##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      FORM 10-K
  (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, 2008ORo

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
      
 (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. o
  12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller reporting
    company o (Do not check if a smaller
    reporting company)
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





TABLE OF
    CONTENTS
   
 Item

Description

PagePART I1.


Business


3Business Strategy


4Our Operating Segments


5Our Management


10Environmental Matters


12Insurance Coverage


121A.


Risk Factors


131B.


Unresolved Staff Comments


212.


Properties


21Geographic Distribution


22Properties


22Unconsolidated Investees


253.


Legal Proceedings


274.


Submission of Matters to a Vote of Security
    Holders


27PART II5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


27Market Information and Holders


27Distributions and Dividends


27Securities Authorized for Issuance
    Under Equity Compensation Plans


28Other Shareholder Matters


286.


Selected Financial Data


297.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


30Managements Overview


31Results of Operations


34Portfolio Information


43Environmental Matters


46Liquidity and Capital Resources


46Off-Balance Sheet Arrangements


52Contractual Obligations


53Critical Accounting Policies


54New Accounting Pronouncements


56Funds from Operations


567A.


Quantitative and Qualitative Disclosure About
    Market Risk


608.


Financial Statements and Supplementary Data


619.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


629A.


Controls and Procedures


629B.


Other Information


62PART III10.


Directors, Executive Officers and Corporate
    Governance


6311.


Executive Compensation


6312.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


6313.


Certain Relationships and Related Transactions,
    and Director Independence


6314.


Principal Accounting Fees and Services


63PART IV15.


Exhibits, Financial Statement Schedules


63EX-3.5EX-10.13EX-10.16EX-10.17EX-10.18EX-10.19EX-10.20EX-10.22EX-10.23EX-10.24EX-10.25EX-10.29EX-10.30EX-12.1EX-12.2EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1   2




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Form 10-K.
 PART I ITEM 1.
    Business    Form 10-K.
       3




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Number ofProperties


Square Feet(in thousands)Square feet owned, managed and under development:Direct owned:Industrial properties:Operating properties


1,297



195,710Properties under development


65



19,837Retail and mixed use properties


34



1,404Total direct owned


1,396



216,951Investment management-industrial properties


1,339



297,665Total properties owned and under management


2,735



514,616  Business
    Strategy      
    Simplify our business model and focus on our core business;
    Complete the development and leasing of properties currently in
    our development portfolio;
    Manage our core portfolio of industrial distribution properties
    to maintain and improve our net operating income stream from
    these assets;
    Provide exceptional customer service to our current and future
    customers;
    Generate liquidity through contributions of properties to our
    property funds and through sales to third parties;
    Reduce our debt at December 31, 2009 by $2 billion
    from our debt levels at September 30, 2008, through debt
    retirements; utilizing proceeds from property contributions and
    dispositions and other possible means, such as buying back
    outstanding debt and issuing additional equity;
    Recast our global line of credit; and
    Reduce our general and administrative expenses through various
    cost savings initiatives, including reductions in workforce.    
    Employ a conservative growth expansion model;
    Develop industrial properties utilizing a portion of our
    existing land parcels, which we will hold for long-term direct
    investment, or otherwise monetize our land holdings through
    dispositions; and
    Grow the property funds by utilizing the property fund structure
    for the development of properties and the opportunistic
    acquisition of properties from third parties. 4




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
    Appointed a new Chief Executive Officer;
    Reduced our expected annual distribution rate from $2.07 to
    $1.00 per common share;
    Halted the start of substantially all new development activity,
    other than those we were contractually committed to complete;
    Entered into a binding contract to sell our China operations and
    our 20% equity interest in the Japan property funds for
    $1.3 billion of cash. This transaction closed in February
    2009 with the receipt of $500 million that was used to pay
    down debt. The remaining proceeds will be funded upon
    satisfactory completion of year-end financial statement audits
    of certain entities. In the event that the audits reflect a
    material disparity from the unaudited information previously
    furnished, the buyer will have the option to unwind the
    transaction. (See Note 21 to our Consolidated Financial
    Statements in Item 8);
    Purchased $310 million aggregate principal of our senior
    notes for $217 million in cash;
    Received proceeds of $1.3 billion from the contribution or
    sale of properties to unconsolidated property funds or third
    parties; and
    Implemented a reduction in workforce (RIF) plan
    that, along with other initiatives, will reduce our gross
    general and administrative expenses on a prospective basis by
    approximately $100 million in 2009. Our
    Operating Segments      Operating
    Segments  Direct Owned
   5




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Investments
    Investment(before depreciation)Number of


Square


at December 31,


LeasedProperties


Feet/Acres


2008


PercentageCore Properties


1,191



156,351 square feet


$
8,284,011



92.2
%Completed Development Properties


140



40,763 square feet


$
3,031,449



43.5
%Properties under development


65



19,837 square feet


$
1,163,610



37.2
%Land held for development






10,134 acres


$
2,481,216



n/a       Results
    of Operations
  lease-up
  Market
    Presence
    Competition
   6




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Property
    Management
    Customers
    Employees
    Future
    Plans
    and/or
 7




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Operating
    Segments  Investment Management
      
    allows us, as the manager of the property funds, to maintain and
    expand our market presence and customer relationships;
    allows us to maintain a long-term ownership position in the
    properties;
    allows us to earn fees for providing services to the property
    funds; and
    provides us an opportunity to earn incentive performance
    participation income based on the investors returns over a
    specified period.    
    allowed us to realize a portion of the profits from our
    development activities by contributing our stabilized
    development properties to property funds (profits are recognized
    to the extent of third party ownership in the property
    fund); and
    provided diversified sources of capital.    Investments
      Results
    of Operations
   8




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Market
    Presence
    Competition
    Property
    Management
    Customers
    Employees
    Future
    Plans
   9




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Operating
    Segments  CDFS Business
  and/or
  Other
   Our
    Management    
    Walter C. Rakowich, Chief Executive Officer
    Ted R. Antenucci, Chief Investment Officer
    Edward S. Nekritz, General Counsel and Secretary
    William E. Sullivan, Chief Financial Officer         10




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##### Table of Contents



Regulation S-K,
  Capital
    Management and Capital Deployment
      ®
  Customer
    Service
    Executive
    and Senior Management
  Walter C. Rakowich*
 11




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Ted R. Antenucci*
  Edward S. Nekritz*
  William E. Sullivan*
  Gary E. Anderson
  John P. Morland  ,
  Charles E. Sullivan *
  Mike Yamada
  Regulation S-K.
 Environmental
    Matters   Insurance
    Coverage   12




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##### Table of Contents



ITEM 1A. Risk
    Factors    Current
    Events
  The
    recent market disruptions may adversely affect our operating
    results and financial condition.
  and/or and/or
  
    Debt and Equity Markets  Our results of
    operations and share price are sensitive to the volatility of
    the credit markets. The commercial real estate debt markets are
    currently experiencing volatility as a result of certain
    factors, including the tightening of underwriting standards by
    lenders and credit rating agencies and the significant inventory
    of unsold collateralized mortgage backed securities in the
    market. Credit spreads for major sources of capital have widened
    significantly as investors have demanded a higher risk premium,
    resulting in lenders increasing the cost for debt financing.
    Should the overall cost of borrowings increase, either by
    increases in the index rates or by increases in lender spreads,
    we will need to factor such increases into the economics of our
    acquisitions, developments and property contributions and
    dispositions. This may result in lower overall economic returns
    and a reduced level of cash flow, which could potentially impact
    our ability to make distributions to our shareholders and to
    comply with certain debt covenants. In addition, the recent
    dislocations in the debt markets have reduced the amount of
    capital that is available to finance real estate, which, in
    turn: (i) limits the ability of real estate investors to
    benefit from lower real estate values; (ii) has slowed real
    estate transaction activity; and (iii) may result in an
    inability to refinance debt as it becomes due, all of which may
    reasonably be expected to have a material adverse impact on
    revenues, income
    and/or cash
    flow from the acquisition and operations of real properties and
    mortgage loans. In addition, the state of the debt markets could
    have an impact on the overall amount of capital being invested
    in real estate, which may result in price or value decreases of
    real estate assets and impact the ability to raise equity
    capital for us and within our unconsolidated investees.
    Valuations  The recent market volatility will
    likely make the valuation of our properties and those of our
    unconsolidated investees more difficult. There may be
    significant uncertainty in the valuation, or in the stability of
    the value, of our properties and those of our unconsolidated
    investees, that could result in a substantial decrease in the
    value of our properties and those of our unconsolidated
    investees. As a result, we may not be able to recover the
    current carrying amount of our properties, our investments in
    our unconsolidated investees
    and/or
    goodwill, which may require us to recognize an impairment charge
    in earnings in addition to the charges we recognized in the
    fourth quarter of 2008. Additionally, certain of the fees we
    generate from our unconsolidated investees are dependent upon
    the value of the properties held by the investees or the level
    of contributions we make to the investees. Therefore, if
    property values decrease or our level of contributions decrease,
    certain fees paid to us by our unconsolidated investees may also
    decrease. 13




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
    Government Intervention  The pervasive and
    fundamental disruptions that the global financial markets are
    currently undergoing have led to extensive and unprecedented
    governmental intervention. Such intervention has in certain
    cases been implemented on an emergency basis,
    suddenly and substantially eliminating market participants
    ability to continue to implement certain strategies or manage
    the risk of their outstanding positions. It is impossible to
    predict what, if any, additional interim or permanent
    governmental restrictions may be imposed on the markets
    and/or the
    effect of such restrictions on us and our results of operations.
    There is a high likelihood of significantly increased regulation
    of the financial markets that could have a material impact on
    our operating results and financial condition.  General
    Real Estate Risks
  General
    economic conditions and other events or occurrences that affect
    areas in which our properties are geographically concentrated,
    may impact financial results.
    Real
    property investments are subject to risks that could adversely
    affect our business.
    
    local conditions, such as an oversupply of distribution space or
    a reduction in demand for distribution space in an area;
    the attractiveness of our properties to potential customers;
    competition from other available properties;
    our ability to provide adequate maintenance of, and insurance
    on, our properties;
    our ability to control rents and variable operating costs;
    governmental regulations, including zoning, usage and tax laws
    and changes in these laws; and
    potential liability under, and changes in, environmental, zoning
    and other laws. 14




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Our
    investments are concentrated in the industrial distribution
    sector and our business would be adversely affected by an
    economic downturn in that sector or an unanticipated change in
    the supply chain dynamics.
    Our real
    estate development strategies may not be successful.
        
    the risk that we may not be able to lease the available space in
    our properties under development or recently completed
    developments at rents that are sufficient to be profitable;
    the risk that we will decide to sell certain land parcels and we
    will not be able to find a third party to acquire such land or
    that the sales price will not allow us to recover our
    investment, resulting in additional impairment charges;
    the risk that development opportunities explored by us may be
    abandoned and the related investment will be impaired;
    the risk that we may not be able to obtain, or may experience
    delays in obtaining, all necessary zoning, building, occupancy
    and other governmental permits and authorizations;
    the risk that due to the increased cost of land our activities
    may not be as profitable, especially in certain land constrained
    areas;
    the risk that construction costs of a property may exceed the
    original estimates, or that construction may not be concluded on
    schedule, making the project less profitable than originally
    estimated or not profitable at all; including the possibility of
    contract default, the effects of local weather conditions, the
    possibility of local or national strikes and the possibility of
    shortages in materials, building supplies or energy and fuel for
    equipment; and
    the risk that occupancy levels and the rents that can be earned
    for a completed project will not be sufficient to recover our
    investment. 15




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Our
    business strategy to provide liquidity to reduce debt by
    contributing properties to property funds or disposing of
    properties to third parties may not be successful.
    We may
    acquire properties, which involves risks that could adversely
    affect our operating results and the value of our
    securities.
    Our
    operating results and distributable cash flow will depend on the
    continued generation of lease revenues from customers.
    Our
    ability to renew leases or re-lease space on favorable terms as
    leases expire significantly affects our business.
   16




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Real
    estate investments are not as liquid as other types of assets,
    which may reduce economic returns to investors.
    Our
    insurance coverage does not include all potential
    losses.
    We are
    exposed to various environmental risks that may result in
    unanticipated losses that could affect our operating results and
    financial condition.
       17




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Risks
    Related to Financing and Capital
  Our
    operating results and financial condition could be adversely
    affected if we are unable to make required payments on our debt
    or are unable to refinance our debt.
    Covenants
    in our credit agreements could limit our flexibility and
    breaches of these covenants could adversely affect our financial
    condition.
    Federal
    Income Tax Risks
  Failure
    to qualify as a REIT could adversely affect our cash
    flows.
     18




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REIT
    distribution requirements could adversely affect our financial
    condition.
    Prohibited
    transaction income could result from certain property
    transfers.
    Liabilities
    recorded for pre-existing tax audits may not be
    sufficient.
  1999-2002
  Uncertainties
    relating to Catellus estimate of its earnings and
    profits attributable to C-corporation taxable years may
    have an adverse effect on our distributable cash flow.
   19




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There are
    potential deferred and contingent tax liabilities that could
    affect our operating results or financial condition.
  built-in-gain built-in-gains.
  Other
    Risks
  We are
    dependent on key personnel.
    Share
    prices may be affected by market interest rates.
    As a
    global company, we are subject to social, political and economic
    risks of doing business in foreign countries.
    
    difficulties and costs of staffing and managing international
    operations in certain regions;
    currency restrictions, which may prevent the transfer of capital
    and profits to the United States;
    unexpected changes in regulatory requirements;
    potentially adverse tax consequences; 20




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
    the responsibility of complying with multiple and potentially
    conflicting laws, e.g., with respect to corrupt practices,
    employment and licensing;
    the impact of regional or country-specific business cycles and
    economic instability;
    political instability, civil unrest, drug trafficking, political
    activism or the continuation or escalation of terrorist or gang
    activities (particularly with respect to our operations in
    Mexico); and
    foreign ownership restrictions with respect to operations in
    certain foreign countries.    non-U.S. subsidiaries
  The
    depreciation in the value of the foreign currency in countries
    where we have a significant investment may adversely affect our
    results of operations and financial position.
    We are
    subject to governmental regulations and actions that affect
    operating results and financial condition.
   ITEM 1B. Unresolved
    Staff Comments   ITEM 2. Properties     21




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Geographic
    Distribution   Properties   22




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##### Table of Contents



Rentable


InvestmentNo. of


Percentage


Square


BeforeBldgs.


Leased (1)


Footage


Depreciation


Encumbrances (2)Operating properties owned in the direct owned segment at
    December 31, 2008 (dollars and rentable square footage in
    thousands):Industrial properties:North America  by Country (40
    markets) (3):United States:Atlanta, Georgia


81



91.80
%


12,630


$
447,178


$
30,260Austin, Texas


16



89.95
%


1,095



44,596



Central Valley, California


13



84.54
%


3,486



172,142



24,611Charlotte, North Carolina


31



96.79
%


3,623



117,300



35,673Chicago, Illinois


86



89.62
%


18,660



985,289



158,299Cincinnati, Ohio


21



87.41
%


3,603



106,996



22,504Columbus, Ohio


30



87.02
%


5,873



221,767



27,353Dallas/Fort Worth, Texas


106



86.10
%


16,128



644,492



42,919Denver, Colorado


30



93.56
%


4,700



234,834



49,717El Paso, Texas


16



94.87
%


2,051



63,578



Houston, Texas


77



98.12
%


7,227



251,459



I-81 Corridor, Pennsylvania


10



71.69
%


3,736



192,452



Indianapolis, Indiana


30



95.37
%


3,155



113,481



Inland Empire, California


38



83.79
%


15,775



1,204,255



173,979Las Vegas, Nevada


17



92.12
%


2,061



96,622



10,173Los Angeles, California


65



98.30
%


5,465



596,057



87,870Louisville, Kentucky


12



81.80
%


3,259



109,773



11,530Memphis, Tennessee


22



88.49
%


4,905



137,976



Nashville, Tennessee


29



97.19
%


2,983



84,678



New Jersey


36



88.51
%


6,890



424,645



33,437Orlando, Florida


21



67.97
%


2,365



114,616



Phoenix, Arizona


33



94.40
%


2,700



127,811



Portland, Oregon


26



86.75
%


2,371



133,305



29,306Reno, Nevada


18



87.06
%


3,211



133,881



5,200Salt Lake City, Utah


4



100.00
%


661



24,389



San Antonio, Texas


42



87.49
%


3,826



136,886



3,437San Francisco (East Bay), California


57



98.12
%


4,901



312,710



58,011San Francisco (South Bay), California


84



94.09
%


5,516



465,083



36,591Seattle, Washington


11



83.65
%


1,281



72,663



264South Florida


17



59.04
%


1,533



106,048



6,215St. Louis, Missouri


6



77.87
%


685



23,026



Tampa, Florida


52



90.50
%


3,562



146,773



8,931Washington D.C./Baltimore, Maryland


39



96.72
%


5,232



266,231



36,305Other


2



100.00
%


367



19,263



Subtotal United States


1,178



89.23
%


165,516



8,332,255



892,585Mexico:Guadalajara


2



14.32
%


269



10,632



Juarez


5



0.00
%


489



19,146



Mexico City


7



59.70
%


1,507



83,962



Monterrey


6



20.35
%


909



34,990



Reynosa


3



58.35
%


305



12,498



Tijuana


3



46.12
%


691



37,622



Subtotal Mexico


26



35.10
%


4,170



198,850



Canada  Toronto


1



100.00
%


110



7,832



Subtotal North America


1,205



88.00
%


169,796



8,538,937



892,585Europe  by Country (29 markets) (4):Belgium


1



0.00
%


187



14,136



Czech Republic


6



27.38
%


1,702



142,903



France


6



74.14
%


2,024



136,812



2,900Germany


10



44.70
%


1,569



122,536



Hungary


5



34.69
%


1,279



75,007



Italy


5



28.62
%


1,562



103,730



Netherlands


1



0.00
%


280



14,879



Poland


17



58.58
%


3,700



208,471



Romania


4



89.63
%


1,170



72,085



Slovakia


7



83.65
%


1,895



129,931



Spain


1



0.00
%


470



22,465



Sweden


1



78.68
%


84



6,051



United Kingdom


18



4.68
%


4,010



390,982



Subtotal Europe


82



43.21
%


19,932



1,439,988



2,900Asia  by Country (6 markets) (5):Japan


7



39.17
%


5,725



951,857



Korea


3



100.00
%


257



25,686



4,540Subtotal Asia


10



41.79
%


5,982



977,543



4,540Total industrial properties


1,297



82.02
%


195,710



10,956,468



900,025Retail properties:North America  by Country (5 markets):United States


34



94.48
%


1,404



358,992



4,447Total retail properties


34



94.48
%


1,404



358,992



4,447Total operating properties owned in the direct owned segment
    at December 31, 2008


1,331



82.11
%


197,114


$
11,315,460


$
904,472   23




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Land Held for Development


Properties Under DevelopmentRentableNo. of


Percentage


Square


Current


Total ExpectedAcreage


Investment


Bldgs.


Leased (1)


Footage


Investment


Cost (6)Land held for development and properties under development at
    December 31, 2008 (dollars and rentable square footage in
    thousands):North America  by Market (37 total markets):United States:Atlanta, Georgia


467


$
37,460














$



$
Austin, Texas


6



2,869



















Central Valley, California


845



27,505



2



100.00
%


1,226



68,979



80,286Charlotte, North Carolina


29



4,929



















Chicago, Illinois


753



93,295



1



0.00
%


257



22,559



30,345Cincinnati, Ohio


85



8,594



















Columbus, Ohio


233



13,775



















Dallas, Texas


501



42,657



















Denver, Colorado


94



10,664



















East Bay, California


2



7,849



















El Paso, Texas


70



4,048



















Houston, Texas


120



9,774



















Indianapolis, Indiana


93



5,235



















Inland Empire, California


463



137,411



1



100.00
%


658



69,572



78,460Jacksonville, Florida


103



16,806



















Las Vegas, Nevada


68



34,634



















Los Angeles, California


30



46,373



















Louisville, Kentucky


13



995



















Memphis, Tennessee


159



11,643



















Nashville, Tennessee


24



3,002



















New Jersey


301



177,339



















Norfolk, Virginia


83



9,165



















Pennsylvania


307



43,756



















Phoenix, Arizona


148



23,102



















Portland, Oregon


23



5,204



















Reno, Nevada


178



22,828



















San Antonio, Texas


55



5,958



















South Florida


81



53,562



2



0.00
%


200



20,558



23,366Tampa, Florida


45



6,319



















Washington D.C./Baltimore, Maryland


138



23,973



















Mexico:Guadalajara


48



17,296



















Juarez


146



17,181



3



0.00
%


458



21,123



27,296Matamoros


122



15,956



















Mexico City


121



41,838



2



0.00
%


793



33,454



40,874Monterrey


159



30,163



















Reynosa


108



11,689



1



0.00
%


302



10,754



15,290Canada  Toronto


179



84,796



1



0.00
%


416



19,905



28,931Subtotal North America


6,400



1,109,643



13



43.69
%


4,310



266,904



324,848Europe  by Country (35 total markets):Austria


33



29,518



















Belgium


30



13,622



1



100.00
%


247



9,228



17,686Czech Republic


307



85,953



3



24.02
%


694



64,168



65,954France


316



74,462



9



10.92
%


2,241



68,156



175,886Germany


251



96,231



14



56.64
%


3,020



164,365



257,326Hungary


162



34,700



















Italy


74



28,623



1



0.00
%


130



107



10,560Netherlands


58



41,910



1



100.00
%


306



7,065



26,314Poland


839



154,697



13



27.89
%


3,695



180,539



288,912Romania


90



21,136



















Slovakia


86



27,568



1



50.12
%


285



17,182



19,825Spain


98



67,752



3



76.26
%


1,301



30,041



99,273Sweden


6



1,881



1



27.35
%


921



55,238



70,124United Kingdom


1,264



416,771



1



100.00
%


47



2,719



5,744Subtotal Europe


3,614



1,094,824



48



39.88
%


12,887



598,808



1,037,604Asia  by Country (6 total markets):Japan


100



267,691



3



7.68
%


2,470



288,784



489,335Korea


20



9,058



1



100.00
%


170



9,114



13,258Subtotal Asia


120



276,749



4



13.59
%


2,640



297,898



502,593Total land held for development and properties under
    development in the direct owned segment at December 31,
    2008


10,134


$
2,481,216



65



37.21
%


19,837


$
1,163,610


$
1,865,045  24




---



##### Table of Contents



InvestmentBefore Depreciation(in thousands)Operating properties

$
11,315,460Land subject to ground leases and other (7)


424,489Properties under development


1,163,610Land held for development


2,481,216Other investments (8)


321,397Total

$
15,706,172     (1)
    
    Represents the percentage leased at December 31, 2008.
    Operating properties at December 31, 2008 include recently
    completed development properties and recently acquired
    properties that may be in the initial
    lease-up
    phase, which reduces the overall leased percentage (see
    notes 3, 4 and 5 below for information regarding developed
    properties).(2)
    
    Certain properties are pledged as security under our secured
    debt and assessment bonds at December 31, 2008. For
    purposes of this table, the total principal balance of a debt
    issuance that is secured by a pool of properties is allocated
    among the properties in the pool based on each propertys
    investment balance. In addition to the amounts reflected here,
    we also have $3.1 million of encumbrances related to other
    real estate assets not included in the direct owned segment. See
    Schedule III  Real Estate and Accumulated
    Depreciation to our Consolidated Financial Statements in
    Item 8 for additional identification of the properties
    pledged.(3)
    
    In North America, includes 55 recently Completed Development
    Properties aggregating 16.8 million square feet at a total
    investment of $772.2 million that are 47.5% leased and in
    our development portfolio.(4)
    
    In Europe, includes 77 recently Completed Development Properties
    aggregating 18.1 million square feet at a total investment
    of $1.3 billion that are 41.0% leased and in our
    development portfolio.(5)
    
    In Asia, includes 8 recently Completed Development Properties
    aggregating 5.8 million square feet at a total investment
    of $955.0 million that are 39.7% leased and in our
    development portfolio.(6)
    
    Represents the total expected cost to complete a property under
    development and may include the cost of land, fees, permits,
    payments to contractors, architectural and engineering fees,
    interest, project management costs and other appropriate costs
    to be capitalized during construction and also leasing costs,
    rather than the total actual costs incurred to date.(7)
    
    Amounts represent investments of $389.2 million in land
    subject to ground leases and an investment of $35.3 million
    in railway depots.(8)
    
    Other investments include: (i) restricted funds that are
    held in escrow pending the completion of tax-deferred exchange
    transactions involving operating properties; (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; and (v) costs related to our corporate office
    buildings. Unconsolidated
    Investees   25




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##### Table of Contents



Property
    Funds
      RentableNo. of


No. of


Square


Percentage


EntitysBldgs.


Markets


Footage


Leased


Investment (1)North America:Property funds:ProLogis California


80



1



14,178



98.67
%

$
697,590ProLogis North American Properties Fund I


36



16



9,406



95.57
%


386,572ProLogis North American Properties Fund VI


22



7



8,648



93.01
%


516,675ProLogis North American Properties Fund VII


29



8



6,205



90.13
%


397,327ProLogis North American Properties Fund VIII


24



9



3,064



97.31
%


193,380ProLogis North American Properties Fund IX


20



7



3,439



71.83
%


197,066ProLogis North American Properties Fund X


29



9



4,191



92.28
%


223,441ProLogis North American Properties Fund XI


13



2



4,112



95.21
%


219,487ProLogis North American Industrial Fund


258



31



49,656



96.31
%


2,916,806ProLogis North American Industrial Fund II


150



30



35,752



94.54
%


2,161,805ProLogis North American Industrial Fund III


120



7



24,709



94.39
%


1,746,538ProLogis Mexico Industrial Fund


73



11



9,494



94.23
%


588,382Property funds


854



44
(2)


172,854



94.73
%


10,245,069Other unconsolidated investees


3



2



736



47.74
%


31,762Total North America


857



44
(2)


173,590



94.53
%


10,276,831Europe  property funds:ProLogis European Properties


246



28



56,273



97.42
%


4,819,603ProLogis European Properties Fund II


153



26



38,853



97.89
%


3,918,541Total Europe


399



35
(2)


95,126



97.62
%


8,738,144Asia  property funds:ProLogis Japan property funds (3)


70



8



27,034



99.56
%


5,595,985ProLogis Korea Fund


13



2



1,915



100.00
%


142,896Total Asia


83



10
(2)


28,949



99.59
%


5,738,881Total unconsolidated investees


1,339



89



297,665



96.01
%

$
24,753,856     (1)
    
    Investment represents 100% of the carrying value of the
    properties, before depreciation, of each entity at
    December 31, 2008.(2)
    
    Represents the total number of markets in each continent on a
    combined basis. 26




---



##### Table of Contents



(3)
    
    We entered into a binding agreement in December 2008 to sell
    these investments, along with the ProLogis China Acquisition
    fund, which was formed in 2008 and is classified as held for
    sale. See Note 21 to our Consolidated Financial Statements
    in Item 8 for more information. ITEM 3. Legal
    Proceedings   ITEM 4. Submission
    of Matters to a Vote of Security Holders   PART II  ITEM 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities Market
    Information and Holders    Per CommonHigh Sale


Low Sale


Share CashPrice


Price


Distribution2007:First Quarter

$
72.08


$
58.00


$
0.46Second Quarter


67.99



55.76



0.46Third Quarter


66.86



51.65



0.46Fourth Quarter


73.34



59.37



0.462008:First Quarter

$
64.00


$
51.04


$
0.5175Second Quarter


66.51



53.42



0.5175Third Quarter


54.89



34.61



0.5175Fourth Quarter


39.85



2.20



0.51752009:First Quarter (through February 20)

$
16.68


$
5.90


$
0.25
(1)     (1)
    
    Declared on February 9, 2009 and payable on
    February 27, 2009 to holders of record on February 19,
    2009.   Distributions
    and Dividends   27




---



##### Table of Contents



Years Ended December 31,2008


2007Series C Preferred Shares

$
4.27


$
4.27Series F Preferred Shares

$
1.69


$
1.69Series G Preferred Shares

$
1.69


$
1.69      Securities
    Authorized for Issuance Under Equity Compensation
    Plans   Other
    Shareholder Matters  Other
    Issuances of Common Shares
    Common
    Share Plans
     28




---



##### Table of Contents



ITEM 6. Selected
    Financial Data    Years Ended December 31,2008


2007


2006


2005


2004Operating Data:Total revenues

$
5,655


$
6,189


$
2,438


$
1,815


$
1,837Total expenses

$
5,031


$
5,047


$
1,673


$
1,388


$
1,492Operating income

$
624


$
1,142


$
765


$
427


$
345Interest expense

$
341


$
369


$
296


$
177


$
153Earnings (loss) from continuing operations (1)

$
(195
)

$
988


$
714


$
301


$
216Discontinued operations (2)

$
(212
)

$
86


$
160


$
95


$
17Net earnings (loss)

$
(407
)

$
1,074


$
874


$
396


$
233Net earnings (loss) attributable to common shares

$
(432
)

$
1,049


$
849


$
371


$
203Net earnings (loss) per share attributable to common
    shares  Basic:Continuing operations

$
(0.85
)

$
3.74


$
2.79


$
1.35


$
1.02Discontinued operations


(0.80
)


0.34



0.66



0.47



0.09Net earnings (loss) per share attributable to common
    shares  Basic

$
(1.65
)

$
4.08


$
3.45


$
1.82


$
1.11Net earnings (loss) per share attributable to common
    shares  Diluted:Continuing operations

$
(0.85
)

$
3.62


$
2.69


$
1.31


$
0.99Discontinued operations


(0.80
)


0.32



0.63



0.45



0.09Net earnings (loss) per share attributable to common
    shares  Diluted

$
(1.65
)

$
3.94


$
3.32


$
1.76


$
1.08Weighted average common shares outstanding:Basic


263



257



246



203



182Diluted


263



267



257



214



192Common Share Distributions:Common share cash distributions paid

$
551


$
473


$
393


$
297


$
266Common share distributions paid per share

$
2.07


$
1.84


$
1.60


$
1.48


$
1.46FFO (3):Reconciliation of net earnings to FFO:Net earnings (loss) attributable to common shares

$
(432
)

$
1,049


$
849


$
371


$
203Total NAREIT defined adjustments


449



150



149



161



196Total our defined adjustments


164



28



(53
)


(2
)


1FFO attributable to common shares as defined by ProLogis,
    including significant non-cash items

$
181


$
1,227


$
945


$
530


$
400Add (deduct) significant non-cash items:Impairment of goodwill and other assets


321















Impairment related to assets held for sale  China
    operations


198















Losses related to temperature-controlled distribution assets














25



37Impairment of real estate properties


275















Our share of the loss/impairment recorded by an unconsolidated
    investee


108















Gain on early extinguishment of debt


(91
)














FFO attributable to common shares as defined by ProLogis,
    excluding significant non-cash items

$
992


$
1,227


$
945


$
555


$
437Cash Flow Data:Net cash provided by operating activities

$
844


$
1,206


$
687


$
488


$
484Net cash used in investing activities

$
(1,302
)

$
(4,053
)

$
(2,069
)

$
(2,223
)

$
(620
)Net cash provided by financing activities

$
358


$
2,742


$
1,645


$
1,713


$
37   29




---



##### Table of Contents



As of December 31,2008


2007


2006


2005


2004Financial Position:Real estate owned, excluding land held for development, before
    depreciation

$
13,225


$
14,426


$
12,500


$
10,830


$
5,738Land held for development

$
2,481


$
2,153


$
1,397


$
1,045


$
596Investments in and advances to unconsolidated investees

$
2,270


$
2,345


$
1,300


$
1,050


$
909Total assets

$
19,252


$
19,724


$
15,904


$
13,126


$
7,098Total debt

$
11,008


$
10,506


$
8,387


$
6,678


$
3,414Total liabilities

$
12,808


$
12,209


$
9,453


$
7,580


$
3,929Minority interest

$
19


$
79


$
52


$
58


$
67Total shareholders equity

$
6,425


$
7,436


$
6,399


$
5,488


$
3,102Number of common shares outstanding


267



258



251



244



186     (1)
    
    During 2008, we recognized impairment charges on certain of our
    real estate properties of $274.7 million and on goodwill
    and other assets of $320.6 million and our share of
    impairment charges recorded by an unconsolidated investee of
    $108.2 million. See our Consolidated Financial Statements
    in Item 8 for more information.(2)
    
    Discontinued operations include income (loss) attributable to
    assets held for sale and disposed properties, net gains
    recognized on the disposition of properties to third parties
    and, in 2008, an impairment charge of $198.2 million as a
    result of our sale in February 2009 of our China operations. See
    Note 21 to our Consolidated Financial Statements in
    Item 8 for additional information. Amounts include
    impairment charges related to temperature controlled
    distribution assets of $25.2 million and $36.7 million
    in 2005 and 2004, respectively.(3)
    
    Funds from operations (FFO) is a
    non-U.S.
    generally accepted accounting principle (GAAP)
    measure that is commonly used in the real estate industry. The
    most directly comparable GAAP measure to FFO is net earnings.
    Although the National Association of Real Estate Investment
    Trusts (NAREIT) has published a definition of FFO,
    modifications to the NAREIT calculation of FFO are common among
    REITs, as companies seek to provide financial measures that
    meaningfully reflect their business. FFO, as we define it, is
    presented as a supplemental financial measure. FFO is not used
    by us as, nor should it be considered to be, an alternative to
    net earnings computed under GAAP as an indicator of our
    operating performance or as an alternative to cash from
    operating activities computed under GAAP as an indicator of our
    ability to fund our cash needs.FFO is not meant to represent a comprehensive system of
    financial reporting and does not present, nor do we intend it to
    present, a complete picture of our financial condition and
    operating performance. We believe net earnings computed under
    GAAP remains the primary measure of performance and that FFO is
    only meaningful when it is used in conjunction with net earnings
    computed under GAAP. Further, we believe that our consolidated
    financial statements, prepared in accordance with GAAP, provide
    the most meaningful picture of our financial condition and our
    operating performance.At the same time that NAREIT created and defined its FFO concept
    for the REIT industry, it also recognized that management
    of each of its member companies has the responsibility and
    authority to publish financial information that it regards as
    useful to the financial community. We believe that
    financial analysts, potential investors and shareholders who
    review our operating results are best served by a defined FFO
    measure that includes other adjustments to net earnings computed
    under GAAP in addition to those included in the NAREIT defined
    measure of FFO. Our FFO measure is discussed in Item 7.
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations  Funds From
    Operations. ITEM 7.
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations   30




---



##### Table of Contents



Managements
    Overview        
    Simplify our business model and focus on our core business;
    Complete the development and leasing of properties currently in
    our development portfolio;
    Manage our core portfolio of industrial distribution properties
    to maintain and improve our net operating income stream from
    these assets;
    Provide exceptional customer service to our current and future
    customers;
    Generate liquidity through contributions of properties to our
    property funds and through sales to third parties;
    Reduce our debt at December 31, 2009 by $2.0 billion
    from our debt levels at September 30, 2008, through debt
    retirements; utilizing proceeds from property contributions and
    dispositions and other possible means, such as buying back
    outstanding debt and issuing additional equity;
    Recast our global line of credit; and
    Reduce our general and administrative expenses through various
    cost savings initiatives, including reductions in workforce.    
    Employ a conservative growth expansion model;
    Develop industrial properties utilizing a portion of our
    existing land parcels, which we will hold for long-term direct
    investment, or otherwise monetize our land holdings through
    dispositions; and
    Grow the property funds by utilizing the property fund structure
    for the development of properties and the opportunistic
    acquisition of properties from third parties.   31




---



##### Table of Contents




    Direct Owned Segment  We earn rent from our
    customers, including reimbursements of certain operating costs,
    under long-term operating leases for the industrial and retail
    properties that we own directly. The revenue in this segment
    decreased in 2008 primarily due to the contribution of
    properties to property funds, offset partially with increases in
    occupancy levels within our development portfolio. However, due
    to current market challenges, leasing activity has slowed and
    rental revenues generated by the
    lease-up of
    newly developed properties has not been adequate to completely
    offset the loss of rental revenues from property contributions.
    We expect our total revenues from this segment will decrease in
    2009 due to the contributions and dispositions of properties we
    made in 2008. We intend to grow our revenue in the remaining
    properties primarily through increases in occupied square feet
    in our development portfolio. Our development portfolio,
    including Completed Development Properties and those currently
    under development, was 41.4% leased at December 31, 2008.
    Our current business plan allows for the limited expansion of
    operating properties as necessary to: (i) address the
    specific expansion needs of customers; (ii) initiate or
    enhance our market presence in a specific country, market or
    submarket; (iii) take advantage of opportunities where we
    believe we have the ability to achieve favorable returns; and
    (iv) expand the portfolio of properties we own through
    opportunistic acquisitions.
    Investment Management Segment  We recognize our
    proportionate share of the earnings or losses from our
    investments in unconsolidated property funds and certain joint
    ventures. In addition to the income recognized under the equity
    method, we recognize fees and incentives earned for services
    performed on behalf of these entities and interest earned on
    advances to these entities, if any. We provide services to these
    entities, such as property management, asset management,
    acquisition, financing and development. We may also earn
    incentives from our property funds depending on the return
    provided to the fund partners over a specified period. We expect
    future growth in income recognized to result from growth in
    existing property funds, primarily from properties the funds
    acquired from us in 2008 and may acquire, from us or third
    parties, in the future, as well as the formation of future funds.
    CDFS Business Segment  Through December 31,
    2008, we recognized income primarily from the contributions of
    developed, rehabilitated and repositioned properties and
    acquired portfolios of properties to the property funds as well
    as from dispositions of land and properties to third parties.
    The income was generated due to the increased fair value of the
    properties at the time of contribution, based on third party
    appraisals, and income was recognized only to the extent of the
    third party ownership interest in the property fund acquiring
    the property. Given the challenges that we are facing in this
    current environment and the corresponding changes we have made
    to our business strategy, we do not expect to have a CDFS
    business segment in 2009. All of the assets and liabilities that
    were in this segment have been transferred to our two remaining
    segments. We transferred all of our real estate and other assets
    that were in our development pipeline to our direct owned
    segment. The investments we had in certain joint ventures have
    been transferred to our investment management segment. We may
    contribute Completed Development Properties
    and/or Core
    Properties to the property funds or sell to third parties,
    although these will no longer be reported in our CDFS business
    segment.  Key Items
    in 2008
  
    In December 2008, we entered into a binding agreement to sell
    our China operations and our investments in the Japan property
    funds for $1.3 billion of cash. This resulted in an
    impairment charge of $198.2 million on the sale of our
    China operations, which is included in Discontinued Operations
    in our Consolidated Financial Statements in Item 8. In
    2009, after the sale has closed and we have received all the
    proceeds, we will recognize a gain related to the sale of our
    interests in the Japan property funds. See Note 21 to our
    Consolidated Financial Statements in Item 8. 32




---



##### Table of Contents




    In 2008, we generated aggregate proceeds of $4.7 billion
    and recognized aggregate gains of $690.1 million from
    contributions and dispositions of properties, net of amounts
    deferred, as follows:  ¡
    We generated $4.2 billion of proceeds and
    $658.9 million of gains from the contributions of CDFS
    developed and repositioned properties and sales of land. This is
    net of the deferral of $209.5 million of gains related to
    our ongoing ownership in the property funds or other
    unconsolidated investees that acquired the properties and also
    includes $25.0 million of previously deferred gains. This
    also includes one property sold to a third party that was
    developed under a pre-sale agreement.¡
    We contributed, to certain property funds, acquired CDFS
    property portfolios at cost, generating $372.7 million of
    proceeds. We acquired these portfolios of properties in 2008,
    2007 and 2006 with the intent to contribute them to a new or
    existing property fund at our cost. In addition, we contributed
    two non-CDFS properties to property funds generating
    $35.5 million of proceeds and $11.7 million of gains.¡
    We disposed of 15 properties and land subject to a ground lease
    to third parties, all of which are included in discontinued
    operations, generating proceeds of $127.4 million and
    $19.5 million of gains.  
    We increased our direct investment in PEPF II by 20% by
    acquiring units from PEPR for $61.1 million.
    As a result of significant adverse changes in market conditions,
    we reviewed our assets for potential impairment under the
    appropriate accounting literature, considering current market
    conditions as well as our intent with regard to owning or
    disposing of the asset. In connection with that review, in the
    fourth quarter of 2008, we recorded impairment charges of
    $274.7 million on our real estate properties and
    $320.6 million on goodwill and other assets. See
    Note 13 to our Consolidated Financial Statements in
    Item 8.
    In connection with cost savings initiatives we implemented to
    reduce our general and administrative expenses, we initiated a
    RIF plan with a total cost of $26.4 million, including
    $3.3 million related to our China operations and reflected
    in discontinued operations.
    During the fourth quarter of 2008, we completed a tender offer
    related to our senior notes. We purchased $309.7 million
    aggregate principal amount of 5.25% notes due November 2010
    for $216.8 million, resulting in a gain of
    $90.7 million, after transaction costs and expensing
    previously deferred debt issuance and discount costs of
    $2.2 million.
    We raised $1.1 billion of proceeds through the issuance of
    $600 million of 6.625% senior notes and
    $550 million of 2.625% convertible senior notes.
    We generated $196.4 million from the issuance of
    3.4 million common shares under our Controlled Equity
    Offering Program.  Summary
    of 2008
     33




---



##### Table of Contents



Results
    of Operations    2008


2007


2006Net earnings (loss) attributable to common shares (in millions)

$
(432.2
)

$
1,048.9


$
849.0Net earnings (loss) per share attributable to common
    shares  Basic

$
(1.65
)

$
4.08


$
3.45Net earnings (loss) per share attributable to common
    shares  Diluted

$
(1.65
)

$
3.94


$
3.32     Direct
    Owned Segment
   34




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##### Table of Contents



Years Ended December 31,2008


2007


2006Rental income

$
953,866


$
1,009,173


$
865,145Rental expenses


312,121



269,602



221,780Total net operating income  direct owned segment

$
641,745


$
739,571


$
643,365     December 31, 2008


December 31, 2007Number of








Number ofProperties


Square Feet


Leased%


Properties


Square Feet


Leased %Industrial properties


1,157



154,947



92.2
%


1,187



161,105



93.2
%Retail properties


34



1,404



94.5
%


32



1,282



94.0
%Subtotal non-development properties


1,191



156,351



92.2
%


1,219



162,387



93.2
%Completed development properties (1)


140



40,763



43.5
%


141



38,634



56.4
%Total operating portfolio


1,331



197,114



82.1
%


1,360



201,021



86.1
%Assets held for sale at December 31, 2008














50



7,559



67.0
%Total


1,331



197,114



82.1
%


1,410



208,580



85.5
%     (1)
    
    Included at December 31, 2008, are 93 properties with
    23.7 million square feet on which development was completed
    in 2008. Included as of December 31, 2007, are 94
    properties with 21.5 million square feet that were
    contributed to property funds during 2008 and therefore are no
    longer in our portfolio as of December 31, 2008. The leased
    percentage fluctuates based on the composition of properties.     35




---



##### Table of Contents



Investment
    Management Segment
      Years Ended December 31,2008


2007


2006Unconsolidated property funds:North America (1)

$
65,024


$
64,325


$
117,532Europe (2)


(42,460
)


104,665



167,227Asia (3)


39,331



30,182



20,225Unconsolidated joint ventures (4)


4,546



(3,221
)


41,996Total net operating income  investment management
    segment

$
66,441


$
195,951


$
346,980     (1)
    
    Represents the income earned by us from our investments in
    property funds in North America. We had interests in 12, 12 and
    10 property funds at December 31, 2008, 2007 and 2006,
    respectively that owned, on a combined basis, 854, 777 and 535
    properties at December 31, 2008, 2007 and 2006,
    respectively. Our ownership interests ranged from 20% to 50% at
    December 31, 2008. Included in 2008 are net losses of
    $28.2 million, which represent our proportionate share of
    losses that were recognized by certain of the property funds,
    related to interest rate derivative contracts that no longer met
    the requirements for hedge accounting. Excluding these losses,
    the increase in net operating income we recognized in 2008 over
    2007 is due principally to increased management fees and income
    from the larger portfolios in the property funds.In January 2006, we purchased the 80% ownership interests held
    by our fund partner in three property funds and subsequently
    contributed substantially all of the assets and associated
    liabilities to the North American Industrial Fund in March 2006.
    In connection with this transaction, we earned an incentive
    return of $22.0 million and we recognized
    $37.1 million in income, representing our proportionate
    share of the net gain recognized by the property funds upon
    termination.(2)
    
    In 2008 and 2007, amounts represent the income earned by us from
    our investments in two property funds in Europe, PEPR and PEPF
    II, and, prior to the formation of PEPF II in the third quarter
    of 2007, represents the income from our investment in PEPR. On a
    combined basis, these funds owned 399, 288 and 36




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##### Table of Contents



277 properties at December 31, 2008, 2007 and 2006,
    respectively. Our ownership interest in PEPR and PEPF II was
    24.9% and 36.9%, respectively, at December 31, 2008
    including both our direct and indirect investments. Our
    ownership interest in PEPF II includes our direct ownership
    interest of 34.3% and our indirect 2.6% interest through our
    ownership in PEPR, which owned a 10.4% interest in PEPF II.Included in 2008, are $108.2 million of losses representing
    our share of losses recognized by PEPR on the sale of its 20%
    investment in PEPF II to us and an impairment charge related to
    its remaining 10% interest. In February 2009, PEPR sold its 10%
    interest to a third party, which decreased our ownership
    interest in PEPF II to 34.3%. In July 2007, PEPR disposed of 47
    properties, which resulted in our recognition of additional
    earnings of $38.2 million, representing our proportionate
    share of the gain recognized by PEPR. In 2006, we recognized
    $109.2 million in incentive return fees in connection with
    PEPRs Initial Public Offering (IPO).(3)
    
    Represents the income earned by us from our 20% ownership
    interest in two property funds in Japan and one property fund in
    South Korea. These property funds on a combined basis owned 83,
    66 and 31 properties at December 31, 2008, 2007 and 2006.
    In 2009, we sold our investments in the Japan property funds to
    our fund partner. See Note 21 to our Consolidated Financial
    Statements in Item 8.(4)
    
    All periods have been restated to include our proportionate
    share of the net earnings or losses related to our joint
    ventures that develop and operate principally industrial and
    retail properties. These amounts were previously included in the
    CDFS business segment but were transferred in connection with
    the changes in our business segments made in 2008. Included in
    the earnings for 2006 was $35.0 million, representing our
    share of the earnings of a joint venture, that redeveloped and
    sold land parcels. This entity substantially completed its
    operations at the end of 2006.  CDFS
    Business Segment
       37




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##### Table of Contents



Years Ended December 31,2008


2007


2006CDFS transactions in continuing operations:Disposition proceeds, prior to deferral (1)

$
4,679,900


$
5,230,788


$
1,337,278Proceeds deferred and not recognized (2)


(209,484
)


(243,411
)


(65,542
)Recognition of previously deferred amounts (2)


25,049



18,035



15,105Cost of dispositions (1)


(3,836,519
)


(4,241,700
)


(993,926
)Net gains


658,946



763,712



292,915Development management and other income (3)


25,857



26,322



37,443Other income (expense), net (4)


(26,924
)


(3,853
)


4,176Total net operating income - CDFS business segment

$
657,879


$
786,181


$
334,534     (1)
    
    During 2008, we contributed 163 developed and repositioned
    properties to the property funds (53 in North America, 99
    in Europe and 11 in Japan) and we contributed 17 properties that
    were acquired property portfolios to the property funds, (6 in
    North America and 11 in Europe). This compares with 2007 when we
    contributed 87 developed and repositioned properties (41 in
    North America, 41 in Europe and 5 in Japan) and we contributed
    175 properties that were part of acquired property portfolios to
    the property funds (162 in North America and 13 in Europe). In
    2006 we contributed 55 developed and repositioned properties (30
    in North America, 19 in Europe and 6 in Japan). We also
    recognized net gains of $3.3 million, $93.3 million
    and $24.6 million from the disposition of land parcels to
    third parties during 2008, 2007 and 2006, respectively. In
    addition, we contributed non  CDFS properties to the
    property funds. See discussion below in Gains Recognized
    on Dispositions of Certain Non-CDFS Business Assets.The net profit margins we earn in this segment vary quarter to
    quarter depending on a number of factors, including the type of
    property contributed, the market in which the land parcel or
    property is located and other market conditions, including
    investment capitalization rates. Additionally, we experienced an
    increase in construction costs due to higher average concrete,
    oil and steel prices, increasing both our construction costs and
    the replacement cost of our portfolio during 2008. The net
    profit margins we earned on developed and repositioned
    properties contributed in 2008 were lower than 2007 due to a
    combination of these factors.(2)
    
    When we contribute a property to an entity in which we have an
    ownership interest, we do not recognize a portion of the
    proceeds in our computation of the gain resulting from the
    contribution. The amount of the gain that we defer is based on
    our continuing ownership interest in the contributed property
    that arises due to our ownership interest in the entity
    acquiring the property. We defer this portion of the gain by
    recognizing a reduction to our investment in the applicable
    unconsolidated investee. If a loss results when a property is
    contributed, the entire loss is recognized when it is known.When a property that we originally contributed to an
    unconsolidated investee is disposed of by the unconsolidated
    investee to a third party, we recognize a gain during the period
    that the disposition occurs related to the gains we had
    previously deferred, in addition to our proportionate share of
    the gain recognized by the entity. Further, during periods when
    our ownership interest in a property fund decreases, we
    recognize gains to the extent that gains were previously
    deferred to coincide with our new ownership interest in the
    property fund. 38




---



##### Table of Contents



(3)
    
    Amounts include fees we earned for the performance of
    development activities on behalf of our customers or other third
    parties. These amounts fluctuate based on the level of third
    party development activities.(4)
    
    Includes land holding costs and charges for previously
    capitalized costs related to potential CDFS business segment
    projects when the acquisition is no longer probable, offset by
    interest income in notes receivable. Due to the changes in our
    development plans in the fourth quarter of 2008, we expensed
    certain costs that had been incurred related to potential
    development projects that we are no longer pursuing.  and/or
  Operational
    Outlook
        Other
    Components of Operating Income
   and 
   39




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##### Table of Contents



Year Ended December 31,2008


2007


2006Gross interest expense

$
477,933


$
487,410


$
397,453Net premium amortization


(702
)


(7,797
)


(13,861
)Amortization of deferred loan costs


12,759



10,555



7,673Interest expense before capitalization


489,990



490,168



391,265Capitalized amounts


(148,685
)


(121,656
)


(95,636
)Net interest expense

$
341,305


$
368,512


$
295,629    40




---



##### Table of Contents



41




---



##### Table of Contents



30-day
           42




---



##### Table of Contents



Portfolio
    Information    December 31,2008


2007


2006Number of


Square


Number of


Square


Number of


SquareReportable Business Segment

Properties


Feet


Properties


Feet


Properties


FeetDirect Owned


1,331



197,114



1,409



208,530



1,473



204,674Investment Management (1)


1,339



297,665



1,170



250,951



875



186,747Totals


2,670



494,779



2,579



459,481



2,348



391,421     (1)
    
    Amounts for 2007 and 2006 include 39 and 32 industrial
    properties owned by joint ventures that were previously included
    in our CDFS segment, primarily China joint ventures that are
    classified as held for sale at December 31, 2008.  Same
    Store Analysis
   43




---



##### Table of Contents



For the Years EndedDecember 31,


Percentage2008


2007


ChangeRental Income (1)(2)Consolidated:Rental income per our Consolidated Statements of Operations

$
1,002,493


$
1,052,219Adjustments to derive same store results:Rental income of properties not in the same store
    portfolio  properties developed and acquired during
    the period


(158,016
)


(95,381
)Rental income of properties in our other segment, not included
    in the same store portfolio  see Note 19 to our
    Consolidated Financial Statements


(48,627
)


(43,046
)Effect of changes in foreign currency exchange rates and other


(2,298
)


(14,105
)Unconsolidated investees :Rental income of properties managed by us and owned by our
    unconsolidated investees


1,428,908



1,245,748Same store portfolio  rental income (2)(3)

$
2,222,460


$
2,145,435



3.59
%Rental Expenses (1)(4)Consolidated:Rental expenses per our Consolidated Statements of Operations

$
325,049


$
284,421Adjustments to derive same store results:Rental expenses of properties not in the same store
    portfolio  properties developed and acquired during
    the period


(60,845
)


(29,271
)Rental expenses of properties in our other segment, not included
    in the same store portfolio  see Note 19 to our
    Consolidated Financial Statements


(12,928
)


(14,819
)Effect of changes in foreign currency exchange rates and other


(25,360
)


(9,483
)Unconsolidated investees :Rental expenses of properties managed by us and owned by our
    unconsolidated investees


310,978



255,918Same store portfolio  rental expenses (3)(4)

$
536,894


$
486,766



10.30
%  44




---



##### Table of Contents



For the Years EndedDecember 31,


Percentage2008


2007


ChangeNet Operating Income (1)Consolidated:Net operating income per our Consolidated Statements of
    Operations

$
677,444


$
767,798Adjustments to derive same store results:Net operating income of properties not in the same store
    portfolio  properties developed and acquired during
    the period


(97,171
)


(66,110
)Net operating income of properties in our other segment, not
    included in the same store portfolio  see
    Note 19 to our Consolidated Financial Statements


(35,699
)


(28,227
)Effect of changes in foreign currency exchange rates and other


23,062



(4,622
)Unconsolidated investees :Net operating income of properties managed by us and owned by
    our unconsolidated investees


1,117,930



989,830Same store portfolio  net operating income (3)

$
1,685,566


$
1,658,669



1.62
%     (1)
    
    As discussed above, our same store portfolio aggregates
    properties from our consolidated portfolio and properties owned
    by the property funds and industrial joint ventures that are
    managed by us and in which we invest. During the periods
    presented, certain properties owned by us were contributed to an
    unconsolidated investee and are included in the same store
    portfolio on an aggregate basis. Neither our consolidated
    results nor that of the unconsolidated investees, when viewed
    individually, would be comparable on a same store basis due to
    the changes in composition of the respective portfolios from
    period to period (for example, the results of a contributed
    property would be included in our consolidated results through
    the contribution date and in the results of the unconsolidated
    investee subsequent to the contribution date).(2)
    
    Rental income in the same store portfolio includes straight-line
    rents and rental recoveries, as well as base rent. We exclude
    the net termination and renegotiation fees from our same store
    rental income to allow us to evaluate the growth or decline in
    each propertys rental income without regard to items that
    are not indicative of the propertys recurring operating
    performance. Net termination and renegotiation fees represent
    the gross fee negotiated to allow a customer to terminate or
    renegotiate their lease, offset by the write-off of the asset
    recognized due to the adjustment to straight-line rents over the
    lease term. The adjustments to remove these items are included
    as effect of changes in foreign currency exchange rates
    and other in the tables above.(3)
    
    These amounts include rental income, rental expenses and net
    operating income of both our consolidated properties and those
    properties owned by our unconsolidated investees and managed by
    us.(4)
    
    Rental expenses in the same store portfolio include the direct
    operating expenses of the property such as property taxes,
    insurance, utilities, etc. In addition, we include an allocation
    of the property management expenses for our direct-owned
    properties based on the property management fee that is provided
    for in the individual management agreements under which our
    wholly owned management companies provides property management
    services to each property (generally, the fee is based on a
    percentage of revenues). On consolidation, the management fee
    income earned by the management company and the management fee
    expense recognized by the properties are eliminated and the
    actual costs of providing property management services are
    recognized as part of our consolidated rental expenses. These
    include the costs to manage the properties we own directly and
    the properties owned by our unconsolidated investees. These
    expenses fluctuate based on the level of properties included in
    the same store portfolio and any adjustment is included as
    effect of changes in foreign currency exchange rates and
    other in the above table. In 45




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##### Table of Contents



addition, for the year ended December 31, 2008, we
    recognized a $6.0 million increase in insurance expense due
    to a tornado that struck certain properties owned by us and the
    property funds, which we insure through our insurance company.
    This amount is included as effect of changes in foreign
    currency exchange rates and other in the tables above. Environmental
    Matters   Liquidity
    and Capital Resources  Overview
      
    Generate cash through the contributions of properties to the
    unconsolidated property funds or sales of assets to third
    parties. In the fourth quarter, we generated $1.3 billion
    of proceeds from the contributions of properties to the
    unconsolidated property funds or sales to third parties. In
    February 2009, we sold our China operations and investments in
    the Japan property funds for $1.3 billion of cash, of which
    $500 million was received on closing and was used to pay
    down borrowings on our credit facilities and the remaining
    $800 million will be funded upon satisfactory completion of
    certain year-end audits. In the event that the audits reflect a
    material disparity from the unaudited information previously
    furnished, the buyer will have the option to unwind the
    transaction at our expense. If this happens, we will use
    available credit facilities to refund the $500 million to
    the buyer and pay expenses;
    Repurchase our senior notes. In December, we bought
    $310 million aggregate principal of notes for
    $217 million using proceeds on our line of credit;
    Issue equity;
    Reduce cash needs. We halted early-stage development projects,
    initiated G&A cost savings initiatives and implemented a
    RIF plan; and
    Lower our common share distribution. We reduced our expected
    annual distribution rate from $2.07 to $1.00 per common share
    beginning with the first quarter of 2009.    12-month
 46




---



##### Table of Contents



OutstandingTotal


Outstanding


Letters of


RemainingCommitment


Debt Balance


Credit


CapacityGlobal Line

$
3,783


$
2,618


$
109


$
1,056Credit Facility


600



600







Sterling Facility


49







33



16Total

$
4,432


$
3,218


$
142


$
1,072       
    completion of the development and leasing of the properties in
    our development portfolio. As of December 31, 2008, we had
    65 properties under development with a current investment of
    $1.2 billion and a total expected investment of
    $1.9 billion when completed and leased;
    repayment of debt, including payments on our credit facilities
    or buy-back of senior unsecured notes in order to achieve our
    goal of reducing debt;
    scheduled principal payments. In 2009, we have scheduled
    principal payments of $339.3 million, which includes
    $250.0 million of floating rate senior notes that mature in
    August 2009;
    tax and interest payments of $230.0 million related to the
    completion of certain audits of Catellus tax returns;
    capital expenditures and leasing costs on properties, including
    completed development properties that are not yet leased;
    investments in current or future unconsolidated property funds,
    including our remaining capital commitments of
    $970.4 million. Generally, we fulfill our equity commitment
    with a portion of the proceeds from properties we contribute to
    the property fund. However, to the extent a property fund
    acquires properties from a third party or requires cash to
    pay-off debt or has other cash needs, we may be required to
    contribute our proportionate share of the equity component in
    cash to the property fund; and depending on market conditions,
    direct acquisitions or development of operating properties
    and/or
    portfolios of operating properties in key distribution markets
    for direct, long-term investment in the direct owned segment; 47




---



##### Table of Contents




    proceeds of $1.3 billion expected to be received from the
    sale of our China operations and investments in the Japan
    property funds;
    available cash balances ($174.6 million at
    December 31, 2008);
    property operations;
    fees and incentives earned for services performed on behalf of
    the property funds and distributions received from the property
    funds;
    proceeds from the disposition of properties or land parcels to
    third parties;
    cash proceeds from the contributions of properties to property
    funds;
    borrowing capacity under existing credit facilities
    ($1.1 billion available as of December 31, 2008), or
    other future facilities;
    proceeds from the issuance of equity securities, including sales
    under various common share plans, all subject to market
    conditions. We have 11.6 million authorized shares
    available under our Controlled Equity Offering Program and our
    Board has authorized an increase to 40.0 million
    shares); and
    proceeds from the issuance of debt securities, including the
    issuance of secured debt.      Debt
    Covenants
     48




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##### Table of Contents



Commitments
    Related to Future Contributions to Property Funds
    Fund Acquisitions











AvailableEquity


Remaining Equity Commitments


UnderThird








and





Fund


Expiration


CreditProLogis


Parties


Total


Debt


Other


ProLogis


Partners


Date


FacilityProLogis North American Industrial Fund (1)

$
815.2


$



$
815.2


$
243.0


$
572.2


$
72.5


$
211.7



2/10


$
223.4ProLogis Mexico Industrial Fund (2)


155.0



189.8



344.8



155.8



189.0



44.3



246.7



8/10



ProLogis European Properties Fund II (2)(3)


2,604.3



84.0



2,688.3



1,172.1



1,516.2



830.4
(4)


1,253.1
(4)


8/10



77.7ProLogis Japan Properties Fund II (5)


876.8



83.7



960.5



555.0



405.5















ProLogis Korea Fund (2)


11.1



119.1



130.2



25.2



105.0



23.2



92.8



6/10



Total

$
4,462.4


$
476.6


$
4,939.0


$
2,151.1


$
2,787.9


$
970.4


$
1,804.3






$
301.1     (1)
    
    The investor agreements were modified in early 2009 to extend
    the remaining equity commitments through 2010, which were
    originally scheduled to expire in February 2009. In connection
    with the modifications, the commitments related to property
    contributions were eliminated and one investor did not extend
    its commitment. Amounts presented reflect these changes. We
    expect the remaining equity commitments to be used to pay down
    existing debt or to make opportunistic acquisitions, depending
    on market conditions and other factors.(2)
    
    We are committed to offer to contribute substantially all of the
    properties that we develop and stabilize in Europe, Mexico and
    South Korea to these respective funds. These property funds are
    committed to acquire such properties, subject to certain
    exceptions, including that the properties meet certain specified
    leasing and other criteria, and that the property funds have
    available capital. We are not obligated to contribute properties
    at a loss.Dependent on market conditions, we expect to make contributions
    of properties to these property funds in 2009. Given the current
    debt markets, it is likely that the acquisitions will be
    financed by the property funds with all equity. Generally, the
    properties are contributed based on third-party appraised value
    (see Note 3 below).(3)
    
    During the fourth quarter, we modified the determination of the
    contribution value related to 2009 contributions to PEPF II.
    After the capitalization rate is determined based on a third
    party appraisal, a margin of 0.25 to 0.75 percentage points
    is added depending on the quarter contributed. This modification
    was made due to the belief that appraisals were lagging true
    market conditions. The agreement provides for an adjustment in
    our favor if the appraised values at the end of 2010 are higher
    than those used to determine contribution values.(4)
    
    PEPF IIs equity commitments are denominated in euro and
    include ProLogis of 568.1 million, PEPR of
    136.1 million and remaining fund partners of
    721.3 million. Our equity commitments include the 20%
    interest in PEPF II we acquired from PEPR in December 2008.(5)
    
    In connection with the sale of our investments in the Japan
    property funds, we entered into an agreement to sell a property
    in Japan to our fund partner in 2009, which will utilize the
    remaining equity commitment from our fund partner. This property
    is included in assets held for sale at December 31, 2008 in
    our Consolidated Financial Statements in Item 8.   49




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##### Table of Contents



Cash
    Provided by Operating Activities
      Cash
    Investing and Cash Financing Activities
    
    We invested $5.6 billion in real estate during the year
    ended December 31, 2008; $5.3 billion for the same
    period in 2007, excluding the MPR and Parkridge acquisitions;
    and $3.8 billion for the same period in 2006, excluding the
    purchase of ownership interests in property funds. These amounts
    include the acquisition of operating properties (25 properties,
    41 properties and 74 properties with an aggregate purchase price
    of $324.0 million, $351.6 million and
    $735.4 million in 2008, 2007 and 2006, respectively);
    acquisitions of land or land use rights for future development;
    costs for current and future development projects; and recurring
    capital expenditures and tenant improvements on existing
    operating properties. At December 31, 2008, we had 65
    distribution and retail properties aggregating 19.8 million
    square feet under development, with a total expected investment
    of $1.9 billion.
    In February 2007, we purchased the industrial business and made
    a 25% investment in the retail business of Parkridge. The total
    purchase price was $1.3 billion of which we paid cash of
    $733.9 million and the balance in common shares or
    assumption of liabilities.
    On July 11, 2007, we completed the acquisition of MPR for
    total consideration of approximately $2.0 billion,
    consisting of $1.2 billion of cash and the assumption of
    debt and other liabilities of $0.8 billion. The cash
    portion was financed by the issuance of a $473.1 million
    term loan and a $646.2 million convertible loan with an
    affiliate of Citigroup. On August 27, 2007, when Citigroup
    converted $546.2 million of the convertible loan into
    equity of a newly created property fund, ProLogis North American
    Industrial Fund II, we made a $100.0 million cash
    equity contribution to the property fund, which it used to repay
    the remaining balance on the convertible loan and included in
    the $661.8 million of investments to unconsolidated
    investees.
    We generated net cash from contributions and dispositions of
    properties and land parcels of $4.5 billion,
    $3.6 billion and $2.1 billion in 2008, 2007 and 2006,
    respectively. See further discussion in - Results of
    Operations-CDFS Business Segment.
    We invested cash of $329.6 million, $661.8 million and
    $175.7 million in 2008, 2007 and 2006, respectively, in new
    and existing unconsolidated investees. These investments
    principally include our proportionate share of the equity
    component for third-party acquisitions made by the property
    funds and investments and advances to development joint
    ventures. In 2008, our investments include $167.3 million
    in PEPF II and $68.5 million in joint ventures operating in
    China. In 2007, our investments include $100.0 million in
    ProLogis North American Industrial Fund II,
    $360.0 million in ProLogis North American Industrial
    Fund III, and excludes the initial investment in the
    Parkridge retail business, which is detailed separately. The
    2006 investments include $34.6 million in North American
    Industrial Fund, $56.5 million 50




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##### Table of Contents



in joint ventures operating in China, along with
    $54.6 million in a preferred interest in ProLogis North
    American Properties Fund V, which we subsequently sold in
    August 2006.  
    We invested cash of $259.2 million in connection with the
    purchase of our fund partners ownership interests in three
    of our North America property funds during the first quarter of
    2006.
    We received proceeds from unconsolidated investees as a return
    of investment of $127.0 million, $50.2 million and
    $146.2 million in 2008, 2007 and 2006, respectively. The
    proceeds in 2006 include $54.6 million related to the sale
    of a preferred interest in ProLogis North American Properties
    Fund V discussed above.
    We generated net cash proceeds from payments on notes receivable
    of $4.2 million and $97.4 million in 2008 and 2007,
    respectively, and net cash payments for advances on notes
    receivable of $41.7 million in 2006.    
    In May 2008 we closed on $550.0 million of 2.625%
    convertible senior notes due in 2038. The proceeds were used to
    repay secured debt and borrowings on our credit facilities and
    for general corporate purposes. In March 2007, we issued
    $1.25 billion with a coupon rate of 2.25% due in March 2037
    and in November 2007, we issued $1.12 billion with a coupon
    rate of 1.875% due in November 2037. We used the net proceeds of
    the offerings to repay a portion of the outstanding balance
    under our Global Line and senior notes that were maturing in
    November 2007 and for general corporate purposes.
    On our lines of credit and other credit facilities, including
    the Global Line and the Credit Facility, we had net proceeds
    from borrowings of $743.9 million and $368.2 million
    in 2008 and 2006, respectively, and net payments of
    $431.5 million in 2007.
    During 2007, we received proceeds of $1.1 billion and
    $600.1 million under facilities used to partially finance
    the MPR and Parkridge acquisitions, respectively (see
    Note 5 and Note 8 to our Consolidated Financial
    Statements in Item 8).
    On our other debt, we had net payments of $1.2 billion,
    $1.2 billion and $588.8 million for the year ended
    December 31, 2008, 2007 and 2006, respectively. In May
    2008, we issued $600.0 million of 6.625% senior notes
    due 2018. In 2007 and 2006, we received proceeds of
    $781.8 million and $1.9 billion from the issuance of
    senior notes and other secured and unsecured debt, respectively.
    We paid distributions to holders of common shares of
    $542.8 million, $472.6 million and $393.3 million
    in 2008, 2007 and 2006, respectively. We paid dividends on
    preferred shares of $25.4 million, $31.8 million and
    $19.1 million in 2008, 2007 and 2006, respectively.
    We generated proceeds from the sale and issuance of common
    shares of $222.2 million, $46.9 million and
    $358.0 million in 2008, 2007 and 2006, respectively. This
    includes $196.4 million received in 2008 for the issuance
    of 3.4 million common shares and $320.8 million
    received in 2006 for the issuance of 5.4 million common
    shares, both under our Controlled Equity Offering Program. 51




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##### Table of Contents



Off-Balance
    Sheet Arrangements      2009


2010


2011


2012


2013


Thereafter


Total (1)ProLogis European Properties (2)

$
490.9


$
1,460.6


$



$
378.4


$



$
730.8


$
3,060.7ProLogis European Properties Fund II (3)






1,383.9











385.3







1,769.2ProLogis California LLC (4)


314.2























314.2ProLogis North American Properties Fund I






130.6



111.7















242.3ProLogis North American Properties
    Fund VI-X


2.1



2.2



2.4



882.1



12.4







901.2ProLogis North American Properties Fund XI


14.8



42.7



0.7



0.7



0.4







59.3ProLogis North American Industrial Fund (5)






26.6



190.0



78.0



169.5



1,047.7



1,511.8ProLogis North American Industrial Fund II (6)


454.1



108.6



(1.9
)


153.0



63.1



548.3



1,325.2ProLogis North American Industrial Fund III (7)


167.3



2.0



120.1



2.3



385.0



426.2



1,102.9ProLogis Mexico Industrial Fund (8)














99.1



170.0







269.1ProLogis Korea Fund










14.0



28.2











42.2$
1,443.4


$
3,157.2


$
437.0


$
1,621.8


$
1,185.7


$
2,753.0


$
10,598.1Japan property funds (9)


























2,864.3Total property funds

























$
13,462.4     (1)
    
    As of December 31, 2008, we had not guaranteed any of the
    third party debt. In our role as the manager of the property
    funds, we work with the property funds to refinance their
    maturing debt. There can be no assurance that the property funds
    will be able to refinance any maturing indebtedness at terms as
    favorable as the maturing debt, or at all. If the property funds
    are unable to refinance the maturing indebtedness with newly
    issued debt, they may be able to otherwise obtain funds by
    capital contributions from us and our fund partners, in
    proportion to our ownership interest in such funds, or by
    selling assets. Certain of the property funds also have credit
    facilities, which may be used to obtain funds. Generally, the
    property funds issue long-term debt and utilize the proceeds to
    repay borrowings under the credit facilities. See above for
    information on remaining equity commitments of the property
    funds.(2)
    
    PEPR has $490.9 million of Collateralized Mortgage Backed
    Securities (CMBS) maturing in July 2009. We are
    currently in negotiations with German mortgage banks to
    refinance the debt. PEPR has a credit facility that matures in
    May 2010, with aggregate borrowing capacity of
    900 million (or $1.3 billion ) under which
    $816.9 million was outstanding with $498.6 million
    remaining capacity, all at December 31, 2008. The facility
    has three tranches; (i) a 300 million revolving
    credit facility that matures December 13, 2010; (ii) a
    300 million term loan facility that matures
    December 13, 2010; and (iii) a 300 million
    term loan facility that matures December 11, 2012. In
    addition, PEPR has cash of $112.7 million at
    December 31, 2008, primarily due to the sale of its equity
    investment in PEPF II to us. No assurances can be given that
    this property fund will be able to refinance this debt on
    favorable terms or at all.(3)
    
    PEPF II has a 1 billion credit facility
    (approximately $1.46 billion) to partially fund property
    acquisitions. As of December 31, 2008, approximately
    $1.38 billion was outstanding and $77.7 million was
    available to borrow under this facility. The property fund is in
    discussions with a group of German mortgage banks for a
    five-year loan for 350 million.(4)
    
    ProLogis California LLC has $314.2 million maturing in 2009
    (approximately half in March and half in August). We have term
    sheets from existing lenders to extend the 2009 maturities for
    one to five years and we have rate lock agreements on a new
    $120 million, ten year financing. No assurances can be
    given that this property fund will be able to refinance this
    debt on favorable terms or at all. 52




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##### Table of Contents



(5)
    
    ProLogis North American Industrial Fund has a
    $250.0 million credit facility that matures July 17,
    2010, under which approximately $26.6 million was
    outstanding and $223.4 million was available at
    December 31, 2008. Capital was called on February 10,
    2009 to repay the outstanding balance.(6)
    
    The maturities in 2009 include a term loan for
    $411.4 million that was issued by our fund partner in July
    2007 when this property fund was formed and matures in July
    2009. We are in active discussions with our fund partner
    regarding an extension of the term loan, as well as their
    underlying equity investment in the property fund. No assurances
    can be given that this property fund will be able to refinance
    this debt on favorable terms or at all.(7)
    
    The 2009 maturities include a $165.4 million that
    represents a bridge loan that was issued by a subsidiary of our
    fund partner, Lehman Brothers Holding, Inc., at the formation of
    the fund in July 2007 that was due in 2008. We have been in
    discussions with the lender and hope to extend the maturity date
    for three years. No assurances can be given that this property
    fund will be able to refinance this debt on favorable terms or
    at all.(8)
    
    In addition to its existing third party debt, this property fund
    has a note payable to us for $15.2 million at
    December 31, 2008.(9)
    
    In 2009, we sold our investments in the Japan property funds to
    our fund partner. Contractual
    Obligations      Payments Due By PeriodLess than


1 to 3


3 to 5


More thanTotal


1 year


years


years


5 yearsDebt obligations, other than credit facilities

$
7,795


$
339


$
811


$
4,001


$
2,644Interest on debt obligations, other than credit facilities


1,941



342



629



413



557Unfunded commitments on development projects (1)


701



701











Unfunded commitments on acquisitions


7



7











Unfunded capital commitments to unconsolidated investees (2)


971







971







Amounts due on credit facilities (3)


3,218







3,218







Interest on lines of credit (3)


127



79



48







Tax liabilities (4)


285



50



100



135



Totals

$
15,045


$
1,518


$
5,777


$
4,549


$
3,201     (1)
    
    We had properties under development at December 31, 2008
    with a total expected investment of $1.9 billion. The
    unfunded commitments presented include not only those costs that
    we are obligated to fund under construction contracts, but all
    costs necessary to place the property into service, including
    the costs of tenant improvements and marketing and leasing costs.(2)
    
    Generally, we fulfill our equity commitment with a portion of
    the proceeds from properties we contribute to the property fund.
    However, to the extent a property fund acquires properties from
    a third party or requires cash to pay-off debt or has other cash
    needs, we may be required to contribute our proportionate share
    of the equity component in cash to the property fund.(3)
    
    For purposes of this table, we have assumed that we exercise our
    option to extend these facilities.(4)
    
    These amounts represent our Financial Accounting Standards Board
    Interpretation No. 48, Accounting for Uncertainty
    in Income Taxes  An Interpretation of FASB Statement
    No. 109 (FIN 48) liabilities,
    which include an estimate of the period of settlement. See
    Note 14 to our Consolidated Financial Statements in
    Item 8.    and/or
 53




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##### Table of Contents



Critical
    Accounting Policies    Impairment
    of Long-Lived Assets
       54




---



##### Table of Contents



and/or
  Investments
    in Unconsolidated Investees
    Revenue
    Recognition
    Business
    Combinations
    Consolidation
   55




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##### Table of Contents



and/or
  Capitalization
    of Costs and Depreciation
    Income
    Taxes
  built-in-gain
 New
    Accounting Pronouncements   Funds
    from Operations   56




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##### Table of Contents



(i)
    deferred income tax benefits and deferred income tax expenses
    recognized by our subsidiaries;(ii)
    current income tax expense related to acquired tax liabilities
    that were recorded as deferred tax liabilities in an
    acquisition, to the extent the expense is offset with a deferred
    income tax benefit in GAAP earnings that is excluded from our
    defined FFO measure;(iii)
    certain foreign currency exchange gains and losses resulting
    from certain debt transactions between us and our foreign
    consolidated subsidiaries and our foreign unconsolidated
    investees;(iv)
    foreign currency exchange gains and losses from the
    remeasurement (based on current foreign currency exchange rates)
    of certain third party debt of our foreign consolidated
    subsidiaries and our foreign unconsolidated investees; and(v)
    mark-to-market adjustments associated with derivative financial
    instruments utilized to manage foreign currency and interest
    rate risks. 57




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##### Table of Contents




    The current income tax expenses that are excluded from our
    defined FFO measures represent the taxes that are payable.
    Depreciation and amortization of real estate assets are economic
    costs that are excluded from FFO. FFO is limited, as it does not
    reflect the cash requirements that may be necessary for future
    replacements of the real estate assets. Further, the
    amortization of capital expenditures and leasing costs necessary
    to maintain the operating performance of industrial properties
    are not reflected in FFO.
    Gains or losses from property dispositions represent changes in
    the value of the disposed properties. By excluding these gains
    and losses, FFO does not capture realized changes in the value
    of disposed properties arising from changes in market conditions.
    The deferred income tax benefits and expenses that are excluded
    from our defined FFO measures result from the creation of a
    deferred income tax asset or liability that may have to be
    settled at some future point. Our defined FFO measures do not
    currently reflect any income or expense that may result from
    such settlement.
    The foreign currency exchange gains and losses that are excluded
    from our defined FFO measures are generally recognized based on
    movements in foreign currency exchange rates through a specific
    point in time. The ultimate settlement of our foreign
    currency-denominated net assets is indefinite as to timing and 58




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##### Table of Contents



amount. Our FFO measures are limited in that they do not reflect
    the current period changes in these net assets that result from
    periodic foreign currency exchange rate movements.  
    The non-cash impairment charges that we exclude from our FFO,
    excluding significant non-cash items, measure may be realized in
    the future upon the ultimate disposition of the related real
    estate properties or other assets.     59




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Years Ended December 31,2008


2007


2006FFO:Reconciliation of net earnings to FFO:Net earnings attributable to common shares

$
(432,196
)

$
1,048,917


$
848,951Add (deduct) NAREIT defined adjustments:Real estate related depreciation and amortization


323,159



291,531



273,980Adjustments to gains on CDFS dispositions for depreciation


(2,866
)


(6,196
)


466Gains recognized on dispositions of certain non-CDFS business
    assets


(11,620
)


(146,667
)


(81,470
)Reconciling items attributable to discontinued operations:Gains recognized on dispositions of non-CDFS business assets


(9,718
)


(52,776
)


(103,729
)Real estate related depreciation and amortization


11,485



9,454



15,036Total discontinued operations


1,767



(43,322
)


(88,693
)Our share of reconciling items from unconsolidated investees:Real estate related depreciation and amortization


155,067



99,026



68,151Gains on dispositions of non-CDFS business assets


(492
)


(35,672
)


(7,124
)Other amortization items


(15,840
)


(8,731
)


(16,000
)Total unconsolidated investees


138,735



54,623



45,027Total NAREIT defined adjustments


449,175



149,969



149,310Subtotal  NAREIT defined FFO


16,979



1,198,886



998,261Add (deduct) our defined adjustments:Foreign currency exchange losses (gains), net


144,364



16,384



(19,555
)Current income tax expense


9,656



3,038



23,191Deferred income tax expense (benefit)


4,073



550



(53,722
)Our share of reconciling items from unconsolidated investees:Foreign currency exchange losses (gains), net


2,331



1,823



(45
)Unrealized losses on derivative contracts, net


23,005







Deferred income tax expense (benefit)


(19,538
)


6,327



(2,982
)Total unconsolidated investees


5,798



8,150



(3,027
)Total our defined adjustments


163,891



28,122



(53,113
)FFO, including significant non-cash items, attributable to
    common shares, as defined by us


180,870



1,227,008



945,148Impairment of goodwill and other assets


320,636







Impairment related to assets held for sale  China
    operations


198,236







Impairment of real estate properties


274,705







Our share of the loss/impairment recorded by PEPR


108,195







Gain on early extinguishment of debt


(90,719
)






FFO, excluding significant non-cash items, attributable to
    common shares, as defined by us

$
991,923


$
1,227,008


$
945,148  ITEM 7A.
    Quantitative and Qualitative Disclosure About Market
    Risk     60




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Interest
    Rate Risk
            Foreign
    Currency Risk
        Fair
    Value of Financial Instruments
   ITEM 8.
    Financial Statements and Supplementary Data   61




---



##### Table of Contents



ITEM 9.
    Changes in and Disagreements with Accountants on Accounting and
    Financial Disclosure   ITEM 9A.
    Controls and Procedures  Rule 13a-15(e)
  Managements
    Report on Internal Control over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
      Limitations
    of the Effectiveness of Controls
   ITEM 9B.
    Other Information   62




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##### Table of Contents



PART III ITEM 10. Directors,
    Executive Officers and Corporate Governance  Trustees
    and Officers
   ITEM 11. Executive
    Compensation    ITEM 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters   ITEM 13. Certain
    Relationships and Related Transactions, and Director
    Independence   ITEM 14. Principal
    Accounting Fees and Services   PART IV ITEM 15. Exhibits,
    Financial Statement Schedules                Regulation S-K
   63




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##### Table of Contents



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS AND
    SCHEDULE III
   
 PageProLogis:Reports of Independent Registered Public
    Accounting Firm


65Consolidated Balance Sheets


67Consolidated Statements of Operations


68Consolidated Statements of Shareholders
    Equity and Comprehensive Income (Loss)


69Consolidated Statements of Cash Flows


70Notes to Consolidated Financial Statements


71Report of Independent Registered Public
    Accounting Firm


125Schedule III  Real Estate and Accumulated
    Depreciation


126  64




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Internal Control  Integrated Framework
      65




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     Internal Control  Integrated
    Framework
        Internal Control  Integrated Framework
        66




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##### Table of Contents



PROLOGIS



CONSOLIDATED
    BALANCE SHEETS

(In
    thousands, except per share data)  December 31,2008


2007ASSETSReal estate

$
15,706,172


$
16,578,845Less accumulated depreciation


1,583,299



1,368,45814,122,873



15,210,387Investments in and advances to unconsolidated investees


2,269,993



2,345,277Cash and cash equivalents


174,636



399,910Accounts and notes receivable


244,778



340,039Other assets


1,129,182



1,408,814Discontinued operations  assets held for sale


1,310,754



19,607Total assets

$
19,252,216


$
19,724,034LIABILITIES AND SHAREHOLDERS EQUITYLiabilities:Debt

$
11,007,636


$
10,506,068Accounts payable and accrued expenses


658,868



933,075Other liabilities


751,238



769,408Discontinued operations  assets held for sale


389,884



424Total liabilities


12,807,626



12,208,975Minority interest


19,878



78,661Shareholders 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, 2008 and 2007


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, 2008 and 2007


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, 2008 and 2007


125,000



125,000Common shares; $0.01 par value; 267,005 shares issued
    and outstanding at December 31, 2008 and
    257,712 shares issued and outstanding at December 31,
    2007


2,670



2,577Additional paid-in capital


6,688,615



6,412,473Accumulated other comprehensive income (loss):Unrealized losses on derivative contracts, net


(52,219
)


(27,091
)Foreign currency translation gains, net


22,845



302,413(Distributions in excess of net earnings) retained earnings


(587,199
)


396,026Total shareholders equity


6,424,712



7,436,398Total liabilities and shareholders equity

$
19,252,216


$
19,724,034    67




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##### Table of Contents



PROLOGIS
    CONSOLIDATED STATEMENTS OF OPERATIONS
    Years Ended December 31, 2008, 2007 and 2006
    (In thousands, except per share data)  2008


2007


2006Revenues:Rental income

$
1,002,493


$
1,052,219


$
901,954CDFS disposition proceeds:Developed and repositioned properties


4,206,446



2,530,377



1,286,841Acquired property portfolios


289,019



2,475,035



Property management and other fees and incentives


131,011



104,719



211,929Development management and other income


25,857



26,322



37,443Total revenues


5,654,826



6,188,672



2,438,167Expenses:Rental expenses


325,049



284,421



236,054Cost of CDFS dispositions:Developed and repositioned properties


3,547,500



1,835,274



993,926Acquired property portfolios


289,019



2,406,426



General and administrative


204,300



193,204



147,193Reduction in workforce


23,131







Impairment of real estate properties


274,705



12,600



Depreciation and amortization


339,491



302,413



283,306Other expenses


28,104



12,363



13,013Total expenses


5,031,299



5,046,701



1,673,492Operating income


623,527



1,141,971



764,675Other income (expense):Earnings (loss) from unconsolidated property funds, net


(69,116
)


94,453



93,055Earnings from other unconsolidated investees, net


13,342



4,573



47,748Interest expense


(341,305
)


(368,512
)


(295,629
)Impairment of goodwill and other assets


(320,636
)






Gain on early extinguishment of debt


90,719







Interest and other income, net


16,522



32,129



34,625Total other income (expense)


(610,474
)


(237,357
)


(120,201
)Earnings before minority interest


13,053



904,614



644,474Minority interest share in earnings, net


(3,837
)


(4,814
)


(3,451
)Earnings before certain net gains (losses)


9,216



899,800



641,023Gains recognized on dispositions of certain non-CDFS business
    assets


11,668



146,667



81,470Foreign currency exchange gains (losses), net


(148,281
)


8,132



21,444Earnings (loss) before income taxes


(127,397
)


1,054,599



743,937Income taxes:Current income tax expense


63,441



66,339



83,508Deferred income tax expense (benefit)


4,570



516



(53,722
)Total income taxes


68,011



66,855



29,786Earnings (loss) from continuing operations


(195,408
)


987,744



714,151Discontinued operations:Income (loss) attributable to assets held for sale and disposed
    properties, net


(32,630
)


5,099



22,973Impairment related to assets held for sale  China
    operations


(198,236
)






Gains recognized on dispositions:Non-CDFS business assets


9,718



52,776



103,729CDFS business assets


9,783



28,721



33,514Total discontinued operations


(211,365
)


86,596



160,216Net earnings (loss)


(406,773
)


1,074,340



874,367Less preferred share dividends


25,423



25,423



25,416Net earnings (loss) attributable to common shares

$
(432,196
)

$
1,048,917


$
848,951Weighted average common shares outstanding  Basic


262,729



256,873



245,952Weighted average common shares outstanding  Diluted


262,729



267,226



256,852Net earnings (loss) per share attributable to common
    shares  Basic:Continuing operations

$
(0.85
)

$
3.74


$
2.80Discontinued operations


(0.80
)


0.34



0.65Net earnings (loss) per share attributable to common
    shares  Basic

$
(1.65
)

$
4.08


$
3.45Net earnings (loss) per share attributable to common
    shares  Diluted:Continuing operations

$
(0.85
)

$
3.62


$
2.69Discontinued operations


(0.80
)


0.32



0.63Net earnings (loss) per share attributable to common
    shares  Diluted

$
(1.65
)

$
3.94


$
3.32Distributions per common share

$
2.07


$
1.84


$
1.60    68




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##### Table of Contents



PROLOGIS
    CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
    AND COMPREHENSIVE INCOME (LOSS)
    Years Ended December 31, 2008, 2007 and 2006
    (In thousands)  2008


2007


2006Common shares  number of shares at beginning of year


257,712



250,912



243,781Issuance of common shares in connection with acquisitions






4,781



Issuances of common shares under common share plans


5,381



1,891



6,951Conversions of limited partnership units


3,912



128



180Common shares  number of shares at end of year


267,005



257,712



250,912Common shares  par value at beginning of year

$
2,577


$
2,509


$
2,438Issuance of common shares in connection with acquisitions






48



Issuances of common shares under common share plans


54



19



69Conversions of limited partnership units


39



1



2Common shares  par value at end of year

$
2,670


$
2,577


$
2,509Preferred shares at stated liquidation preference

$
350,000


$
350,000


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

$
6,412,473


$
6,000,119


$
5,606,017Issuance of common shares in connection with acquisitions






339,449



Issuances of common shares under common share plans


219,012



37,417



357,448Conversions of limited partnership units


17,126



4,444



6,475Cost of issuing common shares


(199
)


(106
)


(76
)Change in receivable from timing differences on equity
    transactions


113



247



244Cost of share-based compensation awards


40,090



30,903



30,011Additional paid-in capital at end of year

$
6,688,615


$
6,412,473


$
6,000,119Accumulated other comprehensive income at beginning of year

$
275,322


$
216,922


$
149,586Foreign currency translation gains (losses), net


(279,568
)


90,015



70,777Unrealized losses on derivative contracts, net


(25,128
)


(31,615
)


(3,441
)Accumulated other comprehensive income (loss) at end of year

$
(29,374
)

$
275,322


$
216,922Retained earnings (distributions in excess of net earnings) at
    beginning of year

$
396,026


$
(170,971
)

$
(620,018
)Net earnings (loss)


(406,773
)


1,074,340



874,367Effect of adoption of FIN 48






(9,272
)


Preferred share dividends


(25,423
)


(25,423
)


(25,416
)Common share distributions


(551,029
)


(472,648
)


(399,904
)Retained earnings (distributions in excess of net earnings) at
    end of year

$
(587,199
)

$
396,026


$
(170,971
)Total shareholders equity at end of year

$
6,424,712


$
7,436,398


$
6,398,579Comprehensive income (loss) attributable to common shares:Net earnings (loss)

$
(406,773
)

$
1,074,340


$
874,367Preferred share dividends


(25,423
)


(25,423
)


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


(279,568
)


90,015



70,777Losses on derivative contracts, net


(25,128
)


(31,615
)


(3,441
)Comprehensive income (loss) attributable to common shares

$
(736,892
)

$
1,107,317


$
916,287    69




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##### Table of Contents



PROLOGIS
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    Years Ended December 31, 2008, 2007 and 2006
    (In thousands)  2008


2007


2006Operating activities:Net earnings (loss)

$
(406,773
)

$
1,074,340


$
874,367Adjustments to reconcile net earnings (loss) to net cash
    provided by operating activities:Minority interest share in earnings (loss), net


(6,231
)


6,003



3,457Straight-lined rents


(34,063
)


(44,403
)


(36,418
)Cost of share-based compensation awards


28,321



23,934



21,567Depreciation and amortization


350,976



311,867



298,342Equity in (earnings)/share of loss from unconsolidated investees


71,956



(105,618
)


(143,758
)Changes in operating receivables and distributions from
    unconsolidated investees


19,956



74,348



99,062Amortization of deferred loan costs


12,759



10,555



7,673Amortization of debt premium, net


(702
)


(7,797
)


(13,861
)Gains recognized on dispositions of non-CDFS business assets


(21,386
)


(199,443
)


(185,199
)Gains recognized on dispositions of CDFS business assets
    included in discontinued operations


(9,783
)


(28,721
)


(33,514
)Impairment of goodwill and other assets


320,636







Impairment related to assets held for sale  China
    operations


198,236







Impairment of real estate properties


274,705



13,259



Gain on early extinguishment of debt


(90,719
)






Unrealized foreign currency exchange losses (gains)


144,364



16,229



(18,774
)Deferred income tax expense (benefit)


4,072



550



(53,722
)(Increase) decrease in accounts and notes receivable and other
    assets


63,769



(155,486
)


(204,096
)Increase (decrease) in accounts payable and accrued expenses and
    other liabilities


(76,472
)


216,338



72,201Net cash provided by operating activities


843,621



1,205,955



687,327Investing activities:Real estate investments


(5,482,792
)


(5,213,870
)


(3,695,799
)Tenant improvements and lease commissions on previously leased
    space


(58,076
)


(67,317
)


(66,787
)Non-development capital expenditures


(36,902
)


(37,948
)


(29,437
)Cash consideration paid in Parkridge acquisition, net of cash
    acquired






(700,812
)


Purchase of Macquarie ProLogis Trust (MPR), net of
    cash acquired






(1,137,028
)


Proceeds from dispositions of real estate assets


4,474,228



3,618,622



2,095,231Investments in and advances to unconsolidated investees


(329,553
)


(661,796
)


(175,677
)Purchase of ownership interests in property funds










(259,248
)Return of investment from unconsolidated investees


126,983



50,243



146,206Advances on notes receivable






(18,270
)


(115,417
)Proceeds from repayments of notes receivable


4,200



115,620



73,723Increase in restricted cash for potential investment










(42,174
)Net cash used in investing activities


(1,301,912
)


(4,052,556
)


(2,069,379
)Financing activities:Proceeds from sales and issuances of common shares under various
    common share plans


222,162



46,855



358,038Distributions paid on common shares


(542,792
)


(472,645
)


(393,317
)Dividends paid on preferred shares


(25,423
)


(31,781
)


(19,062
)Minority interest redemptions (distributions), net


23,827



(9,341
)


(11,576
)Debt and equity issuance costs paid


(12,121
)


(15,830
)


(13,840
)Net proceeds from (payments on) credit facilities


743,934



(431,506
)


368,158Proceeds from issuance of debt to finance MPR and Parkridge
    acquisitions






1,719,453



Proceeds from issuance of senior convertible notes


544,500



2,329,016



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


606,044



781,802



1,945,325Payments on senior notes, secured debt, unsecured debt and
    assessment bonds


(1,202,028
)


(1,174,335
)


(588,844
)Net cash provided by financing activities


358,103



2,741,688



1,644,882Effect of exchange rate changes on cash


(13,950
)


29,032



9,161Net increase (decrease) in cash and cash equivalents


(114,138
)


(75,881
)


271,991Cash and cash equivalents, beginning of year


399,910



475,791



203,800Cash and cash equivalents, assets held for sale


(111,136
)






Cash and cash equivalents, end of year

$
174,636


$
399,910


$
475,791      70




---



##### Table of Contents



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.
 71




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
              Business Combinations. ,
  
    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; 72




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     
    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.    Long-Lived
    Assets
  Real Estate Assets.
     73




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
          Goodwill.
     74




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      Assets Held for Sale and Discontinued
    Operations.
    Investments in Unconsolidated
    Investees.
  Cash and Cash Equivalents.
  Minority Interest.
   75




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    Costs of Raising Capital.
  Revenue
    Recognition.
  Rental and other income.
  Gains on Disposition of Real Estate.
      Rental Expenses. on-site
  Share-Based Compensation. Share Based Payment
  Income Taxes.
 76




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
        Accounting for Uncertainty in Income Taxes 
    An Interpretation of FASB Statement No. 109 Accounting for Income
    Taxes
    Financial Instruments.
   77




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
        Fair Value
    Measurements No. FAS 157-2 FAS 157-2). FAS 157-2 FAS 157-2
  Environmental costs.
  Recent Accounting Pronouncements. Business Combinations Noncontrolling Interests in Consolidated Financial
    Statements  An Amendment of ARB No. 51
  Disclosures about Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133
 78




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    Accounting for Derivative Instruments and Hedging
    Activities
  14-1 Accounting for Convertible Debt Instruments that May Be
    Settled in Cash Upon Conversion (Including Partial Cash
    Settlement)
    December 31, 2008


December 31, 2007As Reported


As Adjusted


As Reported


As AdjustedConsolidated Balance Sheets (1):Real estate

$
15,706,172


$
15,725,069


$
16,578,845


$
16,581,119Debt

$
11,007,636


$
10,711,350


$
10,506,068


$
10,217,168Shareholders equity

$
6,424,712


$
6,739,895


$
7,436,398


$
7,727,572Consolidated Statements of Operations (1):Total cost of CDFS dispositions

$
3,836,519


$
3,839,923


$
4,241,700


$
4,241,716Interest expense

$
341,305


$
384,715


$
368,512


$
390,256Loss from discontinued operations

$
(211,365
)

$
(212,360
)

$
86,596


$
86,596Net earnings (loss)

$
(406,773
)

$
(454,582
)

$
1,074,340


$
1,052,580     (1)
    
    Amounts do not include adjustments to previously deferred gains
    or depreciation expense due to immateriality.  No. 08-6 EITF 08-6 The Equity Method of Accounting for Investments in
    Common Stock EITF 08-6 EITF 08-6 EITF 08-6
 79




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    EITF 08-6 EITF 08-6
  Reclassifications.
  3.
    Real
    Estate:  Real
    Estate Assets
    December 31,2008


2007Investments in real estate assets:Industrial properties (1):Improved land

$
2,414,023


$
2,247,013Buildings and improvements


8,542,445



8,799,318Retail and mixed use properties (2):Improved land


81,117



77,536Buildings and improvements


277,875



258,743Properties under development (3)


1,163,610



1,986,285Land held for development (4)


2,481,216



2,152,960Land subject to ground leases and other (5)


424,489



404,671Other investments (6)


321,397



652,319Investment before depreciation


15,706,172



16,578,845Less accumulated depreciation


1,583,299



1,368,458Net real estate assets

$
14,122,873


$
15,210,387     (1)
    
    At December 31, 2008 and 2007, we had 1,297 and 1,378
    industrial operating properties consisting of 195.7 million
    square feet and 207.3 million square feet, respectively.(2)
    
    At December 31, 2008 and 2007, we had 34 and 32 retail
    operating properties consisting of 1.4 million square feet
    and 1.3 million square feet, respectively. Amounts include
    an office property with a cost of $7.9 million at both
    December 31, 2008 and 2007.(3)
    
    Properties under development consisted of 65 industrial
    properties aggregating 19.8 million square feet at
    December 31, 2008 and 180 properties aggregating
    48.8 million square feet at December 31, 2007. At
    December 31, 2008, our total expected investment upon
    completion of the properties under development is approximately
    $1.9 billion, of which $1.2 billion was incurred.(4)
    
    Land held for future development consisted of 10,134 and
    9,351 acres of land or land use rights at December 31,
    2008 and 2007, respectively.(5)
    
    At December 31, 2008 and 2007, amount represents
    investments of $389.2 million and $368.5 million in
    land we own and lease to our customers under long-term ground
    leases and an investment of $35.3 million and
    $36.2 million in railway depots, 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
    ($9.0 million and $94.5 million at 80




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    December 31, 2008 and 2007, 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 (2007 only); and (vi) costs
    related to our corporate office buildings.      Number of


Aggregate


AggregateProperties


Square Feet


Purchase Price


Debt Assumed2008


25



5,812


$
324,029


$
6,5992007


41



7,347


$
351,639


$
27,3052006


74



13,529


$
735,427


$
87,919         Operating
    Lease Agreements
   81




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      2009

$
680,6112010


586,8932011


472,7662012


356,0252013


248,955Thereafter


1,255,467$
3,600,717     4.
    Acquisitions:       82




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    5.
    Unconsolidated
    Investees:  Summary
    of Investments
    December 31,2008


2007Property funds

$
1,957,977


$
1,755,113Other investees


312,016



590,164Totals

$
2,269,993


$
2,345,277   Property
    Funds
      Years Ended December 31,2008


2007


2006Earnings (loss) from unconsolidated property funds:North America

$
3,271


$
17,161


$
59,732Europe


(94,429
)


60,913



21,605Asia


22,042



16,379



11,718Total earnings (loss) from unconsolidated property funds

$
(69,116
)

$
94,453


$
93,055Property management and other fees and incentives:North America

$
61,753


$
47,164


$
57,800Europe


51,969



43,752



145,622Asia


17,289



13,803



8,507Total property management and other fees and incentives

$
131,011


$
104,719


$
211,929  83




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      As of December 31,SquareNumber of


feet





Investment inproperties


(in


Ownership


and advances toowned


millions)


Percentage


(in thousands)Fund Names

2008


2008


2008


2007


2008


2007ProLogis California (ProLogis California I LLC ) (1)


80



14.2



50.0
%


50.0
%

$
102,685


$
106,630ProLogis North American Properties Fund I ( ProLogis North
    American Properties Fund I LLC) (1)


36



9.4



41.3
%


41.3
%


25,018



27,135ProLogis North American Properties Fund VI (Allagash
    Property Trust) (1)


22



8.6



20.0
%


20.0
%


35,659



37,218ProLogis North American Properties Fund VII (Brazos
    Property Trust) (1)


29



6.2



20.0
%


20.0
%


32,679



31,321ProLogis North American Properties Fund VIII (Cimmaron
    Property Trust)  (1)


24



3.1



20.0
%


20.0
%


13,281



14,982ProLogis North American Properties Fund IX (Deerfield
    Property Trust) (1)


20



3.4



20.0
%


20.0
%


13,375



13,986ProLogis North American Properties Fund X (Elkhorn Property
    Trust) (1)


29



4.2



20.0
%


20.0
%


15,567



15,721ProLogis North American Properties Fund XI (KPJV, LLP) (1)


13



4.1



20.0
%


20.0
%


28,322



30,712ProLogis North American Industrial Fund (2)


258



49.6



23.1
%


23.2
%


191,088



104,277ProLogis North American Industrial Fund II (ProLogis NA2
    LP) (1)(3)


150



35.8



36.9
%


36.9
%


265,575



274,238ProLogis North American Industrial Fund III (ProLogis NA3
    LP) (1)(4)


120



24.7



20.0
%


20.0
%


122,148



123,720ProLogis Mexico Industrial Fund (ProLogis MX Fund LP) (5)


73



9.5



24.2
%


20.0
%


96,320



38,085PEPR (ProLogis European Properties) (6)


246



56.3



24.9
%


24.9
%


321,984



494,593PEPF II (ProLogis European Properties II) (7)


153



38.9



36.9
%


24.3
%


312,600



158,483ProLogis Japan Properties Fund I (PLD/RECO Japan TMK
    Property Trust) (1)(8)


16



7.1



20.0
%


20.0
%


114,111



87,663ProLogis Japan Properties Fund II (ProLogis Japan
    Properties Trust) (1)(8)


54



19.9



20.0
%


20.0
%


245,698



189,584ProLogis Korea Fund (ProLogis Korea Properties Trust) (1)


13



1.9



20.0
%


20.0
%


21,867



6,765Totals


1,336



296.9










$
1,957,977


$
1,755,113     (1)
    
    We have one fund partner in each of these property funds.(2)
    
    We refer to the combined entities in which we have ownership
    interests with ten institutional investors 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. In connection with the contribution of
    properties in 2008, we advanced the property fund
    $7.5 million, all of which was repaid in 2008.(3)
    
    In July 2007, we acquired all of the units in Macquarie ProLogis
    Trust, an Australian listed property trust (MPR)
    which had an 88.7% ownership interest in ProLogis North American
    Properties Fund V. The total consideration was
    approximately $2.0 billion consisting of cash in the amount
    of $1.2 billion and assumed liabilities of
    $0.8 billion. We entered into foreign currency forward
    contracts to economically hedge the purchase price of MPR. As
    this type of contract does not qualify for hedge accounting
    treatment, we recognized gains of $26.6 million in 2007
    when the contract settled that are included in Foreign Currency
    Exchange Gains and Losses, Net in our Consolidated Statements of
    Operations.    (4)
    
    In July 2007, we formed a new property fund to acquire a
    portfolio of industrial properties from a third party. We refer
    to the combined entities in which we have ownership interests as
    one property fund named 84




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    ProLogis North American Industrial Fund III. The total
    consideration for the acquisition was approximately
    $1.8 billion, including transaction costs.(5)
    
    On September 11, 2007, we contributed properties to a new
    property fund formed with several institutional investors. We
    refer to the combined entities in which we have ownership
    interests as one property fund named ProLogis Mexico Industrial
    Fund. During 2008, we loaned this property fund
    $153.1 million that was used to repay bridge financing that
    had matured and for a portion of the costs related to a third
    party acquisition. Through December 31, 2008, the fund had
    repaid $137.9 million of this loan with proceeds obtained
    from third party financing. The loan bears interest at LIBOR
    plus a margin and is payable upon demand.(6)
    
    In December 2008, we purchased units in ProLogis European
    Properties Fund II (PEPF II) from ProLogis
    European Properties (PEPR) that represented a 20%
    interest for 43 million ($61.1 million) and
    assumed 348 million of PEPRs future equity
    commitments related to these units. The units were purchased at
    a discount to net asset value due to PEPRs near-term
    liquidity needs.    12-month
    (7)
    
    In July 2007, we formed a new European property fund, PEPF II
    with several third party investors. From July 2007 through
    December 2008 PEPR owned approximately 30% of PEPF II. During
    that same period we owned approximately 24% of PEPF II, which
    included an indirect interest through PEPR. As a result of the
    additional 20% investment we made in December and contributions
    made in December, as of December 31, 2008, we own a 34.3%
    direct interest in PEPF II. PEPR owned a 10.4% interest in PEPF
    II, which due to our ownership in PEPR, results in us owning an
    additional 2.6% of PEPF II indirectly (combined direct and
    indirect ownership in PEPF II at December 31, 2008 was
    36.9%).(8)
    
    On December 23, 2008, we entered into an agreement to sell
    our interests in the Japan property funds (see Note 21).   85




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      Fund Acquisitions











AvailableEquity


Remaining Equity Commitments


UnderThird








and





Fund


Expiration


CreditProLogis


Parties


Total


Debt


Other


ProLogis


Partners


Date


FacilityProLogis North American Industrial Fund (1)

$
815.2


$



$
815.2


$
243.0


$
572.2


$
72.5


$
211.7



2/10


$
223.4ProLogis Mexico Industrial Fund (2)


155.0



189.8



344.8



155.8



189.0



44.3



246.7



8/10



ProLogis European Properties Fund II (2)(3)


2,604.3



84.0



2,688.3



1,172.1



1,516.2



830.4
(4)


1,253.1
(4)


8/10



77.7ProLogis Japan Properties Fund II (5)


876.8



83.7



960.5



555.0



405.5















ProLogis Korea Fund (2)


11.1



119.1



130.2



25.2



105.0



23.2



92.8



6/10



Total

$
4,462.4


$
476.6


$
4,939.0


$
2,151.1


$
2,787.9


$
970.4


$
1,804.3






$
301.1     (1)
    
    The investor agreements were modified in early 2009 to extend
    the remaining equity commitments through 2010, which were
    originally scheduled to expire in February 2009. In connection
    with the modifications, the commitments related to property
    contributions were eliminated and one investor did not extend
    its commitment. Amounts presented reflect these changes. We
    expect the remaining equity commitments to be used to pay down
    existing debt or to make opportunistic acquisitions, depending
    on market conditions and other factors.(2)
    
    We are committed to offer to contribute substantially all of the
    properties that we develop and stabilize in Europe, Mexico and
    South Korea to these respective funds. These property funds are
    committed to acquire such properties, subject to certain
    exceptions, including that the properties meet certain specified
    leasing and other criteria, and that the property funds have
    available capital. We are not obligated to contribute properties
    at a loss.Dependent on market conditions, we expect to make contributions
    of properties to these property funds in 2009. Given the current
    debt markets, it is likely that the acquisitions will be
    financed by the property funds with all equity. Generally, the
    properties are contributed based on third-party appraised value
    (see note 3 below).(3)
    
    During the fourth quarter, we modified the determination of the
    contribution value related to 2009 contributions to PEPF II.
    Once the capitalization rate is determined based on a third
    party appraisal, a margin of 0.25 to 0.75 percentage points
    is added depending on the quarter contributed. This modification
    was made due to the belief that appraisals were lagging true
    market conditions. The agreement provides for an adjustment in
    our favor if capitalization rates at the end of 2010 are lower
    than those used to determine contribution values.(4)
    
    PEPF IIs equity commitments are denominated in euro and
    include ProLogis of 568.1 million, PEPR of
    136.1 million and remaining fund partners of
    721.3 million. Our equity commitments include the 20%
    interest in PEPF II we acquired from PEPR in December 2008.(5)
    
    In connection with the sale of our investments in the Japan
    property funds, we entered into an agreement to sell a property
    in Japan to our fund partner in 2009, which will utilize the
    remaining equity commitment from our fund partner. This property
    is included in assets held for sale at December 31, 2008. 86




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
       2008NorthAmerica


Europe


Asia


TotalRevenues

$
835.8


$
665.6


$
299.6


$
1,801.0Net earnings (loss) (1)(2)

$
(24.2
)

$
(404.6
)

$
82.8


$
(346.0
)Total assets

$
9,979.2


$
8,982.9


$
5,821.6


$
24,783.7Amounts due to us

$
30.2


$
22.4


$
147.4


$
200.0Third party debt (3)

$
5,726.0


$
4,829.9


$
2,906.5


$
13,462.4Total liabilities

$
5,985.4


$
5,581.1


$
3,855.1


$
15,421.6Minority interest

$
10.7


$
19.8


$



$
30.5Equity

$
3,983.1


$
3,382.0


$
1,966.5


$
9,331.6Our weighted average ownership at end of period (4)


27.5%



30.2%



20.0%



26.9%Our investment balance (5)

$
941.7


$
634.6


$
381.7


$
1,958.0Deferred proceeds, net of amortization(6)

$
246.7


$
299.0


$
163.3


$
709.0   2007NorthAmerica


Europe


Asia


TotalRevenues

$
634.1


$
493.2


$
180.4


$
1,307.7Net earnings (1)(7)

$
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 (3)

$
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


$
2,457.9


$
1,259.8


$
7,056.5Our weighted average ownership at end of period (4)


27.9%



24.8%



20.0%



25.5%Our investment balance (5)

$
818.0


$
653.1


$
284.0


$
1,755.1Deferred proceeds, net of amortization (6)

$
216.4


$
193.9


$
127.0


$
537.3     (1)
    
    In North America, two of the property funds issued short-term
    bridge financing in 2007 to finance their acquisitions of
    properties from us and third parties and entered into interest
    rate swap contracts, designated as cash flow hedges, to mitigate
    interest expense volatility associated with movements of
    interest rates. Based on the anticipated refinancing of the
    bridge financings with long-term debt issuances, certain of
    these derivative contracts no longer met the requirements for
    hedge accounting and, therefore, the change in fair value of
    these contracts was recorded through earnings, along with the
    gain or loss on settlement. Included in net earnings (loss) from
    North America for 2008 are net losses of $77.0 million,
    which represent the losses recognized from the change in value
    and settlement of these contracts. We included our proportionate
    share of these losses of $28.2 million in Earnings (Loss)
    from Unconsolidated Property Funds for the year ended
    December 31, 2008 in our Consolidated Statements of
    Operations.We have recorded our proportionate share of the losses of the
    North America funds in the amount of $38.0 million that
    relate to the instruments that qualify for hedge accounting,
    including the outstanding contracts discussed above in
    Accumulated Other Comprehensive Income in Shareholders
    Equity. Once these contracts are settled, the amount of the gain
    or loss upon settlement that is recorded by the property funds
    in comprehensive income will be amortized over the life of the
    forecasted transaction. As discussed above, for the contracts
    that did not qualify for hedge accounting, we recognized our
    share of the gains or 87




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    losses in earnings. As of December 31, 2008, ProLogis North
    American Industrial Fund II has outstanding interest rate
    swap contracts, with notional amounts aggregating
    $223.2 million resulting in a liability at fair value of
    $48.0 million and swap rates ranging from 5.73% to 5.83%.In Japan, the property funds entered into swap contracts that
    fixed the interest rate of their variable rate debt. These
    contracts did not qualify for hedge accounting and any change in
    value of these contracts is recognized as an unrealized gain or
    loss in earnings over the term of the contract. These contracts
    have no cash settlement at the end of the contract term.
    Included in net earnings from Asia for the year ended
    December 31, 2008 are net losses of $20.3 million,
    which represent the change in value of these contracts. We
    included our proportionate share of these losses of
    $4.1 million in Earnings (Loss) from Unconsolidated
    Property Funds for the year ended December 31, 2008 in our
    Consolidated Statements of Operations.(2)
    
    Included in net loss for Europe in 2008 is the loss on sale and
    impairment of PEPRs ownership in PEPF II, as discussed
    above, of $434.3 million, of which $108.2 million was
    our share.(3)
    
    As of December 31, 2008 and 2007, we had not guaranteed any
    of the debt of the property funds.(4)
    
    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.(5)
    
    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 we have
    made to the property funds, generally timing related to fees.(6)
    
    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.(7)
    
    Included in net earnings for Europe in 2007 is a net gain of
    $155.8 million from the disposition of 47 properties by
    PEPR, of which $38.2 million was our proportionate share.  Other
    unconsolidated investees
    Years Ended December 31,2008


2007


2006North America

$
11,527


$
7,428


$
45,651Europe


1,815



(2,855
)


2,097Total earnings from other unconsolidated investees

$
13,342


$
4,573


$
47,748    88




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      2008


2007North America

$
150,963


$
146,221Europe


161,053



249,360Asia (1)






194,583Total

$
312,016


$
590,164     (1)
    
    As of December 31, 2008, all of our unconsolidated
    investees in China were recorded as held for sale. See
    Note 21.  6.
    Other
    Assets and Other Liabilities:    2008


2007Goodwill

$
395,626


$
530,760Value added taxes receivable


250,707



287,659Leasing commissions


115,194



135,662Rent leveling assets and above market leases


81,558



100,263Fixed assets


80,323



72,509Loan fees


39,327



40,954Non-qualified savings plan assets


24,901



53,113Other


141,546



187,894Totals

$
1,129,182


$
1,408,814     2008


2007Income tax liabilities

$
284,698


$
192,438Tenant security deposits


120,590



94,483Accrued disposition costs


91,476



90,998Deferred income taxes


82,928



107,620Unearned rents


60,331



55,073Non-qualified savings plan liabilities


27,206



41,558Value added taxes payable


10,571



73,896Below market leases


7,332



12,015Other


66,106



101,327Totals

$
751,238


$
769,408  89




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      Amortization


Net Charge toExpense


Rental Income2009

$
35,413


$
1,8472010


25,148



12,8322011


20,454



13,9132012


15,190



12,9402013


9,108



9,458Thereafter


9,881



23,236Total

$
115,194


$
74,226     7.
    Assets
    Held for Sale and Discontinued Operations:  Held for
    Sale
     90




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      As ofDecember 31,2008Assets  discontinued operations  assets
    held for sale:Investments in real estate assets:Completed industrial properties

$
471,221Properties under development


225,971Land held for development


245,965Other investments


147,3561,090,513Accumulated depreciation


(15,463
)Net investments in real estate assets


1,075,050Investments in and advances to unconsolidated investees:Property funds


32,952Other investees


247,507Total investments in and advances to unconsolidated investees


280,459Cash and cash equivalents


111,136Other assets


42,345Total assets before impairment


1,508,990Impairment of assets


(198,236
)Total assets  discontinued operations 
    assets held for sale

$
1,310,754Liabilities  discontinued operations 
    assets held for sale:Debt

$
218,463Other liabilities


104,547Minority interest


66,874Total liabilities  discontinued
    operations  assets held for sale

$
389,884     Discontinued
    Operations
   91




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      2008


2007


2006Revenues:Rental revenue

$
32,842


$
27,741


$
71,085CDFS dispositions proceeds  acquired property
    portfolios


83,648







Development management and other income


1,514



348



Total revenues


118,004



28,089



71,085Expenses:Rental expenses


18,143



7,643



29,307Cost of CDFS dispositions  acquired property
    portfolios


83,648







General and administrative


21,721



11,354



6,323Reduction in workforce


3,300







Depreciation and amortization


11,485



9,454



15,036Other expenses


5,088







Total expenses


143,385



28,451



50,666Operating income (loss)


(25,381
)


(362
)


20,419Other income (expense):Earnings (loss) from unconsolidated investees


(16,182
)


6,592



2,955Interest and other income, net


3,845



2,319



705Minority interest share in (earnings) loss


10,068



(1,189
)


(6
)Foreign currency exchange loss


(3,092
)


(217
)


(358
)Income taxes


(1,888
)


(2,044
)


(742
)Total other income (expense)


(7,249
)


5,461



2,554Income (loss) attributable to assets held for sale and disposed
    properties


(32,630
)


5,099



22,973Impairment related to assets held for sale  China
    operations


(198,236
)






Gains recognized on dispositions


19,501



81,497



137,243Total discontinued operations

$
(211,365
)

$
86,596


$
160,216     2008


2007


2006Non-CDFS business assets:Number of properties


9



75



74Net proceeds from dispositions

$
66,687


$
221,063


$
531,969Net gains from dispositions

$
9,718


$
52,776


$
103,729CDFS business assets:Number of properties


6



5



15Net proceeds from dispositions

$
60,741


$
205,775


$
245,500Net gains from dispositions

$
9,783


$
28,721


$
33,514  92




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    8.
    Debt:    2008


2007Global Line

$
2,617,764


$
1,955,138Credit Facility


600,519



609,222Senior and other notes


3,995,410



4,281,884Convertible senior notes


2,886,401



2,332,905Secured debt


877,916



1,294,809Assessment bonds


29,626



32,110Total

$
11,007,636


$
10,506,068   Unsecured
    Lines of Credit
  12-month
   93




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      Years Ended December 31,2008


2007


2006Weighted average daily interest rate


3.26
%


3.72
%


3.03
%Borrowings outstanding at December 31

$
3,218.3


$
2,564.4


$
2,462.8Weighted average daily borrowings

$
3,248.4


$
3,075.9


$
2,294.7Maximum borrowings outstanding at any month end

$
3,663.6


$
3,538.2


$
2,760.8Aggregate borrowing capacity of all lines of credit at December
    31

$
4,432.1


$
4,354.9


$
3,529.3Outstanding letters of credit under the lines of credit

$
142.4


$
148.2


$
129.1Aggregate remaining capacity available to us on all lines of
    credit at December 31

$
1,071.5


$
1,642.4


$
937.4   Senior
    and Other Notes
   94




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      Principal


CouponMaturity Date

Balance


RateSenior notes:March 1, 2009 (1)

$
18,750



8.72%May 15, 2009 (1)


9,375



7.88%August 24, 2009 (1)(2)


250,000



floatingNovember 15, 2010 (1)


190,278



5.25%April 1, 2012 (1)


450,000



5.50%March 1, 2013 (1)


300,000



5.50%February 1, 2015 (3)


100,000



7.81%March 1, 2015 (4)


50,000



9.34%November 15, 2015 (1)


400,000



5.63%April 1, 2016 (1)


400,000



5.75%May 15, 2016 (5)


50,000



8.65%November 15, 2016 (1)


550,000



5.63%July 1, 2017 (1)


100,000



7.63%May 1, 2018 (1)(6)


600,000



6.63%Total senior notes


3,468,403Other notes:November 20, 2009 (1)


25,000



7.30%April 13, 2011 (1)(7)


511,560



4.38%Total other notes


536,560Total par value


4,004,963Discount, net


(9,553)Total senior and other notes, net

$
3,995,410     (1)
    
    Principal due at maturity.(2)
    
    Represents $250.0 million of senior notes that bear
    interest at a variable rate based on LIBOR plus a margin (2.4%
    at December 31, 2008).(3)
    
    Beginning on February 1, 2010, and through February 1,
    2015, requires annual principal payments ranging from
    $10.0 million to $20.0 million.(4)
    
    Beginning on March 1, 2010, and through March 1, 2015,
    requires annual principal payments ranging from
    $5.0 million to $12.5 million.(5)
    
    Beginning on May 15, 2010, and through May 15, 2016,
    requires annual principal payments ranging from
    $5.0 million to $12.5 million.(6)
    
    We issued these notes in May 2008.(7)
    
    Represents 350.0 million notes. 95




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
           Convertible
    Notes
       96




---



##### Table of Contents



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


Carrying


Due atMaturity Date

Rate (1)


Date


Value


MaturityApril 1, 2012


7.05
%


(2
)

$
234,044


$
196,462August 1, 2015


5.47
%


(2
)


131,069


$
111,690April 12, 2016


7.25
%


(2
)


202,326


$
149,917April 1, 2024


7.58
%


(2
)


192,623


$
127,187Various


(3
)


(3
)


117,854



(3)Total secured debt (4)









$
877,916     (1)
    
    The weighted average annual interest rate for total secured debt
    was 6.73% for the year ended December 31, 2008.(2)
    
    Monthly amortization with a balloon payment due at maturity.(3)
    
    Includes 12 mortgage notes with interest rates ranging from 4.7%
    to 7.23%, maturing from 2009 to 2025, primarily requiring
    monthly amortization with a balloon payment at maturity. The
    combined balloon payment for all of the notes is $109.3 million.(4)
    
    Debt is secured by 185 real estate properties with an aggregate
    undepreciated cost of $1.9 billion at December 31,
    2008.  Assessment
    Bonds
    Debt
    Covenants
     97




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
        Long-Term
    Debt Maturities
    2009 (1)

$
339,2762010


249,9092011


561,5522012 (2)


3,074,0212013 (2)


926,631Thereafter


2,643,933Total principal due


7,795,322Discount, net


(5,969
)Total carrying value

$
7,789,353     (1)
    
    We have the intent and ability to pay the amounts due in 2009
    with available cash or borrowings under our available credit
    facilities.(2)
    
    The maturities in 2012 and 2013 included the aggregate principal
    amounts of the convertible notes of $2,370.5 million and
    $550.0 million, respectively, due to potential conversion
    and/or redemption in these years, as discussed above.  Interest
    Expense
    Years Ended December 31,2008


2007


2006Gross interest expense

$
477,933


$
487,410


$
397,453Amortization of premium, net


(702
)


(7,797
)


(13,861
)Amortization of deferred loan costs


12,759



10,555



7,673489,990



490,168



391,265Capitalized amounts


(148,685
)


(121,656
)


(95,636
)Net interest expense

$
341,305


$
368,512


$
295,629  98




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      9.
    Minority
    Interest:    2008


2007Type of Entity

Balance


Minority Interest


Balance


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

$
14,396



4-7
%

$
31,192



4-31
%North America  joint ventures


676



1-25
%


537



1-25
%Europe joint venture


4,806



50
%


6,286



50
%China joint ventures (4)










40,646



20-49
%$
19,878






$
78,661     (1)
    
    At December 31, 2008 and 2007, an aggregate of 1,233,566
    and 5,052,197 limited partnership units, respectively, held by
    minority interest holders are convertible into 1,234,556 and
    5,053,187 common shares, respectively. The majority of the
    outstanding limited partnership units are entitled to receive
    cumulative preferential quarterly cash distributions equal to
    the quarterly distributions paid on our common shares.(2)
    
    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.(3)
    
    In 2008, 3,911,923 of outstanding limited partnership units were
    converted into an equal number of common shares. Also in 2008,
    we issued 93,293 limited partnership units in exchange for a
    property that was contributed by a minority interest unitholder
    to the partnership.(4)
    
    Our China operations are classified as held for sale at
    December 31, 2008.  10.
    Shareholders
    Equity:  Shares
    Authorized
    Common
    Shares
   99




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    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:  Currently
    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. In 2008, 3.4 million shares were issued resulting in
    11.6 million shares available for future issuance.
    The Incentive Plan and Outside Trustees
    Plan:  Certain of our employees and outside
    trustees participate in share-based compensation plans that
    provide compensation, generally in the form of common shares.
    See Note 11 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 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, 2008, we have 4.7 million
    shares available under this plan.    2008


2007


2006Shares


Proceeds


Shares


Proceeds


Shares


Proceeds1999 Dividend Reinvestment Plan


335


$
4,376



66


$
4,145



69


$
3,738Controlled Equity Offering Program


3,367



196,381











5,383



320,786Incentive Plan and Outside Trustees Plan


1,603



16,359



1,781



31,151



1,460



31,350Employee Share Plan


76



1,950



44



2,140



39



1,643Total


5,381


$
219,066



1,891


$
37,436



6,951


$
357,517       Preferred
    Shares
   100




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
        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
     101




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    Distributions
    and Dividends
    Years Ended December 31,2008


2007


2006Per common share:Ordinary income

$
1.01


$
0.89


$
0.95Qualified dividend


0.01







0.04Capital gains


1.05



0.64



Return of capital






0.31



0.61Total distribution

$
2.07


$
1.84


$
1.60Per preferred share  Series C:Ordinary income

$
2.07


$
2.47


$
4.10Qualified dividend


0.03







0.17Capital gains


2.17



1.80



Total dividend

$
4.27


$
4.27


$
4.27Per preferred share  Series F:Ordinary income

$
0.82


$
0.98


$
1.62Qualified dividend


0.01







0.07Capital gains


0.86



0.71



Total dividend

$
1.69


$
1.69


$
1.69Per preferred share  Series G:Ordinary income

$
0.82


$
0.98


$
1.62Qualified dividend


0.01







0.07Capital gains


0.86



0.71



Total dividend

$
1.69


$
1.69


$
1.69      102




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
          11.
    Long-Term
    Compensation:    Share
    Options
   103




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      WeightedAverageNumber of





Expiration

Remaining LifeOptions


Exercise Price


Date

(in years)Outside trustees


100,000



$19.75 - $43.80


2009-2015


3.64Incentive Plan:1999 grants


513,826



$17.19 - $18.63


2009


0.72000 grants


534,736



$21.75 - $24.25


2010


1.72001 grants


332,485



$20.67 - $22.02


2011


2.72002 grants


583,185



$22.98 - $24.76


2012


3.72003 grants


808,317



$24.90 - $31.26


2013


4.72004 grants


1,332,530



$29.41 - $41.50


2014


5.72005 grants


811,199



$40.86 - $45.46


2015


6.92006 grants


637,034



$53.07 - $59.92


2016


8.02007 grants


747,459



$60.60 - $64.82


2017


9.02008 grants


1,378,976



$6.87 - $61.75


2018


9.9Total


7,779,747









6.1     Options Outstanding


Options ExercisableWeighted





Weighted


WeightedAverage





Average


AverageNumber of


Exercise


Number of


Exercise


LifeOptions


Price


Options


Price


(in years)Balance at January 1, 2008


7,998,410


$
36.63Granted


1,378,976



7.02Exercised


(1,066,461
)


23.92Forfeited


(531,178
)


56.61Balance at December 31, 2008


7,779,747


$
31.76



5,526,718


$
32.71



4.8       Weighted-AverageNumber of


Grant-DateShares


Fair ValueBalance at January 1, 2008


2,494,128


$
9.33Granted


1,378,976



2.38Vested


(1,181,825
)


8.95Forfeited


(438,250
)


10.53Balance at December 31, 2008


2,253,029


$
5.04  104




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    Full
    Value Awards
                   105




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##### Table of Contents



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


Weighted Average


Number ofShares


Original Value


Vested SharesBalance at January 1, 2008


2,554,786


$
50.50



829,689Granted


1,780,365



12.57Distributed


(438,702
)


36.20Forfeited


(515,440
)


39.01Balance at December 31, 2008


3,381,009


$
34.13



844,602       Weighted-AverageNumber of


Grant-DateShares


Fair ValueBalance at January 1, 2008


1,725,097


$
57.55Granted


1,780,365



12.57Vested


(453,615
)


39.59Forfeited


(515,440
)


39.01Balance at December 31, 2008


2,536,407


$
32.96   Compensation
    Expense
      Years Ended December 31,2008


2007


2006Risk-free interest rate


2.56
%


3.78
%


4.51
%Dividend yield


1.92
%


3.44
%


3.40
%Volatility


40.35
%


23.43
%


19.46
%Weighted average option life


5.8 years



5.8  years



5.8  years    106




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      Other
    Plans
      12.
    Reduction
    in Workforce:    13.
    Impairment
    Charges:    Impairment
    of Real Estate Properties
  and/or
 107




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      Land

$
194,137Properties under development


19,814Completed properties


15,026Pre-development costs


45,728Total

$
274,705   Impairment
    of Goodwill and Other Assets
      14. Income
    Taxes:
  Liability
    for Unrecognized Tax Benefits
     108




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
          2008


2007Balance at January 1,

$
192,438


$
172,650Additions based on tax positions related to the current year


4,785



8,501Additions for tax positions of prior years


143,045



16,109Reductions for tax positions of prior years


(49,168
)


(2,322
)Reductions due to lapse of applicable statute of limitations


(6,402
)


(2,500
)Balance at December 31,

$
284,698


$
192,438   Components
    of Earnings (Loss) before Income Taxes
    2008


2007


2006Domestic

$
59,321


$
275,334


$
349,602International


(186,718
)


779,265



394,335Total

$
(127,397
)

$
1,054,599


$
743,937   Summary
    of Current and Deferred Income Taxes
    2008


2007


2006Current income tax expenseFederal

$
30,020


$
28,264


$
49,900Non-U.S


32,283



35,423



19,512State and local


1,138



2,652



14,096Total Current


63,441



66,339



83,508Deferred income tax (benefit) expenseFederal


9,637



(16,197
)


(26,382
)Non-U.S


(5,067
)


16,713



(27,340
)Total Deferred


4,570



516



(53,722
)Total income tax expense

$
68,011


$
66,855


$
29,786  109




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    Current
    Income Taxes
    Deferred
    Income Taxes
     110




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      2008


2007Deferred income tax assets:Net operating loss carryforwards (1)

$
17,775


$
22,139Basis difference  real estate properties


6,378



8,060Alternative minimum tax credit carryforward


921



786Other  temporary differences


14,754



15,007Total deferred income tax assets


39,828



45,992Valuation allowance






(675
)Net deferred income tax assets


39,828



45,317Deferred income tax liabilities:Basis difference  real estate properties


5,009



50,698Built-in gains  real estate properties


23,279



29,802Basis difference  equity investees


11,210



11,554Built-in gains  equity investees


24,741



26,597Indemnification liabilities


38,412



15,451Other  temporary differences


20,105



18,835Total deferred income tax liabilities


122,756



152,937Net deferred income tax liabilities

$
82,928


$
107,620     (1)
    
    At December 31, 2008, we had net operating loss
    (NOL) carryforwards for U.S. federal income tax
    purposes of $45.9 million. If not utilized, the U.S. NOLs
    expire between 2022 and 2027.  Indemnification
    Agreements
     111




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
        15.
    Earnings
    Per Common Share:      Years Ended December 31,2008(1)


2007


2006Net earnings (loss) attributable to common shares

$
(432,196
)

$
1,048,917


$
848,951Minority interest (2)






4,814



3,451Adjusted net earnings (loss) attributable to common shares

$
(432,196
)

$
1,053,731


$
852,402Weighted average common shares outstanding  Basic


262,729



256,873



245,952Incremental weighted average effect of conversion of limited
    partnership units






5,078



5,198Incremental weighted average effect of share awards (3)






5,275



5,702Weighted average common shares outstanding  Diluted


262,729



267,226



256,852Net earnings (loss) per share attributable to common
    shares  Basic

$
(1.65
)

$
4.08


$
3.45Net earnings (loss) per share attributable to common
    shares  Diluted

$
(1.65
)

$
3.94


$
3.32     (1)
    
    In periods with a net loss, the inclusion of any incremental
    shares is anti-dilutive, and, therefore, both basic and diluted
    shares are the same.(2)
    
    Includes the minority interest related to the convertible
    limited partnership units, which are included in incremental
    shares.(3)
    
    Total weighted average potentially dilutive share awards
    outstanding for 2007 and 2006 (in thousands) were 10,098 and
    10,909, respectively. The majority of potentially dilutive share
    awards were dilutive for both periods. 112




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     16.
    Related
    Party Transactions:    17.
    Financial
    Instruments:  Derivative
    Financial Instruments
          Foreign Currency


Foreign Currency


InterestPut Options (1)


Forwards (2)


Rate Swaps (3)Notional amounts at January 1, 2006

$



$



$
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



New contracts










250.0Matured or expired contracts






(360.7
)


(250.0
)Notional amounts at December 31, 2008

$



$



$
     (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. 113




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     These contracts do not qualify for hedge accounting treatment
    and are marked-to-market through earnings at the end of each
    period. We did not recognize any expense in 2008 or 2007, and
    net expense of $1.5 million in 2006.(2)
    
    The foreign 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
    associated intercompany loans. We had no forward contracts
    related to intercompany loans outstanding at December 31,
    2008. We recognized net losses of $3.1 million,
    $95.9 million and $13.3 million for the years ended
    December 31, 2008, 2007 and 2006, respectively, related to
    these contracts.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 5).
    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 included in earnings. 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 Foreign Currency Exchange Gains (Losses), Net for the year
    ended December 31, 2007.(3)
    
    During 2008, 2007 and 2006, we entered into several contracts
    with total notional amounts of $250.0 million,
    $959.2 million, and $350.0 million, respectively,
    associated with an anticipated debt issuance.  
    
    During 2008, in connection with the issuance of senior notes and
    convertible senior notes, we entered into contracts that
    qualified as cash flow hedges and recognized a decrease in value
    of $3.3 million, associated with the unwinding of these
    contracts, in Accumulated Other Comprehensive Income (Loss) and
    began amortizing as an increase to interest expense as interest
    payments are made on the related 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, at which
    time the contracts qualified for hedge accounting treatment by
    the fund. See Note 5 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. See Note 5 for
    additional information on these contracts.
    
    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, we
    unwound the contracts, recognized a decrease in value of
    $1.4 million associated with these contracts in Accumulated
    Other Comprehensive Income (Loss) and began amortizing as an
    increase to interest expense as interest payments are made on
    the senior notes. 114




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     
    
    In 2006, all 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. All of the contracts were settled as of
    December 31, 2006 and we recognized a decrease in value of
    $13.1 million associated with these contracts in
    Accumulated Other Comprehensive Income (Loss) as of
    December 31, 2006. 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.  Fair
    Value of Financial Instruments
      
    Level 1  Quoted prices in active markets for
    identical assets or liabilities that the entity has the ability
    to access.
    Level 2  Observable inputs, other than quoted
    prices included in Level 1, such as quoted prices for
    similar assets and liabilities in active markets; quoted prices
    for identical or similar assets and liabilities in markets that
    are not active; or other inputs that are observable or can be
    corroborated by observable market data.
    Level 3  Unobservable inputs that are supported
    by little or no market activity and that are significant to the
    fair value of the assets and liabilities. This includes certain
    pricing models, discounted cash flow methodologies and similar
    techniques that use significant unobservable inputs.  and/or
 115




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      December 31,2008


2007Carrying





CarryingValue


Fair Value


Value


Fair ValueDebt:Lines of Credit

$
3,218,283


$
3,175,128


$
2,564,360


$
2,564,360Senior and other notes


3,995,410



2,284,892



4,281,884



4,224,831Convertible notes


2,886,401



1,289,163



2,332,905



2,249,341Secured debt


877,916



837,727



1,294,809



1,283,779Assessment bonds


29,626



32,903



32,110



31,473Total debt

$
11,007,636


$
7,619,813


$
10,506,068


$
10,353,784Derivative contracts  foreign currency forwards

$



$



$
773


$
773   18.
    Commitments
    and Contingencies:  Environmental
    Matters
    Off-Balance
    Sheet Liabilities
       116




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
        19.
    Business
    Segments:    
    Direct Owned (previously referred to as 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. The costs of our property management function for both
    our direct-owned portfolio and the properties owned by
    unconsolidated investees and managed by us are all reported in
    rental expenses in the direct owned segment. Our operations in
    the direct owned business segment are in North America (Canada,
    Mexico and the United States), Europe (Austria, Belgium, the
    Czech Republic, France, Germany, Hungary, Italy, the
    Netherlands, Poland, Romania, Slovakia, Spain, Sweden and the
    United 117




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      
    Investment Management  representing the long-term
    investment management of property funds and industrial and
    retail joint ventures and the properties they own. We recognize
    our proportionate share of the earnings or losses from our
    investments in unconsolidated property funds and joint ventures
    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
    unconsolidated investees and interest income earned on advances
    to unconsolidated investees, if any. We utilize our leasing and
    property management expertise to efficiently manage the
    properties and our unconsolidated investees, and we report the
    costs as part of rental expenses in the property operations
    segment. Each investment in a property fund or joint venture 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 (Canada,
    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 were subsequently contributed to
    a property fund in which we had an ownership interest and acted
    as manager, or sold to third parties. Additionally, we acquired
    properties with the intent to rehabilitate
    and/or
    reposition the property 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 Operations. In addition, we
    occasionally acquired 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 Operations. During the period between the
    completion of development, rehabilitation or repositioning of a
    property and the date the property is contributed to a property
    fund or sold to a third party, the property and its associated
    rental income and rental expenses were included in the direct
    owned segment because the primary activity associated with the
    property during that period is leasing. Upon contribution or
    sale, the resulting gain or loss is included in the income of
    the CDFS business segment. Additionally, we include fees earned
    for development activities performed on behalf of customers or
    third parties and gains on the disposition of land parcels,
    including land subject to ground leases in the CDFS segment. The
    separate activities in this segment are considered to be
    individual operating segments having similar economic
    characteristics that are combined within the reportable segment
    based upon geographic location. Our CDFS business segment
    operations in 2008 were in North America (Canada, Mexico and the
    United States), in Europe (the Czech Republic, France, Germany,
    Hungary, Italy, the Netherlands, Poland, Slovakia, Spain, Sweden
    and the United Kingdom) and in Asia (Japan and South Korea).     118




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
       119




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      Years Ended December 31,2008


2007


2006Revenues (1):Direct Owned (2):North America

$
820,045


$
859,685


$
803,018Europe


100,183



114,218



35,619Asia


33,638



35,270



26,508Total direct owned segment


953,866



1,009,173



865,145Investment management (3):North America


68,994



65,603



158,528Europe


(41,884
)


100,164



168,227Asia


39,331



30,184



20,225Total investment management segment


66,441



195,951



346,980CDFS business (4):North America


1,045,705



2,885,906



508,185Europe


2,623,313



1,498,821



450,154Asia


853,025



655,074



382,675Total CDFS business segment


4,522,043



5,039,801



1,341,014Total segment revenue


5,542,350



6,244,925



2,553,139Other  North America


48,627



43,046



36,809Reconciling items (5)


63,849



(99,299
)


(151,781
)Total revenues

$
5,654,826


$
6,188,672


$
2,438,167Net operating income:Direct owned(6):North America

$
570,580


$
636,752


$
600,259Europe


46,570



74,950



18,865Asia


24,595



27,869



24,241Total direct owned segment


641,745



739,571



643,365Investment management (3):North America


68,994



65,603



158,528Europe


(41,884
)


100,164



168,227Asia


39,331



30,184



20,225Total investment management segment


66,441



195,951



346,980CDFS business (7):North America


122,828



255,869



135,703Europe


311,008



288,924



107,079Asia


224,043



241,388



91,752Total CDFS business segment


657,879



786,181



334,534Total segment net operating income


1,366,065



1,721,703



1,324,879Other  North America


35,699



28,227



22,535Reconciling items:Earnings from other unconsolidated investees


8,796



7,794



5,752General and administrative expenses


(204,300
)


(193,204
)


(147,193
)Reduction in workforce


(23,131
)






Impairment of real estate properties (8)


(274,705
)


(12,600
)


Depreciation and amortization expense


(339,491
)


(302,413
)


(283,306
)Impairment of goodwill and other assets (9)


(320,636
)






Gain on early extinguishment of debt


90,719







Other expenses


(459
)


(443
)


(459
)Interest expense


(341,305
)


(368,512
)


(295,629
)Interest and other income, net


15,801



24,062



17,895Total reconciling items


(1,388,711
)


(845,316
)


(702,940
)Total earnings before minority interest

$
13,053


$
904,614


$
644,474   120




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    December 31,2008


2007Assets (10):Direct owned:North America (9)

$
8,784,687


$
7,971,582Europe(9)


3,993,223



1,900,327Asia


1,740,509



940,827Total direct owned segment


14,518,419



10,812,736Investment management (11):North America


1,004,811



818,025Europe (9)


803,235



653,076Asia


382,014



284,012Total investment management segment


2,190,060



1,755,113CDFS business (12):North America






1,596,659Europe (9)






2,996,415Asia






1,184,276Total CDFS business segment






5,777,350Total segment assets


16,708,479



18,345,199Other  North America


760,644



636,073Reconciling items:Investments in and advances to other unconsolidated investees


105,219



106,683Cash and cash equivalents


174,636



399,910Accounts and notes receivable


2,253



17,290Other assets


190,231



199,272Discontinued operations  assets held for sale


1,310,754



19,607Total reconciling items


1,783,093



742,762Total assets

$
19,252,216


$
19,724,034     (1)
    
    Includes revenues attributable to the United States for the
    years ended December 31, 2008, 2007 and 2006 of
    $1,698.4 million, $3,571.9 million and
    $1,419.0 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 investments in unconsolidated property funds and
    certain industrial and retail joint ventures along with interest
    earned on advances to these unconsolidated investees. In 2008,
    the net operating income of this segment was reduced by
    $108.2 million representing our proportionate share of the
    loss on sale/impairment recognized by one of the property funds
    in Europe. See Note 5 for more information.(4)
    
    Includes proceeds received on CDFS property dispositions, fees
    earned from customers and third parties for development
    activities and interest income on notes receivable related to
    asset dispositions.(5)
    
    Amount represents the earnings or losses recognized under the
    equity method from our investments in unconsolidated investees
    that are reflected in the revenues of the investment management
    segment and interest income on notes receivable related to asset
    dispositions that are reflected in revenues of the CDFS business
    segment. These items are not presented as a component of
    revenues in our Consolidated Statements of Operations. 121




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     (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 and joint
    ventures.(7)
    
    Includes net gains on CDFS property dispositions, fees earned
    from customers and third parties for development activities and
    interest income on notes receivable related to asset
    dispositions, offset 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)
    
    During 2008, we recognized certain impairment charges on our
    real estate properties in our Direct Owned segment
    ($21.0 million in North America and $253.7 million in
    Europe). See Note 13 for more discussion of these charges.(9)
    
    During 2008, in connection with the changes in our business
    strategy, we transferred the investment and development
    activities previously included in the CDFS business segment,
    along with the related assets, to the direct owned and
    investment management segments (Europe reporting unit). The
    related goodwill was transferred to the respective segments
    based on the relative fair value of the assets transferred. In
    connection with our review of goodwill for recoverability in the
    fourth quarter of 2008, we recognized an impairment charge of
    $175.4 million related to goodwill in the direct owned
    segment in Europe. The goodwill balance attributable to a
    segment as of December 31 2008, subsequent to impairment and
    reallocation, was $388.0 million, of which
    $362.7 million was attributable to the direct owned segment
    ($235.4 million in North America and $127.3 million in
    Europe) and $25.3 million was attributable to the
    investment management segment in Europe. The goodwill balance
    attributable to a segment at December 31, 2007 was
    $523.2 million, $177.4 million was attributable to the
    direct owned segment in North America and $345.8 million
    was attributable to the CDFS business segment in Europe. In both
    periods, $7.6 million was not attributable to a segment.
    See Note 13 for additional information.(10)
    
    Includes long-lived assets attributable to the United States as
    of December 31, 2008 and 2007 of $9.5 billion and
    $9.2 billion, respectively.(11)
    
    Represents our investments in and advances to the property funds
    and certain investments in industrial and retail joint ventures.(12)
    
    As discussed earlier, the assets from the CDFS business segment
    were transferred to our two existing segments at
    December 31, 2008.  20.
    Supplemental
    Cash Flow Information:    
    We received $455.0 million, $351.3 million and
    $128.0 million of equity interests in property funds from
    the contribution of properties to these property funds during
    2008, 2007 and 2006, respectively. In 2007, in connection with
    these contributions, we recorded $51.6 million in potential
    liabilities for future obligations we may have associated with
    these transactions.
    We capitalized portions of the total cost of our share-based
    compensation awards of $12.1 million, $10.8 million
    and $8.4 million to the investment basis of our real estate
    and other assets during the years ended December 31, 2008,
    2007, and 2006, respectively.
    We assumed $6.6 million, $27.3 million, and
    $141.6 million of secured debt and other liabilities in
    2008, 2007 and 2006, respectively, in connection with the
    acquisition of properties and operating receivables and
    liabilities of $19.0 million and $22.6 million,
    respectively, in 2006 in connection with the acquisition of
    properties.
    We recorded $6.7 million and $27.8 million of minority
    interest liabilities associated with investments made in
    entities that we consolidate and own less that 100% in 2008 and
    2007, respectively. 122




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     
    We settled $21.3 million, $4.4 million and
    $6.5 million of minority interest liabilities with the
    conversion of limited partnership units into 3.9 million
    common shares, 128,000 common shares and 180,000 common shares
    in 2008, 2007 and 2006, respectively.
    As partial consideration for property contributions in 2008, the
    China property fund assumed $47.9 million in construction
    liabilities and in 2006 we received $1.9 million in the
    form of notes receivable from ProLogis North American Properties
    Fund V.
    We recognized a $9.3 million increase in the liability for
    unrecognized tax benefits, which was accounted for as a
    reduction to the January 1, 2007 balance of retained
    earnings in connection with the adoption of the provisions of
    FIN 48.


    In connection with the acquisition of all of the units in MPR in
    July 2007 (see Note 5), 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 began accounting for our
    investment in this property fund under the equity method of
    accounting. This transaction resulted in 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.
    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 5 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.
    In connection with the purchase of the 80% ownership interests
    held by our fund partner in three of our North American property
    funds in 2006, we assumed $418.0 million of secured debt
    (which was later assumed by the North American Industrial Fund).
    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.    21.
    Subsequent
    Event:       123




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    22.
    Selected
    Quarterly Financial Data (Unaudited):    Three Months Ended,March 31,


June 30,


September 30,


December 31,2008:Total revenues

$
1,646,139


$
1,508,149


$
1,008,292


$
1,492,246Operating income (loss)

$
358,617


$
267,008


$
143,109


$
(145,207
)Earnings (loss) from continuing operations

$
197,729


$
231,198


$
51,624


$
(675,959
)Net earnings (loss) attributable to common shares

$
194,005


$
217,392


$
43,472


$
(887,065
)Net earnings (loss) per share attributable to common
    shares  Basic (1)

$
.75


$
.83


$
.17


$
(3.34
)Net earnings (loss) per share attributable to common
    shares  Diluted (1) (2)

$
.73


$
.80


$
.16


$
(3.34
)2007:Total revenues

$
952,804


$
984,228


$
3,456,837


$
794,803Operating income

$
321,210


$
298,626


$
350,489


$
171,646Earnings from continuing operations

$
229,017


$
365,898


$
297,295


$
95,534Net 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


$
.43     (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.(2)
    
    In periods with a net loss, the inclusion of any incremental
    shares is anti-dilutive, and therefore, both basic and diluted
    loss per share is the same. 124




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM         KPMG LLP
    125




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##### Table of Contents





PROLOGIS
    SCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION
    December 31, 2008
    (In thousands of U.S. dollars, as applicable)
  Gross Amounts AtCosts


Which Carried as ofInitial Cost to ProLogis


Capitalized


December 31, 2008


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 West Distribution Center

17

(e)


10,128



46,784



15,197



10,103



62,006



72,109



(21,474
)

1994, 1996,
    2005, 2006Atlanta NE Distribution Center

8

(e)


5,582



3,047



26,910



6,356



29,183



35,539



(12,252
)

1996, 1997Berkeley Lake Distribution Center

1




2,178



8,712



185



2,225



8,850



11,075



(574
)

2006Braselton Business Park

1




3,860



15,258







3,860



15,258



19,118



(365
)

2008Buford Distribution Center (d)

1




1,487







5,056



1,501



5,042



6,543



(46
)

2007Cedars Distribution Center

1




1,366



7,739



3,016



1,719



10,402



12,121



(3,635
)

1999Douglas Hill Distribution Center

5




16,647



46,825



30,617



16,860



77,229



94,089



(7,148
)

2005, 2006Greenwood Industrial Park (d)

1




3,989







21,714



4,047



21,656



25,703



(844
)

2006Horizon Distribution Center

1




2,846



11,385



152



2,878



11,505



14,383



(749
)

2006International Airport Industrial Center

9




2,939



14,146



8,249



3,029



22,305



25,334



(10,417
)

1994, 1995LaGrange Distribution Center

1




174



986



720



178



1,702



1,880



(1,017
)

1994Midland Distribution Center

1




1,919



7,679



1,417



1,944



9,071



11,015



(560
)

2006New Manchester DC Center

1




3,323



13,334



893



3,363



14,187



17,550



(246
)

2007Northeast Industrial Center

3




841



4,744



2,225



799



7,011



7,810



(3,695
)

1996Northmont Industrial Center

1




566



3,209



1,050



577



4,248



4,825



(2,231
)

1994Peachtree Corners Business Center

5




1,519



7,253



2,150



1,544



9,378



10,922



(3,234
)

1994, 2006Piedmont Ct. Distribution Center

2




885



5,013



2,560



904



7,554



8,458



(3,897
)

1997Plaza Industrial Center

1




66



372



260



67



631



698



(303
)

1995Pleasantdale Industrial Center

2




541



3,184



1,163



552



4,336



4,888



(2,234
)

1995Riverside Distribution Center

3




2,533



13,336



3,008



2,599



16,278



18,877



(5,583
)

1999South Royal Atlanta Distribution Center

1




356



2,019



283



362



2,296



2,658



(466
)

2002Tradeport Distribution Center

3

(e)


1,464



4,563



7,134



1,509



11,652



13,161



(5,669
)

1994, 1996Weaver Distribution Center

2




935



5,182



2,088



954



7,251



8,205



(3,544
)

1995Westfork Industrial Center

10

(e)


2,483



14,115



3,619



2,488



17,729



20,217



(8,299
)

1995Total Atlanta, Georgia

81




68,627



238,885



139,666



70,418



376,760



447,178



(98,482
)Austin, TexasCorridor Park Corporate Center

6




1,652



1,681



15,144



2,155



16,322



18,477



(7,922
)

1995, 1996Montopolis Distribution Center

1




580



3,384



1,221



591



4,594



5,185



(2,599
)

1994Rutland Distribution Center

2




460



2,617



854



471



3,460



3,931



(1,714
)

1993Southpark Corporate Center

2




684







4,978



697



4,965



5,662



(2,308
)

1994Walnut Creek Corporate Center

5




1,615



8,204



1,522



1,680



9,661



11,341



(1,945
)

1994, 2008Total Austin, Texas

16




4,991



15,886



23,719



5,594



39,002



44,596



(16,488
)Central Valley, CaliforniaCentral Valley Distribution Center

1




2,233



13,432



431



2,269



13,827



16,096



(4,477
)

1999Central Valley Industrial Center

4

(e)


11,418



48,726



5,963



12,017



54,090



66,107



(12,614
)

1999, 2002,
    2005Manteca Distribution Center

1

(e)


9,280



27,841



64



9,365



27,820



37,185



(3,074
)

2005Patterson Pass Business Center

6




3,520



4,885



17,272



3,577



22,100



25,677



(6,505
)

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

1








20,384



6,693



4,134



22,943



27,077



(90
)

2007Total Central Valley, California

13




26,451



115,268



30,423



31,362



140,780



172,142



(26,760
)Charlotte, North CarolinaBarringer Industrial Center

3




308



1,746



1,048



315



2,787



3,102



(1,456
)

1994Bond Distribution Center

2




905



5,126



2,243



923



7,351



8,274



(3,551
)

1994Charlotte Commerce Center

10

(e)


4,341



24,954



9,017



4,429



33,883



38,312



(17,906
)

1994Charlotte Distribution Center

9

(e)


4,578







26,302



6,166



24,714



30,880



(10,985
)

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

3




948



3,030



5,186



974



8,190



9,164



(2,051
)

1997, 2006Northpark Distribution Center

2

(e)


1,183



6,707



2,335



1,207



9,018



10,225



(3,907
)

1994, 1998 126




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##### Table of Contents



PROLOGIS
    SCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2008
    (In thousands of U.S. dollars, as applicable)
  Gross Amounts AtCosts


Which Carried as ofInitial Cost to ProLogis


Capitalized


December 31, 2008


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionWest Pointe Business Center (d)

1




2,416







8,353



2,441



8,328



10,769



(171
)

2006Wilson Business Park Distribution Center

1




976



5,598







983



5,591



6,574



(344
)

2007Total Charlotte, North Carolina

31




15,655



47,161



54,484



17,438



99,862



117,300



(40,371
)Chicago, IllinoisAddison Distribution Center

1




646



3,662



823



651



4,480



5,131



(1,956
)

1997Alsip Distribution Center

2




2,093



11,859



8,438



2,600



19,790



22,390



(10,643
)

1997, 1999Arlington Heights Distribution Center

1




831



3,326



20



841



3,336



4,177



(274
)

2006Bedford Park Industrial Center

1




941



4,907



2,011



959



6,900



7,859



(622
)

2005Bensenville Distribution Center

2




1,668



9,448



5,518



1,705



14,929



16,634



(7,925
)

1997Bolingbrook Distribution Center

6




16,178



73,755



1,950



16,183



75,700



91,883



(13,540
)

1999, 2003,
    2006Des Plaines Distribution Center

3




2,158



12,232



4,858



2,202



17,046



19,248



(8,350
)

1995, 1996Elk Grove Distribution Center

25




20,516



94,843



20,583



20,707



115,235



135,942



(30,373
)

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

1




713



4,043



971



726



5,001



5,727



(2,131
)

1997Glendale Heights Distribution Center

3

(e)


3,903



22,119



2,712



3,968



24,766



28,734



(8,104
)

1999Glenview Distribution Center

2




1,156



6,550



1,715



1,177



8,244



9,421



(3,386
)

1996, 1999I-55 Distribution Center (d)

2




5,383



25,504



21,271



10,602



41,556



52,158



(1,148
)

2007Itasca Distribution Center

2




604



3,382



851



615



4,222



4,837



(1,924
)

1996, 1997Lombard Distribution Center

1




1,170



6,630



397



1,189



7,008



8,197



(2,372
)

1999Minooka Distribution Center

2

(e)


12,240



41,745



15,301



12,359



56,927



69,286



(4,654
)

2005, 2008Mitchell Distribution Center

1




1,236



7,004



1,961



1,259



8,942



10,201



(4,373
)

1996North Avenue Distribution Center

2




3,201







8,729



2,074



9,856



11,930



(3,999
)

1997, 1998Northbrook Distribution Center

1




2,056



8,227



199



2,079



8,403



10,482



(504
)

2007Northlake Distribution Center

1




372



2,106



688



379



2,787



3,166



(1,287
)

1996Pleasant Prairie Distribution Center

1




1,314



7,450



2,148



1,339



9,573



10,912



(2,796
)

1999Rochelle Distribution Center (d)

1




4,457



20,100







4,457



20,100



24,557






2008Romeoville Distribution Center

6

(e)


23,731



96,764



915



24,006



97,404



121,410



(12,196
)

1999, 2005S.C. Johnson & Son (d)

1




2,267



15,911







2,267



15,911



18,178






2008Waukegan Distribution Center

2




4,368



17,632



274



4,418



17,856



22,274



(1,124
)

2007West Chicago Distribution Center

1




3,125



12,499



21



3,160



12,485



15,645



(1,339
)

2005Woodale Distribution Center

1




263



1,490



445



268



1,930



2,198



(863
)

1997Woodridge Distribution Center

14

(e)


46,575



197,289



8,848



50,514



202,198



252,712



(20,738
)

2005, 2007Total Chicago, Illinois

86




163,165



710,477



111,647



172,704



812,585



985,289



(146,621
)Cincinnati, OhioAirpark Distribution Center

2

(e)


1,128







11,558



1,744



10,942



12,686



(4,563
)

1996Capital Distribution Center II

5

(e)


1,953



11,067



4,452



1,992



15,480



17,472



(7,992
)

1994Constitution Distribution Center

1




1,465



8,301



642



1,488



8,920



10,408



(2,982
)

1999Dues Drive Distribution Center

1




921



5,218



1,814



939



7,014



7,953



(1,054
)

2003Empire Distribution Center

3

(e)


529



2,995



2,234



542



5,216



5,758



(2,640
)

1995Enterprise Distribution Center

1




1,275



7,222



35



1,294



7,238



8,532



(534
)

2005Fairfield Business Center

1




348



1,971



573



388



2,504



2,892



(436
)

2004Fairfield Distribution Center

1




586



3,319



1,199



597



4,507



5,104



(911
)

2002Park I-275 (d)

1




3,899



12,014







3,899



12,014



15,913






2008Production Distribution Center

2




717



2,717



2,855



838



5,451



6,289



(1,976
)

1994, 1998Sharonville Distribution Center

3

(e)


1,761







12,228



2,456



11,533



13,989



(3,685
)

1997, 1998Total Cincinnati, Ohio

21




14,582



54,824



37,590



16,177



90,819



106,996



(26,773
)Columbus, OhioBrookham Distribution Center

2




5,964



23,858



2,670



6,038



26,454



32,492



(2,936
)

2005Canal Pointe Distribution Center

1




1,237



7,013



1,685



1,303



8,632



9,935



(2,373
)

1999Capital Park South Distribution Center

3

(e)


1,588







23,983



2,038



23,533



25,571



(9,245
)

1996 127




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##### Table of Contents



PROLOGIS
    SCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2008
    (In thousands of U.S. dollars, as applicable)
  Gross Amounts AtCosts


Which Carried as ofInitial Cost to ProLogis


Capitalized


December 31, 2008


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionCharter Street Distribution Center

1




1,245



7,055



367



1,265



7,402



8,667



(2,380
)

1999Corporate Park West

2

(e)


679



3,847



1,758



693



5,591



6,284



(2,539
)

1996Etna Distribution Center (d)

1




3,308







13,603



1,707



15,204



16,911



(62
)

2007Fisher Distribution Center

1

(e)


1,197



6,785



2,419



1,221



9,180



10,401



(5,038
)

1995Foreign Trade Center I

5

(e)


6,527



36,989



6,477



7,105



42,888



49,993



(13,874
)

1999McCormick Distribution Center

5

(e)


1,664



9,429



7,575



1,706



16,962



18,668



(7,298
)

1994New World Distribution Center

1




207



1,173



1,924



214



3,090



3,304



(1,832
)

1994South Park Distribution Center

2

(e)


3,344



15,182



1,204



3,388



16,342



19,730



(3,154
)

1999, 2005Westbelt Business Center

3




1,777



7,168



34



1,797



7,182



8,979



(630
)

2006Westpointe Distribution Center

2




1,450



7,601



343



1,471



7,923



9,394



(444
)

2007Wingate Distribution Center

1




152



859



427



155



1,283



1,438



(540
)

1994Total Columbus, Ohio

30




30,339



126,959



64,469



30,101



191,666



221,767



(52,345
)Dallas/Fort Worth, TexasAlliance Distribution Center

1




3,654



14,613



2



3,695



14,574



18,269



(1,603
)

2005Carter Industrial Center

1




334







2,332



340



2,326



2,666



(1,012
)

1996Centerport Distribution Center

1




1,250



7,082



435



1,270



7,497



8,767



(2,477
)

1999Dallas Corporate Center

10




5,161







31,522



5,543



31,140



36,683



(12,563
)

1996, 1997,
    1998, 1999Enterprise Distribution Center

3




2,719



15,410



815



2,762



16,182



18,944



(5,119
)

1999Flower Mound Distribution Center

1




5,157



20,991



98



5,217



21,029



26,246



(858
)

2007Freeport Distribution Center

4




1,393



5,549



4,974



1,467



10,449



11,916



(4,202
)

1996, 1997,
    1998Great Southwest Distribution Center

38

(e)


39,449



173,329



19,279



38,508



193,549



232,057



(45,609
)

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

2




5,388



14,362



17,726



5,435



32,041



37,476



(322
)

2007, 2008Lone Star Distribution Center

1




512



2,896



1,347



522



4,233



4,755



(1,823
)

1996Northgate Distribution Center

9

(e)


15,481



72,651



6,872



16,538



78,466



95,004



(12,349
)

1994, 1999,
    2005, 2008Pinnacle Park Distribution Center (f)

1




5,058







19,649



3,936



20,771



24,707



(4,212
)

2001Plano Distribution Center

7




3,915



22,186



2,549



3,980



24,670



28,650



(7,950
)

1999Redbird Distribution Center

2




1,095



6,212



2,091



1,117



8,281



9,398



(3,092
)

1994, 1999Royal Distribution Center

1




811



4,598



589



825



5,173



5,998



(1,326
)

2001Stemmons Distribution Center

1




272



1,544



782



278



2,320



2,598



(1,065
)

1995Stemmons Industrial Center

11




1,820



11,705



4,580



1,860



16,245



18,105



(7,750
)

1994, 1995,
    1996, 1999Trinity Mills Distribution Center

7




4,453



27,346



3,012



4,484



30,327



34,811



(11,391
)

1996, 1999,
    2001Valwood Business Center

4

(e)


3,785



16,846



658



3,710



17,579



21,289



(2,774
)

2001, 2006Valwood Distribution Center

1




850



4,890



413



864



5,289



6,153



(1,608
)

1999Total Dallas/Fort Worth, Texas

106




102,557



422,210



119,725



102,351



542,141



644,492



(129,105
)Denver, ColoradoDenver Business Center

6




1,507



8,302



9,719



1,550



17,978



19,528



(8,074
)

1992, 1994,
    1996, 2002Moline Distribution Center

1




327



1,850



860



333



2,704



3,037



(1,425
)

1994Moncrieff Distribution Center

1




314



2,493



1,101



323



3,585



3,908



(2,009
)

1992Pagosa Distribution Center

1




406



2,322



1,002



414



3,316



3,730



(1,842
)

1993Stapleton Business Center

12

(e)


34,634



139,256



2,419



35,034



141,275



176,309



(15,758
)

2005Upland Distribution Center

6




808



4,421



11,753



860



16,122



16,982



(8,183
)

1992, 1994,
    1995Upland Distribution Center II

3




1,295



5,159



4,886



1,354



9,986



11,340



(5,189
)

1993Total Denver, Colorado

30




39,291



163,803



31,740



39,868



194,966



234,834



(42,480
) 128




---



##### Table of Contents



PROLOGIS
    SCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2008
    (In thousands of U.S. dollars, as applicable)
  Gross Amounts AtCosts


Which Carried as ofInitial Cost to ProLogis


Capitalized


December 31, 2008


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionEl Paso, TexasBilly the Kid Distribution Center

1




273



1,547



1,538



281



3,077



3,358



(1,356
)

1994Goodyear Distribution Center

1




511



2,899



951



521



3,840



4,361



(1,581
)

1991Northwestern Corporate Center

5




981







18,158



2,030



17,109



19,139



(6,230
)

1992, 1993,
    1994, 1997Pan Am Distribution Center

1




196



1,110



1,575



202



2,679



2,881



(499
)

2002Vista Corporate Center

4




1,945







12,165



1,977



12,133



14,110



(5,316
)

1994, 1995,
    1996Vista Del Sol Industrial Center II

4




996







18,733



2,100



17,629



19,729



(7,398
)

1995, 1997,
    1998Total El Paso, Texas

16




4,902



5,556



53,120



7,111



56,467



63,578



(22,380
)Houston, TexasBlalock Distribution Center

2




595



3,370



1,059



606



4,418



5,024



(854
)

2002Brittmore Distribution Center

2




1,838



10,417



1,191



1,869



11,577



13,446



(4,228
)

1999Crosstimbers Distribution Center

1




359



2,035



1,090



367



3,117



3,484



(1,478
)

1994Hempstead Distribution Center

3




1,013



5,740



3,497



1,036



9,214



10,250



(3,976
)

1994Hobby Business Park

1




721



2,885



240



730



3,116



3,846



(354
)

2005Kempwood Business Center

4




1,746



9,894



1,868



1,777



11,731



13,508



(3,730
)

2001Northpark Distribution Center

3




3,912



16,568



147



3,919



16,708



20,627



(325
)

2006, 2008Perimeter Distribution Center

2




813



4,604



980



827



5,570



6,397



(2,082
)

1999Pine Forest Business Center

9




2,665



14,132



5,011



2,714



19,094



21,808



(9,086
)

1993, 1995Pine North Distribution Center

2




847



4,800



769



862



5,554



6,416



(2,038
)

1999Pine Timbers Distribution Center

2




2,956



16,750



3,090



3,008



19,788



22,796



(7,314
)

1999Pinemont Distribution Center

2




642



3,636



637



653



4,262



4,915



(1,566
)

1999Post Oak Business Center

15




3,005



15,378



8,032



3,065



23,350



26,415



(11,910
)

1993, 1994,
    1996Post Oak Distribution Center

7




2,115



12,017



5,984



2,085



18,031



20,116



(10,192
)

1993, 1994South Loop Distribution Center

5




1,051



5,964



4,071



1,077



10,009



11,086



(5,458
)

1994Southland Distribution Center

1




1,209



6,849



1,454



1,230



8,282



9,512



(1,020
)

2002West by Northwest Industrial Center

15




4,040



7,980



35,304



4,251



43,073



47,324



(18,815
)

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

1




469



2,656



1,364



479



4,010



4,489



(1,791
)

1995Total Houston, Texas

77




29,996



145,675



75,788



30,555



220,904



251,459



(86,217
)I-81 Corridor, PennsylvaniaHarrisburg Distribution Center

1




2,243



12,572



631



2,266



13,180



15,446



(1,928
)

2004Harrisburg Industrial Center

1




782



6,190



870



800



7,042



7,842



(1,277
)

2002Kraft Distribution Center

1




2,457



13,920



70



2,494



13,953



16,447



(4,534
)

1999Lehigh Valley Distribution Center

4




6,636



37,114



2,460



6,706



39,504



46,210



(5,843
)

2004Middleton Distribution Center

1




4,190



23,478



124



4,231



23,561



27,792



(3,447
)

2004Park 33 Distribution Center (d)

1




13,411







30,644



13,522



30,533



44,055



(96
)

2007Quakertown Distribution Center

1




6,966







27,694



7,044



27,616



34,660



(1,751
)

2006Total I-81 Corridor, Pennsylvania

10




36,685



93,274



62,493



37,063



155,389



192,452



(18,876
)Indianapolis, IndianaEastside Distribution Center

2




1,204



6,820



1,259



1,296



7,987



9,283



(2,865
)

1995, 1999Logo Court Distribution Center

1




3,352



18,678



197



3,384



18,843



22,227



(2,755
)

2004North by Northeast Corporate Center

1




1,058







6,991



1,077



6,972



8,049



(2,957
)

1995Park 100 Industrial Center

14




4,948



28,691



11,042



5,001



39,680



44,681



(17,935
)

1994, 1995Park Fletcher Distribution Center

9




2,687



15,224



6,129



2,839



21,201



24,040



(9,915
)

1994, 1995,
    1996Shadeland Industrial Center

3




428



2,431



2,342



441



4,760



5,201



(2,373
)

1995Total Indianapolis, Indiana

30




13,677



71,844



27,960



14,038



99,443



113,481



(38,800
) 129




---



##### Table of Contents



PROLOGIS
    SCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2008
    (In thousands of U.S. dollars, as applicable)
  Gross Amounts AtCosts


Which Carried as ofInitial Cost to ProLogis


Capitalized


December 31, 2008


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionInland Empire, CaliforniaCalifornia Commerce Center

1

(e)


4,201



7,802



67



4,229



7,841



12,070



(876
)

2005Crossroads Business Park

7

(e)






84,519



64,974



52,000



97,493



149,493



(10,796
)

2005Haven Distribution Center

5




100,127



73,902







100,127



73,902



174,029






2008Inland Empire Distribution Center

6

(e)


42,927



84,275



5,882



43,982



89,102



133,084



(12,571
)

1999, 2005Kaiser Distribution Center

8

(e)


130,680



242,618



14,324



136,902



250,720



387,622



(24,931
)

2005, 2008Meridian Park

1




13,016



24,268







13,016



24,268



37,284



(634
)

2008ProLogis Park Ontario

2

(e)


25,500



47,366



81



25,664



47,283



72,947



(2,829
)

2007Rancho Cucamonga Distribution Center

6

(e)(g)


51,283



95,241



249



51,616



95,157



146,773



(10,488
)

2005Redlands Distribution Center

2




21,543



43,423



25,987



23,016



67,937



90,953



(2,825
)

2006, 2007Total Inland Empire, California

38




389,277



703,414



111,564



450,552



753,703



1,204,255



(65,950
)Las Vegas, NevadaBlack Mountain Distribution Center

2




1,108







7,188



1,225



7,071



8,296



(2,832
)

1997Cameron Business Center

1

(e)


1,634



9,256



330



1,659



9,561



11,220



(3,153
)

1999Hughes Airport Center

1




876







2,935



919



2,892



3,811



(1,275
)

1994Las Vegas Corporate Center

7

(g)


4,701







22,153



4,849



22,005



26,854



(9,695
)

1994, 1995,
    1996, 1997Placid St. Distribution Center

1

(e)


2,620



14,848



160



2,660



14,968



17,628



(4,854
)

1999South Arville Center

1




1,440



8,160



313



1,462



8,451



9,913



(2,763
)

1999West One Business Center

4




2,468



13,985



2,447



2,511



16,389



18,900



(6,802
)

1996Total Las Vegas, Nevada

17




14,847



46,249



35,526



15,285



81,337



96,622



(31,374
)Los Angeles, CaliforniaAnaheim Industrial Center

13

(e)


32,275



59,983



757



32,486



60,529



93,015



(6,658
)

2005Dominguez North Industrial Center

2




7,340



13,739



86



7,388



13,777



21,165



(857
)

2007Fullerton Industrial Center

2




8,238



15,300



77



8,292



15,323



23,615



(1,693
)

2005Industry Distribution Center

7

(e)(g)


50,268



93,355



471



50,594



93,500



144,094



(10,374
)

2005Los Angeles Industrial Center

2




3,777



7,015



198



3,802



7,188



10,990



(778
)

2005Mid Counties Industrial Center

14

(e)


45,864



87,107



10,819



46,156



97,634



143,790



(11,367
)

2005, 2006Orange Industrial Center

2




5,930



11,014







5,969



10,975



16,944



(1,208
)

2005Santa Ana Distribution Center

2




4,318



8,019



40



4,346



8,031



12,377



(890
)

2005South Bay Distribution Center

4




14,478



27,511



984



14,575



28,398



42,973



(2,709
)

2005, 2007Tustin Industrial Center

2




4,553



8,456



47



4,583



8,473



13,056



(942
)

2005Vernon Distribution Center

15




25,439



47,250



1,349



25,608



48,430



74,038



(5,457
)

2005Total Los Angeles, California

65




202,480



378,749



14,828



203,799



392,258



596,057



(42,933
)Louisville, KentuckyAirpark Commerce Center

4




1,583



8,971



5,408



1,619



14,343



15,962



(7,445
)

1998Cedar Grove Distribution Center

2

(e)


6,065



30,404



204



6,108



30,565



36,673



(1,870
)

2005, 2008Commerce Crossings Distribution Center

1




1,912



7,649



49



1,934



7,676



9,610



(842
)

2005I-65 Meyer Dist. Center (d)

2




4,258







22,417



4,625



22,050



26,675



(1,060
)

2006, 2007Louisville Distribution Center

2

(e)


680



3,402



4,484



709



7,857



8,566



(3,114
)

1995, 1998Riverport Distribution Center

1




1,515



8,585



2,187



1,543



10,744



12,287



(2,950
)

1999Total Louisville, Kentucky

12




16,013



59,011



34,749



16,538



93,235



109,773



(17,281
)Memphis, TennesseeAirport Distribution Center

7




2,660



14,853



5,651



2,713



20,451



23,164



(9,305
)

1995, 1996,
    1999Centerpointe Distribution Center

1




1,401



9,019



236



1,425



9,231



10,656



(2,944
)

2001Delp Distribution Center

6




3,870



21,853



5,339



3,940



27,122



31,062



(11,714
)

1995, 1999DeSoto Distribution Center (d)

1




4,761







25,343



4,830



25,274



30,104



(473
)

2007Fred Jones Distribution Center

1




125



707



308



127



1,013



1,140



(520
)

1994Memphis Distribution Center

1




480



2,723



410



489



3,124



3,613



(688
)

2002Olive Branch Distribution Center

2




2,892



16,389



2,215



2,941



18,555



21,496



(6,713
)

1999Raines Distribution Center

1




1,635



4,262







1,648



4,249



5,897



(6,719
)

1998 130




---



##### Table of Contents



PROLOGIS
    SCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2008
    (In thousands of U.S. dollars, as applicable)
  Gross Amounts AtCosts


Which Carried as ofInitial Cost to ProLogis


Capitalized


December 31, 2008


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionSouthpark Distribution Center

1




859



4,866



704



873



5,556



6,429



(670
)

2003Willow Lake Distribution Center

1




613



3,474



328



623



3,792



4,415



(1,379
)

1999Total Memphis, Tennessee

22




19,296



78,146



40,534



19,609



118,367



137,976



(41,125
)Nashville, TennesseeBakertown Distribution Center

2




463



2,626



649



472



3,266



3,738



(1,631
)

1995I-40 Industrial Center

4




1,711



9,698



1,499



1,741



11,167



12,908



(4,574
)

1995, 1996,
    1999Interchange City Distribution Center

8




5,179



26,540



4,299



5,986



30,032



36,018



(4,274
)

1998, 2003,
    2008Space Park South Distribution Center

15




3,499



19,830



8,685



3,572



28,442



32,014



(15,199
)

1994Total Nashville, Tennessee

29




10,852



58,694



15,132



11,771



72,907



84,678



(25,678
)New JerseyBellmawr Distribution Center

1




212



1,197



379



215



1,573



1,788



(633
)

1999Brunswick Distribution Center

2




870



4,928



2,030



887



6,941



7,828



(3,805
)

1997Chester Distribution Center

1




548



5,319







561



5,306



5,867



(3,109
)

2002Clearview Distribution Center

1




2,232



12,648



525



2,267



13,138



15,405



(6,164
)

1996Exit 8A Distribution Center

1




7,626



44,103



554



8,062



44,221



52,283



(4,872
)

2005Exit 10 Distribution Center

6




22,738



126,961



1,214



23,080



127,833



150,913



(13,985
)

2005Kilmer Distribution Center

4

(e)


2,526



14,313



2,692



2,570



16,961



19,531



(7,602
)

1996Meadowland Distribution Center

4

(e)


10,272



57,480



725



10,426



58,051



68,477



(5,589
)

2005Meadowland Industrial Center

8

(e)


5,676



32,167



15,924



5,798



47,969



53,767



(26,153
)

1996, 1997,
    1998Mount Olive Distribution Center

1




1,509



8,552







1,532



8,529



10,061



(392
)

2007Mt. Laurel Distribution Center

3




826



4,679



1,481



842



6,144



6,986



(2,243
)

1999Pennsauken Distribution Center

3




376



2,132



430



390



2,548



2,938



(976
)

1999Port Reading Business Park (d)

1




4,138







24,663



4,336



24,465



28,801



(1,499
)

2005Total New Jersey

36




59,549



314,479



50,617



60,966



363,679



424,645



(77,022
)Orlando, Florida33rd Street Industrial Center

9




1,980



11,237



4,203



2,019



15,401



17,420



(7,374
)

1994, 1995,
    1996Beltway Commerce Center

3




17,178



25,526







17,178



25,526



42,704



(27
)

2008Chancellor Distribution Center

1




380



2,156



1,558



390



3,704



4,094



(1,792
)

1994Consulate Distribution Center

3




4,148



23,617



1,024



4,213



24,576



28,789



(8,184
)

1999LaQuinta Distribution Center

1




354



2,006



1,664



363



3,661



4,024



(1,905
)

1994Orlando Central Park

3




1,378







9,938



1,896



9,420



11,316



(3,385
)

1997, 1998Princeton Oaks Distribution Center

1




900



5,100



269



914



5,355



6,269



(1,669
)

1999Total Orlando, Florida

21




26,318



69,642



18,656



26,973



87,643



114,616



(24,336
)Phoenix, Arizona24th Street Industrial Center

2




503



2,852



1,460



572



4,243



4,815



(2,445
)

1994Alameda Distribution Center

2




3,872



14,358



1,942



3,918



16,254



20,172



(1,765
)

2005Buckeye Road Industrial Center

2




1,236



4,988



834



1,252



5,806



7,058



(582
)

2005Hohokam 10 Business Center

6




4,258



7,467



12,936



4,314



20,347



24,661



(7,999
)

1996, 1999I-10 West Business Center

3




263



1,525



824



269



2,343



2,612



(1,227
)

1993Kyrene Commons Distribution Center

3




2,369



5,475



506



1,112



7,238



8,350



(3,234
)

1992, 1998,
    1999Kyrene Commons Distribution Center South

2




1,096







5,645



1,178



5,563



6,741



(2,162
)

1998Martin Van Buren Distribution Center

6




572



3,285



1,913



585



5,185



5,770



(2,788
)

1993, 1994Papago Distribution Center

3




4,828



20,017



1,871



4,889



21,827



26,716



(3,497
)

1994, 2005Roosevelt Distribution Center

1




1,766



7,065



34



1,786



7,079



8,865



(780
)

2005University Dr Distribution Center

1




683



2,735



140



691



2,867



3,558



(313
)

2005 131




---



##### Table of Contents



PROLOGIS
    SCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2008
    (In thousands of U.S. dollars, as applicable)
  Gross Amounts AtCosts


Which Carried as ofInitial Cost to ProLogis


Capitalized


December 31, 2008


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionWatkins Street Distribution Center

1




242



1,375



448



247



1,818



2,065



(879
)

1995Wilson Drive Distribution Center

1




1,273



5,093



62



1,288



5,140



6,428



(570
)

2005Total Phoenix, Arizona

33




22,961



76,235



28,615



22,101



105,710



127,811



(28,241
)Portland, OregonArgyle Distribution Center

3




946



5,388



1,839



965



7,208



8,173



(3,521
)

1993Columbia Distribution Center

2




550



3,121



1,058



561



4,168



4,729



(2,129
)

1994PDX Corporate Center East

2

(g)


1,785







7,165



2,121



6,829



8,950



(2,578
)

1997PDX Corporate Center North Phase II (d)

1

(g)


5,077



9,895







5,077



9,895



14,972






2008PDX Corporate Center North/South

7

(g)


2,405







11,666



2,574



11,497



14,071



(5,074
)

1995, 1996Southshore Corporate Center

5

(e)


13,061



52,299



696



13,423



52,633



66,056



(5,426
)

2005, 2006Wilsonville Corporate Center

6

(e)


2,963







13,391



3,001



13,353



16,354



(5,877
)

1995, 1996Total Portland, Oregon

26




26,787



70,703



35,815



27,722



105,583



133,305



(24,605
)Reno, NevadaGolden Valley Distribution Center

3




2,975



13,686



11,194



4,514



23,341



27,855



(5,029
)

1996, 1998,
    2005Meredith Kleppe Business Center

1




526



754



3,519



537



4,262



4,799



(2,005
)

1993Packer Way Distribution Center

2




506



2,879



1,501



517



4,369



4,886



(2,525
)

1993Spice Island Distribution Center

1




435



2,466



2,323



447



4,777



5,224



(1,882
)

1996Tahoe-Reno Industrial Center (d)

1




3,281







23,289



3,341



23,229



26,570



(335
)

2007Vista Industrial Park

10

(e)


9,566



40,036



14,945



9,712



54,835



64,547



(15,968
)

1994, 1995,
    2001Total Reno, Nevada

18




17,289



59,821



56,771



19,068



114,813



133,881



(27,744
)Salt Lake City, UtahCentennial Distribution Center

2




1,149







9,028



1,172



9,005



10,177



(3,998
)

1995Salt Lake International Distribution Center

2




1,367



2,792



10,053



1,396



12,816



14,212



(5,483
)

1994, 1996Total Salt Lake City, Utah

4




2,516



2,792



19,081



2,568



21,821



24,389



(9,481
)San Antonio, Texas10711 Distribution Center

2




582



3,301



1,933



596



5,220



5,816



(2,852
)

1994City Park East Distribution Center

4




1,344



9,645



922



1,361



10,550



11,911



(833
)

2003, 2008Coliseum Distribution Center

1




428







4,974



477



4,925



5,402



(2,672
)

1994Dist Drive Center

1




473



2,680



1,217



483



3,887



4,370



(2,256
)

1992Eisenhauer Distribution Center (d)

1




836



884



2,914



484



4,150



4,634



(25
)

2007Macro Distribution Center

3




1,705



9,024



2,164



1,734



11,159



12,893



(1,500
)

2002Perrin Creek Corporate Center

1




288







1,295



210



1,373



1,583



(594
)

1996Rittiman East Industrial Park

7




5,902



23,746



188



5,970



23,866



29,836



(1,908
)

2006Rittiman West Industrial Park

2




1,237



4,950



229



1,244



5,172



6,416



(411
)

2006San Antonio Distribution Center I

9




1,589



9,028



6,043



1,627



15,033



16,660



(8,221
)

1992, 1993,
    1994San Antonio Distribution Center II

3




945







6,512



902



6,555



7,457



(3,083
)

1994San Antonio Distribution Center III

4




1,176



6,571



3,200



1,201



9,746



10,947



(4,807
)

1996Tri-County Distribution Center

2

(e)


3,183



12,743



190



3,220



12,896



16,116



(515
)

2007Woodlake Distribution Center

2




248



1,405



1,192



254



2,591



2,845



(1,406
)

1994Total San Antonio, Texas

42




19,936



83,977



32,973



19,763



117,123



136,886



(31,083
)San Francisco (East Bay), CaliforniaAlvarado Business Center

10

(e)


20,739



62,595



1,275



20,931



63,678



84,609



(7,109
)

2005Barrington Business Center

3




1,741



9,863



2,245



1,772



12,077



13,849



(3,978
)

1999East Bay Industrial Center

1




531



3,009



554



540



3,554



4,094



(1,858
)

1994Eigenbrodt Way Distribution Center

1

(e)


393



2,228



497



400



2,718



3,118



(1,409
)

1993Hayward Commerce Center

4




1,933



10,955



2,292



1,968



13,212



15,180



(6,490
)

1993Hayward Commerce Park

7




1,968



11,167



3,421



2,006



14,550



16,556



(7,811
)

1994Hayward Distribution Center

6

(e)


2,906



19,165



5,201



3,389



23,883



27,272



(12,282
)

1993 132




---



##### Table of Contents



PROLOGIS
    SCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2008
    (In thousands of U.S. dollars, as applicable)
  Gross Amounts AtCosts


Which Carried as ofInitial Cost to ProLogis


Capitalized


December 31, 2008


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionHayward Industrial Center

13

(e)


4,481



25,393



5,174



4,560



30,488



35,048



(15,835
)

1993Livermore Distribution Center

4




8,992



26,976



1,414



9,077



28,305



37,382



(3,164
)

2005Oakland Industrial Center

3

(e)


8,234



24,704



459



8,310



25,087



33,397



(2,723
)

2005Regatta Business Park

2

(e)


7,688



23,063



256



7,758



23,249



31,007



(2,549
)

2005San Leandro Distribution Center

3

(e)


1,387



7,862



1,949



1,413



9,785



11,198



(4,904
)

1993Total San Francisco (East Bay), California

57




60,993



226,980



24,737



62,124



250,586



312,710



(70,112
)San Francisco (South Bay), CaliforniaBayside Business Center

2

(g)


2,088







4,834



2,104



4,818



6,922



(2,390
)

1996Bayside Corporate Center

7

(g)


4,365







18,618



4,417



18,566



22,983



(8,958
)

1995, 1996Bayside Plaza I

12

(g)


5,212



18,008



4,599



5,279



22,540



27,819



(11,082
)

1993Bayside Plaza II

2

(g)


634







3,247



642



3,239



3,881



(1,867
)

1994Gateway Corporate Center

11

(g)


7,575



24,746



8,270



7,667



32,924



40,591



(16,530
)

1993, 1996Mowry Business Center

4




5,933







19,396



7,872



17,457



25,329



(6,975
)

1997, 1998Overlook Distribution Center

1




1,573



8,915



96



1,597



8,987



10,584



(2,920
)

1999Pacific Commons Industrial Center

7

(g)


30,107



90,416



1,059



30,382



91,200



121,582



(10,044
)

2005Pacific Industrial Center

6

(e)


21,676



65,083



5,310



21,884



70,185



92,069



(7,324
)

2005Shoreline Business Center

8

(g)


4,328



16,101



2,404



4,379



18,454



22,833



(9,041
)

1993Shoreline Business Center II

2

(g)


922







5,610



937



5,595



6,532



(2,799
)

1995Spinnaker Business Center

12

(g)


7,043



25,220



5,310



7,128



30,445



37,573



(15,211
)

1993Thornton Business Center

5




3,988



11,706



7,237



4,041



18,890



22,931



(8,385
)

1993, 1996Trimble Distribution Center

5




2,836



16,067



4,551



2,889



20,565



23,454



(10,072
)

1994Total San Francisco (South Bay), California

84




98,280



276,262



90,541



101,218



363,865



465,083



(113,598
)Seattle, WashingtonAndover East Business Center

2




535



3,033



848



545



3,871



4,416



(1,835
)

1994Fife Corporate Center

3




4,059







11,185



4,244



11,000



15,244



(4,505
)

1996Kent Corporate Center

2

(g)


2,882



1,987



9,721



3,309



11,281



14,590



(5,155
)

1995ProLogis Park SeaTac (d)

2




12,230



14,170







12,230



14,170



26,400






2008Van Dorens Distribution Center

2

(g)


2,473







9,540



3,138



8,875



12,013



(4,086
)

1995, 1997Total Seattle, Washington

11




22,179



19,190



31,294



23,466



49,197



72,663



(15,581
)South FloridaAirport West Distribution Center

2




1,253



3,825



3,303



1,993



6,388



8,381



(2,417
)

1995, 1998Boca Distribution Center

1




1,474



5,918



189



1,492



6,089



7,581



(502
)

2006CenterPort Distribution Center

3




2,083



11,806



1,051



2,117



12,823



14,940



(4,316
)

1999Copans Distribution Center

2




504



2,857



684



513



3,532



4,045



(1,505
)

1997, 1998Dade Distribution Center

1




2,589



14,670



272



2,629



14,902



17,531



(1,702
)

2005North Andrews Distribution Center

1




698



3,956



102



709



4,047



4,756



(1,925
)

1994Pompano Beach Distribution Center (d)

3




11,101



15,137







11,101



15,137



26,238



(11
)

2008Port Lauderdale Distribution Center

2




896







7,907



2,225



6,578



8,803



(2,159
)

1997ProLogis Park I-595

2

(e)


1,998



11,326



449



2,030



11,743



13,773



(2,291
)

2003Total South Florida

17




22,596



69,495



13,957



24,809



81,239



106,048



(16,828
)St. Louis, MissouriEarth City Industrial Center

5




2,225



12,820



4,405



2,270



17,180



19,450



(7,339
)

1997, 1998Westport Distribution Center

1




366



1,247



1,963



373



3,203



3,576



(1,136
)

1997Total St. Louis, Missouri

6




2,591



14,067



6,368



2,643



20,383



23,026



(8,475
)Tampa, FloridaAdamo Distribution Center

6




2,105



11,930



2,015



2,142



13,908



16,050



(3,959
)

1995, 2001Commerce Park Distribution Center

4




811



4,597



1,421



827



6,002



6,829



(3,287
)

1994Eastwood Distribution Center

1




122



690



148



124



836



960



(420
)

1994Lakeland Distribution Center

1




938



5,313



1,326



955



6,622



7,577



(3,232
)

1994 133




---



##### Table of Contents



PROLOGIS
    SCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2008
    (In thousands of U.S. dollars, as applicable)
  Gross Amounts AtCosts


Which Carried as ofInitial Cost to ProLogis


Capitalized


December 31, 2008


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionMadison Distribution Center

1








5,313



84



3,200



2,197



5,397



(3
)

2007Orchid Lake Industrial Center

1




41



235



46



42



280



322



(130
)

1994Plant City Distribution Center

1




206



1,169



255



210



1,420



1,630



(714
)

1994Sabal Park Distribution Center

8

(e)


3,180







25,694



3,582



25,292



28,874



(8,022
)

1996, 1997,
    1998, 2002Silo Bend Distribution Center

4




2,887



16,358



3,613



2,939



19,919



22,858



(9,756
)

1994Silo Bend Industrial Center

1




525



2,975



793



535



3,758



4,293



(1,846
)

1994Tampa East Distribution Center

9




2,627



14,835



2,835



2,514



17,783



20,297



(9,045
)

1994Tampa East Industrial Center

1




303



1,513



557



308



2,065



2,373



(1,075
)

1994Tampa West Distribution Center

11




2,874



16,128



4,004



2,971



20,035



23,006



(10,250
)

1994, 1995Tampa West Industrial Center

3




346







5,961



649



5,658



6,307



(2,241
)

1996, 1998Total Tampa, Florida

52




16,965



81,056



48,752



20,998



125,775



146,773



(53,980
)Washington D.C./Baltimore, Maryland1901 Park 100 Drive

1




2,409



7,227



992



2,433



8,195



10,628



(637
)

20067616 Canton Center Dr

1




1,521



4,528







1,535



4,514



6,049



(221
)

2007Airport Commons Distribution Center

2

(e)


2,320







8,979



2,386



8,913



11,299



(2,730
)

1997Ardmore Distribution Center

3




1,431



8,110



1,677



1,457



9,761



11,218



(4,882
)

1994Ardmore Industrial Center

2




984



5,581



1,281



1,003



6,843



7,846



(3,585
)

1994Corcorde Industrial Center

4

(e)


1,538



8,717



2,992



1,568



11,679



13,247



(5,649
)

1995DeSoto Business Park

6




2,709



12,892



7,022



2,761



19,862



22,623



(5,745
)

1996, 2007Eisenhower Industrial Center

3




1,240



7,025



2,959



1,265



9,959



11,224



(4,723
)

1994Fleet Distribution Center

8




3,198



18,121



3,608



3,172



21,755



24,927



(9,981
)

1996Gateway Distribution Center

2




192







4,610



842



3,960



4,802



(1,216
)

1998Hickory Ridge Distribution Center

2

(e)


15,988



47,964



626



16,134



48,444



64,578



(5,203
)

2005Meadowridge Distribution Center

1

(e)


1,757







6,077



1,920



5,914



7,834



(1,863
)

1998Patapsco Distribution Center

1




270



1,528



1,049



276



2,571



2,847



(1,112
)

1995ProLogis Park Edgewood

1




4,244



12,732



5,606



4,295



18,287



22,582



(2,162
)

2005White Oak Distribution Center

1




3,986



24,107



7



4,049



24,051



28,100



(4,316
)

2002Winchester Distribution Center

1




3,286



13,141







3,323



13,104



16,427



(1,444
)

2005Total Washington D.C./Baltimore, Maryland

39




47,073



171,673



47,485



48,419



217,812



266,231



(55,469
)OtherValley Industrial Center

1




363







4,610



374



4,599



4,973



(1,319
)

1997Shawnee Distribution Center

1




2,859



11,431







2,890



11,400



14,290



(1,254
)

2005Total Other

2




3,222



11,431



4,610



3,264



15,999



19,263



(2,573
)Mexico:GuadalajaraEl Salto Distribution Center (d)

2




4,473



6,159







4,473



6,159



10,632






2008Total Guadalajara, Mexico

2




4,473



6,159







4,473



6,159



10,632



JuarezBermudez Industrial Center

2




1,155



4,619



2,050



1,173



6,651



7,824



(263
)

2007Del Norte Industrial Center II (d)

2




1,523



5,729







1,523



5,729



7,252






2008Ramon Rivera Lara Industrial Center

1




445







3,625



2,255



1,815



4,070



(570
)

2000Total Juarez, Mexico

5




3,123



10,348



5,675



4,951



14,195



19,146



(833
)Mexico CityCedros-Tepotzotlan Distribution Center

2




11,990



6,719



12,756



12,861



18,604



31,465



(718
)

2006, 2007Nor-T Distribution Center

4




7,247



32,135



1



5,890



33,493



39,383



(4,028
)

2006Puente Grande Distribution Center (d)

1




6,301



6,813







6,301



6,813



13,114



(62
)

2008Total Mexico City, Mexico

7




25,538



45,667



12,757



25,052



58,910



83,962



(4,808
) 134




---



##### Table of Contents



PROLOGIS
    SCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2008
    (In thousands of U.S. dollars, as applicable)
  Gross Amounts AtCosts


Which Carried as ofInitial Cost to ProLogis


Capitalized


December 31, 2008


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionMonterreyMonterrey Airport (d)

3




9,263



12,878



5,230



9,279



18,092



27,371



(170
)

2007, 2008Monterrey Industrial Park

3




1,563



809



5,247



1,426



6,193



7,619



(2,886
)

1997Total Monterrey, Mexico

6




10,826



13,687



10,477



10,705



24,285



34,990



(3,056
)ReynosaEl Puente Industrial Center (d)

2




1,906



5,823







1,906



5,823



7,729






2008Pharr Bridge Industrial Center (d)

1




1,088



3,682



(1
)


1,088



3,681



4,769






2008Total Reynosa, Mexico

3




2,994



9,505



(1
)


2,994



9,504



12,498



TijuanaProLogis Park Alamar (d)

3




20,540



17,081



1



20,540



17,082



37,622






2008Total Tijuana, Mexico

3




20,540



17,081



1



20,540



17,082



37,622



Canada:TorontoMississauga Gateway Center (d)

1




1,512



6,320







1,512



6,320



7,832






2008Total Toronto, Canada

1




1,512



6,320







1,512



6,320



7,832



Subtotal North American Markets

1,205




1,721,944



5,192,655



1,624,338



1,828,663



6,710,274



8,538,937



(1,537,864
)European MarketsBelgium:Willebroek Distribution Center (d)

1




3,545



10,591







3,545



10,591



14,136






2008Total Belgium

1




3,545



10,591







3,545



10,591



14,136



Czech Republic:Ostrava Distribution Center (d)

2




7,993



57,501







7,993



57,501



65,494






2008Stenovice Distribution Center (d)

2




2,815



32,424







2,815



32,424



35,239






2008Uzice Distribution Center (d)

2




6,453







35,717



6,665



35,505



42,170



(824
)

2007Total Czech Republic

6




17,261



89,925



35,717



17,473



125,430



142,903



(824
)France:Avignon Distribution Center (d)

1




3,405



24,084







3,405



24,084



27,489






2008Isle dAbeau Distribution Center

1




12,792



20,230



7,553



9,302



31,273



40,575



(2,702
)

2006Macon Distribution Center (d)

1




2,065







25,585



3,300



24,350



27,650



(900
)

2006Mitry Mory Distribution Center

1




2,243



9,149







2,243



9,149



11,392






2008Strasbourg Distribution Center (d)

2




67



30,427



(788
)


67



29,639



29,706



(114
)

2008Total France

6




20,572



83,890



32,350



18,317



118,495



136,812



(3,716
)Germany:Alzenau Distribution Center (d)

1




4,618



9,832







4,618



9,832



14,450






2008Bremen Distribution Center (d)

1




2,151



14,782



(4
)


2,151



14,778



16,929






2008Cologne Eifeltor Distribution Center (d)

1




3,040



12,585







3,040



12,585



15,625






2008Kolleda Distribution Center (d)

1




289



4,306



(226
)


289



4,080



4,369






2008Leipzig DC (d)

1




2,754



5,109



(1,529
)


2,754



3,580



6,334






2008Manching Distribution Center (d)

1




2,176



10,186



(351
)


2,176



9,835



12,011






2008Meerane Distribution Center (d)

1




830



5,714







830



5,714



6,544






2008Munich Distribution Center (d)

1




14,805



14,970







14,805



14,970



29,775






2008Weilerswist Distribution Center (d)

2




4,701



11,798







4,701



11,798



16,499






2008Total Germany

10




35,364



89,282



(2,110
)


35,364



87,172



122,536



Hungary:Batta Distribution Center (d)

1




2,497



15,829







2,497



15,829



18,326






2008Budapest Park (d)

1




1,183







8,005



1,277



7,911



9,188



(190
)

2007Budapest Park Phase II (d)

1




952



21,215



(528
)


952



20,687



21,639






2008 135




---



##### Table of Contents



PROLOGIS
    SCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2008
    (In thousands of U.S. dollars, as applicable)
  Gross Amounts AtCosts


Which Carried as ofInitial Cost to ProLogis


Capitalized


December 31, 2008


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionBudapest-Sziget Dist. Center (d)

1




2,763



9,500







2,763



9,500



12,263






2008Hegyeshalom Distribution Center (d)

1




965







12,626



1,008



12,583



13,591



(197
)

2007Total Hungary

5




8,360



46,544



20,103



8,497



66,510



75,007



(387
)Italy:Bologna Distribution Center (d)

1




4,413







12,761



4,940



12,234



17,174



(575
)

2006Lodi Distribution Center

2




7,996



35,613



6,706



13,011



37,304



50,315



(3,693
)

2005, 2006Romentino Distribution Center (d)

2




3,758







32,483



4,128



32,113



36,241



(1,560
)

2006Total Italy

5




16,167



35,613



51,950



22,079



81,651



103,730



(5,828
)Netherlands:Venlo Dist. Center (d)

1




3,494



11,126



259



3,752



11,127



14,879






2008Total Netherlands

1




3,494



11,126



259



3,752



11,127



14,879



Poland:Janki Distribution Center (d)

2




7,979



41,409



(1,591
)


7,979



39,818



47,797



(153
)

2008Piotrkow Distribution Center (d)

2




1,006



9,764







1,006



9,764



10,770






2008Poznan II Distribution Center (d)

1




5,554







3,949



1,749



7,754



9,503



(73
)

2007Sochaczew Distribution Center (d)

4




1,534



12,782



14,326



2,924



25,718



28,642



(209
)

2007, 2008Szczecin Distribution Center (d)

1




3,430



21,344







3,430



21,344



24,774






2008Warsaw II Distribution Center (d)

4




5,879



30,484



(709
)


5,879



29,775



35,654






2008Wroclaw Distribution Center (d)

2




3,839



33,390







3,839



33,390



37,229






2008Wroclaw II Distribution Center (d)

1




1,909







12,193



1,974



12,128



14,102



(659
)

2007Total Poland

17




31,130



149,173



28,168



28,780



179,691



208,471



(1,094
)Romania:Bucharest Distribution Center (d)

4




7,592



33,188



31,305



7,699



64,386



72,085



(866
)

2007, 2008Total Romania

4




7,592



33,188



31,305



7,699



64,386



72,085



(866
)Slovakia:Bratislava Distribution Center

3




6,280



45,922



15,224



6,432



60,994



67,426



(2,219
)

2007, 2008Galanta Distribution Center (d)

3




9,426



50,586



(5,450
)


9,426



45,136



54,562



(544
)

2008ProLogis Park Nove Mesto (d)

1




1,051



6,892







1,051



6,892



7,943






2008Total Slovakia

7




16,757



103,400



9,774



16,909



113,022



129,931



(2,763
)Spain:Tarancon Distribution Center (d)

1




4,146



18,319







4,146



18,319



22,465






2008Total Spain

1




4,146



18,319







4,146



18,319



22,465



Sweden:Gothenburg Distribution Center (d)

1




1,036



7,325



(2,310
)


1,036



5,015



6,051






2008Total Sweden

1




1,036



7,325



(2,310
)


1,036



5,015



6,051



United Kingdom:Cabot Park Distribution Center (d)

1




3,708



8,952







3,708



8,952



12,660






2008Campbell Road Distribution Center (d)

1




9,204



18,604







9,204



18,604



27,808






2008Corby Distribution Center (d)

1




1,968







10,495



1,191



11,272



12,463



(271
)

2007Coventry Distribution Center (d)

1




4,322







6,689



3,294



7,717



11,011



(40
)

2007Crewe Distribution Center (d)

1




11,478



19,049







11,478



19,049



30,527






2008Hayes Distribution Center (d)

3




22,123







37,960



41,024



19,059



60,083



(340
)

2007Houghton Main Distribution Center (d)

1




8,993







23,968



7,119



25,842



32,961



(675
)

2006Midpoint Park (d)

2




29,189



30,098







29,189



30,098



59,287






2008North Kettering Bus Pk (d)

2




22,367







23,218



17,210



28,375



45,585



(487
)

2007Peterborough Dist. Center.(d)

1




6,554







12,758



5,634



13,678



19,312



(43
)

2007 136




---



##### Table of Contents



PROLOGIS
    SCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2008
    (In thousands of U.S. dollars, as applicable)
  Gross Amounts AtCosts


Which Carried as ofInitial Cost to ProLogis


Capitalized


December 31, 2008


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)

2




18,368



29,767







18,368



29,767



48,135






2008Stafford Distribution Center (d)

2




14,583







16,567



11,346



19,804



31,150



(426
)

2006, 2007Total United Kingdom

18




152,857



106,470



131,655



158,765



232,217



390,982



(2,282
)Subtotal European Markets

82




318,281



784,846



336,861



326,362



1,113,626



1,439,988



(17,760
)Asian MarketsJapan:Chiba Distribution Center (d)

1




29,647



56,727







29,647



56,727



86,374






2008Iwanuma I Land (d)

1




6,377



38,225







6,377



38,225



44,602






2008ProLogis Park Aichi Distribution Center (d)

1




26,362







90,177



32,850



83,689



116,539



(1,214
)

2007ProLogis Park Ichikawa (d)

1




91,315



165,709







91,315



165,709



257,024






2008ProLogis Park Maishima III (d)

1




25,124



98,516







25,124



98,516



123,640






2008ProLogis Park Narita III (d)

1




24,527



86,956







24,527



86,956



111,483






2008ProLogis Park Osaka II (d)

1




30,630







181,565



38,342



173,853



212,195



(2,520
)

2007Total Japan

7




233,982



446,133



271,742



248,182



703,675



951,857



(3,734
)Korea:ProLogis Park Deokpyung

1




5,062



6,364







3,593



7,833



11,426



(681
)

2006ProLogis Park Okcheon (d)

1




819



2,349







819



2,349



3,168



(16
)

2008ProLogis Park Yongin

1

(e)


8,871



2,221







6,404



4,688



11,092



(446
)

2007Total Korea

3




14,752



10,934







10,816



14,870



25,686



(1,143
)Subtotal Asian Markets

10




248,734



457,067



271,742



258,998



718,545



977,543



(4,877
)Total Industrial Operating Properties

1,297




2,288,959



6,434,568



2,232,941



2,414,023



8,542,445



10,956,468



(1,560,501
)Retail operating propertiesAustin, TexasMueller Regional Retail

6




9,792



12,873



30,802



8,890



44,577



53,467



(750
)

2007, 2008Total Austin, Texas

6




9,792



12,873



30,802



8,890



44,577



53,467



(750
)Chicago, IllinoisGlenview Office Center

1












7,859



1,313



6,546



7,859



(544
)

2005Total Chicago, Illinois

1












7,859



1,313



6,546



7,859



(544
)Los Angeles / Orange County, CaliforniaNewport Retail Center

1




4,478



10,450







4,478



10,450



14,928



(860
)

2005Woodland Retail Center

3




10,376



24,208



671



10,375



24,880



35,255



(4,308
)

2005Total Los Angeles / Orange County, California

4




14,854



34,658



671



14,853



35,330



50,183



(5,168
)San Francisco (East Bay), CaliforniaEB Bridge Shopping Center

8

(g)


23,042



81,693



186



23,042



81,879



104,921



(7,870
)

2005Granada Shopping Center

1




2,604



9,232



161



2,604



9,393



11,997



(765
)

2005Total San Francisco (East Bay), California

9




25,646



90,925



347



25,646



91,272



116,918



(8,635
)San Francisco (South Bay), CaliforniaPacific Commons Retail

14




28,144



64,829



37,592



30,415



100,150



130,565



(6,074
)

2005, 2006,
    2008Total San Francisco (South Bay), California

14




28,144



64,829



37,592



30,415



100,150



130,565



(6,074
)Total Retail Operating Properties

34




78,436



203,285



77,271



81,117



277,875



358,992



(21,171
) 137




---



##### Table of Contents



PROLOGIS
    SCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2008
    (In thousands of U.S. dollars, as applicable)
  Gross Amounts AtCosts


Which Carried as ofInitial Cost to ProLogis


Capitalized


December 31, 2008


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionTotal Operating Properties

1,331




2,367,395



6,637,853



2,310,212



2,495,140



8,820,320



11,315,460



(1,581,672
)Properties Under DevelopmentNorth American Markets:United StatesCentral Valley, CaliforniaTracy II Distribution Center

2












68,979



68,979







68,979






2008Total Central Valley, California

2












68,979



68,979







68,979



Chicago, IllinoisElk Grove Distribution Center

1




11,912







10,647



22,559







22,559






2007Total Chicago, Illinois

1




11,912







10,647



22,559







22,559



Inland Empire, CaliforniaRiverbluff Distribution Center

1




41,235







28,337



69,572







69,572






2008Total Inland Empire, California

1




41,235







28,337



69,572







69,572



South FloridaSawgrass Distribution Center

2




9,939







10,619



20,558







20,558






2007Total South Florida

2




9,939







10,619



20,558







20,558



Mexico:JuarezCentro Industrial Center

3




8,358







12,765



21,123







21,123






2008Total Juarez, Mexico

3




8,358







12,765



21,123







21,123



Mexico CityPuente Grande Distribution Center

1




8,447







8,423



16,870







16,870






2007Toluca Distribution Center

1




7,846







8,738



16,584







16,584






2008Total Mexico City, Mexico

2




16,293







17,161



33,454







33,454



ReynosaPharr Bridge Industrial Center

1




2,399







8,355



10,754







10,754






2007Total Reynosa, Mexico

1




2,399







8,355



10,754







10,754



Canada:TorontoBolton Distribution Center

1




7,854







12,051



19,905







19,905






2008Total Toronto, Canada

1




7,854







12,051



19,905







19,905



Subtotal North American Markets

13




97,990







168,914



266,904







266,904



European Markets:BelgiumLiege Park

1




854







8,374



9,228







9,228






2008Total Belgium

1




854







8,374



9,228







9,228



Czech RepublicStenovice Distribution Center

1












17,871



17,871







17,871






2008Uzice Distribution Center

2




5,649







40,648



46,297







46,297






2007, 2008Total Czech Republic

3




5,649







58,519



64,168







64,168



FranceClesud Grans Miramas Distribution Center

1




3,710







9,768



13,478







13,478






2008Le Havre Distribution Center

1




551







13,360



13,911







13,911






2008Moissy Cramayel Distribution Center

1












1,420



1,420







1,420






2008 138




---



##### Table of Contents



PROLOGIS
    SCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2008
    (In thousands of U.S. dollars, as applicable)
  Gross Amounts AtCosts


Which Carried as ofInitial Cost to ProLogis


Capitalized


December 31, 2008


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionRennes Distribution Center

1




614







13,364



13,978







13,978






2007Vemars Distribution Center

5




14,210







11,159



25,369







25,369






2008Total France

9




19,085







49,071



68,156







68,156



GermanyAugsburg Distribution Center

1




9,205







16,906



26,111







26,111






2008Billbrook Hamburg Distribution Center

1




6,471







14,588



21,059







21,059






2008Bochum Distribution Center

1












7,441



7,441







7,441






2008Cologne Eifeltor Distribution Center

1




995







7,104



8,099







8,099






2008Edermunde Distribution Center

1




6,656







8,442



15,098







15,098






2008Heilbronn Distribution Center

3




14,024







32,113



46,137







46,137






2008Herford Distribution Center

2




2,691







11,407



14,098







14,098






2008Krefeld Park

1




3,051







4,713



7,764







7,764






2008Lehrte Distribution Center

2




7,630







7,489



15,119







15,119






2008Malsfeld Distribution Center

1




3,439











3,439







3,439






2008Total Germany

14




54,162







110,203



164,365







164,365



ItalyTurin Distribution Center

1




62







45



107







107






2008Total Italy

1




62







45



107







107



NetherlandsAlmere Distribution Center

1




7,065











7,065







7,065






2008Total Netherlands

1




7,065











7,065







7,065



PolandBedzin Distribution Center

2




4,203







6,260



10,463







10,463






2008Blonie II Distribution Center

4




16,286







40,423



56,709







56,709






2008Chorzow Distribution Center

2




12,941







32,579



45,520







45,520






2008Nadarzyn Distribution Center

1




526







9,514



10,040







10,040






2007Piotrkow II Distribution Center

1




899







8,307



9,206







9,206






2007ProLogis Park Rawa

1




2,056







11,187



13,243







13,243






2008Wroclaw III Distribution Center

2




6,968







28,390



35,358







35,358






2008Total Poland

13




43,879







136,660



180,539







180,539



SlovakiaSered Distribution Center

1




2,918







14,264



17,182







17,182






2008Total Slovakia

1




2,918







14,264



17,182







17,182



SpainMassalaves Distribution Center

1




2,518







7,358



9,876







9,876






2006Sallent Distribution Center

1




8,896







3,761



12,657







12,657






2008Zaragoza Distribution Center

1




5,763







1,745



7,508







7,508






2008Total Spain

3




17,177







12,864



30,041







30,041



SwedenJonkoping Distribution Center

1




2,236







53,002



55,238







55,238






2008Total Sweden

1




2,236







53,002



55,238







55,238



United KingdomNorth Kettering Business Park

1




1,638







1,081



2,719







2,719






2008Total United Kingdom

1




1,638







1,081



2,719







2,719



Subtotal European Markets

48




154,725







444,083



598,808







598,808



 139




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##### Table of Contents



PROLOGIS
    SCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  Continued
    December 31, 2008
    (In thousands of U.S. dollars, as applicable)
  Gross Amounts AtCosts


Which Carried as ofInitial Cost to ProLogis


Capitalized


December 31, 2008


Accumulated


Date ofNo. of

Encum-




Building &


Subsequent





Building &





Depreciation


Construction/Description

Bldgs.

brances

Land


Improvements


To Acquisition


Land


Improvements


Total (a,b)


(c)


AcquisitionAsian Markets:JapanKitanagoya Distribution Center

1




28,711







19,764



48,475







48,475






2008ProLogis Park Ichikawa II

1




48,629







47,751



96,380







96,380






2007Zama Distribution Center

1




60,840







83,089



143,929







143,929






2008Total Japan

3




138,180







150,604



288,784







288,784



KoreaProLogis Park Namyangju

1




3,588







5,526



9,114







9,114






2008Total Korea

1




3,588







5,526



9,114







9,114



Subtotal Asian Markets

4




141,768







156,130



297,898







297,898



Total Properties Under Development

65




394,483







769,127



1,163,610







1,163,610



GRAND TOTAL





$
2,761,878


$
6,637,853


$
3,079,339


$
3,658,750


$
8,820,320


$
12,479,070


$
(1,581,672
)  140




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##### Table of Contents





Schedule III  Footnotes
      (a)
    
    Reconciliation of real estate assets per Schedule III to
    our Consolidated Balance Sheet as of December 31, 2008 (in
    thousands):  Total per Schedule III

$
12,479,070Land held for development


2,481,216Land subject to ground leases and other


424,489
(e)(g)Other investments


321,397
(h)Total per consolidated balance sheet

$
15,706,172
(i)    (b)
    
    The aggregate cost for Federal tax purposes at 12/31/2008 of our
    real estate assets was approximately $13,376,072,000.(c)
    
    Real estate assets (excluding land balances) are depreciated
    over their estimated useful lives. These useful lives are
    generally seven years for capital improvements, 10 years
    for standard tenant improvements, 30 years for acquired
    industrial properties, 40 years for office and retail
    properties acquired and 40 years for properties we develop.Reconciliation of accumulated depreciation per Schedule III
    to our Consolidated Balance Sheets as of December 31, 2008
    (in thousands):  Total accumulated depreciation per Schedule III

$
1,581,672Accumulated depreciation on other investments


1,627Total per Consolidated Balance Sheet

$
1,583,299    (d)
    
    Total operating properties include 140 properties developed in
    the Completed Development Portfolio aggregating
    40.8 million square feet at a total investment of
    $3.0 billion. See Item 1. Business 
    Operating Segments - Direct Owned.(e)
    
    Properties with an aggregate undepreciated cost of
    $1,890,376,507 secure $877,915,904 of mortgage notes. See
    Note 8.(f)
    
    With respect to one building, we own only 98,000 square
    feet or 31% of the building. The remaining portion is owned by
    the North American Industrial Fund II.(g)
    
    Properties with an aggregate undepreciated cost of $999,237,367
    secure $29,626,460 of assessment bonds. See Note 8.(h)
    
    Other investments primarily include: (i) restricted funds
    that are held in escrow pending the completion of tax-deferred
    exchange transactions involving operating properties;
    (ii) earnest money deposits assocoated 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; and (v) costs related to our
    corporate office buildings.(i)
    
    A summary of activity for our real estate assets and accumulated
    depreciation for the three years ended December 31, 2008,
    2007 and 2006 is as follows (in thousands of U.S. dollars):  141




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##### Table of Contents



2008


2007


2006Real estate assets:Balance at beginning of year

$
16,578,845


$
13,897,091


$
11,875,130Acquisitions of operating properties, transfers of development
    completions from CIP and improvements to operating properties


3,963,945



5,407,449



3,345,394Basis of operating properties disposed of


(3,996,256
)


(4,729,843
)


(1,636,116
)Change in properties under development balance


(822,675
)


1,021,443



80,497Change in land held for development balance


328,256



755,879



352,039Change in land subject to ground leases and other balance


19,819



(13,630
)


(320,256
)Impairment of real estate properties(1)


(34,840
)






Change in capitalized preacquisition costs balance


(330,922
)


240,456



200,403Balance at end of year

$
15,706,172


$
16,578,845


$
13,897,091Accumulated Depreciation:Balance at beginning of year

$
1,368,458


$
1,264,227


$
1,118,547Depreciation expense


285,647



248,552



248,484Balances retired upon disposition of operating properties


(70,806
)


(144,321
)


(102,804
)Balance at end of year

$
1,583,299


$
1,368,458


$
1,264,227     (1)
    
    Due to the current market conditions and the resulting changes
    in our business strategy during the fourth quarter of 2008, we
    determined that there were certain real estate assets, primarily
    land parcels, for which it was more likely that we would dispose
    of the asset rather than develop and/or hold and use the asset.
    During this timeframe, the capitalization rates used to value
    these properties have increased, which along with the distressed
    market conditions, has contributed to a significant decline in
    fair value, especially in the United Kingdom. As a result of our
    review and based on our intent with regard to these properties,
    we recognized impairment charges of $274.7 million to
    adjust the carrying value to fair value as of December 31,
    2008. In addition, we recognized impairment charges related to
    costs that had been previously deferred related to potential
    future development costs as it is no longer probable that we
    will complete the development of these properties given the
    current market conditions, specifically in the United Kingdom,
    as follows (in thousands):  Land

$
194,137Properties under development


19,814Completed properties


15,026Pre-development costs


45,728Total

$
274,705  142




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##### Table of Contents



SIGNATURES
      By:
    /s/  WALTER
    C. RAKOWICH  Chief Executive Officer and Trustee
      Signature

Title

Date/s/  WALTER
    C. RAKOWICHWalter
    C. Rakowich

Chief Executive Officer and
    Trustee

February 27, 2009/s/  WILLIAM E. SULLIVANWilliam
    E. Sullivan

Chief Financial Officer

February 27, 2009/s/  JEFFREY
    S. FINNINJeffrey
    S. Finnin

Chief Accounting Officer

February 27, 2009/s/  STEPHEN
    L. FEINBERGStephen
    L. Feinberg

Chairman of the Board of Trustees

February 27, 2009/s/  GEORGE
    L. FOTIADESGeorge
    L. Fotiades

Trustee

February 27, 2009/s/  CHRISTINE
    N. GARVEYChristine
    N. Garvey

Trustee

February 27, 2009/s/  DONALD
    P. JACOBSDonald
    P. Jacobs

Trustee

February 27, 2009/s/  LAWRENCE
    V. JACKSONLawrence
    V. Jackson

Trustee

February 27, 2009/s/  D.
    MICHAEL STEUERTD.
    Michael Steuert

Trustee

February 27, 2009/s/  J.
    ANDRÉ TEIXEIRAJ.
    André Teixeira

Trustee

February 27, 2009/s/  WILLIAM
    D. ZOLLARSWilliam
    D. Zollars

Trustee

February 27, 2009/s/  ANDREA
    M. ZULBERTIAndrea
    M. Zulberti

Trustee

February 27, 2009  143




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##### Table of Contents



Rule 12b-32,
  ExhibitNumber



Description1
.1



Sales Agreement dates February 27, 2007, between ProLogis
    and Cantor Fitzgerald & Co. (incorporated by reference
    to exhibit 1.1 to ProLogis
    Form 10-K
    for the year ended December 31, 2006).3
.1



Articles of Amendment and Restatement of Declaration of Trust of
    ProLogis (incorporated by reference to exhibit 4.1 to
    ProLogis
    Form 10-Q
    for the quarter ended June 30, 1999).3
.2



Certificate of Amendment, dated as of May 22, 2002, to
    Amended and Restated of Declaration of Trust of ProLogis
    (incorporated by reference to exhibit 99.1 to
    ProLogis
    Form 8-K
    dated May 30, 2002).3
.3



Articles of Amendment to Amended and Restated Declaration of
    Trust of ProLogis dated as of May 19, 2005 (incorporated by
    reference to exhibit 3.1 to ProLogis
    Form 8-K
    filed on May 20, 2005).3
.4



Articles of Amendment to Amended and Restated Declaration of
    Trust of ProLogis dated as of July 12, 2005 (incorporated
    by reference to exhibit 3.1 to ProLogis
    Form 8-K
    filed on July 13, 2005).3
.5



Articles of Amendment to Amended and Restated Declaration of
    Trust of ProLogis dated as of February 27, 2009.3
.6



Amended and Restated Bylaws of ProLogis dated as of
    March 15, 2005 (incorporated by reference to
    exhibit 3.1 to ProLogis
    Form 8-K
    filed on March 21, 2005).3
.7



Amendment to Amended and Restated Bylaws, dated as of
    March 15, 2006 (incorporated by reference to
    exhibit 3.1 to ProLogis
    Form 8-K
    filed on March 17, 2006).3
.8



Amendment to Amended and Restated Bylaws, dated as of
    December 9, 2008 (incorporated by reference to
    exhibit 3.1 to ProLogis
    Form 8-K
    filed on December 12, 2008).3
.9



Articles Supplementary Classifying and Designating the
    Series F Cumulative Redeemable Preferred Shares of
    Beneficial Interest (incorporated by reference to
    exhibit 4.2 to ProLogis
    Form 8-K
    dated December 24, 2003).3
.10



Articles Supplementary Classifying and Designating the
    Series G Cumulative Redeemable Preferred Shares of
    Beneficial Interest (incorporated by reference to
    exhibit 4.3 to ProLogis
    Form 8-K
    dated December 24, 2003).3
.11



Articles Supplementary Reclassifying and Designating Shares
    of Beneficial Interest of ProLogis as Common Shares of
    Beneficial Interest (incorporated by reference to
    exhibit 3.2 to ProLogis
    Form 8-K
    filed on July 13, 2005).4
.1



Form of share certificate for common shares of Beneficial
    Interest of ProLogis (incorporated by reference to
    exhibit 4.4 to ProLogis registration statement
    No. 33-73382).4
.2



Form of share certificate for Series C Cumulative
    Redeemable Preferred Shares of Beneficial Interest of ProLogis
    (incorporated by reference to exhibit 4.8 to ProLogis
    Form 10-K
    for the year ended December 31, 1996).4
.3



Form of share certificate for Series F Cumulative
    Redeemable Preferred Shares of Beneficial Interest of ProLogis
    (incorporated by reference to exhibit 4.1 to ProLogis
    Form 8-K
    dated November 26, 2003).4
.4



Form of share certificate for Series G Cumulative
    Redeemable Preferred Shares of Beneficial Interest of ProLogis
    (incorporated by reference to exhibit 4.1 to ProLogis
    Form 8-K
    dated December 24, 2003).4
.5



ProLogis Trust Employee Share Purchase Plan, as amended and
    restated (incorporated by reference to exhibit 4.27 to
    ProLogis
    Form S-8,
    dated September 27, 2001).4
.6



Indenture, dated as of March 1, 1995, between ProLogis and
    State Street Bank and Trust Company, as Trustee
    (incorporated by reference to Exhibit 4.9 to ProLogis
    Form 10-K
    for the year ended December 31, 1994). 144




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##### Table of Contents



4
.7



First Supplemental Indenture, dated as of February 9, 2005,
    by and between ProLogis and U.S. Bank National Association, as
    Trustee (as successor in interest to State Street Bank and
    Trust Company) (incorporated by reference to
    exhibit 4.1 to ProLogis
    Form 8-K
    dated February 9, 2005).4
.8



Second Supplemental Indenture dated as of November 2, 2005
    by and between ProLogis and U.S. Bank National Association, as
    Trustee (as successor in interest to State Street Bank and
    Trust Company) (incorporated by reference to
    Exhibit 4.1 to ProLogis
    Form 8-K
    filed on November 4, 2005).4
.9



Third Supplemental Indenture dated as of November 2, 2005
    by and between ProLogis and U.S. Bank National Association, as
    Trustee (as successor in interest to State Street Bank and
    Trust Company) (incorporated by reference to
    Exhibit 4.2 to ProLogis
    Form 8-K
    filed on November 4, 2005).4
.10



Fourth Supplemental Indenture dated as of March 26, 2007 by
    and between ProLogis and U.S. Bank National Association, as
    Trustee (as successor in interest to State Street Bank and
    Trust Company) (incorporated by reference to
    exhibit 4.1 to ProLogis
    form 8-K
    filed on March 26, 2007).4
.11



Fifth Supplemental Indenture dated as of November 8, 2007
    by and between ProLogis and U.S. Bank National Association, as
    Trustee (as successor in interest to State Street Bank and
    Trust Company) (incorporated by reference to
    exhibit 4.1 to ProLogis
    form 8-K
    filed on November 7, 2007).4
.12



Sixth Supplemental Indenture dated as of May 7, 2008 by and
    between ProLogis and U.S. Bank National Association, as Trustee
    (as successor in interest to State Street Bank and
    Trust Company) (incorporated by reference to
    exhibit 4.1 to ProLogis
    Form 10-Q
    for the quarter ended June 30, 2008).4
.13



Seventh Supplemental Indenture dated as of May 7, 2008 by
    and between ProLogis and U.S. Bank National Association, as
    Trustee (as successor in interest to State Street Bank and
    Trust Company) (incorporated by reference to
    exhibit 4.2 to ProLogis
    Form 10-Q
    for the quarter ended June 30, 2008).4
.14



8.72% Note due March 1, 2009 (incorporated by
    reference to exhibit 4.7 to ProLogis
    Form 10-K
    for the year ended December 31, 1994).4
.15



9.34% Note due March 1, 2015 (incorporated by
    reference to exhibit 4.8 to ProLogis
    Form 10-K
    for the year ended December 31, 1994).4
.16



7.875% Note due May 15, 2009 (incorporated by
    reference to exhibit 4.4 to ProLogis
    Form 8-K
    dated May 9, 1995).4
.17



8.65% Note due May 15, 2016 (incorporated by reference
    to exhibit 4.3 to ProLogis
    Form 10-Q
    for the quarter ended June 30, 1996).4
.18



7.81% Medium-Term Notes, Series A, due February 1,
    2015 (incorporated by reference to exhibit 4.17 to
    ProLogis
    Form 10-K
    for the year ended December 31, 1996).4
.19



7.625% Note due July 1, 2017 (incorporated by
    reference to exhibit 4 to ProLogis
    Form 8-K
    dated July 11, 1997).4
.20



Form of 5.50% Promissory Note due March 1, 2013
    (incorporated by reference to exhibit 4.26 to
    ProLogis
    Form 10-K
    for the year ended December 31, 2002).4
.21



Form of 2.25% Convertible Notes due 2037 (incorporated by
    reference to exhibit 10.3 to ProLogis
    10-Q for the
    quarter ended March 31, 2007).10
.1



Agreement of Limited Partnership of ProLogis Limited
    Partnership-I, dated as of December 22, 1993, by and among
    ProLogis, as general partner, and the limited partners set forth
    therein (incorporated by reference to exhibit 10.4 to
    ProLogis Registration Statement
    No. 33-73382).10
.2



Agreement of Limited Partnership of Meridian Realty Partners,
    L.P. (incorporated by reference to exhibit 99.1 to
    ProLogis Registration Statement
    No. 333-86081).10
.3



Amended and Restated Agreement of Limited Partnership of
    ProLogis Fraser, L.P. dated as of August 4, 2004
    (incorporated by reference to exhibit 10.1 to
    ProLogis
    Form 10-Q
    for the quarter ended September 30, 2004). 145




---



##### Table of Contents



10
.4



Form of Indemnification Agreement entered into between ProLogis
    and its Trustees and executive officers (incorporated by
    reference to exhibit 10.16 to ProLogis Registration
    Statement
    No. 33-73382).10
.5



Indemnification Agreement between ProLogis and each of its
    independent Trustees (incorporated by reference to
    exhibit 10.16 to ProLogis
    Form 10-K
    for the year ended December 31, 1995).10
.6



Declaration of Trust for the benefit of ProLogis
    independent Trustees (incorporated by reference to
    exhibit 10.17 to ProLogis
    Form 10-K
    for the year ended December 31, 1995).10
.7



Note Purchase Agreement among Meridian and The Travelers
    Insurance Company (I/N/TRAL & CO.), United Services
    Automobile Association (I/N/O SALKELD & CO.), The
    Variable Annuity Life Insurance Company, The United States Life
    Insurance Company in the City of New York, All American Life
    Insurance Company, The Old Line Life Insurance Company of
    America, The Lincoln National Life Insurance Company, Lincoln
    Life & Annuity Company of New York, First Penn-Pacific
    Life Insurance Company (I/N/O CUDD & CO),Lincoln
    National Health & Casualty Insurance Company, Allied
    Life Insurance Company B (I/N/O GERLACH &
    CO), sons of Norway (I/N/O VAR & CO), Aid Association
    for Lutherans(I/N/O NIMER & CO), Metropolitan Life
    Insurance Company, National Life Insurance Company, Life
    Insurance Company of the Southwest, Keyport Life Insurance
    Company (I/N/O BOST &CO), Union Central Life Insurance
    Company (I/N/O HARE & CO),and
    Pan-American
    Life Insurance Company, dated November 15,1997
    (incorporated by reference to exhibit 10.66 to
    Meridians
    Form 10-K
    for the year ended December 31, 1997).10
.8



Amendment, dated as of May 2, 2005, to Note Purchase
    Agreement among ProLogis (as successor by merger to Meridian
    Industrial Trust, Inc., a Maryland corporation) and The
    Travelers Insurance Company (I/N/TRAL & CO.), United
    Services Automobile Association (I/N/O SALKELD & CO.),
    The Variable Annuity Life Insurance Company, The United States
    Life Insurance Company in the City of New York, All American
    Life Insurance Company, The Old Line Life Insurance Company of
    America, The Lincoln National Life Insurance Company, Lincoln
    Life & Annuity Company of New York, First Penn-Pacific
    Life Insurance Company (I/N/O CUDD & CO), Lincoln
    National Health & Casualty Insurance Company, Allied
    Life Insurance Company B (I/N/O GERLACH &
    CO), sons of Norway (I/N/O VAR & CO), Aid Association
    for Lutherans (I/N/O NIMER & CO), Metropolitan Life
    Insurance Company, National Life Insurance Company, Life
    Insurance Company of the Southwest, Keyport Life Insurance
    Company (I/N/O BOST & CO), Union Central Life
    Insurance Company (I/N/O HARE & CO), and
    Pan-American
    Life Insurance Company (incorporated by reference to
    Exhibit 10.1 to ProLogis
    Form 8-K
    filed on May 2, 2005).10
.9



Amended and Restated Security Agency Agreement dated as of
    October 6, 2005, among Bank of America, N.A., as global
    administrative agent under the Global Senior Credit Agreement
    referred to therein, certain other creditors of ProLogis and
    Bank of America, N.A., as collateral agent (incorporated by
    reference to Exhibit 10.2 to ProLogis
    Form 8-K
    filed on November 4, 2005).10
.10



Global Senior Credit Agreement dated as of October 6, 2005,
    among ProLogis, certain of its subsidiaries, Bank of America,
    N.A., as global administrative agent, collateral agent, U.S.
    funding agent, U.S. swing line lender, and a U.S. L/C issuer,
    Bank of America, N.A., acting through its Canada Branch, as
    Canadian funding agent and a Canadian L/C issuer, ABN AMRO Bank
    N.V., as global syndication agent, Euro funding agent, Euro
    swing line lender, and a Euro L/C issuer, Sumitomo Mitsui
    Banking Corporation, as a global documentation agent, Yen
    tranche bookrunner, KRW tranche bookrunner, Yen Funding Agent,
    KRW funding agent, and a Yen L/C issuer, JPMorgan Chase Bank,
    N.A. and the Royal Bank of Scotland PLC, as global documentation
    agents, and the other lenders party thereto Banc of America
    Securities LLC and ABN AMRO Bank N.V., as global joint lead
    arrangers and global joint book runners (incorporated by
    reference to Exhibit 10.1 to ProLogis
    Form 8-K
    filed on October 12, 2005). 146




---



##### Table of Contents



10
.11



First Amendment to Global Senior Credit Agreement, dated as of
    June 27, 2006, among ProLogis, certain of its subsidiaries,
    Bank of America, N.A., as Global Administrative Agent,
    Collateral Agent, U.S. Funding Agent, U.S. Swing Line Lender,
    and a U.S. L/C Issuer, Bank of America, N.A., acting through its
    Canada Branch, as Canadian Funding Agent and a Canadian L/C
    Issuer, ABN AMRO Bank N.V., as Global Syndication Agent, Euro
    Funding Agent, Euro Swing Line Lender, and a Euro L/C Issuer,
    Sumitomo Mitsui Banking Corporation, as a Global Documentation
    Agent, Yen Tranche Bookrunner, KRW Tranche Bookrunner,
    Yen Funding Agent, KRW Funding Agent, and a Yen L/C Issuer, Bank
    of America, N.A., acting through its Shanghai Brach, as RMB
    Funding Agent, JPMorgan Chase Bank, N.A. and the Royal Bank of
    Scotland PLC, as Global Documentation Agents, the other lenders
    party thereto and Banc of America Securities LLC and ABN AMRO
    Bank N.V., as Global Joint Lead Arrangers and Global Joint Book
    Runners (incorporated by reference to exhibit 10.1 to
    ProLogis
    Form 8-K
    filed on July 3, 2006).10
.12



1999 Dividend Reinvestment and Share Purchase Plan (incorporated
    by reference to the Prospectus filed January 5, 2007
    pursuant to Rule 424(b)(3) with respect to Registration
    Statement
    No. 333-102166).10
.13*



ProLogis 2000 Share Option Plan for Outside Trustees (as
    Amended and Restated Effective as of December 31, 2008).10
.14*



ProLogis Trust 1997 Long-Term Incentive Plan (as Amended
    and Restated Effective as of September 26, 2002
    (incorporated by reference to exhibit 10.1 to
    ProLogis
    Form 8-K
    dated February 19, 2003).10
.15*



ProLogis 2006 Long-Term Incentive Plan (incorporated by
    reference to exhibit 10.2 to ProLogis
    Form 8-K
    filed on June 2, 2006).10
.16*



ProLogis Nonqualified Savings Plan (as Amended and Restated
    effective as of December 31, 2008).10
.17*



ProLogis Executive Deferred Compensation Plan (effective as of
    December 31, 2008).10
.18*



ProLogis Deferred Fee Plan for Trustees (as Amended and Restated
    as of December 31, 2008).10
.19*



Third Amended and Restated Employment Agreement, dated
    January 7, 2009, entered into between ProLogis and Walter
    C. Rakowich.10
.20*



Amended and Restated Employment Agreement, effective as of
    December 31, 2008, entered into between ProLogis and Ted R.
    Antenucci.10
.21*



Employment Agreement, dated March 14, 2008 and effective as
    of January 1, 2008, between ProLogis and Jeffrey H.
    Schwartz (incorporated by reference to exhibit 10.1 to
    ProLogis
    Form 8-K
    filed on March 18, 2008).10
.22*



Agreement and General Release, dated as of November 21,
    2008, between ProLogis and Jeffrey H. Schwartz.10
.23*



Form of Executive Protection Agreements entered into between
    ProLogis and Edward S. Nekritz, William E. Sullivan and Robert
    J. Watson, effective as of December 31, 2008.10
.24*



Executive Protection Agreement entered into between ProLogis and
    Gary E. Anderson, effective as of December 31, 2008.10
.25*



Form of Executive Protection Agreements entered into between
    ProLogis and Paul C. Congleton, M. Gordon Keiser, Jr., Masato
    Miki and Miki Yamada, effective as of December 31, 2008.10
.26*



Amended and Restated Special Equity Agreement between ProLogis
    and K. Dane Brooksher, dated as of March 5, 2003
    (incorporated by reference to exhibit 10.28 to
    ProLogis
    Form 10-K
    for the year ended December 31, 2002).10
.27*



First Amendment to the Amended and Restated Special Equity
    Agreement dated as of March 5, 2003 by and between ProLogis
    and K. Dane Brooksher entered into as of September 22, 2005
    (incorporated by reference to Exhibit 10.1 to
    ProLogis
    Form 8-K
    filed on September 26, 2005).10
.28*



Advisory Agreement, dated May 15, 2007, entered into
    between ProLogis and K. Dane Brooksher (incorporated by
    reference to exhibit 10.1 to ProLogis
    Form 10-Q
    for the quarter ended June 30, 2007). 147




---



##### Table of Contents



10
.29



Master Implementation Agreement, dated December 23, 2008,
    entered into between ProLogis and Reco China Logistics Pte Ltd,
    relating to the sale and purchase of ProLogis interest in:
    (i) PRC Holdco; (ii) the Japan Trusts;
    (iii) Master Lessees; (iv) Barbados Managementco;
    (v) HK Managementco; (vi) Barbados Targetcos;
    (vii) Targetco (each as defined therein).10
.30



Supplemental Agreement, dated February 9, 2009, entered
    into between ProLogis and Reco China Logistics Pte Ltd.10
.31*



Share Option Plan for Outside Trustees (incorporated by
    reference to exhibit 10.18 to ProLogis Form 10-Q
    for the quarter ended June 30, 1994).12
.1



Statement re: Computation of Ratio of Earnings to Fixed Charges.12
.2



Statement re: Computation of Ratio of Earnings to Combined Fixed
    Charges and Preferred Share Dividends.21
.1



Subsidiaries of ProLogis.23
.1



Consent of KPMG LLP.31
.1



Certification of Chief Executive Officer.31
.2



Certification of Chief Financial Officer.32
.1



Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.99
.1



Limited Liability Company Agreement of CSI/Frigo LLC dated as of
    January 2, 2001 (incorporated by reference to
    exhibit 99.5 to ProLogis
    Form 10-K/A#1
    for the year ended December 31, 2000).99
.2



Promissory Note from CSI/Frigo LLC dated January 5,
    2001(incorporated by reference to exhibit 99.6 to
    ProLogis
    Form 10-K/A#1
    for the year ended December 31, 2000).99
.3



Promissory Note from K. Dane Brooksher dated July 18, 2000
    to GoProLogis Incorporated (incorporated by reference to
    exhibit 99.8 to ProLogis
    Form 10-K/A#1
    for the year ended December 31, 2000).99
.4



Option agreement dated July 18, 2000 among GoProLogis
    Incorporated, K. Dane Brooksher and ProLogis (incorporated by
    reference to exhibit 99.9 to ProLogis
    Form 10-K/A#1
    for the year ended December 31, 2000).99
.5



Promissory Note from K. Dane Brooksher dated September 20,
    2000 to ProLogis Broadband(1) Incorporated (incorporated by
    reference to exhibit 99.10 to ProLogis
    Form 10-K/A#1
    for the year ended December 31, 2000).99
.6



Promissory Note from K. Dane Brooksher dated January 4,
    2001to ProLogis Broadband(1) Incorporated (incorporated by
    reference to exhibit 99.11 to ProLogis
    Form 10-K/A#1
    for the year ended December 31, 2000).99
.7



Option Agreement dated September 20, 2000 among ProLogis
    Broadband(1) Incorporated, K. Dane Brooksher and ProLogis
    (incorporated by reference to exhibit 99.12 to
    ProLogis
    Form 10-K/A#1
    for the year ended December 31, 2000).99
.8



Purchase and Sale Agreement dated October 23, 2002, between
    CSI/Frigo LLC and ProLogis (incorporated by reference to
    exhibit 99.14 to ProLogis
    Form 10-K
    for the year ended December 31, 2002).99
.9



Promissory Note from CSI/Frigo LLC dated October 23, 2002
    (incorporated by reference to exhibit 99.15 to
    ProLogis
    Form 10-K
    for the year ended December 31, 2002).99
.10



Registration Rights Agreement dated February 9, 2007,
    between ProLogis and each of the parties identified therein
    (incorporated by reference to exhibit 99.10 to
    ProLogis
    Form 10-K
    for the year ended December 31, 2006).   *
    
    Management Contract or Compensatory Plan or Arrangement 148