(e)


10,336



48,444



14,253



10,147



62,886



73,033



(20,246
)

1994, 1996, 2005, 2006Berkeley Lake Distribution Center

1




2,178



8,712



170



2,200



8,860



11,060



(352
)

2006Buford Distribution Center (d)

1




1,487







4,805



1,487



4,805



6,292






2007Cedars Distribution Center

1




1,366



7,739



2,991



1,692



10,404



12,096



(3,233
)

1999Douglas Hill Distribution Center

5




16,647



46,825



30,586



16,647



77,411



94,058



(4,660
)

2005, 2006Greenwood Industrial Park (d)

1




3,989







21,273



3,989



21,273



25,262






2006Horizon Distribution Center

1




2,846



11,385



148



2,846



11,533



14,379



(455
)

2006International Airport Industrial Center

9




2,939



14,146



7,679



2,972



21,792



24,764



(9,541
)

1994, 1995LaGrange Distribution Center

1




174



986



718



174



1,704



1,878



(929
)

1994Midland Distribution Center

1




1,919



7,679



486



1,919



8,165



10,084



(314
)

2006New Manchester Distribution Center (d)

1




3,323



13,334







3,323



13,334



16,657






2007Northeast Industrial Center

3




841



4,744



2,153



782



6,956



7,738



(3,381
)

1996Northmont Industrial Center

1




566



3,209



977



566



4,186



4,752



(2,031
)

1994Peachtree Commerce Business Center

5




1,519



7,253



1,955



1,519



9,208



10,727



(2,839
)

1994, 2006Piedmont Court Distribution Center

2




885



5,013



2,499



885



7,512



8,397



(3,567
)

1997Plaza Industrial Center

1




66



372



260



66



632



698



(268
)

1995Pleasantdale Industrial Center

2




541



3,184



1,143



541



4,327



4,868



(2,047
)

1995Riverside Distribution Center

3




2,533



13,336



2,978



2,556



16,291



18,847



(4,911
)

1999South Royal Distribution Center

1




356



2,019



111



356



2,130



2,486



(386
)

2002Tradeport Distribution Center

3

(e)


1,464



4,563



7,008



1,479



11,556



13,035



(5,301
)

1994, 1996Weaver Distribution Center

2




935



5,182



1,746



935



6,928



7,863



(3,232
)

1995Westfork Industrial Center

10

(e)


2,483



14,115



3,316



2,442



17,472



19,914



(7,552
)

1995Total Atlanta, Georgia

81




64,975



225,287



133,514



65,798



357,978



423,776



(86,673
)Austin, TexasCorridor Park Corporate Center

6




1,652



1,681



14,835



2,113



16,055



18,168



(7,338
)

1995, 1996Montopolis Distribution Center

1




580



3,384



1,179



580



4,563



5,143



(2,432
)

1994Rutland Distribution Center

2




460



2,617



846



462



3,461



3,923



(1,572
)

1993Southpark Corporate Center

2




684







4,970



684



4,970



5,654



(2,189
)

1994Walnut Creek Corporate Center

3




461



2,632



1,083



515



3,661



4,176



(1,801
)

1994Total Austin, Texas

14




3,837



10,314



22,913



4,354



32,710



37,064



(15,332
)Charlotte, North CarolinaBarringer Industrial Center

3




308



1,746



1,032



308



2,778



3,086



(1,322
)

1994Bond Distribution Center

2




905



5,126



1,941



904



7,068



7,972



(3,220
)

1994Charlotte Commerce Center

10

(e)


4,341



24,954



8,179



4,342



33,132



37,474



(16,565
)

1994Charlotte Distribution Center

9

(e)


4,578







26,101



6,096



24,583



30,679



(10,157
)

1995, 1996, 1997, 1998, 1998Interstate North Business Park (d)

3




948



3,030



4,494



954



7,518



8,472



(1,753
)

1997, 2006Northpark Distribution Center

2

(e)


1,183



6,707



2,324



1,184



9,030



10,214



(3,442
)

1994, 1998West Pointe Business Center

2




4,851







14,156



4,851



14,156



19,007



(170
)

2006Wilson Business Park Distribution Center

1




976



5,656







976



5,656



6,632



(150
)

2007Total Charlotte, North Carolina

32




18,090



47,219



58,227



19,615



103,921



123,536



(36,779
)Chicago, IllinoisAddison Distribution Center

1




646



3,662



812



640



4,480



5,120



(1,811
)

1997Alsip Distribution Center

2




2,093



11,859



8,183



2,549



19,586



22,135



(9,908
)

1997, 1999Arlington Heights Distribution Center

1




831



3,326



20



831



3,346



4,177



(165
)

2006Bedford Park Industrial Center

1




941



4,907



879



941



5,786



6,727



(435
)

2005Bensenville Distribution Center

2




1,668



9,448



5,424



1,667



14,873



16,540



(7,329
)

1997Bolingbrook Distribution Center (d)

6




16,178



73,755



1,672



15,975



75,630



91,605



(9,991
)

1999, 2003, 2006Des Plaines Distribution Center

3




2,158



12,232



4,651



2,159



16,882



19,041



(7,587
)

1995, 1996Elk Grove Distribution Center

25




20,516



94,843



17,074



20,416



112,017



132,433



(25,769
)

1995, 1996, 1997, 1998, 1999, 2006Elmhurst Distribution Center

1




713



4,043



941



713



4,984



5,697



(1,892
)

1997Glendale Heights Distribution Center

3

(e)


3,903



22,119



2,415



3,903



24,534



28,437



(7,125
)

1999Glenview Distribution Center

2




1,156



6,550



1,699



1,156



8,249



9,405



(3,028
)

1996, 1999I-55 Distribution Center (d)

2




5,383



25,504



19,885



5,383



45,389



50,772



(17
)

2007I-80 Morris

1




4,690







29,799



4,690



29,799



34,489



(388
)

2006  59




---



##### 



PROLOGIS
    SCHEDULE III - REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2007
    (In thousands of dollars, as applicable)
   Initial Cost to





Gross Amounts At Which CarriedProLogis


Costs Capitalized


as of December 31, 2007


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionItasca Distribution Center

2




604



3,382



776



604



4,158



4,762



(1,753
)

1996, 1997Lombard Distribution Center

1




1,170



6,630



357



1,170



6,987



8,157



(2,118
)

1999Minooka Distribution Center

1

(e)


10,403



27,247



15,286



10,403



42,533



52,936



(3,259
)

2005Mitchell Distribution Center

1




1,236



7,004



1,803



1,236



8,807



10,043



(4,039
)

1996North Avenue Distribution Center

2




3,201







8,668



2,047



9,822



11,869



(3,656
)

1997, 1998Northbrook Distribution Center (d)

1




2,056



8,227







2,056



8,227



10,283






2007Northlake Distribution Center

1




372



2,106



680



372



2,786



3,158



(1,138
)

1996Pleasant Prairie Distribution Center

1




1,314



7,450



2,195



1,315



9,644



10,959



(2,386
)

1999ProLogis Park 57

1




686



3,885



1,322



686



5,207



5,893



(646
)

2004Romeoville Distribution Center

6

(e)


23,731



96,764



503



23,731



97,267



120,998



(8,985
)

1999, 2005South Holland Distribution Center

2




1,156



6,550



1,107



1,156



7,657



8,813



(2,422
)

1999Waukegan Distribution Center

2




4,368



17,632







4,368



17,632



22,000



(525
)

2007West Chicago Distribution Center

1




3,125



12,499



21



3,125



12,520



15,645



(932
)

2005Woodale Distribution Center

1




263



1,490



431



263



1,921



2,184



(772
)

1997Woodridge Distribution Center (d)

15

(e)


49,508



209,024



1,758



49,507



210,783



260,290



(15,408
)

2005, 2007Total Chicago, Illinois

88




164,069



682,138



128,361



163,062



811,506



974,568



(123,484
)Cincinnati, OhioAirpark Distribution Center

2

(e)


1,128







11,461



1,716



10,873



12,589



(4,311
)

1996Capital Distribution Center II

5

(e)


1,953



11,067



4,268



1,953



15,335



17,288



(7,331
)

1994Constitution Distribution Center

1




1,465



8,301



609



1,465



8,910



10,375



(2,643
)

1999Dues Drive Distribution Center

1




921



5,218



1,739



921



6,957



7,878



(698
)

2003Empire Distribution Center

3

(e)


529



2,995



2,020



529



5,015



5,544



(2,356
)

1995Enterprise Distribution Center

1




1,275



7,222



35



1,275



7,257



8,532



(298
)

2005Fairfield Business Center

1




348



1,971



548



381



2,486



2,867



(331
)

2004Fairfield Distribution Center

1




586



3,319



1,135



586



4,454



5,040



(721
)

2002I-275 Park

1




6,317







21,090



6,316



21,091



27,407



(91
)

2007Production Distribution Center

2




717



2,717



2,699



824



5,309



6,133



(1,815
)

1994, 1998Sharonville Distribution Center

3

(e)


1,761







12,127



2,423



11,465



13,888



(3,316
)

1997, 1998Total Cincinnati, Ohio

21




17,000



42,810



57,731



18,389



99,152



117,541



(23,911
)Columbus, OhioBrookham Distribution Center

2




5,964



23,858



2,048



5,965



25,905



31,870



(1,990
)

2005Canal Pointe Distribution Center

1




1,237



7,013



1,690



1,280



8,660



9,940



(2,084
)

1999Capital Park South Distribution Center

3

(e)


1,588







23,439



1,980



23,047



25,027



(8,602
)

1996Charter Street Distribution Center

1

(e)


1,245



7,055



336



1,245



7,391



8,636



(2,121
)

1999Corporate Park West

2

(e)


679



3,847



1,721



679



5,568



6,247



(2,227
)

1996Etna Distribution Center (d)

3




4,941







46,891



4,941



46,891



51,832



(377
)

2006, 2007Fisher Distribution Center

1

(e)


1,197



6,785



2,393



1,197



9,178



10,375



(4,674
)

1995Foreign Trade Center I

5

(e)


6,527



36,989



6,032



6,992



42,556



49,548



(12,357
)

1999McCormick Distribution Center

5

(e)


1,664



9,429



7,477



1,664



16,906



18,570



(6,477
)

1994New World Distribution Center

1




207



1,173



1,829



207



3,002



3,209



(1,698
)

1994South Park Distribution Center

2

(e)


3,344



15,182



937



3,343



16,120



19,463



(2,598
)

1999, 2005Westbelt Business Center

3




1,777



7,168



11



1,777



7,179



8,956



(392
)

2006Westpointe Distribution Center (d)

2




1,450



7,601







1,450



7,601



9,051



(110
)

2007Wingate Distribution Center

1




152



859



324



152



1,183



1,335



(467
)

1994Total Columbus, Ohio

32




31,972



126,959



95,128



32,872



221,187



254,059



(46,174
)Dallas/Fort Worth, TexasAlliance Distribution Center

1

(e)


3,654



14,613







3,654



14,613



18,267



(1,128
)

2005Carter Industrial Center

1




334







2,332



334



2,332



2,666



(966
)

1996Centerport Distribution Center

1




1,250



7,082



398



1,250



7,480



8,730



(2,206
)

1999Dallas Corporate Center

10




5,161







31,539



5,460



31,240



36,700



(11,598
)

1996, 1997, 1998, 1999Enterprise Distribution Center

3




2,719



15,410



728



2,719



16,138



18,857



(4,544
)

1999Flower Mound Distribution Center (d)

1




5,157



20,991







5,157



20,991



26,148






2007Freeport Corporate Center(d)

2




555



5,997



4,340



560



10,332



10,892






2006, 2007Freeport Distribution Center

4




1,393



5,549



4,773



1,440



10,275



11,715



(3,802
)

1996, 1997, 1998Great Southwest Distribution Center

38

(e)


39,449



173,329



17,486



37,984



192,280



230,264



(38,491
)

1995, 1996, 1997, 1998, 1999,
    2000, 2001, 2002, 2005Lancaster Distribution Center (d)

1




2,808







17,371



2,808



17,371



20,179






2007Lone Star Distribution Center

1




512



2,896



1,252



511



4,149



4,660



(1,575
)

1996Northgate Distribution Center

8

(e)


12,928



57,757



5,576



13,809



62,452



76,261



(10,089
)

1994, 1999, 2005Pinnacle Park Distribution Center (d)(f)

1




5,058







19,468



3,880



20,646



24,526



(3,527
)

2001Plano Distribution Center

7




3,915



22,186



1,972



3,915



24,158



28,073



(7,018
)

1999  60




---



##### 



PROLOGIS
    SCHEDULE III - REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2007
    (In thousands of dollars, as applicable)
   Initial Cost to





Gross Amounts At Which CarriedProLogis


Costs Capitalized


as of December 31, 2007


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionRedbird Distribution Center

2




1,095



6,212



1,441



1,096



7,652



8,748



(2,729
)

1994, 1999Royal Distribution Center

1




811



4,598



589



811



5,187



5,998



(1,113
)

2001Stemmons Distribution Center

1




272



1,544



758



272



2,302



2,574



(969
)

1995Stemmons Industrial Center

11




1,820



11,705



4,250



1,819



15,956



17,775



(6,953
)

1994, 1995, 1996, 1999Trinity Mills Distribution Center

7




4,453



27,346



2,237



4,405



29,631



34,036



(10,197
)

1996, 1999, 2001Valwood Business Center

4

(e)


3,785



16,846



593



3,662



17,562



21,224



(2,099
)

2001, 2006Valwood Distribution Center

1




850



4,890



17



850



4,907



5,757



(1,439
)

1999Total Dallas/Fort Worth, Texas

106




97,979



398,951



117,120



96,396



517,654



614,050



(110,443
)Denver, ColoradoDenver Business Center

6




1,507



8,302



9,126



1,506



17,429



18,935



(7,433
)

1992, 1994, 1996, 2002Moline Distribution Center

1




327



1,850



798



327



2,648



2,975



(1,284
)

1994Moncrieff Distribution Center

1




314



2,493



1,006



314



3,499



3,813



(1,859
)

1992Pagosa Distribution Center

1




406



2,322



919



406



3,241



3,647



(1,700
)

1993Stapleton Business Center

12

(e)


34,634



139,256



1,866



34,635



141,121



175,756



(10,950
)

2005Upland Distribution Center I

6




808



4,421



11,170



821



15,578



16,399



(7,581
)

1992, 1994, 1995Upland Distribution Center II

3




1,295



5,159



4,665



1,328



9,791



11,119



(4,696
)

1993Total Denver, Colorado

30




39,291



163,803



29,550



39,337



193,307



232,644



(35,503
)El Paso, TexasBilly the Kid Distribution Center

1




273



1,547



1,269



273



2,816



3,089



(1,194
)

1994Goodyear Distribution Center

1




511



2,899



681



511



3,580



4,091



(1,408
)

1991Northwestern Corporate Center

5




981







17,729



2,192



16,518



18,710



(5,771
)

1992, 1993, 1994, 1997Pan American Distribution Center

1




196



1,110



1,386



196



2,496



2,692



(286
)

2002Vista Corporate Center

4




1,945







12,023



1,946



12,022



13,968



(4,950
)

1994, 1995, 1996Vista Del Sol Industrial Center

4




996







18,814



2,056



17,754



19,810



(6,769
)

1995, 1997, 1998Total El Paso, Texas

16




4,902



5,556



51,902



7,174



55,186



62,360



(20,378
)Houston, TexasBlalock Distribution Center

2




595



3,370



985



595



4,355



4,950



(627
)

2002Brittmore Distribution Center

2




1,838



10,417



1,118



1,838



11,535



13,373



(3,832
)

1999Crosstimbers Distribution Center

1




359



2,035



1,055



359



3,090



3,449



(1,336
)

1994Hempstead Distribution Center

3




1,013



5,740



3,306



1,013



9,046



10,059



(3,612
)

1994Hobby Business Park

1




721



2,885



184



721



3,069



3,790



(234
)

2005Jersey Village Corporate Center (d)

1




1,780







12,455



1,780



12,455



14,235






2007Kempwood Business Center

4




1,746



9,894



1,779



1,746



11,673



13,419



(3,180
)

2001Northpark Distribution Center

1




1,148



4,591



124



1,142



4,721



5,863



(166
)

2006Perimeter Distribution Center

2




813



4,604



918



813



5,522



6,335



(1,828
)

1999Pine Forest Business Center

9




2,665



14,132



4,437



2,665



18,569



21,234



(8,353
)

1993, 1995Pine North Distribution Center

2




847



4,800



751



847



5,551



6,398



(1,840
)

1999Pine Timbers Distribution Center

2




2,956



16,750



2,777



2,955



19,528



22,483



(6,582
)

1999Pinemont Distribution Center

2




642



3,636



575



642



4,211



4,853



(1,414
)

1999Post Oak Business Center

15




3,005



15,378



7,086



3,005



22,464



25,469



(10,940
)

1993, 1994, 1996Post Oak Distribution Center

7




2,115



12,017



5,565



2,039



17,658



19,697



(9,484
)

1993, 1994South Loop Distribution Center

5




1,051



5,964



3,888



1,052



9,851



10,903



(4,984
)

1994Southland Distribution Center

1




1,209



6,849



1,155



1,209



8,004



9,213



(682
)

2002West by Northwest Industrial Center

15




4,040



7,980



34,258



4,143



42,135



46,278



(17,293
)

1993, 1994, 1995, 1996, 1997, 1998White Street Distribution Center

1




469



2,656



1,281



469



3,937



4,406



(1,565
)

1995Total Houston, Texas

76




29,012



133,698



83,697



29,033



217,374



246,407



(77,952
)I-81 Corridor, PennsylvaniaHarrisburg Distribution Center

1




2,243



12,572



590



2,243



13,162



15,405



(1,487
)

2004Harrisburg Industrial Center

1




782



6,190



854



782



7,044



7,826



(1,062
)

2002Kraft Distribution Center

1




2,457



13,920



70



2,457



13,990



16,447



(4,071
)

1999Lehigh Valley Distribution Center

4




6,636



37,114



1,683



6,636



38,797



45,433



(4,463
)

2004Middleton Distribution Center

1

(e)


4,190



23,478



272



4,190



23,750



27,940



(2,691
)

2004Northport Industrial Center (d)

2




1,927



21,707



13,275



3,402



33,507



36,909



(3,284
)

2002, 2007Park 33 Distribution Center (d)

1




13,411







26,479



13,411



26,479



39,890






2007Quakertown Distribution Center

1




6,966







27,692



6,965



27,693



34,658



(1,085
)

2006Total I-81 Corridor, Pennsylvania

12




38,612



114,981



70,915



40,086



184,422



224,508



(18,143
)Indianapolis, IndianaEastside Distribution Center

2




1,204



6,820



1,221



1,275



7,970



9,245



(2,565
)

1995, 1999  61




---



##### 



PROLOGIS
    SCHEDULE III - REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2007
    (In thousands of dollars, as applicable)
   Initial Cost to





Gross Amounts At Which CarriedProLogis


Costs Capitalized


as of December 31, 2007


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionLogo Court Distribution Center

1




3,352



18,678



317



3,352



18,995



22,347



(2,151
)

2004North by Northeast Distribution Center

1




1,058







6,947



1,059



6,946



8,005



(2,720
)

1995Park 100 Industrial Center

14




4,948



28,691



9,301



4,899



38,041



42,940



(16,049
)

1994, 1995Park Fletcher Distribution Center

9




2,687



15,224



5,760



2,785



20,886



23,671



(9,004
)

1994, 1995, 1996Shadeland Industrial Center

3




428



2,431



2,218



429



4,648



5,077



(2,107
)

1995Total Indianapolis, Indiana

30




13,677



71,844



25,764



13,799



97,486



111,285



(34,596
)Las Vegas, NevadaBlack Mountain Distribution Center

2




1,108







7,179



1,206



7,081



8,287



(2,613
)

1997Cameron Business Center

1

(e)


1,634



9,256



287



1,634



9,543



11,177



(2,823
)

1999Hughes Airport Center

1




876







2,995



910



2,961



3,871



(1,213
)

1994Las Vegas Corporate Center

7

(g)


4,701







22,590



4,789



22,502



27,291



(9,036
)

1994, 1995, 1996, 1997Placid Street Distribution Center

1

(e)


2,620



14,848



52



2,620



14,900



17,520



(4,358
)

1999South Arville Center

1




1,440



8,160



217



1,440



8,377



9,817



(2,472
)

1999West One Business Center

4




2,468



13,985



1,420



2,468



15,405



17,873



(6,239
)

1996Total Las Vegas, Nevada

17




14,847



46,249



34,740



15,067



80,769



95,836



(28,754
)Louisville, KentuckyAirpark Commerce Center

4




1,583



8,971



5,256



1,583



14,227



15,810



(6,781
)

1998Cedar Grove Distribution Center

1

(e)


3,775



15,098



189



3,775



15,287



19,062



(1,184
)

2005Commerce Crossings Distribution Center

1




1,912



7,649



6



1,912



7,655



9,567



(591
)

2005I-65 Meyer Distribution Center (d)

2




4,258







21,915



4,259



21,914



26,173






2006, 2007Louisville Distribution Center

2

(e)


680



3,402



4,523



689



7,916



8,605



(2,856
)

1995, 1998Riverport Distribution Center

1

(e)


1,515



8,585



2,260



1,515



10,845



12,360



(2,583
)

1999Total Louisville, Kentucky

11




13,723



43,705



34,149



13,733



77,844



91,577



(13,995
)Memphis, TennesseeAirport Distribution Center

7




2,660



14,853



4,891



2,661



19,743



22,404



(8,566
)

1995, 1996, 1999Centerpointe Distribution Center

1




1,401



9,019







1,401



9,019



10,420



(2,543
)

2001Delp Distribution Center

6




3,870



21,853



5,119



3,869



26,973



30,842



(10,628
)

1995, 1999DeSoto Distribution Center(d)

2




5,425







25,313



5,425



25,313



30,738






2007Fred Jones Distribution Center

1




125



707



262



125



969



1,094



(481
)

1994Memphis Distribution Center

1




480



2,723



559



481



3,281



3,762



(553
)

2002Olive Branch Distribution Center

2




2,892



16,389



2,115



2,892



18,504



21,396



(5,899
)

1999Raines Distribution Center

1




1,635



8,451







1,635



8,451



10,086



(6,251
)

1998Southpark Distribution Center

1




859



4,866



591



859



5,457



6,316



(441
)

2003Willow Lake Distribution Center

1




613



3,474



305



613



3,779



4,392



(1,224
)

1999Total Memphis, Tennessee

23




19,960



82,335



39,155



19,961



121,489



141,450



(36,586
)Nashville, TennesseeBakertown Distribution Center

2




463



2,626



638



463



3,264



3,727



(1,506
)

1995I-40 Industrial Center

4




1,711



9,698



1,283



1,712



10,980



12,692



(4,152
)

1995, 1996, 1999Interchange City Distribution Center

7




2,297



17,079



3,322



3,050



19,648



22,698



(3,460
)

1998, 2003Space Park South Distribution Center

15




3,499



19,830



8,632



3,500



28,461



31,961



(13,963
)

1994Total Nashville, Tennessee

28




7,970



49,233



13,875



8,725



62,353



71,078



(23,081
)New JerseyBellmawr Distribution Center

1




212



1,197



379



211



1,577



1,788



(543
)

1999Brunswick Distribution Center

2




870



4,928



2,026



870



6,954



7,824



(3,579
)

1997Chester Distribution Center

1




548



5,320







548



5,320



5,868



(2,961
)

2002Clearview Distribution Center

1




2,232



12,648



525



2,232



13,173



15,405



(5,147
)

1996Clifton Business Center

1




2,014



11,317



25



2,014



11,342



13,356



(882
)

2005Exit 10 Distribution Center

6




22,738



126,961



478



22,738



127,439



150,177



(9,813
)

2005Exit 8A Distribution Center

1

(e)


7,626



44,103



494



7,787



44,436



52,223



(3,428
)

2005Kilmer Distribution Center

4

(e)


2,526



14,313



2,660



2,526



16,973



19,499



(6,885
)

1996Meadowland Distribution Center

5

(e)


12,526



80,219



250



12,525



80,470



92,995



(26,693
)

2002, 2005Meadowland Industrial Center

8

(e)


5,676



32,167



15,772



5,677



47,938



53,615



(24,477
)

1996, 1997, 1998Mount Laurel Distribution Center

3




826



4,679



1,433



826



6,112



6,938



(1,912
)

1999Mount Olive Distribution Center (d)

1




1,509



8,552







1,509



8,552



10,061






2007Pennsauken Distribution Center

3




376



2,132



393



384



2,517



2,901



(856
)

1999Port Reading Business Park (d)

2




4,138



22,085



24,538



4,138



46,623



50,761






2005, 2007Total New Jersey

39




63,817



370,621



48,973



63,985



419,426



483,411



(87,176
)  62




---



##### 



PROLOGIS
    SCHEDULE III - REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2007
    (In thousands of dollars, as applicable)
   Initial Cost to





Gross Amounts At Which CarriedProLogis


Costs Capitalized


as of December 31, 2007


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionOrlando, Florida33rd Street Industrial Center

9




1,980



11,237



3,799



1,980



15,036



17,016



(6,698
)

1994, 1995, 1996Chancellor Distribution Center

1




380



2,156



1,470



380



3,626



4,006



(1,643
)

1994Consulate Distribution Center

3




4,148



23,617



1,047



4,148



24,664



28,812



(7,300
)

1999La Quinta Distribution Center

1




354



2,006



1,613



354



3,619



3,973



(1,675
)

1994Orlando Central Park

3




1,378







9,847



1,871



9,354



11,225



(3,087
)

1997, 1998Orlando Corporate Center (d)

1




959







7,858



959



7,858



8,817






2006Princeton Oaks Distribution Center

1

(e)


900



5,100



22



900



5,122



6,022



(1,494
)

1999Titusville Industrial Center

1




283



1,603



517



283



2,120



2,403



(856
)

1994Total Orlando, Florida

20




10,382



45,719



26,173



10,875



71,399



82,274



(22,753
)Phoenix, Arizona24th Street Industrial Center

2




503



2,852



1,425



561



4,219



4,780



(2,261
)

1994Alameda Distribution Center

2

(e)


3,872



14,358



1,817



3,872



16,175



20,047



(1,207
)

2005Buckeye Road Industrial Center

2




1,236



4,988



608



1,236



5,596



6,832



(396
)

2005Hohokam 10 Industrial Center

6




4,258



7,467



12,781



4,258



20,248



24,506



(7,346
)

1996, 1999I-10 West Business Center

3




263



1,525



684



263



2,209



2,472



(1,127
)

1993Kyrene Commons Distribution Center

3




2,369



5,475



491



1,093



7,242



8,335



(2,945
)

1992, 1998, 1999Kyrene Commons South Distribution Center

2




1,096







5,666



1,163



5,599



6,762



(1,911
)

1998Martin Van Buren Distribution Center

6




572



3,285



1,803



572



5,088



5,660



(2,551
)

1993, 1994Papago Distribution Center

3




4,828



20,017



777



4,828



20,794



25,622



(2,690
)

1994, 2005Roosevelt Distribution Center

1

(e)


1,766



7,065



5



1,766



7,070



8,836



(546
)

2005University Dr Distribution Center

1




683



2,735



70



683



2,805



3,488



(215
)

2005Watkins Distribution Center

1




242



1,375



444



243



1,818



2,061



(799
)

1995Wilson Drive Distribution Center

1

(e)


1,273



5,093



45



1,273



5,138



6,411



(398
)

2005Total Phoenix, Arizona

33




22,961



76,235



26,616



21,811



104,001



125,812



(24,392
)Portland, OregonArgyle Distribution Center

3




946



5,388



1,192



946



6,580



7,526



(3,234
)

1993Clackamas Distribution Center (d)

1




775







4,104



775



4,104



4,879






2007Columbia Distribution Center

2




550



3,121



968



551



4,088



4,639



(1,934
)

1994PDX Corporate Center North Phase II (d)

3

(g)


5,803







14,668



5,777



14,694



20,471






2006, 2007PDX Corporate Center East

2

(g)


1,785







6,844



2,100



6,529



8,629



(2,381
)

1997PDX Corporate Center North

7

(g)


2,405







11,547



2,542



11,410



13,952



(4,726
)

1995, 1996Southshore Corporate Center

5

(e)(g)


13,061



52,299



397



13,274



52,483



65,757



(3,685
)

2005, 2006Wilsonville Corporate Center

6

(e)


2,963







13,253



2,964



13,252



16,216



(5,508
)

1995, 1996Total Portland, Oregon

29




28,288



60,808



52,973



28,929



113,140



142,069



(21,468
)Reno, NevadaGolden Valley Distribution Center

3




2,975



13,686



11,048



4,451



23,258



27,709



(4,289
)

1996, 1998, 2005Meredith Kleppe Business Center

1




526



754



3,510



526



4,264



4,790



(1,820
)

1993Packer Way Distribution Center

2




506



2,879



1,405



506



4,284



4,790



(2,355
)

1993Spice Island Distribution Center

1




435



2,466



2,308



435



4,774



5,209



(1,611
)

1996Tahoe-Reno Industrial Center (d)

1




3,281







19,727



3,281



19,727



23,008






2007Vista Industrial Center

10

(e)


9,566



40,036



14,075



9,565



54,112



63,677



(14,045
)

1994, 1995, 2001Total Reno, Nevada

18




17,289



59,821



52,073



18,764



110,419



129,183



(24,120
)Salt Lake City, UtahCentennial Distribution Center

2




1,149







8,907



1,149



8,907



10,056



(3,747
)

1995Crossroads Corporate Center (d)

1




284







8,461



926



7,819



8,745






2005Salt Lake International Distribution Center

2




1,367



2,792



9,501



1,364



12,296



13,660



(5,077
)

1994, 1996Total Salt Lake City, Utah

5




2,800



2,792



26,869



3,439



29,022



32,461



(8,824
)San Antonio, Texas10711 Distribution Center

2




582



3,301



1,619



582



4,920



5,502



(2,609
)

1994City Park East Distribution Center

3




1,002



5,676



918



1,002



6,594



7,596



(545
)

2003Coliseum Distribution Center (d)

2




1,133



923



7,645



1,170



8,531



9,701



(2,490
)

1994, 2006Distribution Drive Center

1




473



2,680



1,097



473



3,777



4,250



(2,125
)

1992Eisenhauer Distribution Center (d)

3




1,198



3,736



6,233



1,199



9,968



11,167






2007Macro Distribution Center

3




1,705



9,024



2,075



1,705



11,099



12,804



(1,028
)

2002Perrin Creek Corporate Center (d)

2




529







3,908



447



3,990



4,437



(558
)

1996, 2007Rittiman East Industrial Park

7




5,902



23,746







5,902



23,746



29,648



(1,113
)

2006Rittiman West Industrial Park

2




1,237



4,950



59



1,230



5,016



6,246



(233
)

2006  63




---



##### 



PROLOGIS
    SCHEDULE III - REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2007
    (In thousands of dollars, as applicable)
   Initial Cost to





Gross Amounts At Which CarriedProLogis


Costs Capitalized


as of December 31, 2007


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionSan Antonio Distribution Center I

9




1,589



9,028



5,087



1,589



14,115



15,704



(7,615
)

1992, 1993, 1994San Antonio Distribution Center II

3




945







6,495



885



6,555



7,440



(2,903
)

1994San Antonio Distribution Center III

4




1,176



6,571



3,113



1,176



9,684



10,860



(4,323
)

1996Tri-County Distribution Center

2

(e)


3,183



12,743







3,183



12,743



15,926



(81
)

2007Woodlake Distribution Center

2




248



1,405



1,158



248



2,563



2,811



(1,236
)

1994Total San Antonio, Texas

45




20,902



83,783



39,407



20,791



123,301



144,092



(26,859
)San Francisco (Central Valley), CaliforniaCentral Valley Distribution Center

1




2,233



13,432



171



2,234



13,602



15,836



(3,968
)

1999Central Valley Industrial Center

4

(e)(g)


11,418



48,726



5,571



11,868



53,847



65,715



(10,596
)

1999, 2002, 2005Manteca Distribution Center

1

(e)


9,280



27,841



25



9,280



27,866



37,146



(2,162
)

2005Patterson Pass Business Center (d)

6




3,520



4,885



16,454



3,519



21,340



24,859



(5,818
)

1993, 1997, 1998, 2007Tracy Distribution Center (d)

1








20,384











20,384



20,384






2007Total San Francisco (Central Valley), California

13




26,451



115,268



22,221



26,901



137,039



163,940



(22,544
)San Francisco (East Bay), CaliforniaAlvarado Business Center

10

(e)


20,739



62,595



940



20,739



63,535



84,274



(4,940
)

2005Barrington Business Center

3




1,741



9,863



1,965



1,741



11,828



13,569



(3,458
)

1999East Bay Industrial Center

1




531



3,009



554



531



3,563



4,094



(1,735
)

1994Eigenbrodt Way Distribution Center

1

(e)


393



2,228



406



393



2,634



3,027



(1,316
)

1993Hayward Commerce Center

4




1,933



10,955



2,107



1,933



13,062



14,995



(5,944
)

1993Hayward Commerce Park

7




1,968



11,167



3,267



1,968



14,434



16,402



(7,206
)

1994Hayward Distribution Center

6

(e)


2,906



19,165



4,469



3,327



23,213



26,540



(11,301
)

1993Hayward Industrial Center

13

(e)


4,481



25,393



5,101



4,481



30,494



34,975



(14,601
)

1993Livermore Distribution Center

4

(e)


8,992



26,976



1,086



8,992



28,062



37,054



(2,156
)

2005Oakland Industrial Center

3

(e)


8,234



24,704



407



8,235



25,110



33,345



(1,888
)

2005Regatta Business Park

2

(e)


7,688



23,063



30



7,688



23,093



30,781



(1,785
)

2005San Leandro Distribution Center

3

(e)


1,387



7,862



1,260



1,387



9,122



10,509



(4,521
)

1993Total San Francisco (East Bay), California

57




60,993



226,980



21,592



61,415



248,150



309,565



(60,851
)San Francisco (South Bay), CaliforniaBayside Business Center

2

(g)


2,088







4,783



2,088



4,783



6,871



(2,287
)

1996Bayside Corporate Center

7

(g)


4,365







18,680



4,365



18,680



23,045



(8,453
)

1995, 1996Bayside Plaza I

12

(g)


5,212



18,008



3,915



5,216



21,919



27,135



(10,113
)

1993Bayside Plaza II

2

(g)


634







3,195



634



3,195



3,829



(1,784
)

1994Gateway Corporate Center

11

(g)


7,575



24,746



7,041



7,575



31,787



39,362



(15,413
)

1993, 1996Mowry Business Center

4




5,933







18,993



7,815



17,111



24,926



(6,258
)

1997, 1998Overlook Distribution Center

1




1,573



8,915



47



1,573



8,962



10,535



(2,624
)

1999Pacific Commons Industrial Center

7

(e)(g)


30,107



90,416



940



30,106



91,357



121,463



(7,028
)

2005Pacific Industrial Center

6

(e)


21,676



65,083



1,444



21,675



66,528



88,203



(5,066
)

2005Shoreline Business Center

8

(g)


4,328



16,101



1,959



4,328



18,060



22,388



(8,371
)

1993Shoreline Business Center II

2

(g)


922







5,548



922



5,548



6,470



(2,617
)

1995Spinnaker Business Center

12

(g)


7,043



25,220



5,092



7,043



30,312



37,355



(13,982
)

1993Thornton Business Center

5




3,988



11,706



7,213



3,989



18,918



22,907



(7,759
)

1993, 1996Trimble Distribution Center

5




2,836



16,067



4,262



2,836



20,329



23,165



(9,246
)

1994Total San Francisco (South Bay), California

84




98,280



276,262



83,112



100,165



357,489



457,654



(101,001
)Seattle, WashingtonAndover East Business Center

2




535



3,033



727



535



3,760



4,295



(1,676
)

1994Fife Corporate Center

3




4,059







11,017



4,209



10,867



15,076



(4,167
)

1996Kent Corporate Center

2

(g)


2,882



1,987



9,564



3,276



11,157



14,433



(4,860
)

1995Van Dorens Distribution Center

2

(g)


2,473







9,464



3,111



8,826



11,937



(3,772
)

1995, 1997Total Seattle, Washington

9




9,949



5,020



30,772



11,131



34,610



45,741



(14,475
)South FloridaAirport West Distribution Center

2




1,253



3,825



3,263



1,974



6,367



8,341



(2,222
)

1995, 1998Boca Distribution Center

1




1,474



5,918



127



1,474



6,045



7,519



(293
)

2006CenterPort Distribution Center

3




2,083



11,806



809



2,083



12,615



14,698



(3,860
)

1999Copans Distribution Center

2




504



2,857



554



504



3,411



3,915



(1,382
)

1997, 1998Dade Distribution Center

1




2,589



14,670







2,589



14,670



17,259



(1,213
)

2005North Andrews Distribution Center

1




698



3,956



101



698



4,057



4,755



(1,793
)

1994Port Lauderdale Distribution Center

2




896







7,889



2,205



6,580



8,785



(1,965
)

1997ProLogis Park I-595

2

(e)


1,998



11,326



316



1,999



11,641



13,640



(1,906
)

2003Total South Florida

14




11,495



54,358



13,059



13,526



65,386



78,912



(14,634
)  64




---



##### 



PROLOGIS
    SCHEDULE III - REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2007
    (In thousands of dollars, as applicable)
   Initial Cost to





Gross Amounts At Which CarriedProLogis


Costs Capitalized


as of December 31, 2007


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionSouthern CaliforniaAnaheim Industrial Center

13

(e)


32,275



59,983



310



32,275



60,293



92,568



(4,667
)

2005California Commerce Center

1

(e)


4,201



7,802



66



4,201



7,868



12,069



(614
)

2005Crossroads Business Park(d)

8

(e)


56,343



95,951



7,622



51,662



108,254



159,916



(7,513
)

2005, 2006Dominguez North Industrial Center (d)

2




7,340



13,739







7,340



13,739



21,079



(348
)

2007Fullerton Industrial Center

2

(e)


8,238



15,300



62



8,239



15,361



23,600



(1,189
)

2005Industry Distribution Center

7

(e)(g)


50,268



93,355



402



50,268



93,757



144,025



(7,298
)

2005Inland Empire Distribution Center

6

(e)


42,927



84,275



5,636



43,681



89,157



132,838



(9,476
)

1999, 2005Kaiser Distribution Center

7

(e)(g)


120,885



224,599



609



135,528



210,565



346,093



(17,215
)

2005Los Angeles Industrial Center

2

(e)


3,777



7,015



68



3,777



7,083



10,860



(543
)

2005Mid Counties Industrial Center

14

(e)


45,864



87,107



10,284



45,831



97,424



143,255



(7,298
)

2005, 2006Mill Street Distribution Center (d)

1




611







5,473



611



5,473



6,084






2007Orange Industrial Center

2

(e)


5,930



11,014







5,930



11,014



16,944



(852
)

2005ProLogis Park Ontario

2

(e)


25,500



47,366







25,500



47,366



72,866



(1,297
)

2007Rancho Cucamonga Distribution Center

6

(e)(g)


51,283



95,241



203



51,283



95,444



146,727



(7,375
)

2005Redlands Distribution Center(d)

2




21,543



43,423



23,874



21,543



67,297



88,840



(1,619
)

2006, 2007Santa Ana Distribution Center

2

(e)


4,318



8,019



38



4,318



8,057



12,375



(626
)

2005South Bay Distribution Center

4

(e)


14,478



27,511



47



14,478



27,558



42,036



(1,708
)

2005, 2007Tustin Industrial Center

2

(e)


4,553



8,456



46



4,553



8,502



13,055



(662
)

2005Vernon Distribution Center

15

(e)


25,439



47,250



1,277



25,441



48,525



73,966



(3,774
)

2005Total Southern California

98




525,773



977,406



56,017



536,459



1,022,737



1,559,196



(74,074
)St. Louis, MissouriEarth City Industrial Center

5




2,225



12,820



4,061



2,226



16,880



19,106



(6,620
)

1997, 1998Westport Distribution Center

1




366



1,247



1,499



365



2,747



3,112



(990
)

1997Total St. Louis, Missouri

6




2,591



14,067



5,560



2,591



19,627



22,218



(7,610
)Tampa, FloridaAdamo Distribution Center

6




2,105



11,930



1,865



2,105



13,795



15,900



(3,382
)

1995, 2001Commerce Park Distribution Center

4




811



4,597



1,403



811



6,000



6,811



(3,072
)

1994Eastwood Distribution Center

1




122



690



122



122



812



934



(392
)

1994Lakeland Distribution Center

1




938



5,313



1,222



938



6,535



7,473



(2,955
)

1994Madison Distribution Center

1








5,313











5,313



5,313



(3
)

2007Orchid Lake Industrial Center

1




41



235



39



41



274



315



(119
)

1994Plant City Distribution Center

1




206



1,169



255



206



1,424



1,630



(650
)

1994Sabal Park Distribution Center (d)

9

(e)


4,120



10,364



27,330



4,456



37,358



41,814



(7,187
)

1996, 1997, 1998, 2002, 2007Silo Bend Distribution Center

4




2,887



16,358



3,424



2,887



19,782



22,669



(8,898
)

1994Silo Bend Industrial Center

1




525



2,975



741



525



3,716



4,241



(1,699
)

1994Tampa East Distribution Center

9




2,627



14,835



2,740



2,468



17,734



20,202



(8,386
)

1994Tampa East Industrial Center

1




303



1,513



556



303



2,069



2,372



(1,003
)

1994Tampa West Distribution Center

11




2,874



16,128



3,735



2,919



19,818



22,737



(9,467
)

1994, 1995Tampa West Industrial Center

3




355



(9
)


5,823



635



5,534



6,169



(2,084
)

1996, 1998Total Tampa, Florida

53




17,914



91,411



49,255



18,416



140,164



158,580



(49,297
)Washington D.C./Baltimore, Maryland1901 Park 100 Drive

1




2,409



7,227



383



2,409



7,610



10,019



(372
)

20067616 Canton Center Drive

1




1,521



4,571







1,521



4,571



6,092



(4
)

2007Airport Commons Distribution Center

2

(e)


2,320







9,807



2,360



9,767



12,127



(3,602
)

1997Ardmore Distribution Center

3




1,431



8,110



1,619



1,431



9,729



11,160



(4,478
)

1994Ardmore Industrial Center

2




984



5,581



1,247



985



6,827



7,812



(3,326
)

1994Chesapeake Distribution Center (d)

1




6,885







18,816



6,885



18,816



25,701






2007Concorde Industrial Center

4

(e)


1,538



8,717



2,755



1,538



11,472



13,010



(5,103
)

1995DeSoto Business Park(d)

6




2,709



12,892



5,086



2,710



17,977



20,687



(7,281
)

1996, 2007Edgewood Distribution Center (d)

1




4,244



12,732



5,475



4,244



18,207



22,451






2005Eisenhower Industrial Center

3




1,240



7,025



2,475



1,240



9,500



10,740



(4,364
)

1994Fleet Distribution Center

8




3,198



18,121



2,754



3,115



20,958



24,073



(9,214
)

1996Gateway Business Center (d)

4




7,899







18,380



7,898



18,381



26,279






2006, 2007Gateway Distribution Center

2




192







4,553



831



3,914



4,745



(1,087
)

1998Hickory Ridge Distribution Center

2

(e)


15,988



47,964



19



15,987



47,984



63,971



(3,644
)

2005Meadowridge Distribution Center

1

(e)


1,757







6,065



1,902



5,920



7,822



(1,691
)

1998Patapsco Distribution Center

1




270



1,528



1,365



270



2,893



3,163



(1,357
)

1995  65




---



##### 



PROLOGIS
    SCHEDULE III - REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2007
    (In thousands of dollars, as applicable)
   Initial Cost to





Gross Amounts At Which CarriedProLogis


Costs Capitalized


as of December 31, 2007


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionWhite Oak Distribution Center

1




3,986



24,107



8



3,986



24,115



28,101



(3,683
)

2002Winchester Distribution Center

1




3,286



13,142







3,286



13,142



16,428



(1,015
)

2005Total Washington D.C./Baltimore, Maryland

44




61,857



171,717



80,807



62,598



251,783



314,381



(50,221
)OtherShawnee Distribution Center

1




2,859



11,432







2,859



11,432



14,291



(883
)

2005Valley Industrial Center (Brownsville, Texas)

1




363







4,516



363



4,516



4,879



(1,188
)

19972




3,222



11,432



4,516



3,222



15,948



19,170



(2,071
)Mexico:GuadalajaraCedros-Jalisco Distribution Center  (d)

1




3,225



18,197



737



3,235



18,924



22,159






2006El Salto Distribution Center (d)

1




3,456







5,248



3,456



5,248



8,704






2007Total Guadalajara, Mexico

2




6,681



18,197



5,985



6,691



24,172



30,863



JuarezBermudez Industrial Center (d)

2




1,155



4,619







1,155



4,619



5,774






2007Independencia Industrial Center (d)

2




2,534







6,160



2,553



6,141



8,694






2005, 2007Ramon Rivera Lara Industrial Center (d)

2




1,101







5,636



2,902



3,835



6,737



(3
)

2000, 2007Total Juarez, Mexico

6




4,790



4,619



11,796



6,610



14,595



21,205



(3
)Mexico CityCedros-Tepotzotlan Distribution Center (d)

3




13,251



13,855



10,327



13,310



24,123



37,433






2006, 2007JLP Distribution Center (d)

2




5,232



6,227



4,137



5,236



10,360



15,596






2006, 2007Nor-T Distribution Center (d)

7




10,960



62,106



1,003



10,990



63,079



74,069






2006Oriente Distribution Center (d)

2




1,429



7,452







1,429



7,452



8,881






2006Total Mexico City, Mexico

14




30,872



89,640



15,467



30,965



105,014



135,979



MonterreyMonterrey Airport(d)

2




4,027







8,794



4,026



8,795



12,821






2007Monterrey Industrial Park (d)

5




2,626



3,785



7,511



2,850



11,072



13,922



(1,986
)

1997, 1998, 2006Total Monterrey, Mexico

7




6,653



3,785



16,305



6,876



19,867



26,743



(1,986
)ReynosaPharr Bridge Industrial Center (d)

1












7,790



1,440



6,350



7,790






2006Total Reynosa, Mexico

1












7,790



1,440



6,350



7,790



Canada:TorontoMississauga Gateway Center (d)

3




16,371







65,253



27,545



54,079



81,624






2006Total Toronto, Canada

3




16,371







65,253



27,545



54,079



81,624



Subtotal North American Markets

1,219




1,630,247



5,005,023



1,759,332



1,672,546



6,722,056



8,394,602



(1,346,143
)European MarketsCzech Republic:Prague-Jirny Distribution Center (d)

3




7,969



28,904



32,674



7,970



61,577



69,547






2007Uzice Distribution Center (d)

2




6,453







33,944



6,452



33,945



40,397






2007Total Czech Republic

5




14,422



28,904



66,618



14,422



95,522



109,944



France:Clesud Grans Miramas Distribution Center (d)

1




1,438







10,536



1,438



10,536



11,974






2007Grenoble Distribution Center (d)

1




(2,393
)






12,597



(2,393
)


12,597



10,204






2007Isle dAbeau Distribution Center (d)

3




13,601



37,591



20,906



14,670



57,428



72,098






2002, 2006, 2007Macon Distribution Center (d)

1




2,065







25,455



2,291



25,229



27,520






2006Mer Distribution Center (d)

1




912







15,109



912



15,109



16,021






2007Metz Distribution Center (d)

1




1,070



6,500



1,109



1,224



7,455



8,679



(2,618
)

2004Moissy Cramayel Distribution Center (d)

6




4,730







90,676



8,244



87,162



95,406






2005, 2006Strasbourg Distribution Center (d)

1




1,395







11,608



1,395



11,608



13,003






2007Troyes Distribution Center (d)

1




1,084







15,208



1,084



15,208



16,292






2007Total France

16




23,902



44,091



203,204



28,865



242,332



271,197



(2,618
)  66




---



##### 



PROLOGIS
    SCHEDULE III - REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2007
    (In thousands of dollars, as applicable)
   Initial Cost to





Gross Amounts At Which CarriedProLogis


Costs Capitalized


as of December 31, 2007


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionGermany:Bad Hersfeld Distribution Center (d)

1




3,312







23,680



3,312



23,680



26,992






2007Herford Distribution Center (d)

1




3,083







12,697



3,083



12,697



15,780






2007Munich Distribution Center (d)

1




9,194







17,524



9,193



17,525



26,718






2007Total Germany

3




15,589







53,901



15,588



53,902



69,490



Hungary:Budapest Park (d)

1




1,183







7,794



1,183



7,794



8,977






2007Budapest-Sziget Distribution Center (d)

4




6,433



67,295







6,433



67,295



73,728






2007Hegyeshalom Distribution Center (d)

1




965







12,423



965



12,423



13,388






2007Total Hungary

6




8,581



67,295



20,217



8,581



87,512



96,093



Italy:Bologna Distribution Center (d)

1




4,413







12,526



4,834



12,105



16,939






2006Lodi Distribution Center (d)

2




7,996



35,613



6,018



12,721



36,906



49,627






2005, 2006Padua Distribution Center (d)

1




2,724







12,827



3,115



12,436



15,551






2005Romentino Distribution Center (d)

2




3,758







31,429



3,991



31,196



35,187






2006Total Italy

6




18,891



35,613



62,800



24,661



92,643



117,304



Netherlands:Venlo Distribution Center (d)

1




2,750







10,749



3,008



10,491



13,499






2006Total Netherlands

1




2,750







10,749



3,008



10,491



13,499



Poland:Blonie Industrial Park (d)

4




4,773







36,192



5,267



35,698



40,965






2005, 2006, 2007Chorzow Distribution Center (d)

6




9,945







74,168



10,079



74,034



84,113






2006, 2007Gdansk Distribution Center (d)

4




6,191







36,496



6,190



36,497



42,687






2007Nadarzyn Distribution Center (d)

3




1,518



38,920







1,518



38,920



40,438






2007Poznan II Distribution Center (d)

5




7,280







39,645



7,959



38,966



46,925






2005, 2006, 2007Sochaczew Distribution Center (d)

4




1,564



22,916



15,555



1,565



38,470



40,035






2007Teresin Dist Center (d)

1




713







12,331



780



12,264



13,044






2005Warsaw III Dist Center (d)

1




3,284







17,376



3,285



17,375



20,660






2007Wroclaw Distribution Center (d)

3




9,404







39,364



9,404



39,364



48,768






2007Wroclaw II Distribution Center (d)

1




1,909







14,198



1,909



14,198



16,107






2007Wroclaw IV Dist Center (d)

2




1,006



21,710







1,006



21,710



22,716






2007Total Poland

34




47,587



83,546



285,325



48,962



367,496



416,458



Romania:Bucharest Distribution Center (d)

2




3,748







31,467



3,748



31,467



35,215






2007Total Romania

2




3,748







31,467



3,748



31,467



35,215



SlovakiaBratislava Distribution Center (d)

2




2,717



32,323



14,061



2,717



46,384



49,101






2007Sered Distribution Center (d)

3




4,970







34,764



4,970



34,764



39,734






2007Total Slovakia

5




7,687



32,323



48,825



7,687



81,148



88,835



Sweden:Haninge AB Distribution Center (d)

1




1,889







14,745



1,963



14,671



16,634






2006Gothenburg Distribution Center (d)

1




3,631







20,585



3,631



20,585



24,216






2007Total Sweden

2




5,520







35,330



5,594



35,256



40,850



United Kingdom:Campbell Road Distribution Center (d)

1




7,391







20,415



12,002



15,804



27,806






2004Corby Distribution Center (d)

1




1,968







14,179



1,968



14,179



16,147






2007Coventry Distribution Center (d)

1




4,322







9,416



4,322



9,416



13,738






2007Didcot Distribution Center (d)

1




9,512







13,935



10,858



12,589



23,447






2005Fort Dunlop Distribution Center (d)

1




6,640







1,429



8,066



3



8,069






2001Hayes Distribution Center (d)

4




29,302







33,562



29,496



33,368



62,864






2006, 2007Hemel Hempstead (d)

1




15,345







13,647



15,345



13,647



28,992






2007Houghton Main Distribution Center (d)

1




8,993







34,198



9,243



33,948



43,191






2006North Kettering Business Park (d)

2




22,367







36,219



22,367



36,219



58,586






2007Peterborough Distribution Center (d)

2




25,283







58,325



26,071



57,537



83,608






2006, 2007  67




---



##### 



PROLOGIS
    SCHEDULE III - REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2007
    (In thousands of dollars, as applicable)
   Initial Cost to





Gross Amounts At Which CarriedProLogis


Costs Capitalized


as of December 31, 2007


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionPineham Distribution Center (d)

1




32,318







52,721



32,318



52,721



85,039






2007Stafford Distribution Center (d)

3




17,412







30,808



17,623



30,597



48,220






2006, 2007Wellingborough Distribution Center (d)

1




18,071







38,768



18,071



38,768



56,839






2007Total United Kingdom

20




198,924







357,622



207,750



348,796



556,546



Subtotal European Markets

100




347,601



291,772



1,176,058



368,866



1,446,565



1,815,431



(2,618
)Asian MarketsChina:Beijing Airport Phase I (d)

2








14,133











14,133



14,133



(534
)

2007Guangzhou Baopu Distribution Center (d)

5








23,190



1,711







24,901



24,901



(1,190
)

2006Guangzhou Distribution Center (d)

1












4,318







4,318



4,318



(276
)

2005ProLogis Park Chongqing (d)

1








4,020











4,020



4,020



(64
)

2007ProLogis Park Dalian Port (d)

3








4,588











4,588



4,588



(223
)

2007ProLogis Park Hangzhou (d)

3








12,670











12,670



12,670



(78
)

2007ProLogis Park Longgang (d)

1








14,222











14,222



14,222



(746
)

2007ProLogis Park Minghang (d)

5








13,938



291







14,229



14,229



(328
)

2006, 2007ProLogis Park Puyun (d)

2












10,683







10,683



10,683



(658
)

2006ProLogis Park Quindao Chengyang (d)

2








5,706











5,706



5,706



(49
)

2007ProLogis Park TEDA (d)

6








23,958











23,958



23,958



(205
)

2007ProLogis Park Xujing (d)

4








6,954











6,954



6,954






2007ProLogis Park Yunpu (d)

1








5,913











5,913



5,913



(124
)

2007Qingdao Airport West (d)

8








18,441











18,441



18,441






2007Sanshan Distribution Center (d)

1








5,953











5,953



5,953



(28
)

2007Taopu Distribution Center (d)

5












21,538







21,538



21,538



(1,751
)

2005, 2006Total China

50








153,686



38,541







192,227



192,227



(6,254
)Japan:ProLogis Park Aichi Distribution Center (d)

1




26,362







65,796



26,362



65,796



92,158






2007ProLogis Park Amagasaki (d)

1




34,499







93,008



37,000



90,507



127,507






2006ProLogis Parc Hayashima II (d)

1




5,768







11,429



5,768



11,429



17,197






2007ProLogis Park Osaka II (d)

1




30,630







136,822



30,630



136,822



167,452






2007ProLogis Park Sugito II (d)

1




27,035







89,195



27,035



89,195



116,230






2007ProLogis Park Tsumori (d)

1




9,281



5,513



1,703



9,870



6,627



16,497






2006Tomisato Distribution Center (d)

1




8,777







20,707



8,777



20,707



29,484






2007Total Japan

7




142,352



5,513



418,660



145,442



421,083



566,525



Korea:ProLogis Park Deokpyung (d)

1




5,062



9,253



1,595



5,036



10,874



15,910






2006ProLogis Park Yongin (d)

1




8,871



6,513







8,871



6,513



15,384



(109
)

2007Total Korea

2




13,933



15,766



1,595



13,907



17,387



31,294



(109
)Subtotal Asian Markets

59




156,285



174,965



458,796



159,349



630,697



790,046



(6,363
)Total Industrial Operating Properties (d)

1,378




2,134,133



5,471,760



3,394,186



2,200,761



8,799,318



11,000,079



(1,355,124
)Retail Operating PropertiesAustin, TexasMueller Regional Retail (d)

5




7,008







28,065



7,007



28,066



35,073






2007Total Austin, Texas

5




7,008







28,065



7,007



28,066



35,073



Los Angeles / Orange County, CaliforniaNewport Retail Center

1




4,478



10,450







4,478



10,450



14,928



(608
)

2005Woodland Retail Center

3




10,376



24,208



164



10,375



24,373



34,748



(1,418
)

2005Total Los Angeles / Orange County, California

4




14,854



34,658



164



14,853



34,823



49,676



(2,026
)San Francisco (East Bay), CaliforniaEB Bridge Shopping Center

8

(e)(g)


23,042



81,693







23,042



81,693



104,735



(5,546
)

2005Granada Shopping Center

1




2,604



9,232



24



2,604



9,256



11,860



(539
)

2005Total San Francisco (East Bay), California

9




25,646



90,925



24



25,646



90,949



116,595



(6,085
)  68




---



##### 



PROLOGIS
    SCHEDULE III - REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2007
    (In thousands of dollars, as applicable)
   Initial Cost to





Gross Amounts At Which CarriedProLogis


Costs Capitalized


as of December 31, 2007


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionSan Francisco (South Bay), CaliforniaPacific Commons Retail Center (d)

13




27,669



62,358



37,049



29,940



97,136



127,076



(3,402
)

2005, 2006Total San Francisco (South Bay), California

13




27,669



62,358



37,049



29,940



97,136



127,076



(3,402
)Total Retail Operating Properties

31




75,177



187,941



65,302



77,446



250,974



328,420



(11,513
)Total Operating Properties

1,409




2,209,310



5,659,701



3,459,488



2,278,207



9,050,292



11,328,499



(1,366,637
)Properties Under Development(o)North American Markets:United States:Austin, TexasWalnut Creek Corporate Center

2




837







167



1,004







1,004






2007Total Austin, Texas

2




837







167



1,004







1,004



Chicago, IllinoisElk Grove Distribution Center

1




11,912











11,912







11,912






2007Minooka Distribution Center

1




1,589







10,809



12,398







12,398






2007Total Chicago, Illinois

2




13,501







10,809



24,310







24,310



Cincinnati, OhioPark I-275

1




3,809







9,032



12,841







12,841






2007Total Cincinnati, Ohio

1




3,809







9,032



12,841







12,841



Dallas/Fort Worth, TexasLancaster Distribution Center

1




2,509







738



3,247







3,247






2007Mesquite Distribution Center

1




1,201







360



1,561







1,561






2007Northgate Distribution Center

1












11,586



11,586







11,586






2006Total Dallas/Fort Worth, Texas

3




3,710







12,684



16,394







16,394



Houston, TexasNorthpark Distribution Center

3




3,380







12,030



15,410







15,410






2007Total Houston, Texas

3




3,380







12,030



15,410







15,410



I-81 Corridor, PennsylvaniaPark 33 Distribution Center

1




12,557







1,037



13,594







13,594






2007Total I-81 Corridor, Pennsylvania

1




12,557







1,037



13,594







13,594



Louisville, KentuckyCedar Grove Distribution Center

1












12,252



12,252







12,252






2007Total Louisville, Kentucky

1












12,252



12,252







12,252



Nashville, TennesseeInterchange City Distribution Center

1




2,834







8,574



11,408







11,408






2007Total Nashville, Tennessee

1




2,834







8,574



11,408







11,408



New JerseyPort Reading Business Park

1












434



434







434






2006Total New Jersey

1












434



434







434



Portland, OregonPDX Corp Center North Phase II

1




4,893







6,923



11,816







11,816






2007Total Portland, Oregon

1




4,893







6,923



11,816







11,816



San Francisco (Central Valley), CaliforniaDuck Creek Distribution Center

1












24,431



24,431







24,431






2007Total San Francisco (Central Valley), California

1












24,431



24,431







24,431



Seattle, WashingtonProLogis Park SeaTac

2




10,873







9,644



20,517







20,517






2007Total Seattle, Washington

2




10,873







9,644



20,517







20,517



  69




---



##### 



PROLOGIS
    SCHEDULE III - REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2007
    (In thousands of dollars, as applicable)
   Initial Cost to





Gross Amounts At Which CarriedProLogis


Costs Capitalized


as of December 31, 2007


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionSouthern CaliforniaHaven Distribution Center

6




97,046







53,047



150,093







150,093






2007Kaiser Distribution Center

1












783



783







783






2007Carson Distribution Center

1




17,451







139



17,590







17,590






2007Total Southern California

8




114,497







53,969



168,466







168,466



South FloridaPompano Beach Distribution Center

3




11,132







3,306



14,438







14,438






2007Sawgrass Distribution Center

2




9,939







80



10,019







10,019






2007Total South Florida

5




21,071







3,386



24,457







24,457



Tampa, FloridaSabal Park Distribution Center

1




512







5,910



6,422







6,422






2007Total Tampa, Florida

1




512







5,910



6,422







6,422



Mexico:GuadalajaraEl Salto Distribution Center

2




4,246







94



4,340







4,340






2007Total Guadalajara, Mexico

2




4,246







94



4,340







4,340



JuarezDel Norte Industrial Center II

2




932







5,387



6,319







6,319






2007Salvarcar Industrial Center II

2




2,426







6,131



8,557







8,557






2007Total Juarez, Mexico

4




3,358







11,518



14,876







14,876



Mexico CityPuente Grande Distribution Center

2




14,536







11,764



26,300







26,300






2007Total Mexico City, Mexico

2




14,536







11,764



26,300







26,300



MonterreyMonterrey Airport

2




6,721







6,886



13,607







13,607






2007Total Monterrey, Mexico

2




6,721







6,886



13,607







13,607



ReynosaEl Puente Industrialustrial Center

2




1,992







4,936



6,928







6,928






2007Pharr Bridge Industrial Center

3




4,150







4,327



8,477







8,477






2007Total Reynosa, Mexico

5




6,142







9,263



15,405







15,405



TijuanaProLogis Park Alamar

3




17,964







13,993



31,957







31,957






2007Total Tijuana, Mexico

3




17,964







13,993



31,957







31,957



Canada:TorontoMississauga Gateway Center

3




19,634







35,976



55,610







55,610






2006Total Toronto, Canada

3




19,634







35,976



55,610







55,610



Subtotal North American Markets

54




265,075







260,776



525,851







525,851



European Markets:Belgium:Willebroek Distribution Center

1




3,369







1,692



5,061







5,061






2007Total Belgium

1




3,369







1,692



5,061







5,061



Czech Republic:Stenovice Distribution Center

2




3,484







15,530



19,014







19,014






2007Ostrava Distribution Center

2




7,549







28,423



35,972







35,972






2007Uzice Distribution Center

1




2,798







7,674



10,472







10,472






2007Total Czech Republic

5




13,831







51,627



65,458







65,458



  70




---



##### 



PROLOGIS
    SCHEDULE III - REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2007
    (In thousands of dollars, as applicable)
   Initial Cost to





Gross Amounts At Which CarriedProLogis


Costs Capitalized


as of December 31, 2007


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionFrance:Avignon Distribution Center

2




3,292







12,529



15,821







15,821






2007Le Havre Distribution Center

1




467







12,122



12,589







12,589






2007Moissy Cramayel Distribution Center

3




7,522







25,884



33,406







33,406






2007Poitiers Distribution Center

1




6,487







777



7,264







7,264






2007Rennes Distribution Center

1




614







752



1,366







1,366






2007Strasbourg Distribution Center

2












11,095



11,095







11,095






2007Total France

10




18,382







63,159



81,541







81,541



Germany:Borken Distribution Center

1




2,731







14,117



16,848







16,848






2007Bremen Distribution Center

1




2,045







386



2,431







2,431






2007Emmerich Distribution Center

1




11,548







9,008



20,556







20,556






2007Heilbronn Distribution Center

1




2,985







43



3,028







3,028






2007Herford Distribution Center

1




1,093







4,001



5,094







5,094






2007Herten Distribution Center

1




3,043







4,092



7,135







7,135






2007Herten Distribution Center

1




4,426







12,225



16,651







16,651






2007Kolleda Distribution Center

2












4,837



4,837







4,837






2007Malsch Distribution. Center

1




3,900







10,136



14,036







14,036






2007Munich Distribution Center

1




13,295







546



13,841







13,841






2007Neu Wulmstorf Distribution Center

1




4,720







276



4,996







4,996






2007Unna Distribution Center

1




4,236







5,229



9,465







9,465






2007Wetzlar Distribution Center

1




4,330







2,420



6,750







6,750






2007Total Germany

14




58,352







67,316



125,668







125,668



Hungary:Batta Distribution Center

2




2,420







1,805



4,225







4,225






2007Budapest Park

1




1,184







7,079



8,263







8,263






2007Budapest-Sziget Distribution Center

1




1,212







6,821



8,033







8,033






2007Total Hungary

4




4,816







15,705



20,521







20,521



Italy:Rome Distribution Center

1




3,878







14,703



18,581







18,581






2007Total Italy

1




3,878







14,703



18,581







18,581



Netherlands:Etten-Leur Distribution Center

1




3,028







3,731



6,759







6,759






2007Venlo Distribution Center

1




3,668







1,669



5,337







5,337






2007Total Netherlands

2




6,696







5,400



12,096







12,096



Poland:Bedzin Distribution Center

3




4,215







9,042



13,257







13,257






2007Chorzow Distribution Center

1




1,508







3,714



5,222







5,222






2006Gdansk Distribution Center

1




1,854







1,063



2,917







2,917






2007Janki Distribution Center

2




7,841







30,034



37,875







37,875






2006, 2007Nadarzyn Distribution Center

1




526







2,775



3,301







3,301






2007Piotrkow Distribution Center

2




2,690







(884
)


1,806







1,806






2007Piotrkow II Distribution Center

1




899







201



1,100







1,100






2007Sochaczew Distribution Center

2




710







2,987



3,697







3,697






2007Szczecin Distribution Center

1




3,327







4,618



7,945







7,945






2007Warsaw II Distribution Center

4




5,668







19,923



25,591







25,591






2006, 2007Wroclaw III Distribution Center

2




2,711







26,263



28,974







28,974






2007Wroclaw IV Distribution Center

1




793







6,850



7,643







7,643






2007Total Poland

21




32,742







106,586



139,328







139,328



Romania:Bucharest Distribution Center

2




3,735







6,458



10,193







10,193






2007Total Romania

2




3,735







6,458



10,193







10,193



Slovakia:Galanta Distribution Center

3




10,837







1,501



12,338







12,338






2007Novo Mesto Distribution Center

1




2,145







16,096



18,241







18,241






2007Total Slovakia

4




12,982







17,597



30,579







30,579



  71




---



##### 



PROLOGIS
    SCHEDULE III - REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2007
    (In thousands of dollars, as applicable)
   Initial Cost to





Gross Amounts At Which CarriedProLogis


Costs Capitalized


as of December 31, 2007


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionSpain:Massalaves Distribution Center

1




2,518







350



2,868







2,868






2006Tarancon Distribution Center

2




7,737







13,195



20,932







20,932






2006, 2007Zaragoza Distribution Center

1




7,891







16,496



24,387







24,387






2007Total Spain

4




18,146







30,041



48,187







48,187



Sweden:Arlanda Distribution Center

1




3,349







428



3,777







3,777






2007Gothenburg Distribution Center

1




1,135







76



1,211







1,211






2007Total Sweden

2




4,484







504



4,988







4,988



United Kingdom:Pineham Distribution Center

2




24,112







4,571



28,683







28,683






2007Crewe Distribution Center

1




14,809







3,564



18,373







18,373






2007Glasshoughton Distribution Center

1




9,028







3,252



12,280







12,280






2007Cabot Park Distribution Center

2




23,488







55,644



79,132







79,132






2007Campbell Road Distribution Center

2




15,003







6,048



21,051







21,051






2007Midpoint Park

2




38,150







6,327



44,477







44,477






2007Total United Kingdom

10




124,590







79,406



203,996







203,996



Subtotal European Markets

80




306,003







460,194



766,197







766,197



Asian Markets:China:Beijing Airport Phase I

2




6,590







3,653



10,243







10,243






2007Guangzhou Distribution Center

1












643



643







643






2007ProLogis Bonded Park Guangzhou

1




909







207



1,116







1,116






2007ProLogis Park Dalian Port

1




132







2,348



2,480







2,480






2007ProLogis Park Foshan Shunde

1




909







207



1,116







1,116






2007ProLogis Park Hangzhou

3




2,267







203



2,470







2,470






2007ProLogis Park Hongqiao West

2




13,214







451



13,665







13,665






2007ProLogis Park Nanjing

2




1,012







4,645



5,657







5,657






2007ProLogis Park Qianwan

2




5,211







83



5,294







5,294






2007ProLogis Park Shanghai Fengcheng

2




4,209







203



4,412







4,412






2007ProLogis Park Tianjin Airport

2




1,374







5,925



7,299







7,299






2007ProLogis Park Tongzhou

2




4,180







4,031



8,211







8,211






2007ProLogis Park Wuxi New Distribution Center

2




2,606







525



3,131







3,131






2007ProLogis Park Yunpu

2












209



209







209






2007Qingdao Airport West

1




306







206



512







512






2007Sanshan Distribution Center

3




2,643







10,022



12,665







12,665






2006Songjiang Distribution Center

2




4,286







433



4,719







4,719






2007Total China

31




49,848







33,994



83,842







83,842



Japan:Chiba Distribution Center

1




23,862







39,919



63,781







63,781






2006Iwanuma I Distribution Center

1




5,265







169



5,434







5,434






2007Koriyama I Distribution Center

1




6,052







360



6,412







6,412






2007Misato II Distribution Center

1




45,299







11,014



56,313







56,313






2007ProLogis Park Ichikawa

2




94,632







49,938



144,570







144,570






2006, 2007ProLogis Park Ichikawa II

1




48,629







857



49,486







49,486






2007ProLogis Park Komaki

1




35,712







35,854



71,566







71,566






2007ProLogis Park Maishima III

1




19,640







69,784



89,424







89,424






2007ProLogis Park Narita III

1




19,630







33,172



52,802







52,802






2006Tosu I Distribution Center

1




13,778







39,869



53,647







53,647






2007Total Japan

11




312,499







280,936



593,435







593,435



Korea:ProLogis Park Icheon

1




3,871







5,114



8,985







8,985






2007Total Korea

1




3,871







5,114



8,985







8,985



Subtotal Asian Markets

43




366,218







320,044



686,262







686,262



  72




---



##### 



PROLOGIS
    SCHEDULE III - REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2007
    (In thousands of dollars, as applicable)
   Initial Cost to





Gross Amounts At Which CarriedProLogis


Costs Capitalized


as of December 31, 2007


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionRetail and Mixed-use Properties Under DevelopmentAustin, TexasMueller Regional Retail

1




2,512







149



2,661







2,661






2007TC-9 Seton

1




1,282







1,285



2,567







2,567






2007Total Austin, Texas

2




3,794







1,434



5,228







5,228



San Francisco (South Bay), CaliforniaPacific Commons Retail Center

1




475







2,272



2,747







2,747






2007Total San Francisco (South Bay), California

1




475







2,272



2,747







2,747



Total Retail and Mixed-use Properties Under Development

3




4,269







3,706



7,975







7,975



Total Properties Under Development 9 (o)

180




941,565







1,044,720



1,986,285







1,986,285



GRAND TOTAL





$
3,150,875


$
5,659,701


$
4,504,208


$
4,264,492


$
9,050,292


$
13,314,784


$
(1,366,637
)p  73




---



##### 



Schedule III - Footnotes
  
  Total per Schedule III


13,314,784Land held for development


2,152,960Land subject to ground leases and other


458,782
(e)(g)Other investments


652,319
(h)Total per consolidated balance sheet


16,578,845
(i)   12/31/2007
      Total accumulated depreciation per Schedule III


1,366,637Accumulated depreciation on other investments


1,821Total per Consolidated Balance Sheet


1,368,458            74




---



##### 



2007


2006


2005Real estate assets:Balance at beginning of year

$
13,897,091


$
11,875,130


$
6,333,731Acquisitions of operating properties, transfers ofdevelopment completions from CIP andimprovements to operating properties


5,407,449



3,345,394



5,414,725Basis of operating properties disposed of


(4,729,843
)


(1,636,116
)


(1,188,407
)Change in properties under development balance


1,021,443



80,497



308,642Change in land held for development balance


755,879



352,039



449,041Change in land subject to ground leases and otherbalance


(13,630
)


(320,256
)


538,095Change in capitalized preacquisition costs balance


240,456



200,403



19,303Balance at end of year

$
16,578,845


$
13,897,091


$
11,875,130Accumulated Depreciation:Balance at beginning of year

$
1,264,227


$
1,118,547


$
989,221Depreciation expense


248,552



248,484



174,244Balances retired upon disposition of operating properties


(144,321
)


(102,804
)


(44,918
)Balance at end of year

$
1,368,458


$
1,264,227


$
1,118,547  75




---



##### 



PROLOGIS NORTH AMERICAN INDUSTRIAL FUND, LP
 Consolidated Financial Statements   76




---



##### 



Independent Auditors Report 
     
 77




---



##### 



PROLOGIS NORTH AMERICAN INDUSTRIAL FUND, LP
 Consolidated Balance Sheets   2007
    
    
    2006AssetsReal estate
    
    $
    2,104,928
    
    
    $
    1,203,769Less accumulated depreciation
    
    
    (63,787
    )
    
    
    (19,712
    )Net real estate
    
    
    2,041,141
    
    
    
    1,184,057Cash and cash equivalents
    
    
    25,989
    
    
    
    20,022Restricted cash
    
    
    
    
    
    
    838Accounts receivable
    
    
    5,431
    
    
    
    1,471Deferred financing costs, net of accumulated amortization of $3,830 and $1,494
    
    
    13,835
    
    
    
    9,264Other assets, net of accumulated amortization of $18,345 and $6,190
    
    
    49,214
    
    
    
    28,839Total assets
    
    $
    2,135,610
    
    
    $
    1,244,491Liabilities and Partners CapitalLiabilities:Secured debt
    
    $
    1,207,000
    
    
    $
    634,000Unsecured debt (including $2,000 and $3,213 due to partner)
    
    
    48,300
    
    
    
    113,889Accounts payable and accrued expenses
    
    
    21,757
    
    
    
    12,018Accrued distributions
    
    
    20,043
    
    
    
    7,265Other liabilities, net of accumulated amortization of $1,650 and $354
    
    
    13,388
    
    
    
    8,024Total liabilities
    
    
    1,310,488
    
    
    
    775,196Partners capital
    
    
    825,122
    
    
    
    469,295Total liabilities and partners
capital
    
    $
    2,135,610
    
    
    $
    1,244,491
  78




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##### 



PROLOGIS NORTH AMERICAN INDUSTRIAL FUND, LP
 Consolidated Statements of Earnings   2007
    
    
    2006Income:Rental income, including straight-lined rents
of $3,876 and $1,958
    
    $
    116,085
    
    
    $
    52,274Rental expense recoveries
    
    
    33,389
    
    
    
    13,679Interest and other income
    
    
    1,561
    
    
    
    894Total income
    
    
    151,035
    
    
    
    66,847Expenses:Rental expenses
    
    
    37,580
    
    
    
    15,567Depreciation and amortization
    
    
    52,414
    
    
    
    23,566Interest expense
    
    
    58,402
    
    
    
    26,385Other expenses
    
    
    1,874
    
    
    
    832Total expenses
    
    
    150,270
    
    
    
    66,350Net earnings
    
    $
    765
    
    
    $
    497
  79




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##### 



PROLOGIS NORTH AMERICAN INDUSTRIAL FUND, LP
 Consolidated
Statements of Partners Capital and Comprehensive Loss   Limited
    
    
    GeneralPartners
    
    
    Partner
    
    
    TotalInitial contribution, March 1, 2006
    
    $
    310,492
    
    
    $
    12
    
    
    $
    310,504Additional contributions
    
    
    194,924
    
    
    
    
    
    
    
    194,924Total contributions
    
    
    505,416
    
    
    
    12
    
    
    
    505,428Comprehensive loss:Net earnings
    
    
    497
    
    
    
    
    
    
    
    497Amortization of derivative
    
    
    26
    
    
    
    
    
    
    
    26Derivative loss
    
    
    (1,568
    )
    
    
    
    
    
    
    (1,568
    )Total comprehensive loss
    
    
    (1,045
    )
    
    
    
    
    
    
    (1,045
    )Contribution redemption
    
    
    (11,676
    )
    
    
    
    
    
    
    (11,676
    )Distributions
    
    
    (23,411
    )
    
    
    (1
    )
    
    
    (23,412
    )Balance, December 31, 2006
    
    $
    469,284
    
    
    $
    11
    
    
    $
    469,295Contributions
    
    
    418,899
    
    
    
    
    
    
    
    418,899Comprehensive loss:Net earnings
    
    
    765
    
    
    
    
    
    
    
    765Amortization of derivative
    
    
    275
    
    
    
    
    
    
    
    275Derivative loss
    
    
    (11,948
    )
    
    
    
    
    
    
    (11,948
    )Total comprehensive loss
    
    
    (10,908
    )
    
    
    
    
    
    
    (10,908
    )Distributions
    
    
    (52,163
    )
    
    
    (1
    )
    
    
    (52,164
    )Balance, December 31, 2007
    
    $
    825,112
    
    
    $
    10
    
    
    $
    825,122
  80




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##### 



PROLOGIS NORTH AMERICAN INDUSTRIAL FUND, LP
 Consolidated Statements of Cash Flows   2007
    
    
    2006Operating activities:Net earnings
    
    $
    765
    
    
    $
    497Adjustments to reconcile net earnings to net cash provided by operating activities:Depreciation of real estate and amortization of leasing commissions
    
    
    52,414
    
    
    
    23,566Straight-lined rents
    
    
    (3,876
    )
    
    
    (1,958
    )Amortization of lease intangibles, net
    
    
    2,562
    
    
    
    1,981Amortization of deferred financing costs
    
    
    2,336
    
    
    
    1,494Amortization of derivative
    
    
    275
    
    
    
    26Provision for doubtful accounts
    
    
    37
    
    
    
    Decrease in accounts receivable
    
    
    1,565
    
    
    
    5,911Increase in other assets
    
    
    (3,412
    )
    
    
    (2,267
    )Increase (decrease) in accounts payable and accrued expenses
    
    
    6,113
    
    
    
    (2,172
    )Increase in other liabilities
    
    
    1,856
    
    
    
    1,614Settlement of derivative instrument
    
    
    (11,948
    )
    
    
    (1,568
    )Net cash provided by operating activities
    
    
    48,687
    
    
    
    27,124Investing activities:Investment in real estate
    
    
    (827,274
    )
    
    
    (1,122,722
    )Investment in real estate improvements
    
    
    (8,352
    )
    
    
    (5,677
    )Decrease in restricted cash
    
    
    838
    
    
    
    5,107Master lease agreements
    
    
    728
    
    
    
    193Net cash used in investing activities
    
    
    (834,060
    )
    
    
    (1,123,099
    )Financing activities:Deferred financing costs incurred
    
    
    (6,907
    )
    
    
    (10,757
    )Proceeds from secured debt financing transactions
    
    
    573,000
    
    
    
    634,000Proceeds from unsecured debt financing transactions
    
    
    509,947
    
    
    
    197,904Repayment of unsecured debt
    
    
    (575,536
    )
    
    
    (84,015
    )Contributions from partners
    
    
    330,222
    
    
    
    406,688Contribution redemption
    
    
    
    
    
    
    (11,676
    )Distributions to partners
    
    
    (39,386
    )
    
    
    (16,147
    )Net cash provided by financing
activities
    
    
    791,340
    
    
    
    1,115,997Net increase in cash and cash equivalents
    
    
    5,967
    
    
    
    20,022Cash and
cash equivalents, beginning of the period
    
    
    20,022
    
    
    
    Cash and cash equivalents, end of the period
    
    $
    25,989
    
    
    $
    20,022Supplemental schedule of noncash investing and financing activities:Contributions of
assets in exchange for limited partner units
    
    $
    88,677
    
    
    $
    98,740Accrued
distributions to partners
    
    $
    20,043
    
    
    $
    7,265Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    53,244
    
    
    $
    21,926
  81




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##### 



PROLOGIS NORTH AMERICAN INDUSTRIAL FUND, LP
 Notes to Consolidated Financial Statements  (1)
    
    OrganizationThe North American Industrial Fund, LP (the Fund) was formed in February 2006 as an open-ended
fund that will own and operate industrial distribution properties in the United States and
Canada. The Fund has accepted subscription agreements aggregating $1.43 billion in equity
commitments from nine institutional investors (Investors), and a $420 million commitment from
ProLogis, a Maryland real estate investment trust (REIT), which acts as the asset and
property manager of the Fund and earns fees for these services. As of December 31, 2007, the
Investors own approximately 77% of the Fund through limited partner interests and ProLogis
owns approximately 23% through its general partner and limited partner interests. The
Investors equity commitments will be called into the Fund as required to fund investments in
real estate or other capital investments, as well as to fund operating cash as needed. The
equity commitments expire in February 2009. The Fund has an exclusive right, subject to
limited exceptions, to acquire all recently developed facilities in the United States and
Canada from ProLogis that meet specific investment criteria as long as the Fund has available
capital.
 (2)
    
    Summary of Significant Accounting Policies
 (a)
    
    Principles of ConsolidationThe consolidated financial statements include the assets, liabilities, results of
operations, cash flows and changes in partners capital and
comprehensive loss of the
Fund and its wholly owned subsidiaries. These consolidated financial statements are
prepared in conformity with accounting principles generally accepted in the United States
of America. All material intercompany accounts and transactions have been eliminated.(b)
    
    Comparative Reporting PeriodsThe period from inception (March 1, 2006) to December 31, 2006 may not be directly
comparative to the 2007 reporting period that includes a full year of operations.
Additionally, in certain instances, items may be reclassified to conform to the 2007
financial statement presentation; however, these reclassifications have no affect on
previously reported net earnings.(c)
    
    Long-Lived AssetsReal estate assets are carried at cost. Costs incurred that are directly associated with
the successful acquisition or development of real estate assets are capitalized as part
of the investment basis of the real estate assets. Costs incurred in renovating or
rehabilitating existing or recently acquired real estate assets are capitalized as part
of the investment basis of the real estate assets. Costs incurred in making certain other
improvements to the real estate assets are also capitalized; however, costs incurred in
making repairs and maintaining real estate assets are expensed as incurred.
  82




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##### 



PROLOGIS NORTH AMERICAN INDUSTRIAL FUND, LP
   The depreciable portions of the Funds real estate assets are depreciated on a
straight-line basis over their respective estimated useful lives. These useful lives are
generally seven years for capital improvements, ten years for standard tenant
improvements, and generally 30 years for assets that were developed over five years ago
and 40 years for developed properties. Capitalized leasing costs are amortized over the
remaining lease term of the respective leases.Management reviews the real estate assets that it owns for impairment whenever events or
changes in circumstances indicate that the carrying amount of such assets may not be
recoverable in accordance with the provisions of Statement of Financial Accounting
Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.
In managements opinion, the Funds real estate assets are not impaired.(d)
    
    Cash and Cash EquivalentsThe Fund considers all cash on hand, demand deposits with financial institutions and
short-term, highly liquid investments with original maturity dates of three months or
less to be cash equivalents.The Funds cash and cash equivalents are financial instruments that are exposed to
concentrations of credit risk. The Fund invests its cash with high-credit quality
federally insured institutions. Cash balances with any one institution may be in excess
of federally insured limits or may be invested in non-federally insured money market
accounts. The Fund has not realized any losses in such cash investments or accounts and
believes it is not exposed to any significant credit risk.(e)
    
    Restricted CashAt December 31, 2006, restricted cash consists of approximately $338,000 reserved for
capital improvements and $500,000 reserved for closing costs. There was no cash
restricted at December 31, 2007.(f)
    
    Deferred Financing CostsDeferred financing costs consist of amounts paid relative to the issuance of the secured
debt and are amortized over the terms of the related loans. Amortization is included in
interest expense in the accompanying consolidated statements of earnings. For the periods
ended December 31, 2007 and 2006, the Fund amortized approximately $2,336,000 and
$1,494,000 of deferred financing costs.
  83




---



##### 



PROLOGIS NORTH AMERICAN INDUSTRIAL FUND, LP
   (g)
    
    Other AssetsOther assets include the following as of December 31 (in thousands):
 2007
    
    
    2006In-place leases, net of accumulated
amortization of $11,221 and $3,678
    
    $
    26,583
    
    
    $
    17,477Straight-lined rents
    
    
    5,834
    
    
    
    1,958Lease intangible assets, net of accumulated
amortization of $6,193 and $2,335
    
    
    11,721
    
    
    
    7,448Leasing commissions, net of accumulated
amortization of $931 and $177
    
    
    3,569
    
    
    
    1,465Prepaid expenses and other assets
    
    
    1,507
    
    
    
    491Total other assets
    
    $
    49,214
    
    
    $
    28,839
 Leasing commissions are amortized to depreciation and amortization over the life of the
lease.(h)
    
    Acquisition of Real EstateWhen the Fund acquires real estate, it allocates the purchase price to the various
components of the acquisition based upon the fair value of each component in accordance
with SFAS No. 141, Business Combinations. It estimates:
 
    
    the fair value of the buildings on an as-if-vacant basis. The fair value
allocated to land is generally based on relevant market data;
    
    the fair value of in-place leases or the costs to obtain tenants, primarily
leasing commissions. These costs are recorded in other assets;
    
    the value of lease intangibles (market value of above- and
below- market leases)
based upon the Funds best estimate of current market rents. The value of each lease is
recorded in either other assets or other liabilities, as appropriate;
    
    the value of all other assumed assets and liabilities based on the best
information available.
 The Fund amortizes the acquired assets or liabilities as follows:
 
    
    In-place leases are charged to amortization expense over the average remaining
estimated life of the lease.
    
    Lease intangibles are charged to rental income over the average term of the
acquired lease.
 At December 31, 2007 and 2006, an intangible asset of approximately $26,583,000 and
$17,477,000, respectively, net of accumulated amortization of approximately $11,221,000
and $3,678,000, respectively, has been recorded as the cost of in-place leases. For the
periods ended December 31, 2007 and 2006, the Fund recorded amortization expense of
approximately $7,555,000 and $3,678,000, respectively.
  84




---



##### 



PROLOGIS NORTH AMERICAN INDUSTRIAL FUND, LP
   An additional allocation is based on whether the net present value of the acquired leases
is favorable or unfavorable relative to market prices. Favorable and unfavorable
valuations are classified in other assets and other liabilities, respectively, in the
accompanying consolidated balance sheets. These amounts are amortized to rental income
over the remaining lease term of the respective leases.At December 31, 2007 and 2006, intangible assets of approximately $11,721,000 and
$7,448,000, respectively, net of accumulated amortization of approximately $6,193,000 and
$2,335,000, respectively, has been recorded for the lease intangible assets. For the
periods ended December 31, 2007 and 2006, the Fund amortized approximately $3,858,000 and
$2,335,000, respectively, related to favorable intangibles.At December 31, 2007 and 2006, intangible liabilities of approximately $3,436,000 and
$2,091,000, respectively, net of accumulated amortization of approximately $1,650,000 and
$354,000, respectively, has been recorded as lease intangible liabilities. For the
periods ended December 31, 2007 and 2006, the Fund recorded amortization expense of
approximately $1,296,000 and $354,000, respectively, related to unfavorable intangibles.The Fund estimates amortization of in-place leases, lease intangible assets and
liabilities over the succeeding five years and thereafter to be as follows (in
thousands):
 Lease
    
    
    LeaseIn-place
    
    
    intangible
    
    
    intangibleleases
    
    
    assets
    
    
    liabilities2008
    
    $
    9,336
    
    
    $
    4,539
    
    
    $
    1,5512009
    
    
    5,957
    
    
    
    2,273
    
    
    
    9792010
    
    
    4,889
    
    
    
    1,807
    
    
    
    6352011
    
    
    2,853
    
    
    
    1,803
    
    
    
    482012
    
    
    1,253
    
    
    
    827
    
    
    
    472013 and thereafter
    
    
    2,295
    
    
    
    472
    
    
    
    176$
    26,583
    
    
    $
    11,721
    
    
    $
    3,436
 (i)
    
    Other LiabilitiesOther liabilities include unearned rent, customer security deposits and lease intangible
liabilities.(j)
    
    Derivative Instruments and Hedging ActivitiesThe Fund accounts for derivatives and hedging activities in
accordance with SFAS No. 133, Accounting for Derivative Instruments and Certain Hedging
Activities, as amended, which requires that all derivative instruments be recorded on the
balance sheet at their respective fair values.On the date a derivative contract is entered into, the Fund formally documents the
hedging relationship and its risk-management objective and strategy for undertaking the
hedge, the hedging instrument, the item, the nature of the risk being hedged, how the
hedging instruments effectiveness
  85




---



##### 



PROLOGIS NORTH AMERICAN INDUSTRIAL FUND, LP
 
 in offsetting the hedged risk will be assessed, and a
description of the method of measuring ineffectiveness. The Fund also assesses, both at
the hedges inception and on an ongoing basis, whether the derivatives are highly
effective in offsetting changes in cash flows of hedged items.Changes in the fair value of derivatives that are highly effective and that qualify as
cash flow hedges are recorded in other comprehensive income to the extent that they are
effective as a hedge until earnings are affected by the variability in cash flows of the
designated hedged item. Any ineffective portion of a derivative is reported in earnings.(k)
    
    Revenue RecognitionThe Fund leases its real estate under operating leases and recognizes the total lease
payments provided for under the lease agreements on a straight-line basis over the lease
term. A provision for possible loss is made when collection of receivables is considered
to be doubtful.(l)
    
    Rental ExpensesRental expenses primarily include utilities, repairs and maintenance, property insurance,
real estate taxes, management fees paid to ProLogis and costs of certain on-site property
management personnel (reimbursed to ProLogis). Under the terms of the respective leases,
some or all of the Funds rental expenses are recovered from its customers and are
recognized as a component of income.(m)
    
    Income TaxesThe Fund is comprised of a series of separate legal entities that have elected to be
taxed as (i) partnerships or (ii) a REIT under the Internal Revenue Code (the Code).
Under the Code, a partnership is a flow-through entity and is not subject to federal
income tax on its income. A REIT, assuming that it complies with the organization and
operational tests provided for in the Code for a REIT, is not subject to federal income
tax on its income. As a result, the Fund has not recorded a tax provision for federal
income taxes on the financial statements related to the separate activities of the legal
entities. If the Fund fails to qualify as a REIT in any taxable year,
it will be subject
to federal income taxes at regular corporate rates (including any alternative minimum
tax) and may not be able to qualify as a REIT for the four subsequent taxable years. Even
as a REIT, the Fund may be subject to certain state and local taxes on their own income
and property, and to federal income and excise taxes on their undistributed taxable
income.(n)
    
    Recently Issues Accounting PronouncementsIn June 2006, the Financial Accounting Standards Board
(FASB) issued SFAS Interpretation
No. 48, Accounting for Uncertainty in Income Taxesan
interpretation of SFAS Statement
No. 109 (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes
recognized in accordance with SFAS No. 109, Accounting for Income Taxes. This
interpretation prescribes a recognition threshold and measurement attributes for the
financial statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. It also provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure, and transition. On
February 1, 2008, the FASB issued SFAS Staff Position No. FIN 48-2, Effective Date of
SFAS Interpretation No. 48 for Certain Nonpublic Enterprises (FSP FIN48-2). FSP FIN 48-2
postponed the effective date of FIN 48 for nonpublic enterprises included within this
FSPs scope to the annual
  86




---



##### 



PROLOGIS NORTH AMERICAN INDUSTRIAL FUND, LP
   financial statement for fiscal years beginning after December
15, 2007. The Fund is within the scope of this FSP. Management is currently evaluating
the impact the adoption of FIN 48 will have on the Funds net assets and results of
operations, if any.In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS 157). SFAS
157 defines fair value, establishes a framework for measuring fair value in accordance
with accounting principles generally accepted in the United States of America, and
expands disclosure about fair value measurements. SFAS 157 is effective for the Fund
on January 1, 2008. In February 2008, the FASB issued SFAS Staff Position No. FAS 157-2,
Effective Date of FASB Statement No. 157 (FSP FAS 157-2), that delays the effective date of SFAS 157s fair
value measurement requirements for nonfinancial assets and liabilities that are not
required or permitted to be measured at fair value on a recurring basis. Fair value
measurements identified in FSP FAS 157-2 will be effective for the Funds fiscal year
beginning January 1, 2009. The Fund does not expect the adoption of SFAS 157 to have a
material impact on the Funds financial statements.In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities including an Amendment of SFAS Statement No. 115 (SFAS
159). SFAS 159 permits entities to choose to measure many financial instruments and
certain other items at fair value. The provisions of SFAS 159 are effective for the
Funds fiscal year beginning January 1, 2008. The Fund does not plan to elect the fair
value option provided by SFAS 159.In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations
(SFAS 141R). SFAS 141R establishes principles and requirements for how an acquirer
recognizes and measures in its financial statements the identifiable assets acquired, the
liabilities assumed, including those arising from contractual contingencies, any
contingent consideration, any noncontrolling interest in the acquiree and the goodwill
acquired. The provisions of SFAS 141R are effective for the Funds fiscal year beginning
January 1, 2009. The Fund is currently assessing what impact the adoption of SFAS 141R
will have on its financial position and results of operations.(o)
    
    Use of EstimatesThe preparation of consolidated financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and the reported
amounts of income and expenses during the reporting period. Actual results could differ
from those estimates.
  87




---



##### 



PROLOGIS NORTH AMERICAN INDUSTRIAL FUND, LP
   (3)
    
    Real EstateReal estate is comprised of the following as of December 31 (in thousands):
 2007
    
    
    2006Improved land
    
    $
    446,063
    
    
    $
    243,146Building and improvements
    
    
    1,658,865
    
    
    
    960,6232,104,928
    
    
    
    1,203,769Less accumulated depreciation
    
    
    (63,787
    )
    
    
    (19,712
    )Net real estate
    
    $
    2,041,141
    
    
    $
    1,184,057
 At December 31, 2007, the Funds real estate consists of 217 operating properties and
aggregate approximately 37,187,651 square feet. All properties, except one, were acquired from
ProLogis. The Funds financial results are affected by a wide variety of factors, which
include the concentration of the Funds investment in the Inland Empire Market in California. The Fund has six buildings in the Inland
Empire representing approximately 12% of the Funds net real estate assets (sq. feet).ProLogis is obligated to reimburse the Fund under master lease agreements for certain free
rental periods and vacant spaces in properties that were acquired from ProLogis. For the
periods ended December 31, 2007 and 2006, the Fund recorded, as a reduction in the Funds cost
basis of the acquired real estate, $536,000 and $385,000, respectively, related to master
lease agreements. The Fund received cash under these agreements for the periods ended December
31, 2007 and 2006, of approximately $728,000 and $193,000, respectively, and recorded a
receivable from ProLogis of approximately $192,000 at December 31, 2006. There was no
receivable recorded at December 31, 2007.The Fund leases all of its properties to customers under agreements, which are classified as
operating leases. As of December 31, 2007, minimum lease payments receivable on leases with
lease periods greater than one year are as follows (in thousands):
 2008
    
    $
    141,8782009
    
    
    118,1022010
    
    
    96,1802011
    
    
    69,6092012
    
    
    49,8552013 and thereafter
    
    
    113,814$
    589,438
 The schedule does not reflect future rental revenues from the renewal or replacement of
existing leases and excludes reimbursements of property operating expenses. As of December 31,
2007 and 2006, the Funds average remaining lease term is 4 years.
  88




---



##### 



PROLOGIS NORTH AMERICAN INDUSTRIAL FUND, LP
   (4)
    
    Debt
 (a)
    
    Secured DebtSecured debt consists of the following as of December 31 (in thousands):
 FixedPrincipal balance
    
    Principal balance
    
    
    Interest
    
    
    Maturity2007 (1)
    
    2006 (1)
    
    
    Rate
    
    
    Date$
    190,000
    
    $
    190,000
    
    
    
    5.05
    %
    
    
    02/01/11164,827
    
    
    164,827
    
    
    
    5.20
    
    
    
    04/01/16120,173
    

    
    120,173
    
    
    
    5.20
    
    
    
    04/01/1677,500
    
    
    77,500
    
    
    
    6.04
    
    
    
    10/01/1681,500
    
    
    81,500
    
    
    
    5.86
    
    
    
    12/01/1694,000
    
    
    
    
    
    
    5.27
    
    
    
    04/01/1752,000
    
    
    
    
    
    
    5.78
    
    
    
    10/01/1226,000
    
    
    
    
    
    
    6.23
    
    
    
    10/01/12189,000
    
    
    
    
    
    
    6.22
    
    
    
    12/01/17111,000
    
    
    
    
    
    
    6.30
    
    
    
    12/01/1780,800
    
    
    
    
    
    
    6.12
    
    
    
    01/01/1820,200
    
    
    
    
    
    
    6.12
    
    
    
    01/01/18$
    1,207,000
    
    $
    634,000
 (1)

    
    The debt is secured by real estate with a carrying value in thousands
of approximately $1,837,670 and $1,000,470 at December 31, 2007 and 2006,
respectively. All notes are interest only with principal due at maturity.
 The aggregate maturities of secured debt for each of five years subsequent to
December 31, 2007 are as follows (in thousands):
 Principalbalance2008
    
    $
    2009
    
    
    2010
    
    
    2011
    
    
    190,0002012
    
    
    78,0002013 and thereafter
    
    
    939,000$
    1,207,000
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PROLOGIS NORTH AMERICAN INDUSTRIAL FUND, LP
   (b)
    
    Unsecured DebtOn December 6, 2007, the Fund entered into a short-term loan arrangement in the amount of
$46,300,000 that matures on April 6, 2008. Proceeds from the loan were used to acquire
the December contribution of real estate. Interest payments are based on the 30-day
London Interbank Offered Rate (LIBOR) rate; the effective interest rate as of December
31, 2007 was 5.8%. Management expects to extend the maturity date of the short-term loan
arrangement or refinance this debt with secured financing during 2008. If unable to
extend or refinance, the Fund has the ability to call equity to pay off the debt.On September 28, 2006, the Fund entered into a short-term loan arrangement with ProLogis
for an amount not to exceed $6,000,000. The loan matures on September 28, 2008. Proceeds
of $6,000,000 were used during the year ended December 31, 2007 to construct a 79,984
square foot expansion of the Brookridge Distribution Center #1 that was completed in
April of 2007. The Fund repaid $4,000,000 of the proceeds during the year ended December
31, 2007. Interest payments are based on the 90-day LIBOR rate; the effective interest
rate as of December 31, 2007 was 6.44%.On December 20, 2006, the Fund entered into a short-term loan arrangement in the amount
of $17,400,000. Proceeds from the loans were used to acquire real estate. Interest
payments are based on the 30-day LIBOR rate; the effective interest rate as of
December 31, 2006 was 5.9%. On September 27, 2007, the Fund repaid the loan with net
proceeds from permanent financing placed with Allstate Life Insurance Company and
Reliastar Life Insurance Company.In October of 2006, the Fund entered into short-term loan arrangements for $177,291,000.
Proceeds from the loans were used to acquire real estate. In November of 2006, the Fund
repaid approximately $84,015,000 of the October borrowings with net proceeds from
permanent financing placed with Harford Life Insurance Company and funds released from
escrow. Interest payments were based on the 30-day LIBOR rate; the effective interest
rate as of December 31, 2006 was 5.9%. On March 12, 2007,
the Fund repaid the remaining
portion of the loan with net proceeds from permanent financing placed with Massachusetts
Mutual Life Insurance Company.(c)
    
    Interest ExpenseFor the periods ended December 31, 2007 and 2006, the Fund recorded interest expense of
approximately $58,402,000 and $26,385,000, respectively, for all debt instruments,
special assessment bonds, and the amortization of deferred loan fees and derivatives (see
note 8). For the periods ended December 31, 2007 and 2006, the Fund recorded capitalized
interest of approximately $126,000 and $31,000, respectively.
 (5)
    
    Partners CapitalAt December 31, 2007, the Fund had outstanding 912,639 limited partner units and 12 general
partner units. All limited partner units are issued at $1,000 per unit until the earlier of
the date upon which all equity commitments are received by the Fund, or February 28, 2009
(the Initial Subscription Period). After the Initial Subscription Period, units shall be
issued at the Funds net asset value per unit, as defined.The Fund will pay distributions to its partners in accordance with the provisions of the
Amended and Restated Limited Partnership Agreements of ProLogis North American Industrial
Fund, LP and its
  90




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##### 



PROLOGIS NORTH AMERICAN INDUSTRIAL FUND, LP
   subsidiaries (the Agreements). The Agreements provide for distributions to
partners of Net Cash Flow, as defined, based on their weighted average ownership interest
during the applicable quarter. Profits and losses are allocated to the partners in accordance
with their respective percentage ownership interest, and upon ProLogis earning its incentive
performance participation. Profits and losses are allocated based upon an as-liquidated basis
calculated from current net asset values. Distributions of approximately $39,386,000 and
$16,147,000 were paid during the periods ended December 31, 2007 and 2006, respectively. On
December 31, 2007 and 2006, the Fund declared and accrued a distribution of approximately
$20,043,000 and $7,265,000, respectively.On March 1, 2006, the Fund issued 11,676 Bridge Units (the Bridge Units) to ProLogis at $1,000
per unit containing an early redemption feature. On March 31, 2006, the Fund called
additional equity from the Investors and redeemed the Bridge Units at the same price.Investors have the ability to redeem the units at net asset value after February 28, 2008.
Except in the case of an early redemption feature as authorized by
the general partner, no
Investor will be allowed to redeem its units until it has funded its full capital commitment.
The Fund has certain restrictions regarding the sale
of real estate in order to redeem units, including a limitation on sales over 10% of
the gross asset value of its real estate assets in any given year.(6)
    
    Related Party TransactionsPursuant to the Agreements, ProLogis and certain affiliates of
ProLogis are required to manage the Funds financial and operating activities. In exchange for providing
research, strategic planning, investment analysis, asset management, leasing, legal and
accounting services and day-to-day management of the operations, ProLogis can earn various
fees, receive reimbursement for certain expenditures and earn interest on a short-term loan
arrangement. For the periods ended December 31, 2007 and 2006, ProLogis earned approximately
$11,344,000 and $4,440,000, respectively, related to services provided. The Investors pay an
asset management fee directly to ProLogis; therefore, these costs are
not reflected in the consolidated financial statements.(7)
    
    Fair Value of Financial InstrumentsEstimates of the fair value of financial instruments have been determined by management using
available market information and valuation methodologies believed to be appropriate for these
purposes. Considerable judgment and a high degree of subjectivity are involved in developing
these estimates and are not necessarily indicative of amounts the Fund would realize upon
disposition.As of December 31, 2007 and 2006, the carrying amounts of certain financial instruments,
including cash and cash equivalents, restricted cash, accounts receivable, accounts payable,
accrued expenses, unsecured debt, and other liabilities, were representative of their fair
values because of the short-term maturity of these instruments. As of December 31, 2007 and
2006, the fair value of the Funds secured debt is approximately $1,173,704,000 and
$624,413,000, based on discounted future cash flows using rates currently available for debt
with similar terms and maturities. The decrease in the fair value of the secured debt below
the carrying value of approximately $1,207,000,000 and $634,000,000 is a result of a net
increase in the interest rates available to the Fund as of December 31, 2007 and 2006,
respectively, from the interest rates in effect at the dates of issuance of the secured debt.
  91




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##### 



PROLOGIS NORTH AMERICAN INDUSTRIAL FUND, LP
   (8)
    
    Derivative Financial InstrumentsOn July 7, 2006, the Fund entered into a forward-starting interest rate swap contract with a
notional amount of $77,250,000 in anticipation of a future secured debt transaction. This
contract qualified for hedge accounting treatment. The swap was terminated on August 9, 2006
when an interest rate was locked for 5.857% on $81,500,000 of 10-year secured debt. The Fund
recognized a $1,568,000 unrealized loss in comprehensive loss in partners capital at the
termination of the contract. Amortization of this amount will be recorded in interest expense
in the consolidated statement of earnings over the term of the debt. For the periods ended
December 31, 2007 and 2006, the Fund recorded amortization expense of $157,000 and $26,000,
respectively.On June 13, 2007, the Fund entered into forward-starting interest rate swap contracts with a
combined notional amount of $275,000,000 in anticipation of a future secured debt transaction.
The contracts qualify for hedge accounting treatment. The swaps were terminated in August
2007, when an average interest rate was locked for 6.648%. The Fund recognized a realized loss
of approximately $11,948,000 in comprehensive loss in partners capital related to the swap
contract. Amortization of this amount will be recorded in interest expense in the consolidated
statement of earnings over the term of the debt. For the year ended December 31, 2007, the
Fund recorded amortization expense of $118,000.Included in partners capital at December 31, 2007 and 2006, is approximately $13,215,000 and
$1,542,000, respectively, of accumulated other comprehensive income related to these
derivative contracts.(9)
    
    ContingenciesEnvironmental MattersAll of the properties owned by the Fund have been subjected to environmental reviews. While
some of these assessments have led to further investigation and sampling, none of the
environmental assessments has revealed, nor is management aware of, any environmental
liability that management believes would have a material adverse effect on the Funds
business, financial condition or results of operations.
 92




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##### 



SIGNATURES
      By:
    /s/  JEFFREY
    H. SCHWARTZ   Chairman, Chief Executive Officer and Trustee
    93




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##### 



Exhibit Index
 Exhibit 23.1
    
    Consent of KPMG LLPExhibit 31.1
    
    Certification of Chief Executive Officer, dated March 17, 2008Exhibit 31.2
    
    Certification of Chief Financial Officer, dated March 17, 2008
 94