##### 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 1934
    For the fiscal year ended December 31, 2006ORo

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

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

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

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

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

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

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




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TABLE OF
    CONTENTS
  Item

Description

PagePART I1.


Business


4ProLogis


4Our
    Operating Segments


5Operating
    Segments  Property Operations


5Operating
    Segments  Fund Management


7Operating
    Segments  CDFS Business


9Our
    Management


13Environmental
    Matters


16Insurance
    Coverage


161A.


Risk
    Factors


161B.


Unresolved Staff
    Comments


232.


Properties


23Geographic
    Distribution


23Properties


24Unconsolidated
    Investees


283.


Legal
    Proceedings


304.


Submission of
    Matters to a Vote of Security Holders


30PART II5.


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


31Market
    Information and Holders


31Distributions
    and Dividends


31Securities
    Authorized for Issuance Under Equity Compensation
    Plans


32Other
    Shareholder Matters


326.


Selected Financial
    Data


337.


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


34Managements
    Overview


35Critical
    Accounting Policies


37Results
    of Operations


39Environmental
    Matters


48Liquidity
    and Capital Resources


48New
    Accounting Pronouncements


54Funds
    from Operations


547A.


Quantitative and
    Qualitative Disclosure About Market Risk


578.


Financial
    Statements and Supplementary Data


599.


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


599A.


Controls and
    Procedures


599B.


Other
    Information


60 2




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##### Table of Contents



Item

Description

PagePART III10.


Directors,
    Executive Officers and Corporate Governance


6011.


Executive
    Compensation


6012.


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


6013.


Certain
    Relationships and Related Transactions, and Director
    Independence


6014.


Principal
    Accounting Fees and Services


60PART IV15.


Exhibits, Financial
    Statement Schedules


61Sales AgreementStatement re: Computation of Ratio of Earnings to Fixed ChargesStatement re: Computation of Ratio of Earnings to Combined Fixed ChargesSubsidiariesConsent of KPMG LLPCertification of Chief Executive OfficerCertification of Chief Financial OfficerCertification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906Registration Rights Agreement   3




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PART I  ITEM 1.
    Business ProLogis  ®
    Form 10-K, Form 10-Q, Form 8-K
  Business
    Strategy and Global Presence
   4




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state-of-the-art
 Our
    Operating Segments   Operating
    Segments  Property Operations    Investments
    and/or
 5




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and/or
  Results
    of Operations
    Market
    Presence
    Competition
  state-of-the-art
  Property
    Management
   6




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Customers
    Employees
    Future
    Plans
     Operating
    Segments  Fund Management      
    allows us, as the manager of the property funds, to maintain the
    market presence and customer relationships that are the key
    drivers of the ProLogis Operating System;
    allows us to maintain a long-term ownership position in the
    properties;
    allows us to realize a portion of the development profits from
    our CDFS business activities by contributing our stabilized
    development properties to property funds (profits are recognized
    to the extent of third party investment in the property fund);
    provides diversified sources of capital;
    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. 7




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Investments
      
    During 2006, we contributed 94 properties aggregating
    18.7 million square feet to the property funds for net
    proceeds of $1.4 billion, prior to deferral of a portion of
    the gain due to our continuing ownership in the entities
    acquiring the properties.
    On a combined basis, the property funds acquired eight
    properties from third parties, aggregating 2.2 million
    square feet.
    In September 2006, ProLogis European Properties (currently
    referred to as PEPR and formerly known as ProLogis
    European Properties Fund) completed an initial public offering
    (IPO) on the Euronext Amsterdam stock exchange in
    which the selling unitholders offered 49.8 million ordinary
    units. The IPO allowed us, as the manager, to recognize an
    incentive return of $109.2 million based on the internal
    rate of return that the pre-IPO unitholders earned. After the
    IPO, our ownership interest in PEPR increased to 24.0%.
    We made our first contributions to the ProLogis Japan Properties
    Fund II, which was formed in late 2005.
    We formed the North American Industrial Fund, with several
    institutional investors, which will primarily own distribution
    properties in major distribution markets throughout the United
    States and Canada and we made our first contributions.
    On January 4, 2006, we purchased the remaining 80%
    ownership interests in each of ProLogis North American
    Properties Funds II, III and IV held by our fund
    partner and in March 2006, we contributed substantially all of
    the assets and associated liabilities we obtained in this
    acquisition to the North American Industrial Fund. We recognized
    an aggregate of $71.6 million in earnings related to this
    transaction, including an incentive return of $22.0 million.    Results
    of Operations
   8




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Market
    Presence
    Competition
    Property
    Management
    Customers
    Employees
    Future
    Plans
   Operating
    Segments  CDFS Business  and/or
 9




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Investments
    
    North America: 44 properties in Canada, Mexico and the United
    States, for a combined total of 11.6 million square feet,
    with a total expected cost of $597.9 million (approximately
    27.3% of the total);
    Europe: 45 properties in ten countries, for a combined total of
    10.3 million square feet, with a total expected cost of
    $844.0 million (approximately 38.5% of the total); and
    Asia: 25 properties in China and Japan, for a combined total of
    8.1 million square feet, with a total expected cost of
    $748.5 million (approximately 34.2% of the total).          
    We started the development of 143 properties aggregating
    35.6 million square feet with a total expected cost at
    completion of $2.5 billion. These projects either were
    completed during 2006, as discussed below, or are under
    development at December 31, 2006, as discussed above.
    We completed the development of 102 properties aggregating
    27.9 million square feet with a total expected cost of
    $2.2 billion. Either these projects were under development
    at December 31, 2005 or development began in 2006.
    We contributed or disposed of 70 properties aggregating
    15.6 million square feet that were developed or acquired by
    us in the CDFS business segment, including 15 properties
    reflected as discontinued operations. These transactions
    generated proceeds of $1.4 billion, after the deferral of
    $65.5 million of gains due to our continuing ownership in
    the entities acquiring the properties.
    We acquired 2,242 acres of land for future development for
    $812.6 million.
    We disposed of 851.5 acres of land for total proceeds of
    $122.5 million. 10




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
    We invested $74.1 million in CDFS joint ventures operating
    in North America ($17.6 million) and Asia
    ($56.5 million). See Note 4 to our Consolidated
    Financial Statements in Item 8 for more information on our
    investments.  Results
    of Operations
    Market
    Presence
    Competition
       11




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Customers
    Employees
    Seasonal
    Nature of the Business
    Future
    Plans
  state-of-the-art
   12




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Other
   Our
    Management  Senior
    Management
      Regulation S-K,
   13




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ProLogis
    Operating System
    Capital
    Management and Capital Deployment
      Customer
    Service
    Executive
    Committee Members
  Jeffrey H. Schwartz*
 14




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Walter C. Rakowich*
  Ted R. Antenucci*
  Dessa M. Bokides*
  Edward S. Nekritz*
  Gary E. Anderson
  Ming Z. Mei
  Masato Miki
  John P. Morland ,
  Robert J. Watson
 15




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Mike Yamada
  Regulation S-K.
 Environmental
    Matters   Insurance
    Coverage    ITEM 1A. Risk
    Factors
    General Real Estate Risks
  General economic conditions and other events or occurrences
    that affect areas in which our properties are geographically
    concentrated, such as California, may impact financial
    results.
   16




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Real property investments are subject to risks that could
    adversely affect our business.
    
    changes in the general economic climate;
    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.  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 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 we may not be able to obtain land on which to
    develop or 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 make the
    project profitable. 17




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Our business strategy associated with contributing properties
    to property funds we manage or disposing of properties to third
    parties may not be successful.
    Our growth will depend on future acquisitions of distribution
    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.
  month-to-month
 18




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month-to-month
  The fact that real estate investments are not as liquid as
    other types of assets 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.
       19




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Risks
    Related to Financing and Capital
  Our operating results and financial condition could be
    adversely affected if we do not continue to have access to
    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 adversely affect our financial condition.
   20




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Federal
    Income Tax Risks
  Failure to qualify as a REIT could adversely affect our cash
    flows.
      Potential adverse effect of 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.
   21




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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.
    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.
   22




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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
     Geographic
    Distribution   23




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Properties    Rentable


InvestmentNo. of


Percentage


Square


BeforeBldgs.


Leased (1)


Footage


Depreciation


Encumbrances (2)Operating properties owned in
    the property operations segment at December 31, 2006
    (dollars and rentable square footage in thousands):Distribution
    properties:North America  by
    Market (3):United States:Atlanta, Georgia


83



89.52%



11,728


$
404,119


$
33,715Austin, Texas


24



100.00%



1,532



61,810



Charlotte, North Carolina


32



83.49%



4,282



139,598



39,246Chicago, Illinois


88



86.02%



17,943



922,002



172,282Cincinnati, Ohio


39



95.40%



4,814



138,275



25,131Columbus, Ohio


32



88.62%



5,925



218,449



33,888Dallas/Fort Worth, Texas


109



91.99%



14,519



587,484



70,863Denver, Colorado


35



94.97%



5,562



259,356



71,609El Paso, Texas


16



81.39%



2,051



63,339



411Houston, Texas


82



95.99%



7,778



261,496



I-81 Corridor, Pennsylvania


12



93.93%



3,735



190,638



11,361Indianapolis, Indiana


32



95.15%



3,376



120,918



Las Vegas, Nevada


18



88.01%



2,314



108,405



11,354Louisville, Kentucky


10



100.00%



2,502



82,231



18,021Memphis, Tennessee


42



79.93%



6,170



170,704



Nashville, Tennessee


38



91.62%



4,093



109,779



New Jersey


38



94.29%



7,959



486,537



49,956Orlando, Florida


20



96.01%



1,902



80,821



3,341Phoenix, Arizona


33



93.72%



2,700



125,389



14,357Portland, Oregon


28



92.77%



2,451



139,287



23,678Reno, Nevada


21



100.00%



2,897



115,088



Salt Lake City, Utah


5



83.56%



853



31,605



San Antonio, Texas


54



90.37%



4,408



149,597



San Diego, California


13



96.97%



188



26,176



San Francisco (Central
    Valley), California


15



98.14%



3,965



175,787



25,779San Francisco (East Bay),
    California


57



98.69%



4,901



307,540



96,053San Francisco (South Bay),
    California


84



90.69%



5,516



460,650



89,176 24




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Rentable


InvestmentNo. of


Percentage


Square


BeforeBldgs.


Leased (1)


Footage


Depreciation


Encumbrances (2)Seattle, Washington


9



99.50%



1,036


$
46,851


$
327South Florida


14



98.37%



1,288



78,884



6,928Southern California


95



94.47%



20,121



1,542,755



464,741St. Louis, Missouri


13



90.00%



1,252



42,020



4,457Tampa, Florida


56



97.01%



3,649



149,576



9,771Washington D.C./Baltimore, Maryland


41



82.52%



5,428



275,508



56,855Other


7



97.94%



1,514



35,292



Subtotal United States


1,295



91.68%



170,352



8,107,966



1,333,300Mexico:Guadalajara


2



91.98%



423



24,855



Juarez


11



83.97%



1,123



44,385



Mexico City


20



91.28%



3,093



175,447



72,776Monterrey


6



88.40%



576



20,299



Reynosa


16



94.28%



1,923



85,264



Subtotal Mexico


55



90.75%



7,138



350,250



72,776Canada  Toronto


3



81.25%



988



62,120



Subtotal North America


1,353



91.58%



178,478



8,520,336



1,406,076Europe  by Country
    (22 markets) (4):Belgium


3



64.73%



587



33,620



Czech Republic


4



36.21%



401



28,663



France


13



46.83%



3,552



190,510



Germany


6



97.06%



1,411



92,019



Hungary


1



100.00%



211



10,670



Italy


6



19.83%



1,774



107,287



Netherlands


1



0.00%



197



11,679



Poland


15



73.02%



3,474



160,040



Spain


1



100.00%



288



18,748



Sweden


1



0.00%



187



14,868



United Kingdom


19



64.38%



6,150



629,677



Subtotal Europe


70



59.81%



18,232



1,297,781



Asia  by Country (6
    markets) (5):China


14



100.00%



2,436



81,455



Japan


7



93.79%



4,139



496,782



Korea


1



23.98%



134



14,315



Singapore


1



100.00%



150



12,580



Subtotal Asia


23



94.77%



6,859



605,132



Total distribution
    properties


1,446



88.85%



203,569


$
10,423,249


$
1,406,076Retail properties (4
    markets)


27



97.62%



1,105


$
305,188


$
27,597Total operating properties
    owned in the property operations segment at December 31,
    2006


1,473



88.89%



204,674


$
10,728,437


$
1,433,673   25




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Properties Under DevelopmentLand Held for





RentableDevelopment


No. of


Square





Total ExpectedAcreage


Investment


Bldgs.


Footage


Investment


Cost (6)Land held for development and
    properties under development at December 31, 2006 (dollars
    and rentable square footage in thousands):North America  by
    Market:United States:Atlanta, Georgia


489.4


$
32,509










$



$
Austin, Texas


25.3



6,048



5



224



26,050



38,146Charlotte, North Carolina


29.0



4,076















Chicago, Illinois


399.3



54,544



1



750



22,483



26,924Cincinnati, Ohio


40.0



3,349



1



737



19,201



26,112Columbus, Ohio


154.9



6,301



1



524



15,914



17,807Dallas / Fort Worth, Texas


322.2



28,413



3



1,333



13,563



42,825Denver, Colorado


17.0



2,101















El Paso, Texas


73.4



4,429















Houston, Texas


150.8



13,443



1



324



5,815



14,744I-81 Corridor, Pennsylvania


278.5



32,237



1



930



12,735



46,841Indianapolis, Indiana


92.7



5,021















Las Vegas, Nevada


2.1



275















Louisville, Kentucky


42.5



2,887



1



273



3,549



10,528Memphis, Tennessee


159.5



12,658



2



978



7,706



32,244Nashville, Tennessee


44.8



1,641















New Jersey


211.0



98,299



2



379



7,534



26,906Orlando, Florida










1



112



5,666



5,797Portland, Oregon


45.9



12,001



1



72



3,076



4,457Reno, Nevada


6.2



577



1



602



11,861



24,110Salt Lake City, Utah


9.6



216















San Antonio, Texas


7.7



497



4



285



3,608



14,860San Francisco (Central
    Valley), California


996.7



31,186



2



692



3,279



35,132San Francisco (South Bay),
    California


27.2



14,929















Seattle, Washington


10.6



2,309















Southern California


369.7



131,171



2



706



14,662



42,963South Florida


17.5



10,933















Tampa, Florida


32.8



2,005



1



215



6,181



11,380Washington D.C./Baltimore, Maryland


82.6



10,905



3



303



11,055



39,015Mexico:Guadalajara


58.5



17,973



1



224



3,334



10,665Juarez


13.1



2,691



3



233



7,777



10,704Mexico City


111.8



37,202



2



633



19,612



34,582Monterrey


193.9



28,822



2



314



7,463



14,143Reynosa


114.8



9,665















Canada  Toronto


16.6



6,676



3



814



24,186



67,003Subtotal North America


4,647.6



627,989



44



11,657



256,310



597,888Europe  by Country
    (19 total markets):Belgium


20.6



4,667















Czech Republic


73.3



15,805



2



554



9,798



39,914France


186.2



24,343



2



473



14,066



25,498Germany


54.7



22,368



4



699



40,898



66,482 26




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Properties Under DevelopmentLand Held for





RentableDevelopment


No. of


Square





Total ExpectedAcreage


Investment


Bldgs.


Footage


Investment


Cost (6)Hungary


103.9



11,947



3



595



13,738



35,255Italy


80.4



30,133















Netherlands


8.1



3,671



3



667



19,454



46,122Poland


98.8



37,311



17



3,595



86,856



226,588Romania


114.7



19,145



2



578



19,419



33,747Spain


61.6



16,456



2



612



6,167



30,034Sweden










1



222



21,634



22,170United Kingdom


594.5



345,920



9



2,335



157,422



318,149Subtotal Europe


1,396.8



531,766



45



10,330



389,452



843,959Asia  by Country (7
    total markets):China


82.6



16,206



17



2,862



33,430



83,085Japan


48.6



204,500



8



5,189



285,650



665,457Korea


28.2



16,620















Subtotal Asia


159.4



237,326



25



8,051



319,080



748,542Total land held for development
    and properties under development in the CDFS business segment at
    December 31, 2006


6,203.8


$
1,397,081



114



30,038


$
964,842


$
2,190,389     InvestmentBefore Depreciation(in thousands)Distribution
    properties (3)(4)(5)

$
10,423,249Retail properties


305,188Land subject to ground leases and
    other (7)


472,412Properties under development


964,842Land held for development


1,397,081Other investments (8)


391,227Total

$
13,953,999     (1)
    
    Represents the percentage leased at December 31, 2006.
    Operating properties at December 31, 2006 include recently
    completed development properties that may be in the initial
    lease-up
    phase, including 91 properties aggregating 25.3 million
    square feet that were completed in 2006. The inclusion of
    properties in the initial
    lease-up
    phase can reduce the overall leased percentage.(2)
    
    Certain properties are pledged as security under our secured
    debt and assessment bonds at December 31, 2006. 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 $45.3 million of encumbrances related to other
    real estate assets not included in the property operations
    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 114 properties aggregating
    25.4 million square feet at a total investment of
    $1,190.7 million that were developed or acquired in the
    CDFS business segment and are pending contribution to a property
    fund or sale to a third party. 27




---



##### Table of Contents



(4)
    
    In Europe, includes 69 properties aggregating 17.6 million
    square feet at a total investment of $1,273.3 million that
    were developed or acquired in the CDFS business segment and are
    pending contribution to a property fund or sale to a third party.(5)
    
    In Asia, includes 22 properties aggregating 6.8 million
    square feet at a total investment of $597.0 million that
    were developed or acquired in the CDFS business segment and are
    pending contribution to a property fund.(6)
    
    Represents the total expected cost at completion for properties
    under development, including the cost of land, fees, permits,
    payments to contractors, architectural and engineering fees and
    interest, project management costs and other appropriate costs
    to be capitalized during construction, rather than actual costs
    incurred to date.(7)
    
    Amounts represent investments of $422.7 million in land
    subject to ground leases, $20.0 million in office
    properties and an investment of $29.7 million in railway
    depots.(8)
    
    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 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   28




---



##### Table of Contents



Property
    Funds
    RentableNo. of


No. of


Square


Percentage


EntitysBldgs.


Markets


Footage


Leased


Investment (1)North America:ProLogis California


81



1



14,211



99.01
%

$
695,447ProLogis North American Properties
    Fund I


36



16



9,406



95.52
%


381,206ProLogis North American Properties
    Fund V


154



31



36,106



97.59
%


1,531,045ProLogis North American Properties
    Fund VI


22



7



8,648



96.62
%


512,172ProLogis North American Properties
    Fund VII


29



8



6,055



86.10
%


388,832ProLogis North American Properties
    Fund VIII


24



9



3,064



93.94
%


191,825ProLogis North American Properties
    Fund IX


20



7



3,439



92.01
%


194,351ProLogis North American Properties
    Fund X


29



10



4,191



79.54
%


220,022ProLogis North American Properties
    Fund XI


14



3



4,315



98.78
%


230,402ProLogis North American Industrial
    Fund


126



27



21,218



98.48
%


1,200,655Total North America


535



37
(2)


110,653



96.15
%


5,545,957Europe:ProLogis European Properties


277



27



58,114



96.90
%


4,826,246Asia:ProLogis Japan Properties
    Fund I


18



3



7,424



99.45
%


1,183,701ProLogis Japan Properties
    Fund II


13



4



5,082



99.86
%


718,366Total Asia


31



5
(3)


12,506



99.62
%


1,902,067Total property funds


843



69



181,273



96.63
%

$
12,274,270     (1)
    
    Investment represents 100% of the carrying value of the
    properties, before depreciation, of each entity at
    December 31, 2006, except with respect to ProLogis North
    American Properties Fund XI. We acquired our ownership
    interest in this entity in 2004, and therefore, in accordance
    with purchase accounting, the investment represents 100% of the
    fair value of the operating properties owned by these entities
    at that time, adjusted for subsequent activity.(2)
    
    Represents the total number of markets in North America on a
    combined basis.(3)
    
    Represents the total number of markets in Asia on a combined
    basis. 29




---



##### Table of Contents



CDFS
    joint ventures
    Effective Weighted





ThirdOwnership Percentage


Total Assets


Party DebtIndustrial CDFS Joint Ventures:North America


50
%

$
66,595


$
12,568Europe


50
%


18,708



Asia


50
%


179,590



Total Industrial CDFS Joint
    Ventures





$
264,893


$
12,568   Type of

Effective Weighted





ThirdReal Estate

Ownership Percentage


Total Assets


Party DebtNon-Industrial CDFS Joint Ventures:North America

Residential


50
%

$
107,438


$
5,878Asia

Retail


30
%


549,338



410,872Total Non-Industrial CDFS Joint
    Ventures







$
656,776


$
416,750     ITEM 3.
    Legal
    Proceedings    ITEM 4.
    Submission
    of Matters to a Vote of Security Holders   30




---



##### Table of Contents



PART II  ITEM 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities Market
    Information and Holders    High Sale


Low Sale


Per CommonPrice


Price


Share Distribution2005:First Quarter

$
43.50


$
36.67


$
0.37Second Quarter


42.34



36.50



0.37Third Quarter


46.41



40.12



0.37Fourth Quarter


47.61



39.81



0.372006:First Quarter


56.31



46.29



0.40Second Quarter


53.85



46.66



0.40Third Quarter


58.86



52.05



0.40Fourth Quarter


65.81



56.07



0.402007:First Quarter (through February 22)

$
71.64


$
59.02


$
0.46    Distributions
    and Dividends       31




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##### Table of Contents



Years Ended December 31,2006


2005Series 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
     32




---



##### Table of Contents



ITEM 6.
    Selected
    Financial Data    Years Ended December 31,2006


2005 (1)


2004


2003


2002Operating Data:Total revenues

$
2,464


$
1,834


$
1,852


$
1,457


$
1,489Total expenses

$
1,699


$
1,404


$
1,502


$
1,129


$
1,137Operating income

$
765


$
430


$
350


$
328


$
352Interest expense

$
294


$
178


$
153


$
154


$
152Earnings from continuing operations

$
718


$
306


$
220


$
237


$
235Discontinued operations (2)

$
156


$
90


$
13


$
14


$
8Net earnings

$
874


$
396


$
233


$
251


$
243Net earnings attributable to
    common shares

$
849


$
371


$
203


$
212


$
216Net earnings per share
    attributable to common shares  Basic:Continuing operations

$
2.81


$
1.38


$
1.04


$
1.10


$
1.10Discontinued operations


0.64



0.44



0.07



0.08



0.04Net earnings per share
    attributable to common shares  Basic

$
3.45


$
1.82


$
1.11


$
1.18


$
1.14Net earnings per share
    attributable to common shares  Diluted:Continuing operations

$
2.71


$
1.34


$
1.02


$
1.09


$
0.81Discontinued operations


0.61



0.42



0.06



0.07



0.03Net earnings per share
    attributable to common shares  Diluted

$
3.32


$
1.76


$
1.08


$
1.16


$
0.84Weighted average common shares
    outstanding:Basic


246



203



182



179



178Diluted


257



214



192



187



185Common Share
    Distributions:Common share cash distributions
    paid

$
393


$
297


$
266


$
258


$
252Common share distributions paid
    per share

$
1.60


$
1.48


$
1.46


$
1.44


$
1.42FFO (3):Reconciliation of net earnings to
    FFO:Net earnings attributable to
    common shares

$
849


$
371


$
203


$
212


$
216Total NAREIT defined adjustments


149



161



196



159



178Total our defined adjustments


(53
)


(2
)


1



29



(1
)FFO attributable to common shares
    as defined by us

$
945


$
530


$
400


$
400


$
393Cash Flow Data:Net cash provided by operating
    activities

$
721


$
499


$
516


$
367


$
441Net cash used in investing
    activities

$
(2,103
)

$
(2,233
)

$
(652
)

$
(115
)

$
(159
)Net cash provided by (used in)
    financing activities

$
1,645


$
1,713


$
37


$
(31
)

$
(200
)   33




---



##### Table of Contents



December 31,2006


2005 (1)


2004


2003


2002Financial Position:Real estate owned, excluding land
    held for development, before depreciation

$
12,557


$
10,830


$
5,738


$
5,343


$
5,009Land held for development

$
1,397


$
1,045


$
596


$
511


$
387Investments in and advances to
    unconsolidated investees

$
1,300


$
1,050


$
909


$
677


$
809Total assets

$
15,904


$
13,126


$
7,098


$
6,367


$
5,911Total debt

$
8,387


$
6,678


$
3,414


$
2,991


$
2,732Total liabilities

$
9,453


$
7,580


$
3,929


$
3,271


$
2,995Minority interest

$
52


$
58


$
67


$
37


$
42Total shareholders equity

$
6,399


$
5,488


$
3,102


$
3,059


$
2,874Number of common shares outstanding


251



244



186



180



178     (1)
    
    On September 15, 2005, we completed the Catellus Merger
    with an aggregate purchase price of $5.3 billion. See
    Note 3 to our Consolidated Financial Statements in
    Item 8 for additional information.(2)
    
    Discontinued operations include income attributable to assets
    disposed of and net gains recognized on the disposition of
    assets to third parties. See Note 8 to our Consolidated
    Financial Statements in Item 8 for additional information.
    Amounts are net of losses 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   34




---



##### Table of Contents



Managements Overview    and/or
      
    We earn rent from our customers under long-term operating
    leases, including reimbursements of certain operating costs, in
    our distribution and retail properties that we own directly in
    North America, Europe and Asia. We expect to grow our revenue
    through the selective acquisition of properties and increases in
    occupancy rates and rental rates in our existing properties. Our
    strategy is to achieve these increases in occupancy and rental
    rates primarily through continued focus on our customers
    global needs for distribution space in the three continents in
    which we operate and use of the ProLogis Operating System.    
    We recognize our proportionate share of the earnings or losses
    from our investments in unconsolidated property funds operating
    in North America, Europe and Asia. Along with the income
    recognized under the equity method, we include fees and
    incentives earned for services performed on behalf of the
    property funds and interest earned on advances to the property
    funds in this segment. We earn fees for services provided to the
    property funds, such as property management, asset management,
    acquisition, financing and development fees. We may earn
    incentives based on the return provided to the fund partners. We
    expect growth in income recognized to come from newly created
    property funds and growth in existing property funds. The growth
    in the existing property funds is expected to come primarily
    from additional properties the funds will acquire, generally
    from us, and increased rental revenues in the property funds
    due, in part, to our leasing and property management efforts
    from our property operations segment.    
    We recognize income primarily from the contributions of
    developed, rehabilitated and repositioned properties to the
    property funds and from dispositions to third parties. In
    addition, we: (i) earn fees from our customers or other
    third parties for development activities that we provide on
    their behalf; (ii) recognize interest income on notes
    receivable related to asset dispositions; (iii) recognize
    net gains from the disposition of land parcels; and
    (iv) recognize our proportionate share of the earnings or
    losses generated by development joint ventures in which we have
    an investment. We expect increases in this segment to come
    primarily from the continued development of high-quality
    distribution and retail properties in our key markets in North
    America, Europe and Asia, resulting in the contribution to
    property funds or sale to third parties. In addition, we expect
    to increase our land and other mixed-use development activities
    for development management fees and sales to third parties. 35




---



##### Table of Contents



Summary
    of 2006
          Key
    Transactions in 2006
  
    In September 2006, PEPR completed an IPO on the Euronext
    Amsterdam stock exchange in which the selling unitholders
    offered 49.8 million ordinary units. As the manager of the
    property fund, we were entitled to an incentive return based on
    the internal rate of return that the pre-IPO unitholders earned.
    The final incentive return was determined and recognized in the
    fourth quarter of 2006 as $109.2 million. The return was
    paid to us by an initial allocation of ordinary units, which
    increased our investment by $68.6 million and our ownership
    interest to 24.0%, with the balance received in cash. In
    addition, we were previously obligated to the pre-IPO
    unitholders of PEPR under a tax indemnification agreement
    related to properties contributed to PEPR prior to its IPO.
    Based on the average closing price of the ordinary units of PEPR
    during the
    30-day
    post-IPO period, we are no longer obligated for indemnification
    with respect to those properties. Therefore, we recognized a
    deferred tax benefit of $36.8 million related to the
    reversal of this obligation in the fourth quarter of 2006.
    During 2006, we generated net proceeds of $1.3 billion from
    contributions of CDFS properties and sales of land, excluding
    discontinued operations. This includes contributions to our
    recently formed property funds in Japan and North America and is
    after deferral of $65.5 million of gains due to our
    continuing ownership in the property funds. 36




---



##### Table of Contents




    We generated net proceeds of $176.0 million, after deferral
    of $18.6 million of gains, and recognized net gains of
    $81.5 million on the contribution of 39 non-CDFS properties
    to two of the property funds in 2006.
    During 2006, we disposed of 89 CDFS and non-CDFS properties to
    third parties that are included in discontinued operations,
    which generated net proceeds of $777.5 million and resulted
    in the recognition of $137.2 million of gains.
    We acquired 13.5 million square feet of operating
    properties for an aggregate purchase price of
    $735.4 million, primarily to be rehabilitated
    and/or
    repositioned for future contribution to a property fund or, in
    certain circumstances, to be held by us for long-term investment.
    In 2006, we started development on projects with a total
    expected cost at completion of $2.5 billion and completed
    development projects with a total expected cost of
    $2.2 billion. We also acquired 2,242 acres of land for
    future development for $812.6 million.
    On January 4, 2006, we purchased the 80% ownership
    interests in Funds II-IV held by our fund partner. In March
    2006, we contributed substantially all of the assets and
    associated liabilities we obtained in this acquisition to the
    North American Industrial Fund. In connection with this
    transaction, we recognized $59.1 million and
    $12.5 million of income in our fund management and CDFS
    business segments, respectively. See further discussion below
    and in Note 4 to our Consolidated Financial Statements in
    Item 8.
    We invested $74.1 million in CDFS joint ventures operating
    in North America and Asia. These joint ventures primarily
    develop and operate distribution and retail properties.
    During 2006, we issued $1.9 billion of senior and other
    notes.
    In June 2006, we increased our borrowing capacity on our global
    senior credit facility (Global Line) from
    $2.6 billion to $3.4 billion.
    Our Board approved an increase in our annual distribution in
    2007 to $1.84 per common share, from $1.60 per common
    share, or an increase of 15.0%. The common share distribution is
    declared quarterly and may be adjusted at the discretion of the
    Board. Critical Accounting Policies    Revenue
    Recognition
    Business
    Combinations
   37




---



##### Table of Contents



Consolidation
  and/or
  Capitalization
    of Costs and Depreciation
    Impairment
    of Long-Lived Assets
     38




---



##### Table of Contents



Income
    Taxes
  built-in-gain
 Results
    of Operations    December 31,2006


2005


2004Net earnings attributable to
    common shares (in millions)

$
849.0


$
370.7


$
202.8Net earnings per share
    attributable to common shares  Basic

$
3.45


$
1.82


$
1.11Net earnings per share
    attributable to common shares  Diluted

$
3.32


$
1.76


$
1.08   non-CDFS
 39




---



##### Table of Contents



Portfolio
    Information
    December 31,2006


2005


2004Number of


Square


Number of


Square


Number of


SquareReportable Business Segment

Properties


Feet


Properties


Feet


Properties


FeetProperty operations (1)


1,473



204,674



1,461



186,663



1,228



133,630Fund management


843



181,273



752



159,769



708



149,141CDFS business (2)


32



5,474



23



3,283



10



1,538Totals


2,348



391,421



2,236



349,715



1,946



284,309     (1)
    Our operating portfolio includes properties that were developed
    or acquired in our CDFS business segment and are pending
    contribution to a property fund or disposition to a third party
    as follows (square feet in thousands):  Number of Properties


Square Feet2006


205



49,7922005


124



29,3832004


90



17,959   (2)
    Only includes distribution properties owned by the CDFS joint
    ventures. We include our wholly owned CDFS properties in the
    property operations segment (see above).    Same
    Store Analysis
      
    Net operating income generated by the same store portfolio
    (defined for the same store analysis as rental income, excluding
    termination and renegotiation fees, less rental expenses)
    increased 3.1% in 2006 over 40




---



##### Table of Contents



2005, due to a 3.3% increase in rental income, partially offset
    by a 4.2% increase in rental expenses. The increase in rental
    expenses was primarily driven by increases in property insurance
    and property taxes, which are largely recovered from our
    customers as rental recoveries included in rental income. For
    2005, the net operating income of the same store portfolio
    increased by 1.5% over 2004. Rental income increased 2.0% in
    2005 and rental expenses increased 3.9% in 2005, both over 2004.  
    Average occupancy in the same store portfolio increased 2.6% in
    2006 over 2005. This compares with an increase of 2.2% in
    average occupancy in 2005 over 2004.
    The same store portfolios rental rates, associated with
    leasing activity for space that has been previously leased by
    us, increased by 2.6% in 2006 over 2005. In 2005, the rental
    rates in the same store portfolio decreased by 1.5% from 2004.  period-to-period
      Operational
    Outlook
   41




---



##### Table of Contents



Property
    Operations Segment
    Years Ended December 31,2006


2005


2004Rental income

$
885,733


$
589,531


$
509,490Rental expenses


225,432



159,184



131,238Total net operating
    income  property operations segment

$
660,301


$
430,347


$
378,252       Fund
    Management Segment
   42




---



##### Table of Contents



Years Ended December 31,2006


2005


2004ProLogis North American property
    funds (1)

$
117,532


$
56,348


$
48,037ProLogis European
    Properties (2)


167,227



44,002



37,886ProLogis Japan property
    funds (3)


20,225



12,662



7,754Total net operating
    income  fund management segment

$
304,984


$
113,012


$
93,677     (1)
    
    Represents the income earned by us from our investments in
    property funds in North America. We had interests in 10, 12
    and 13 funds at December 31, 2006, 2005 and 2004,
    respectively. Our ownership interests ranged from 11.3% to 50.0%
    at December 31, 2006. These property funds on a combined
    basis owned 535, 471 and 465 properties at December 31,
    2006, 2005 and 2004, respectively.In January 2006, we purchased the 80% ownership interests held
    by our fund partner in Funds II-IV 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 Funds II-IV upon
    termination.On September 30, 2005, we purchased the remaining 80%
    interest in ProLogis North American Properties Fund XII and
    therefore the assets and earnings are now included in our
    property operations segment.(2)
    
    Represents the income earned by us from our investment in one
    property fund, previously referred to as ProLogis European
    Properties Fund. Since its IPO in September 2006, as discussed
    earlier, it is now referred to as ProLogis European Properties
    or PEPR. PEPR has acquired properties, primarily from us, and
    increased its portfolio size since it began operations in 1999.
    PEPR owned 277, 263 and 230 properties at December 31,
    2006, 2005 and 2004, respectively. Our ownership interest in
    PEPR was 24.0%, 21.0% and 21.8% at December 31, 2006, 2005
    and 2004, respectively. In connection with the IPO in 2006, we
    recognized $109.2 million in an incentive return based on
    the internal rate of return that the pre-IPO unit holders
    earned. During 2006, PEPR incurred professional fees and other
    expenses related to the completion of its IPO, which resulted in
    a decrease of approximately $8.9 million in the earnings we
    recognized.(3)
    
    Amounts represent our 20% ownership interest in two property
    funds in Japan. ProLogis Japan Properties Fund I increased
    its portfolio to 18 properties at December 31, 2006 and
    2005 from 13 properties at December 31, 2004. In September
    2005, we formed a second property fund in Japan, ProLogis Japan
    Properties Fund II. During 2006, the fund acquired its
    first 13 properties, six of which were contributed by us.  CDFS
    Business
  and/or
   43




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##### Table of Contents



Years Ended December 31,2006


2005


2004Disposition proceeds, prior to
    deferral (1)

$
1,337,278


$
1,190,264


$
1,322,084Contingent proceeds realized










5,871Proceeds deferred and not
    recognized (2)


(65,542
)


(52,770
)


(43,433
)Recognition of previously deferred
    amounts (2)


15,105



2,963



4,143Cost of dispositions (1)


(993,926
)


(917,782
)


(1,111,698
)Net gains


292,915



222,675



176,967Development management and other
    income (3)


37,420



25,464



2,698Interest income on long-term notes
    receivable (4)


16,730



6,781



Earnings from CDFS joint
    ventures (5)


44,974



5,671



189Other expenses and charges (6)


(12,554
)


(7,983
)


(5,519
)Total net operating
    income  CDFS business segment

$
379,485


$
252,608


$
174,335CDFS transactions recognized as
    discontinued operations (7):Disposition proceeds

$
245,500


$
100,494


$
241,875Cost of dispositions


(211,986
)


(89,878
)


(209,156
)Net CDFS gains in discontinued
    operations

$
33,514


$
10,616


$
32,719     (1)
    
    During 2006, we contributed 55 buildings to the property funds
    (30 in North America, 19 in Europe and six in Japan), compared
    with 42 buildings contributed in 2005 (20 in North America, 19
    in Europe and three in Japan), and compared with 78 buildings
    contributed in 2004 (43 in North America, 32 in Europe and three
    in Japan). In addition, we recognized net gains of
    $24.6 million, $14.5 million and $26.1 million
    from the disposition of land parcels during 2006, 2005 and 2004,
    respectively. 44




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##### Table of Contents



(2)
    
    When we contribute a property to a property fund in which we
    have an ownership interest, we defer a portion of the proceeds
    from the computation of the gain resulting from the
    contribution, based on our continuing ownership interest in the
    contributed property that arises due to our ownership interest
    in the property fund that acquires the property. We defer this
    portion of the proceeds by recognizing a reduction to our
    investment in the respective property fund. We adjust our
    proportionate share of earnings or losses that we recognize
    under the equity method from the property fund in later periods
    to reflect the property funds depreciation expense as if
    the depreciation expense was computed on our lower basis in the
    contributed property rather than on the property funds
    basis in the contributed property. If a loss results when a
    property is contributed to a property fund, the entire loss is
    recognized.When a property that we originally contributed to a property
    fund is disposed of to a third party by the property fund, we
    recognize in earnings the net amount of proceeds we had
    previously deferred in the period that the disposition to the
    third party occurs, in addition to our proportionate share of
    the net gain or loss recognized by the property fund. Further,
    during periods when our ownership interest in a property fund
    decreases, we recognize gains to the extent that previously
    deferred proceeds are recognized to coincide with our new
    ownership interest in the property fund, including
    $12.5 million related to the termination of Funds II-IV
    recognized in the first quarter of 2006.(3)
    
    Amounts include fees we earned for the performance of
    development activities. The increases in both 2006 and 2005,
    over the prior years, are due primarily to development
    management activities undertaken since the Catellus Merger and
    increased development management activity in Europe.(4)
    
    Amounts represent interest income earned on notes receivable
    related to previous property sales that were acquired through
    the Catellus Merger.(5)
    
    Represents the net earnings we recognized under the equity
    method from our investments in CDFS joint ventures. The increase
    in 2006 is due primarily to earnings recognized in our
    investments in joint ventures acquired in connection with the
    Catellus Merger. Included in the earnings for 2006 was
    $35.0 million, representing our proportionate share of the
    earnings of a CDFS joint venture, LAAFB JV. As our
    investment in LAAFB JV is held in a taxable subsidiary, we also
    recognized $27.0 million of current income tax expense and
    a deferred tax benefit of $12.4 million (see further
    discussion in Income Taxes below).(6)
    
    Includes land holding costs and charges for previously
    capitalized pursuit costs related to potential CDFS business
    segment projects when the acquisition is no longer probable.(7)
    
    Includes 15 CDFS business properties aggregating
    1.9 million square feet, eight CDFS business properties
    aggregating 1.1 million square feet and 10 CDFS business
    properties aggregating 2.3 million square feet that were
    sold to third parties during 2006, 2005 and 2004, respectively,
    that met the criteria to be presented as discontinued operations.  state-of-the-art
  
    In North America, in 2006, we acquired 895 acres of land
    for future potential development in the United States and
    Mexico. In 2005, we started our first developments in Canada and
    as part of the Catellus Merger, we acquired 2,500 acres of
    land for future potential development in North America in our
    existing markets and also acquired interests in several entities
    that engage in land and commercial development activities in
    North America, all of which we believe will provide additional
    CDFS business opportunities. 45




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##### Table of Contents




    In Europe, during 2006, we acquired 1,096 acres of land for
    future potential development. This included land acquired in the
    United Kingdom to support more than 3.5 million square feet
    of distribution development in the East and West Midlands.
    In Asia, we believe demand for
    state-of-the-art
    distribution properties will continue to provide opportunities
    for us in the CDFS business segment. In China, we are
    positioning ourselves to meet what we believe will be
    significant future demand for distribution space due to the
    expected growth in manufacturing and consumer demand for goods.
    In both China and Japan, the CDFS business opportunities
    available to us will be limited if we are unable to acquire
    adequate land parcels for development.  Other
    Components of Operating Income
                         46




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30-day
 47




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##### Table of Contents



Environmental
    Matters   Liquidity
    and Capital Resources  Overview
         48




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##### Table of Contents




    development of properties directly and additional investment in
    joint ventures in the CDFS business segment;
    acquisitions of properties in the CDFS business segment;
    acquisitions of land for future development in the CDFS business
    segment;
    direct acquisitions of operating properties
    and/or
    portfolios of operating properties in key distribution markets
    for direct, long-term investment in the property operations
    segment;
    capital expenditures on properties; and
    scheduled principal and interest payments and repayment of debt
    that is scheduled to mature.    
    property operations;
    fees and incentives earned for services performed on behalf of
    the property funds;
    proceeds from the contributions of properties to property funds
    (existing property funds and property funds that may be formed
    in the future);
    proceeds from the sale of certain properties, including
    properties that are classified as held for sale;
    proceeds from the disposition of land parcels and properties to
    third parties;
    borrowing capacity under the Global Line or other credit
    facilities;
    assumption of debt in connection with acquisitions; and
    proceeds from the issuance of equity or debt securities,
    including sales under various common share plans.  Commitments
    related to future contributions to Property Funds
       49




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##### Table of Contents



Cash
    Provided by Operating Activities
    Cash
    Investing and Cash Financing Activities
    
    Investments in real estate required cash of $4.1 billion in
    2006, $2.6 billion in 2005 and $1.7 billion in 2004.
    These amounts include the acquisition of operating properties
    (74 properties, 25 properties and 31 properties with an
    aggregate purchase price of $735.4 million,
    $453.9 million and $322.3 million in 2006, 2005 and
    2004, respectively); acquisitions of land for future
    development; costs for current and future development projects;
    and recurring capital expenditures and tenant improvements on
    existing operating properties. At December 31, 2006, we had
    114 properties aggregating 30.0 million square feet under
    development, with a total expected investment of
    $2.2 billion.
    Invested cash in new and existing unconsolidated investees of
    $217.9 million, $16.7 million and $63.5 million
    in 2006, 2005 and 2004, respectively. These additional
    investments were primarily in the North American Industrial Fund
    and CDFS joint ventures in China, including $42.2 million
    that was escrowed in 2006 for future potential investments in a
    CDFS joint venture that develops retail properties, subject to
    the attainment of certain performance criteria. In January 2006,
    we invested $55.0 million in a preferred interest in
    ProLogis North American Properties Fund V, which we sold in
    August 2006, as discussed below.
    Generated net cash from contributions and dispositions of
    properties and land parcels of $2.1 billion,
    $1.5 billion and $1.4 billion in 2006, 2005 and 2004,
    respectively. See further discussion in
     Results of Operations  CDFS
    Segment.
    Received proceeds from unconsolidated investees as a return of
    investment of $146.2 million, $48.7 million and
    $53.4 million in 2006, 2005 and 2004, respectively
    (including $42.0 million from LAAFB JV and
    $55.0 million related to the sale of a preferred interest
    in ProLogis North American Properties Fund V, both of which
    occurred in 2006). 50




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
    Invested cash of $259.2 million in connection with the
    purchase of our fund partners ownership interests in
    Funds II-IV during the first quarter of 2006.
    Invested cash of $113.9 million related to an acquisition
    that closed in February 2007. See Note 20 to our
    Consolidated Financial Statements in Item 8.
    Generated net cash proceeds from payments on notes receivable
    related to dispositions of assets of $73.7 million,
    $60.0 million and zero in 2006, 2005 and 2004, respectively.
    Used $1.3 billion of cash (net of Catellus cash on
    the merger date) as partial consideration related to the
    Catellus Merger in 2005.
    Net cash payment of $333.5 million was made in 2004
    associated with the Keystone transaction.    
    Issued $1.9 billion of senior and other notes and repaid
    $250.0 million of maturing senior notes, resulting in
    proceeds of $1.7 billion during 2006. Received proceeds
    from issuance of other debt of $375.0 million for 2006 (net
    of $135.0 million of secured debt that was paid off prior
    to maturity). In 2005, we received proceeds from the issuance of
    senior notes of $890.0 million and proceeds from borrowings
    on credit facilities and short-term borrowings of
    $1.3 billion, which were used primarily for the cash
    consideration for the Catellus Merger and repayment of
    $106.4 million of debt assumed in the Catellus Merger. In
    2004, we received proceeds from the issuance of senior notes of
    $420.6 million and proceeds from borrowings on credit
    facilities and short-term $210.8 million.
    Distributions paid to holders of common shares were
    $393.3 million, $297.4 million and $266.1 million
    in 2006, 2005 and 2004, respectively. Dividends paid on
    preferred shares were $19.1 million, $25.4 million and
    $25.7 million in 2006, 2005 and 2004, respectively.
    Generated proceeds from sales and issuances of common shares of
    $358.0 million, $45.6 million and $146.8 million
    in 2006, 2005 and 2004, respectively. This includes
    $320.8 million received for the issuance of
    5.4 million common shares under our Controlled Equity
    Offering Program.
    Redeemed preferred shares in 2004 for $125.0 million.  Borrowing
    Capacities
   51




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##### Table of Contents



Off-Balance
    Sheet Arrangements
      Third Party


Weighted Average


OurTotal Assets


Debt (1) (2)


Interest Rate


OwnershipProLogis California

$
608.6


$
325.0



7.5
%


50.0
%ProLogis North American Properties
    Fund I


333.3



242.3



7.6
%


41.3
%ProLogis North American Properties
    Fund V


2,517.1



827.2



5.4
%


11.3
%ProLogis North American Properties
    Fund VI


508.4



307.0



5.4
%


20.0
%ProLogis North American Properties
    Fund VII


382.8



229.0



5.5
%


20.0
%ProLogis North American Properties
    Fund VIII


191.5



112.0



5.3
%


20.0
%ProLogis North American Properties
    Fund IX


191.8



122.1



5.7
%


20.0
%ProLogis North American Properties
    Fund X


214.5



135.0



5.7
%


20.0
%ProLogis North American Properties
    Fund XI


228.4



66.1



4.5
%


20.0
%ProLogis North American Industrial
    Fund


1,244.3



748.1



5.4
%


20.0
%ProLogis European Properties


4,856.0



2,615.6



5.3
%


24.0
%ProLogis Japan Properties
    Fund I


1,215.5



528.7



1.5
%


20.0
%ProLogis Japan Properties
    Fund II


742.8



375.5



2.0
%


20.0
%Total property funds

$
13,235.0


$
6,633.6     (1)
    As of December 31, 2006, we had guaranteed
    $15.0 million related to borrowings of ProLogis North
    American Properties Fund V, which was repaid in January
    2007 with proceeds from the issuance of secured debt that we do
    not guarantee.  (2)
    
    The approximate principal payments due on the third party debt
    of the property funds during each of the years in the five year
    period ending December 31, 2011 and thereafter are as
    follows: 2007  $976.0 million; 2008 
    $392.0 million; 2009  $1,268.8 million;
    2010  $1,255.7 million; 2011 
    $522.8 million; and thereafter $2,218.3 million. 52




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##### Table of Contents



Contractual
    Obligations
      Payments Due By PeriodLess than


1 to 3


3 to 5


More thanTotal


1 year


years


years


5 yearsLong-term debt obligations

$
5,871


$
543


$
1,095


$
1,078


$
3,155Interest on long-term debt
    obligations


2,006



334



560



441



671Unfunded commitments on
    development projects (1)


1,226



1,226











Amounts due on credit facilities
    (2)


2,463











2,463



Interest on lines of credit and
    short-term borrowings (2)


329



88



174



67



Totals

$
11,895


$
2,191


$
1,829


$
4,049


$
3,826     (1)
    
    We had properties under development at December 31, 2006
    with a total expected investment of $2.2 billion. The
    unfunded commitments presented include all costs necessary to
    place the property into service, including the costs of tenant
    improvements and marketing and leasing costs, not only those
    costs that we are obligated to fund under construction contracts.(2)
    
    The maturity date of the credit agreements assumes that we
    exercise our option to extend.             53




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Derivative
    Financial Instruments
   New
    Accounting Pronouncements   Funds
    from Operations           54




---



##### 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 risks.          
    The current income tax expenses that are excluded from our
    defined FFO measure represent the taxes that are payable. 55




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
    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 distribution 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 measure 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 measure does 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 measure 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
    amount. Our FFO measure is limited in that it does not reflect
    the current period changes in these net assets that result from
    periodic foreign currency exchange rate movements.   56




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##### Table of Contents



Years Ended December 31,2006


2005


2004FFO:Reconciliation of net earnings to
    FFO:Net earnings attributable to
    common shares

$
848,951


$
370,747


$
202,813Add (deduct) NAREIT defined
    adjustments:Real estate related depreciation
    and amortization


283,701



184,792



158,344Additional CDFS proceeds recognized


466







Gains recognized on dispositions
    of certain non-CDFS business assets and other


(81,470
)






(6,236
)Reconciling items attributable to
    discontinued operations:Gains recognized on dispositions
    of non-CDFS business assets


(103,729
)


(86,444
)


(1,718
)Real estate related depreciation
    and amortization


5,315



11,399



6,351Totals discontinued operations


(98,414
)


(75,045
)


4,633Our share of reconciling items
    from unconsolidated investees:Real estate related depreciation
    and amortization


68,151



57,766



42,635(Gains) losses on dispositions of
    non-CDFS business assets


(7,124
)


(1,114
)


601Other amortization items


(16,000
)


(5,134
)


(3,498
)Totals unconsolidated investees


45,027



51,518



39,738Totals NAREIT defined adjustments


149,310



161,265



196,479Subtotals  NAREIT
    defined FFO


998,261



532,012



399,292Add (deduct) our defined
    adjustments:Foreign currency exchange gains,
    net


(19,555
)


(14,065
)


(16,590
)Current income tax expense


23,191







Deferred income tax (benefit)
    expense


(53,722
)


12,045



18,692Reconciling items attributable to
    discontinued operations  deferred income tax benefit






(213
)


(1,075
)Our share of reconciling items
    from unconsolidated investees:Foreign currency exchange (gains)
    expenses/losses, net


(45
)


298



443Deferred income tax (benefit)
    expense


(2,982
)


395



(359
)Totals unconsolidated investees


(3,027
)


693



84Totals our defined adjustments


(53,113
)


(1,540
)


1,111FFO attributable to common shares
    as defined by us

$
945,148


$
530,472


$
400,403   ITEM 7A.
    Quantitative
    and Qualitative Disclosure About Market Risk   57




---



##### Table of Contents



Interest
    Rate Risk
        Foreign
    Currency Risk
       58




---



##### Table of Contents



Fair
    Value of Financial Instruments
   ITEM 8. Financial
    Statements and Supplementary Data   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)
   59




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##### Table of Contents



Limitations
    of the Effectiveness of Controls
   ITEM 9B. Other
    Information   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   60




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##### Table of Contents



PART IV ITEM 15. Exhibits,
    Financial Statement Schedules                Regulation S-K
   61




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##### Table of Contents



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


63Consolidated
    Statements of Earnings


65Consolidated
    Balance Sheets


66Consolidated
    Statements of Shareholders Equity and Comprehensive
    Income


67Consolidated
    Statements of Cash Flows


68Notes to
    Consolidated Financial Statements


69Report of
    Independent Registered Public Accounting Firm


117Schedule III 
    Real Estate and Accumulated Depreciation


118  62




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Internal Control  Integrated
    Framework issued by the Committee of Sponsoring Organizations of
    the Treadway Commission (COSO),
      63




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     Internal Control 
    Integrated Framework issued by the Committee of Sponsoring
    Organizations of the Treadway Commission (COSO).
        Internal
    Control  Integrated Framework issued by the Committee
    of Sponsoring Organizations of the Treadway Commission
    (COSO) Internal Control  Integrated
    Framework issued by the Committee of Sponsoring Organizations of
    the Treadway Commission (COSO).
        64




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##### Table of Contents



PROLOGISCONSOLIDATED STATEMENTS OF EARNINGS
    Years Ended December 31, 2006, 2005 and 2004
    (In thousands, except per share data)
  2006


2005


2004Revenues:Rental income

$
927,719


$
600,869


$
509,490CDFS disposition proceeds


1,286,841



1,140,457



1,288,665Property management and other fees
    and incentives


211,929



66,934



50,778Development management and other
    income


37,420



25,464



2,698Total revenues


2,463,909



1,833,724



1,851,631Expenses:Rental expenses


239,545



161,680



131,238Cost of CDFS dispositions


993,926



917,782



1,111,698General and administrative


156,889



107,164



84,861Depreciation and amortization


293,027



191,945



161,968Merger integration expenses


2,630



12,152



Relocation expenses


93



4,451



6,794Other expenses


13,013



8,633



5,519Total expenses


1,699,123



1,403,807



1,502,078Operating income


764,786



429,917



349,553Other income (expense):Earnings from unconsolidated
    property funds


93,055



46,078



42,899Earnings (losses) from CDFS joint
    ventures and other unconsolidated investees


50,703



6,421



(801
)Interest expense


(294,403
)


(177,562
)


(152,551
)Interest income on long-term notes
    receivable


16,730



6,781



Interest and other income, net


18,248



10,724



5,721Total other income (expense)


(115,667
)


(107,558
)


(104,732
)Earnings before minority interest


649,119



322,359



244,821Minority interest


3,457



5,243



4,875Earnings before certain net gains


645,662



317,116



239,946Gains recognized on dispositions of
    certain non-CDFS business assets and other


81,470







9,400Foreign currency exchange gains, net


21,086



15,979



14,686Earnings before income taxes


748,218



333,095



264,032Income taxes:Current income tax expense


84,250



14,847



24,870Deferred income tax (benefit)
    expense


(53,722
)


12,045



18,692Total income taxes


30,528



26,892



43,562Earnings from continuing operations


717,690



306,203



220,470Discontinued operations:Income attributable to disposed
    properties and assets held for sale


19,434



18,050



14,728Losses related to
    temperature-controlled distribution assets






(25,150
)


(36,671
)Gains recognized on dispositions:Non-CDFS business assets


103,729



86,444



1,549CDFS business assets


33,514



10,616



32,719Total discontinued operations


156,677



89,960



12,325Net earnings


874,367



396,163



232,795Less preferred share dividends


25,416



25,416



25,746Less excess of redemption values
    over carrying values of preferred shares redeemed










4,236Net earnings attributable to common
    shares

$
848,951


$
370,747


$
202,813Weighted average common shares
    outstanding  Basic


245,952



203,337



182,226Weighted average common shares
    outstanding  Diluted


256,852



213,713



191,801Net earnings per share attributable
    to common shares  Basic:Continuing operations

$
2.81


$
1.38


$
1.04Discontinued operations


0.64



0.44



0.07Net earnings per share attributable
    to common shares  Basic

$
3.45


$
1.82


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

$
2.71


$
1.34


$
1.02Discontinued operations


0.61



0.42



0.06Net earnings per share attributable
    to common shares  Diluted

$
3.32


$
1.76


$
1.08Distributions per common share

$
1.60


$
1.48


$
1.46    65




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##### Table of Contents



PROLOGIS
  CONSOLIDATED BALANCE SHEETS
 (In thousands, except per share data)
  December 31,2006


2005ASSETSReal estate

$
13,953,999


$
11,875,130Less accumulated depreciation


1,280,206



1,118,54712,673,793



10,756,583Investments in and advances to
    unconsolidated investees


1,299,697



1,049,743Cash and cash equivalents


475,791



203,800Accounts and notes receivable


439,791



327,214Other assets


957,295



788,840Discontinued
    operations  assets held for sale


57,158



Total assets

$
15,903,525


$
13,126,180LIABILITIES AND
    SHAREHOLDERS EQUITYLiabilities:Debt

$
8,386,886


$
6,677,880Accounts payable and accrued
    expenses


518,651



344,423Other liabilities


546,129



557,210Discontinued
    operations  assets held for sale


1,012



Total liabilities


9,452,678



7,579,513Minority interest


52,268



58,644Shareholders equity:Series C preferred shares at
    stated liquidation preference of $50.00 per share;
    $0.01 par value; 2,000 shares issued and outstanding
    at December 31, 2006 and 2005


100,000



100,000Series F preferred shares at
    stated liquidation preference of $25.00 per share;
    $0.01 par value; 5,000 shares issued and outstanding
    at December 31, 2006 and 2005


125,000



125,000Series G preferred shares at
    stated liquidation preference of $25.00 per share;
    $0.01 par value; 5,000 shares issued and outstanding
    at December 31, 2006 and 2005


125,000



125,000Common shares; $0.01 par
    value; 250,912 shares issued and outstanding at
    December 31, 2006 and 243,781 shares issued and
    outstanding at December 31, 2005


2,509



2,438Additional paid-in capital


6,000,119



5,606,017Accumulated other comprehensive
    income


216,922



149,586Distributions in excess of net
    earnings


(170,971
)


(620,018
)Total shareholders equity


6,398,579



5,488,023Total liabilities and
    shareholders equity

$
15,903,525


$
13,126,180    66




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##### Table of Contents



PROLOGIS
  CONSOLIDATED STATEMENTS OF SHAREHOLDERS
    EQUITY
    AND COMPREHENSIVE INCOME
 Years Ended December 31, 2006, 2005 and 2004
 (In thousands)
  2006


2005


2004Common shares  number of
    shares at beginning of year


243,781



185,789



180,183Issuance of common shares in
    connection with the Catellus Merger






55,889



Issuances of common shares under
    common share plans


6,951



2,092



5,590Conversions of limited partnership
    units


180



11



16Common shares  number of
    shares at end of year


250,912



243,781



185,789Common shares  par value
    at beginning of year

$
2,438


$
1,858


$
1,802Issuance of common shares in
    connection with the Catellus Merger






559



Issuances of common shares under
    common share plans


69



21



56Conversions of limited partnership
    units


2







Common shares  par value
    at end of year

$
2,509


$
2,438


$
1,858Preferred shares at stated
    liquidation preference at beginning of year

$
350,000


$
350,000


$
475,000Redemption of Series D
    preferred shares










(125,000
)Preferred shares at stated
    liquidation preference at end of year

$
350,000


$
350,000


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

$
5,606,017


$
3,249,576


$
3,073,959Issuance of common shares in
    connection with the Catellus Merger






2,285,029



Issuances of common shares under
    common share plans


357,448



43,126



148,248Conversions of limited partnership
    units


6,475



150



869Excess of redemption values over
    carrying values of preferred shares redeemed










4,236Cost of issuing preferred shares










(473
)Cost of issuing common shares


(76
)


(1,395
)


(157
)Change in receivable from timing
    differences on equity transactions


244



2,494



(1,365
)Cost of share-based compensation
    awards


30,011



27,037



24,259Additional paid-in capital at end
    of year

$
6,000,119


$
5,606,017


$
3,249,576Accumulated other comprehensive
    income at beginning of year

$
149,586


$
194,445


$
138,235Foreign currency translation gains
    (losses), net


70,777



(70,076
)


63,276Unrealized (losses) gains on
    derivative contracts, net


(3,441
)


25,217



(7,066
)Accumulated other comprehensive
    income at end of year

$
216,922


$
149,586


$
194,445Distributions in excess of net
    earnings at beginning of year

$
(620,018
)

$
(693,386
)

$
(630,064
)Net earnings


874,367



396,163



232,795Preferred share dividends


(25,416
)


(25,416
)


(25,746
)Excess of redemption values over
    carrying values of preferred shares redeemed










(4,236
)Common share distributions


(399,904
)


(297,379
)


(266,135
)Distributions in excess of net
    earnings at end of year

$
(170,971
)

$
(620,018
)

$
(693,386
)Total shareholders equity at
    end of year

$
6,398,579


$
5,488,023


$
3,102,493Comprehensive income attributable
    to common shares:Net earnings

$
874,367


$
396,163


$
232,795Preferred share dividends


(25,416
)


(25,416
)


(25,746
)Excess of redemption values over
    carrying values of preferred shares redeemed










(4,236
)Foreign currency translation gains
    (losses), net


70,777



(70,076
)


63,276(Losses) gains on derivative
    contracts, net


(3,441
)


25,217



(7,066
)Comprehensive income attributable
    to common shares

$
916,287


$
325,888


$
259,023    67




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##### Table of Contents



PROLOGISCONSOLIDATED STATEMENTS OF CASH FLOWS
    Years Ended December 31, 2006, 2005 and 2004
    (In thousands)
  2006


2005


2004Operating activities:Net earnings

$
874,367


$
396,163


$
232,795Minority interest share in earnings


3,457



5,243



4,875Adjustments to reconcile net
    earnings to net cash provided by operating activities:Straight-lined rents


(36,418
)


(11,411
)


(9,654
)Cost of share-based compensation
    awards


21,567



22,615



15,290Depreciation and amortization


298,342



204,378



174,606Cumulative translation losses and
    impairment charge on assets held for sale






26,864



50,582Equity in earnings from
    unconsolidated investees


(143,758
)


(52,499
)


(42,098
)Distributions from and changes in
    operating receivables of unconsolidated investees


99,062



47,514



34,452Amortization of deferred loan costs
    and net premium on debt


(6,366
)


1,615



5,741Gains recognized on dispositions of
    non-CDFS business assets and investments in property funds, net


(185,199
)


(86,444
)


(10,949
)Adjustments to foreign currency
    exchange amounts recognized


(18,774
)


(10,288
)


(10,477
)Deferred income tax (benefit)
    expense


(53,722
)


12,045



18,692Increase in accounts and notes
    receivable and other assets


(203,918
)


(54,091
)


(64,582
)Increase (decrease) in accounts
    payable and accrued expenses and other liabilities


72,201



(2,986
)


117,102Net cash provided by operating
    activities


720,841



498,718



516,375Investing activities:Real estate investments


(3,729,313
)


(2,468,396
)


(1,659,209
)Purchase of ownership interests in
    property funds


(259,248
)






Tenant improvements and lease
    commissions on previously leased space


(66,787
)


(53,919
)


(46,693
)Recurring capital expenditures


(29,437
)


(26,989
)


(24,561
)Cash consideration paid in Catellus
    Merger in 2005 and Keystone Transaction in 2004, net of cash
    acquired






(1,292,644
)


(510,560
)Cash received associated with the
    Keystone Transaction










177,106Proceeds from dispositions of real
    estate assets


2,095,231



1,516,614



1,405,420Proceeds from dispositions of
    investments in unconsolidated investees










13,209Advances on notes receivable


(115,417
)






Proceeds from repayments of notes
    receivable


73,723



59,991



Increase in restricted cash for
    potential investment


(42,174
)






Investments in unconsolidated
    investees


(175,677
)


(16,726
)


(63,528
)Return of investment from
    unconsolidated investees


146,206



48,652



53,361Adjustments to cash balances
    resulting from a reporting change










3,284Net cash used in investing
    activities


(2,102,893
)


(2,233,417
)


(652,171
)Financing activities:Net proceeds from sales and
    issuances of common shares under various common share plans


358,038



45,641



146,782Redemptions of preferred shares










(125,000
)Distributions paid on common shares


(393,317
)


(297,379
)


(266,135
)Minority interest redemptions and
    distributions


(11,576
)


(13,953
)


(7,685
)Dividends paid on preferred shares


(19,062
)


(25,416
)


(25,746
)Debt and equity issuance costs paid


(13,840
)


(8,112
)


(4,507
)Repayment of debt assumed in
    Catellus Merger






(106,356
)


Net proceeds from lines of credit
    and short-term borrowings


368,158



1,348,023



210,784Proceeds from issuance of senior
    and other notes and secured debt


1,945,325



890,011



420,573Payments on senior notes, secured
    debt and assessment bonds


(588,844
)


(119,067
)


(312,465
)Net cash provided by financing
    activities


1,644,882



1,713,392



36,601Effect of exchange rate changes on
    cash


9,161



(11,422
)


4,221Net increase (decrease) in cash and
    cash equivalents


271,991



(32,729
)


(94,974
)Cash and cash equivalents,
    beginning of year


203,800



236,529



331,503Cash and cash equivalents, end of
    year

$
475,791


$
203,800


$
236,529     The accompanying notes are an
    integral part of these Consolidated Financial Statements.
 68




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##### 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;(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.  04-5 Determining Whether a General Partner, or the General
    Partners as a Group, Controls a Limited Partnership or Similar
    Entity when the Limited Partners Have Certain Rights 04-5). 04-5 04-5 04-5. 04-5
  Use of Estimates.
 69




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      Foreign Operations.
       70




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
       Years Ended December 31,2006


2005


2004Gains from remeasurement of
    certain intercompany and third party debt, net

$
36,025


$
11,316


$
11,075Gains (losses) from the settlement
    of certain intercompany and third party debt, net (1)


1,843



(4,418
)


4,065Transaction gains (losses), net


(2,068
)


(638
)


144Derivative financial
    instruments (2):Expense associated with contracts
    settled during the period


(1,274
)


(1,028
)


(2,048
)Mark-to-market
    (losses) gains on outstanding contracts, net


(15,977
)






1,450Gains realized at settlement of
    contracts (1)


2,537



10,747



Totals

$
21,086


$
15,979


$
14,686     (1)
    
    At the time certain debt balances are settled, remeasurement
    gains or losses that have been recognized in results of
    operations as unrealized are reversed and the cumulative foreign
    currency exchange gain or loss realized with respect to the
    settled balance is recognized in our results of operations as a
    realized gain or loss. During 2006, 2005 and 2004, we recognized
    gains of $6.2 million, losses of $7.2 million and
    gains of $4.1 million, respectively, due to the settlement
    of intercompany loans denominated in British pounds sterling. In
    addition, during 2006 and 2005, we recognized gains of
    $2.4 million and $6.1 million, respectively (with no
    gains in 2004), associated with derivative contracts that
    settled during the period and were designed to manage the
    foreign currency fluctuations of these intercompany loans.(2)
    
    We enter into foreign currency put option contracts related to
    our operations in Europe and Japan. These put option contracts
    do not qualify for hedge accounting treatment. Accordingly, the
    cost of the contract is capitalized at the contracts
    inception and we mark the derivative to market as of the end of
    each subsequent reporting period and the related gains or losses
    are recorded in our earnings. Upon settlement of the contract,
    the
    mark-to-market
    adjustment is reversed, the total cost of the contract is
    expensed and any proceeds received are recognized as a realized
    gain.  Revenue
    Recognition.
  Rental and other income.
  Gains or Losses on Disposition of Real Estate.
 71




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         Rental Expenses. on-site
  Share-Based Compensation. Share Based
    Payment
  Accounting and Disclosure of Stock Based
    Compensation Accounting for Stock Issued to
    Employees
  Relocation Expenses.
  Income Taxes.
 72




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
        Long-Lived
    Assets
  Real Estate Assets.
    and/or
  Business Combinations, Goodwill and Intangible
    Assets. ,
  
    the fair value of the buildings on an as-if-vacant basis. The
    fair value allocated to land is generally based on relevant
    market data;
    the market value of above and below market leases based upon our
    best estimate of current market rents. The value of each lease
    is recorded in either other assets or other liabilities, as
    appropriate; 73




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    
    the value of costs to obtain tenants, primarily leasing
    commissions. These costs are recorded in other assets;
    the value of debt based on quoted market rates for the same or
    similar issues, or by discounting future cash flows using rates
    currently available for debt with similar terms and maturities.
    Any discount or premium is included in the principal amount;
    the value of any management contracts by discounting future
    expected cash flows under these contracts; and
    the value of all other assumed assets and liabilities based on
    the best information available.    
    Above and below market leases are charged to rental income over
    the average term of the acquired 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 to expense over the remaining
    term of the contract.    Investments in Unconsolidated Investees.
  Impairment of Long-Lived Assets.
  Assets Held for Sale and Discontinued
    Operations.
 74




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
        Cash and Cash Equivalents.
    Notes Receivable.
  Minority Interest.
    Preferred Share Redemptions.
  Costs of Raising Capital.
  Financial Instruments.
 75




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
          Environmental costs.
  Recent Accounting Pronouncements. Accounting for
    Uncertainty in Income Taxes  An Interpretation of
    FASB Statement No. 109 Accounting for Income Taxes
  Considering the Effects of
    Prior Year Misstatements when Quantifying Misstatements in
    Current Year Financial Statements
  Fair Value Measurements
 76




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      Reclassifications.
  3.
    Mergers
    and Acquisitions:  Catellus
    Development Corporation
      ProLogis
    North American Properties Fund XII
    Keystone
     77




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      4.
    Unconsolidated
    Investees:  Summary
    of Investments and Income
    December 31,2006


2005Property funds

$
981,840


$
755,320CDFS joint ventures and other
    unconsolidated investees


317,857



294,423Totals

$
1,299,697


$
1,049,743   Property
    Funds
    Years Ended December 31,2006


2005


2004Earnings from unconsolidated
    property funds:North America

$
59,732


$
24,224


$
25,532Europe


21,605



13,938



12,550Asia


11,718



7,916



4,817Total earnings from unconsolidated
    property funds

$
93,055


$
46,078


$
42,899Property management and other fees
    and incentives:North America

$
57,800


$
32,124


$
22,505Europe


145,622



30,064



25,336Asia


8,507



4,746



2,937Total property management and
    other fees and incentives

$
211,929


$
66,934


$
50,778    78




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
         CDFS disposition proceeds (1)

$
12,492Property management and other fees
    and incentives (2)

$
21,958Earnings from unconsolidated
    property funds (3)

$
37,113     (1)
    
    Represents the recognition of proceeds that we had previously
    deferred as part of CDFS proceeds upon the initial contributions
    of the properties to Funds II-IV.(2)
    
    Represents an incentive return we earned due to certain return
    levels achieved by our fund partner upon the termination of
    Funds II-IV.(3)
    
    Represents our proportionate share of the gain on termination
    recognized by Funds II-IV.    SquareNumber of


feetproperties


(in


Ownership


Investment inowned


millions)


Percentage


and advances toFund Names

2006


2006


2006


2005


2006


2005ProLogis California (ProLogis
    California I LLC ) (1)


81



14.2



50.0%



50.0%


$
112,915


$
115,743ProLogis North American Properties
    Fund I (ProLogis North American Properties Fund I
    LLC)(1)


36



9.4



41.3%



41.3%



30,902



33,241ProLogis North American Properties
    Fund II  IV (2)














20.0%







12,410ProLogis North American Properties
    Fund V (3)


154



36.2



11.3%



11.3%



53,331



53,104ProLogis North American Properties
    Fund VI (Allagash Property Trust) (1)


22



8.6



20.0%



20.0%



39,149



42,227ProLogis North American Properties
    Fund VII (Brazos Property Trust) (1)


29



6.1



20.0%



20.0%



31,816



32,543ProLogis North American Properties
    Fund VIII (Cimmaron Property Trust) (1)


24



3.1



20.0%



20.0%



15,397



15,602ProLogis North American Properties
    Fund IX (Deerfield Property Trust) (1)


20



3.4



20.0%



20.0%



14,076



14,274ProLogis North American Properties
    Fund X (Elkhorn Property Trust) (1)


29



4.2



20.0%



20.0%



15,399



15,968ProLogis North American Properties
    Fund XI (KPJV, LLP) (1)


14



4.3



20.0%



20.0%



31,871



33,094ProLogis North American Industrial
    Fund (4)


126



21.2



20.0%







72,053



PEPR (ProLogis European
    Properties) (5)


277



58.1



24.0%



21.0%



430,761



283,435ProLogis Japan Properties
    Fund I (PLD/RECO Japan TMK Property Trust) (1)


18



7.4



20.0%



20.0%



87,705



103,679ProLogis Japan Properties
    Fund II (ProLogis Japan Properties Trust) (1)(6)


13



5.1



20.0%







46,465



Totals


843



181.3










$
981,840


$
755,320  79




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      (1)
    
    We have one fund partner in each of these property funds.(2)
    
    As discussed above, on January 4, 2006, we purchased the
    remaining 80% ownership interests of our fund partner in each of
    these property funds and subsequently contributed substantially
    all the assets and associated liabilities into the North
    American Industrial Fund.(3)
    
    We refer to the combined entities in which we have ownership
    interests (ProLogis-Macquarie Fund and the management company,
    as discussed below) as one property fund named ProLogis North
    American Properties Fund V.  
    Our ownership interest is held directly or indirectly by us,
    Macquarie ProLogis Trust (MPR), a publicly traded
    listed property trust in Australia and Macquarie Bank Limited
    (Macquarie Bank). We and a United States subsidiary
    of Macquarie Bank each have a 50% ownership interest in a
    company that was formed to act as manager of the
    ProLogis-Macquarie Fund.
    At December 31, 2006, we had guaranteed $15.0 million
    of borrowings to ProLogis North American Properties Fund V
    outstanding on a term loan that was repaid in January 2007 with
    proceeds from the issuance of secured debt which we do not
    guarantee. At December 31, 2005, we had guaranteed
    $12.5 million of borrowings of ProLogis North American
    Properties Fund V outstanding on a term loan that was
    repaid in 2006.
    On January 9, 2006, a preferred unit holder in a subsidiary
    of ProLogis North American Properties Fund V exercised its
    option to put its interest to us for $55.0 million, which
    we acquired. We had an agreement with ProLogis North American
    Properties Fund V that enabled us to put this interest to
    the fund at the same price after June 30, 2006. On
    August 4, 2006, we exercised our option and received
    payment from ProLogis North American Properties Fund V.
    During 2006, we contributed 20 properties for aggregate proceeds
    of $132.4 million to ProLogis North American Properties
    Fund V.  (4)
    
    In February 2006, we formed the North American Industrial Fund,
    with ten institutional investors, which will primarily own
    distribution properties in major distribution markets throughout
    the United States and Canada. We refer to the combined entities
    in which we have ownership interests as one property fund named
    ProLogis North American Industrial Fund. Our ownership
    percentage is based on our levels of ownership interest in these
    different entities. We are committed to offer to contribute to
    substantially all of our stabilized distribution properties
    developed in Canada and the United States to the North American
    Industrial Fund. The North American Industrial Fund has equity
    commitments, which expire in February 2009, aggregating
    approximately $1.5 billion from third party investors, of
    which $1.1 billion was unfunded at December 31, 2006.
    During 2006, we contributed 49 buildings for aggregate proceeds
    of $451.8 million to the North American Industrial Fund in
    addition to the assets that were acquired from Funds II-IV,
    as discussed above.(5)
    
    During 2006, prior to PEPRs IPO, we contributed 19
    properties to PEPR for aggregate proceeds of
    $419.6 million. In connection with PEPRs IPO, we
    entered into a property contribution agreement under which we
    are committed to offer to contribute to PEPR certain stabilized
    properties having an aggregate contribution value of
    200 million (the currency equivalent of
    $263.6 million at December 31, 2006), in specified
    markets in Europe through September 30, 2007, subject to
    the property meeting certain leasing and other criteria. As of
    December 31, 2006, we had not contributed any properties
    under this commitment.(6)
    
    ProLogis Japan Properties Fund II was formed on
    September 1, 2005. We are committed to offer to contribute
    all of the properties that we develop and stabilize in Japan
    through August 2008 to this property fund, subject to the
    property meeting certain leasing and other criteria. ProLogis
    Japan Properties Fund II has an equity commitment of
    $600.0 million from our fund partner, which expires in
    August 2008, of 80




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    which $408.4 million was unfunded at December 31,
    2006. During the year ended December 31, 2006, we
    contributed six properties to this property fund for aggregate
    proceeds of $405.5 million and the property fund acquired
    seven properties from third parties.    2006NorthAmerica


Europe


Asia


TotalRevenues

$
494.6


$
414.4


$
120.9


$
1,029.9Net earnings (1)

$
266.2


$
88.2


$
47.7


$
402.1Total assets

$
6,420.7


$
4,856.0


$
1,958.3


$
13,235.0Amounts due to us

$
6.7


$
14.0


$
75.2


$
95.9Third party debt (2)

$
3,113.8


$
2,615.6


$
904.2


$
6,633.6Total liabilities

$
4,360.8


$
2,968.0


$
1,054.2


$
8,383.0Equity

$
2,054.2


$
1,881.4


$
904.1


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


23.1%



24.0%



20.0%



23.0%Our investment balance (4)

$
416.8


$
430.8


$
134.2


$
981.8Deferred proceeds, net of
    amortization (5)

$
112.8


$
123.7


$
66.2


$
302.7   2005NorthAmerica


Europe


Asia


TotalRevenues

$
489.9


$
368.6


$
70.7


$
929.2Net earnings

$
99.3


$
54.0


$
32.9


$
186.2Total assets

$
4,786.6


$
4,052.0


$
1,230.1


$
10,068.7Amounts due to us

$
9.0


$
15.7


$
71.3


$
96.0Third party debt (2)

$
2,690.7


$
1,991.2


$
535.1


$
5,217.0Total liabilities

$
2,921.0


$
2,409.6


$
639.8


$
5,970.4Equity

$
1,864.1


$
1,637.9


$
590.3


$
4,092.3Our weighted average ownership at
    end of period (3)


23.5%



21.0%



20.0%



22.1%Our investment balance (4)

$
368.2


$
283.4


$
103.7


$
755.3Deferred proceeds, net of
    amortization (5)

$
77.7


$
105.5


$
44.1


$
227.3     (1)
    
    Included in net earnings for Europe are expenses of
    approximately $43.3 million related to the costs to
    complete PEPRs IPO, as this was an offering of existing
    units and no new capital was raised by PEPR. Included in net
    earnings for North America is $185.7 million representing
    the net gain recognized by the Funds II-IV upon termination
    in the first quarter of 2006.(2)
    
    As of December 31, 2006 and 2005, we had guaranteed
    $15.0 million and $12.5 million, respectively, related
    to borrowings of ProLogis North American Properties Fund V,
    both of which were repaid with proceeds from the issuance of
    secured debt that we do not guarantee.(3)
    
    Represents the weighted average of our ownership interests in
    all property funds at December 31, based on each
    entitys contribution to total assets, before depreciation,
    net of other liabilities.(4)
    
    The difference between our percentage ownership interest of the
    property funds equity and our investment balance results
    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 81




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    property (see below); (ii) recording additional costs
    associated with our investment in the property fund; and
    (iii) advances to the property funds.(5)
    
    This amount is recorded as a reduction to our investment and
    represents the proceeds that are deferred when we contribute a
    property to a property fund due to our continuing ownership in
    the property.  CDFS
    joint ventures and other unconsolidated investees
      Years Ended December 31,2006


2005


2004North America

$
45,651


$
4,178


$
(2,079)Europe


2,097



1,186



1,201Asia


2,955



1,057



77Total earnings (losses) from CDFS
    joint ventures and other unconsolidated investees

$
50,703


$
6,421


$
(801
)       2006


2005CDFS joint ventures:United States (1)

$
75,197


$
113,008Europe (2)


8,499



12,238China (3)


119,614



57,165Total CDFS joint ventures

$
203,310


$
182,411Other investees:Operating joint ventures (4)

$
88,104


$
84,731Other


26,443



27,281Total other investees

$
114,547


$
112,012Total

$
317,857


$
294,423     (1)
    
    Includes a 50% interest in one multi-use development entity, two
    residential development entities and two entities that own or
    are developing distribution properties. 82




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     (2)
    
    Includes investments in joint ventures that own land for future
    development of distribution properties and develop distribution
    properties.(3)
    
    Includes investments in joint ventures that own distribution
    properties that were acquired from third parties or developed by
    the joint venture, and that also develop distribution
    properties. In September 2006, we invested in an entity in China
    that we present on a consolidated basis. This entity has an
    investment interest ($41.7 million at December 31,
    2006) in an entity that primarily owns and develops retail
    properties and is accounted for under the equity method of
    accounting. As part of this transaction, we may be required to
    invest up to $42.2 million of additional equity based on
    the attainment of certain performance criteria. This amount was
    deposited in escrow and is included in other assets in our
    Consolidated Balance Sheet at December 31, 2006. In
    addition, we have a commitment to provide a financial guarantee
    for up to 600 million renminbi (the currency equivalent of
    $76.9 million at December 31, 2006). As of
    December 31, 2006, we have not been required to provide any
    guarantees.(4)
    
    Includes investments acquired in connection with the Catellus
    Merger, consisting primarily of a 25.16% interest in an entity
    that owns and operates a hotel property, a 38.75% interest in an
    entity that owns and operates the parking lot adjacent to the
    hotel property and a 66.67% interest in an entity that owns and
    operates office properties.  5.
    Long-Term
    Compensation:    Share
    Options
   83




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
       WeightedAverageNumber of




Expiration

Remaining LifeOptions


Exercise Price

Date

(in years)Outside Trustees Plan


110,000


$19.75 - $43.80

2009-2015


5.6Incentive Plan:1997 grants


133,581


$21.22

2007


0.71998 grants


662,105


$20.94 - $21.09

2008


1.91999 grants


651,409


$17.19 - $18.63

2009


2.72000 grants


645,586


$21.75 - $24.25

2010


3.72001 grants


529,625


$20.67 - $22.02

2011


4.72002 grants


985,074


$22.98 - $24.76

2007, 2012


5.42003 grants


1,205,295


$24.90 - $31.26

2013


6.72004 grants


1,610,138


$29.41 - $41.50

2014


7.72005 grants


1,067,210


$40.86 - $45.46

2015


8.92006 grants


864,030


$53.07 - $59.92

2016


10.0Total


8,464,053







6.2     Options Outstanding


Options ExercisableWeighted





Weighted


WeightedAverage





Average


AverageNumber of


Exercise


Number of


Exercise


LifeOptions


Price


Options


Price


(in years)Balance at January 1, 2006


8,873,820


$
29.19Granted


864,030



59.73Exercised


(1,159,663
)


27.05Forfeited


(114,134
)


36.71Balance at December 31, 2006


8,464,053


$
32.50



5,523,080


$
26.20



5.0       Weighted-AverageNumber of


Grant-DateShares


Fair ValueBalance at January 1, 2006


3,897,954


$
5.22Granted


864,030



10.40Vested


(1,706,877
)


4.52Forfeited


(114,134
)


5.40Balance at December 31, 2006


2,940,973


$
7.14  84




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    Full
    Value Awards
  Restricted
    Share Units
    Contingent
    Performance Shares and Performance Share Awards
        Dividend
    Equivalent Units
   85




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     Summary of
    Activity of CPSs, PSAs and RSUs
    Shares OutstandingNumber of


Weighted Average


Number ofShares


Original Value


Vested SharesBalance at January 1, 2006


1,792,335


$
36.74



645,025Granted


791,976



56.02Exercised


(292,703
)


31.02Forfeited


(26,732
)


48.62Balance at December 31, 2006


2,264,876


$
44.08



808,544       Weighted-AverageNumber of


Grant-DateShares


Fair ValueBalance at January 1, 2006


1,147,310


$
42.22Granted


791,976



56.02Vested


(456,222
)


39.97Forfeited


(26,732
)


48.62Balance at December 31, 2006


1,456,332


$
50.31   Adoption
    of SFAS 123R
   86




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
       2005


2004Net earnings attributable to
    common shares:As reported

$
370,747


$
202,813Pro forma

$
373,074


$
206,429Net earnings per share
    attributable to common shares:As reported  Basic

$
1.82


$
1.11As reported  Diluted

$
1.76


$
1.08Pro forma  Basic

$
1.83


$
1.13Pro forma  Diluted

$
1.77


$
1.10     Years Ended December 31,2006

2005

2004Risk-free interest rate


4.51%



4.33%



3.82%Dividend yield


3.40%



3.92%



4.27%Volatility


19.46%



20.33%



20.52%Weighted average option life


5.8 years



5.9 years



6.25 years     Other
    Plans
     87




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     6.
    Minority
    Interest:    2006


2005# of








# ofEntities


Balance


Minority Interest


Entities


Balance


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


6


$
38,112



1-31
%


7


$
57,746



1-31
%China


4



14,156



20-40
%


1



898



20
%$
52,268










$
58,644     (1)
    
    At December 31, 2006 and 2005, an aggregate of 5,138,809
    and 5,410,578, respectively, limited partnership units held by
    minority interest holders are convertible into 5,139,799 and
    5,411,567, respectively, common shares. Certain of the limited
    partnerships units are owned by our Chief Executive Officer. See
    Note 15.(2)
    
    As of December 31, 2006 and 2005, there were 4,658,700 and
    5,400,675, respectively, of the outstanding limited partnership
    units that were entitled to receive cumulative preferential
    quarterly cash distributions equal to the quarterly
    distributions paid on common shares.(3)
    
    Certain properties owned by these partnerships cannot be sold,
    prior to the occurrence of certain events, without the consent
    of the limited partners, other than in tax-deferred exchanges.
    The partnership agreement provides that a minimum level of debt
    must be maintained within the partnership, which can include
    intercompany debt to us.  7.
    Income
    Taxes:       88




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
       2006


2005


2004Domestic

$
353,409


$
91,316


$
90,207International


394,809



241,779



173,825Total

$
748,218


$
333,095


$
264,032     2006


2005


2004Current income tax
    expenseFederal

$
49,900


$
3,379


$
2,598Non-U.S.


20,254



10,547



21,830State and local


14,096



921



442Total Current


84,250



14,847



24,870Deferred income tax (benefit)
    expenseFederal


(26,382
)


5,726



7,310Non-U.S.


(27,340
)


6,319



11,382Total Deferred


(53,722
)


12,045



18,692Total income taxes

$
30,528


$
26,892


$
43,562   Current
    Income Taxes
      Deferred
    Income Taxes
     89




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      Indemnification
    Agreements
  30-day,
 90




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
       2006


2005Deferred income tax assets:Net operating loss
    carryforwards (1)

$
13,759


$
19,492Basis difference  real
    estate properties


8,132



10,664AMT credit carryforward


796



413Other  temporary
    differences


16,371



780Total deferred income tax assets


39,058



31,349Valuation allowance


(1,711
)


(1,000
)Net deferred income tax assets


37,347



30,349Deferred income tax liabilities:Basis difference  real
    estate properties


(7,944
)


Built-in gains  real
    estate properties


(47,621
)


(48,090
)Basis difference 
    equity investees


(9,246
)


(32,258
)Built-in gains  equity
    investees


(22,781
)


(23,614
)Indemnification liabilities


(5,916
)


(28,383
)Other  temporary
    differences


(25,527
)


(24,454
)Total deferred income tax
    liabilities


(119,035
)


(156,799
)Net deferred income tax liabilities

$
(81,688
)

$
(126,450
)     (1)
    
    At December 31, 2006, we have net operating loss
    (NOL) carryforwards for U.S. federal income tax
    purposes and various international jurisdictions of
    approximately $25.0 million and $11.1 million,
    respectively. If not utilized, the U.S. NOLs expire between
    2019 and 2024 and the international NOLs expire in 2011.  8.
    Discontinued
    Operations:    2006


2005


2004Rental income

$
45,343


$
48,661


$
37,458Rental expenses


(19,720
)


(18,135
)


(11,154
)Depreciation and amortization


(5,315
)


(11,399
)


(10,792
)Interest expense


(874
)


(1,077
)


(784
)Income attributable to disposed
    properties and assets held for sale

$
19,434


$
18,050


$
14,728  91




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
      2006


2005


2004Non-CDFS business assets:Number of properties


74



64



10Net proceeds from dispositions

$
531,969


$
335,610


$
23,122Net gains from dispositions

$
103,729


$
86,444


$
1,549CDFS business assets:Number of properties


15



8



10Net proceeds from dispositions

$
245,500


$
100,494


$
241,875Net gains from dispositions

$
33,514


$
10,616


$
32,719      92




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     9.
    Distributions
    and Dividends:    Years Ended December 31,2006


2005


2004Per common share:Ordinary income

$
0.95


$
0.99


$
0.94Qualified dividend


0.04



0.07



Capital gains






0.15



0.17Return of capital


0.61



0.27



0.35Total distribution

$
1.60


$
1.48


$
1.46Per preferred share 
    Series C:Ordinary income

$
4.10


$
3.49


$
3.62Qualified dividend


0.17



0.24



Capital gains






0.54



0.65Total dividend

$
4.27


$
4.27


$
4.27Per preferred share 
    Series F:Ordinary income

$
1.62


$
1.38


$
1.43Qualified dividend


0.07



0.09



Capital gains






0.22



0.26Total dividend

$
1.69


$
1.69


$
1.69Per preferred share 
    Series G:Ordinary income

$
1.62


$
1.38


$
1.43Qualified dividend


0.07



0.09



Capital gains






0.22



0.26Total dividend

$
1.69


$
1.69


$
1.69      93




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
            10.
    Earnings
    Per Common Share:    Years Ended December 31,2006


2005


2004Net earnings attributable to
    common shares

$
848,951


$
370,747


$
202,813Minority interest share in earnings


3,457



5,243



4,875Adjusted net earnings attributable
    to common shares

$
852,408


$
375,990


$
207,688Weighted average common shares
    outstanding  Basic


245,952



203,337



182,226Incremental weighted average
    effect of conversion of limited partnership units


5,198



5,540



5,035Incremental weighted average
    effect of potentially dilutive instruments (1)


5,702



4,836



4,540Weighted average common shares
    outstanding  Diluted


256,852



213,713



191,801Net earnings per share
    attributable to common shares  Basic

$
3.45


$
1.82


$
1.11Net earnings per share
    attributable to common shares  Diluted

$
3.32


$
1.76


$
1.08     (1)
    Total weighted average potentially dilutive instruments
    outstanding (in thousands) were 10,909, 10,783 and 11,356 for
    2006, 2005 and 2004, respectively. Of the total potentially
    dilutive instruments, 25, 103 and 553 (in thousands) were
    antidilutive for 2006, 2005 and 2004, respectively. 94




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     11.
    Real
    Estate:  Real
    Estate Assets
    December 31,2006


2005Distribution operating properties
    (1):Improved land

$
2,227,953


$
1,774,923Buildings and improvements


8,195,296



6,955,983Retail operating properties (2):Improved land


77,808



66,848Buildings and improvements


227,380



221,405Land subject to ground leases and
    other (3)


472,412



792,668Properties under development,
    including cost of land (4)


964,842



884,345Land held for development (5)


1,397,081



1,045,042Other investments (6)


391,227



133,916Total real estate assets


13,953,999



11,875,130Less accumulated depreciation


1,280,206



1,118,547Net real estate assets

$
12,673,793


$
10,756,583     (1)
    At December 31, 2006 and 2005, we had 1,446 and 1,432
    distribution operating properties consisting of
    203.6 million square feet and 185.6 million square
    feet, respectively.(2)
    At December 31, 2006 and 2005, we had 27 and 29 retail
    operating properties consisting of 1.1 million square feet
    at both periods.(3)
    At December 31, 2006 and 2005, we held land subject to
    ground leases as well as railway depots and office properties.
    Also at December 31, 2005, we owned a hotel property and
    several office properties that were sold during 2006.(4)
    Properties under development consisted of 114 properties
    aggregating 30.0 million square feet at December 31,
    2006 and 72 properties aggregating 23.2 million square feet
    at December 31, 2005. Our total expected investment upon
    completion of the properties under development at
    December 31, 2006 is approximately $2.2 billion.(5)
    Land held for future development consisted of 6,204 and
    6,568 acres at December 31, 2006 and 2005,
    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;
    (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.   95




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
       Number of


Aggregate


AggregateProperties


Square Feet


Purchase Price


Debt Assumed2006


74



13,529


$
735,427


$
87,9192005


13



3,783


$
170,744


$
19,9192004


22



4,774


$
195,703


$
   Operating
    Lease Agreements
    2007

$
688,8082008


595,3812009


474,1562010


372,7442011


268,743Thereafter


1,028,298$
3,428,130      96




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     12.
    Other
    Assets and Other Liabilities:    2006


2005Goodwill

$
254,192


$
229,444Value added taxes receivable


215,712



161,237Rent leveling asset and above
    market leases


105,478



93,863Leasing commissions


98,296



108,556Non-qualified savings plan assets


48,579



43,895Fixed assets


28,623



25,037Loan fees


35,715



28,149Performance escrow


42,174



Other


128,526



98,659Totals

$
957,295


$
788,840     2006


2005Tax liabilities

$
160,929


$
151,796Deferred income taxes


81,688



126,450Tenant security deposits


79,378



51,889Unearned rents


40,788



33,837Non-qualified savings plan
    liabilities


37,180



44,315Value added taxes payable


34,896



59,335Disposition costs


33,009



27,814Below market leases


18,155



25,528Other


60,106



36,246Totals

$
546,129


$
557,210     Amortization


Net Charge toExpense


Rental Income2007

$
36,325


$
12,0662008


27,657



14,3562009


11,367



12,9812010


7,936



13,4672011


5,187



7,415Thereafter


9,824



27,038Total

$
98,296


$
87,323  97




---



##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    13.
    Debt:    2006


2005Unsecured lines of credit and
    short-term borrowings

$
2,462,796


$
2,240,054Senior and other notes


4,445,092



2,759,675Secured debt


1,445,021



1,643,586Assessment bonds


33,977



34,565Totals

$
8,386,886


$
6,677,880   Unsecured
    Lines of Credit and Short-Term Borrowings
  12-month
    Years Ended December 31,2006


2005


2004Weighted average daily interest
    rate (1)


3.03%



2.77%



2.08%Borrowings outstanding at
    December 31

$
2,462.8


$
1,850.1


$
912.3Weighted average daily borrowings

$
2,294.7


$
1,278.2


$
930.0Maximum borrowings outstanding at
    any month end

$
2,760.8


$
1,850.1


$
1,036.5Aggregate borrowing capacity of
    all lines of credit at December 31

$
3,529.3


$
2,589.9


$
1,832.2Outstanding letters of credit
    under the lines of credit

$
129.1


$
98.0


$
35.3Aggregate remaining capacity
    available to us on all lines of credit at December 31

$
937.4


$
641.8


$
884.6    98




---



##### Table of Contents



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


CouponMaturity Date

Balance


RateJune 22, 2007 (1)(13)

$
6,550



floatingNovember 20, 2007 (1)


135,000



7.25%December 11, 2007 (1)(13)


287,848



floatingDecember 19, 2007 (1)(13)


7,553



floatingApril 15, 2008 (1)


250,000



7.10%May 15, 2008 (2)


50,000



7.95%March 1, 2009 (3)


56,250



8.72%May 15, 2009 (4)


28,125



7.88%August 24, 2009 (1)(5)


250,000



floatingNovember 20, 2009 (1)


25,000



7.30%November 15, 2010 (1)(6)


500,000



5.25%April 13, 2011 (1)(7)


461,230



4.38%April 1, 2012 (1)(8)


450,000



5.50%March 1, 2013 (1)


300,000



5.50%February 1, 2015 (9)


100,000



7.81%March 1, 2015 (10)


50,000



9.34%November 15, 2015 (1)(6)


400,000



5.63%April 1, 2016 (1)(8)


400,000



5.75%May 15, 2016 (11)


50,000



8.65%November 15, 2016 (1)(12)


550,000



5.63%July 1, 2017 (1)


100,000



7.63%Total par value

$
4,457,556Less: discount, net


12,464Total principal balance, net

$
4,445,092     (1)
    
    Principal due at maturity.(2)
    
    Annual principal payments of $25.0 million are due on
    May 15th of each year through 2008.(3)
    
    Annual principal payments of $18.8 million are due on
    March 1st of each year through 2009.(4)
    
    Annual principal payments of $9.4 million are due on
    May 15th of each year through 2009.(5)
    
    On August 24, 2006, we issued $250.0 million of senior
    notes. Interest on the notes accrues at a variable rate based on
    LIBOR plus a margin (5.62% at December 31, 2006). We
    utilized the net proceeds of $250.0 million to repay
    borrowings under our Global Line and other general corporate
    purposes.(6)
    
    In July 2006, we completed the exchange and registration of
    these senior notes that were issued in a private placement in
    2005.(7)
    
    In 2004, we issued 350.0 million senior notes (the
    currency equivalent of approximately $420.6 million at the
    date of issuance). 99




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PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     (8)
    
    On March 27, 2006, we issued $450.0 million of
    5.5% senior notes and $400.0 million of
    5.75% senior notes. We received net proceeds of
    $838.7 million that were used to repay borrowings under our
    Global Line, the bridge facility from the Catellus Merger and
    other general corporate purposes.(9)
    
    Beginning on February 1, 2010, and through February 1,
    2015, requires annual principal payments ranging from
    $10.0 million to $20.0 million.(10)
    
    Beginning on March 1, 2010, and through March 1, 2015,
    requires annual principal payments ranging from
    $5.0 million to $12.5 million.(11)
    
    Beginning on May 15, 2010, and through May 15, 2016,
    requires annual principal payments ranging from
    $5.0 million to $12.5 million.(12)
    
    On November 14, 2006, we issued $550.0 million of
    5.625% senior notes. We received net proceeds of
    $543.5 million that were used to repay borrowings under our
    Global Line and other general corporate purposes.(13)
    
    On June 19, 2006 and December 7, 2006, we issued
    ¥780.5 million and ¥35.2 billion,
    respectively, in TMK bonds (the currency equivalent of
    approximately $312.9 million at issue date). TMK bonds are
    a financing vehicle in Japan for special purpose companies known
    as TMKs. TMK bonds are not secured by properties, but do contain
    restrictions on the TMKs ability to incur additional debt
    or to use property associated with the loan as security for
    another loan. The net proceeds were used to repay borrowings
    under our Global Line. These bonds will be repaid and refinanced
    by the ProLogis Japan Properties Fund II when we contribute
    the related properties to the property fund.       100




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PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     Secured
    Debt
    BalloonPeriodic





PaymentInterest


Payment


Principal


Due atMaturity Date

Rate (1)


Date


Balance


MaturityNovember 11, 2008


5.96
%


(2
)

$
65,894


$
60,646November 11, 2008


6.01
%


(2
)


301,035


$
276,065April 1, 2012


7.05
%


(2
)


254,386


$
196,462August 1, 2015


5.47
%


(2
)


135,780


$
111,690April 12, 2016


7.25
%


(2
)


213,557


$
150,373April 1, 2024


7.58
%


(2
)


197,063


$
127,187Various


(3
)


(3
)


277,306



(3
)Total secured debt (4)









$
1,445,021     (1)
    
    The weighted average annual interest rate for the total mortgage
    notes was 7.0% for the year ended December 31, 2006.(2)
    
    Monthly amortization with a balloon payment due at maturity.(3)
    
    Includes 32 mortgage notes with interest rates ranging from
    4.12% to 9.68%, maturing from 2007 to 2018, primarily requiring
    monthly amortization with a balloon payment at maturity.(4)
    
    The mortgage notes are secured by 291 real estate properties
    with an aggregate undepreciated cost of $3.2 billion at
    December 31, 2006.  Assessment
    Bonds
    Debt
    Covenants
   101




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PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     Long-Term
    Debt Maturities
    2007

$
542,5972008


716,6212009


377,4952010


564,4552011


515,262Thereafter


3,155,067Total principal due


5,871,497Add: premium, net


52,593Total carrying value

$
5,924,090   Interest
    Expense
    Years Ended December 31,2006


2005


2004Gross interest expense (1)

$
398,066


$
239,832


$
183,946(Premium) discount recognized, net


(12,564
)


(3,980
)


252Amortization of deferred loan costs


6,198



5,595



5,741391,700



241,447



189,939Less: capitalized amounts


97,297



63,885



37,388Net interest expense

$
294,403


$
177,562


$
152,551     (1)
    
    Includes the stated interest on the debt instrument plus
    applicable fees. The amount of interest paid in cash, net of
    amounts capitalized, for the years ended December 31, 2006,
    2005 and 2004 was $288.2 million, $168.0 million, and
    $134.9 million, respectively.  14.
    Shareholders
    Equity:  Shares Authorized
   102




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PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     Common
    Shares
  and/or
  
    1999 Dividend Reinvestment and Share Purchase Plan, as
    amended (the 1999 Dividend Reinvestment
    Plan): Allows holders of common shares to
    automatically reinvest distributions and certain holders and
    persons who are not holders of common shares to purchase a
    limited number of additional common shares by making optional
    cash payments, without payment of any brokerage commission or
    service charge. Common shares that are acquired under the 1999
    Dividend Reinvestment Plan through reinvestment of distributions
    are acquired at a price ranging from 98% to 100% of the market
    price of such common shares, as we determine.
    Controlled Equity Offering Program: Allows us to
    sell up to 7.4 million common shares through two designated
    agents who earn a fee up to 2.25% of the gross proceeds, as
    agreed on a
    transaction-by-transaction
    basis. As of December 31, 2006, we have approximately
    0.4 million shares available under this plan.
    The Incentive Plan and Outside Trustees
    Plan: Certain of our employees and outside trustees
    participate in these share-based compensation plans that provide
    compensation, generally in the form of common shares. See
    Note 5 for additional information on these plans.
    ProLogis Trust Employee Share Purchase Plan (the
    Employee Share Plan): Certain of our
    employees may purchase common shares, through payroll deductions
    only, at a discounted price of 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, 2006, we have approximately
    4.8 million shares available under this plan.    2006


2005


2004Shares


Proceeds


Shares


Proceeds


Shares


Proceeds1999 Dividend Reinvestment Plan


69


$
3,738



412


$
16,197



1,021


$
35,410Controlled Equity Offering Program


5,383



320,786



225



8,267



1,430



53,321Incentive Plan and Outside
    Trustees Plan


1,460



31,350



1,425



17,664



3,096



58,444Employee Share Plan


39



1,643



30



1,019



43



1,129Total


6,951


$
357,517



2,092


$
43,147



5,590


$
148,304      103




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     Preferred
    Shares
      DividendEquivalent Based

OptionalDividend


on Liquidation

RedemptionRate


Preference

DateSeries C Preferred Shares


8.54
%

$4.27 per share

11/13/26Series F Preferred Shares


6.75
%

$1.69 per share

11/28/08Series G Preferred Shares


6.75
%

$1.69 per share

12/30/08     Ownership
    Restrictions
      15.
    Related
    Party Transactions:  Transactions
    with the Chief Executive Officer and Former Vice Chairman of the
    Board
   104




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


Foreign Currency


InterestPut Options (1)


Forwards (2)


Rate Swaps (3)Notional amounts at
    January 1, 2004

$
57.9


$
47.4


$
94.7New contracts


19.6



71.8



190.9Settled contracts


(77.5
)


(119.2
)


(235.6
)Notional amounts at
    December 31, 2004










50.0New contracts


98.0



669.5



650.0Settled contracts


(98.0
)


(669.5
)


(700.0
)Notional amounts at
    December 31, 2005










New contracts


169.3



900.3



350.0Settled contracts


(114.6
)


(239.3
)


(350.0
)Notional amounts at
    December 31, 2006

$
54.7


$
661.0


$
     (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. The notional
    amounts of the put option contracts represent 105




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    $17.5 million on euro option contracts, $13.5 million
    on pound sterling option contracts and $23.7 million on yen
    option contracts at December 31, 2006.  These contracts generally do not qualify for hedge accounting
    treatment and are
    marked-to-market
    through earnings at the end of each period. Upon expiration of
    the contract, the
    mark-to-market
    adjustment is reversed, the total cost of the contract is
    expensed and any proceeds are recognized as a gain. On various
    put option contracts, we recognized net expense of
    $1.5 million in 2006, net gains of $3.6 million in
    2005 and net expense of $0.6 million in 2004, which
    included no
    mark-to-market
    gains in 2006 and 2005 and $1.5 million of
    mark-to-market
    gains in 2004.(2)
    The 2006 and 2005 forward currency forward contracts were
    designed to manage the foreign currency fluctuations of an
    intercompany loan denominated in pounds sterling, and allowed us
    to sell pounds sterling at a fixed exchange rate to the
    U.S. dollar. These contracts were not designated as hedges,
    were
    marked-to-market
    through earnings and were substantially offset by the
    remeasurement gains and losses recognized on the intercompany
    loans. We recognized a net loss of $13.3 million in 2006
    and a net gain of $6.1 million in 2005, which included
    mark-to-market
    losses of $15.7 million in 2006 and no
    mark-to-market
    gains or losses in 2005.The 2004 foreign currency forward contracts were designated as a
    net investment hedge of certain of our investments in Europe and
    allowed us to sell euro at a fixed exchange rate to the
    U.S. dollar. These contracts qualified for hedge accounting
    treatment and we recognized the total increase in value of the
    contracts of $1.7 million in other comprehensive income in
    shareholders equity in 2004 upon settlement of the
    contracts. The value of these contracts will remain in other
    comprehensive income until the investment is substantially sold.(3)
    During 2006 and 2005, we entered into several contracts with a
    total notional amount of $350.0 million and
    $650.0 million, respectively, associated with an
    anticipated debt issuance. All of these contracts were
    designated as cash flow hedges and qualified for hedge
    accounting treatment, which allowed us to fix a portion of the
    interest rate associated with the issuance of senior notes (see
    Note 13). All of the contracts were settled as of
    December 31, 2006 and we recognized a decrease in value of
    $13.1 million and an increase in value of
    $20.7 million associated with these contracts in other
    comprehensive income as of December 31, 2006 and 2005,
    respectively. The amount in other comprehensive income related
    to these contracts is being amortized as an increase to interest
    expense as interest payments are made on the senior notes.In July 2004, we entered into forward-starting interest rate
    swap contracts, with a total notional amount of
    $100 million, related to the anticipated issuance of debt.
    One contract was terminated in August 2004 and we recognized
    $0.3 million of expense upon termination. As of
    December 31, 2004, the anticipated transaction had not been
    completed. We recognized a
    mark-to-market
    adjustment of $1.1 million in other comprehensive income in
    shareholders equity at December 31, 2004, which
    represented the decrease in value of the outstanding contract.In 2003 and 2004, we entered into forward-starting interest rate
    swap contracts related to the anticipated issuance of debt. The
    contracts, designated as cash flow hedges, allowed us to fix a
    portion of the interest rate associated with the seven-year Euro
    Notes that were issued in April 2004 (see Note 13). These
    contracts qualified for hedge accounting treatment. We
    recognized a total decrease in value of $5.6 million in
    other comprehensive income in shareholders equity upon
    settlement of the contracts that is being amortized to interest
    expense as interest payments are made on the Euro Notes.We amortized a net amount of $1.5 million, related to the
    above forward-starting interest rate swap contracts, from other
    comprehensive income as a reduction to interest expense during
    2006 and we will amortize a total of $0.3 million as a
    reduction to interest expense during 2007. 106




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     Fair
    Value of Financial Instruments
          December 31,2006


2005Carrying





CarryingValue


Fair Value


Value


Fair ValueSenior and other notes

$
4,445,092


$
4,507,182


$
2,759,675


$
2,866,796Secured debt and assessment bonds:Secured debt

$
1,445,021


$
1,497,790


$
1,643,586


$
1,686,157Assessment bonds


33,977



34,495



34,565



36,513Total secured debt and assessment
    bonds

$
1,478,998


$
1,532,285


$
1,678,151


$
1,722,670Derivative financial instruments:Foreign currency forwards

$
(15,664
)

$
(15,664
)

$



$
Foreign currency put options


249



249







Total derivative financial
    instruments

$
(15,415
)

$
(15,415
)

$



$
  107




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    17.
    Commitments
    and Contingencies:  Environmental
    Matters
      Off-Balance
    Sheet Liabilities
        dollar-for-dollar
 108




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
        18.
    Business
    Segments:    
    Property operations  representing the direct
    long-term ownership of industrial distribution and retail
    properties. Each operating property is considered to be an
    individual operating segment having similar economic
    characteristics that are combined within the reportable segment
    based upon geographic location. Included in this segment are
    properties we developed and properties we acquired and
    rehabilitated or repositioned within the CDFS business segment
    with the intention of contributing the property to a property
    fund or selling to a third party. The costs of our property
    management function for both our direct-owned portfolio and the
    properties owned by the property funds and managed by us are all
    reported in rental expenses in the property operations segment.
    Our operations in the property operations business segment are
    in North America (Canada, Mexico and the United States), Europe
    (properties are located in Belgium, the Czech Republic, France,
    Germany, Hungary, Italy, the Netherlands, Poland, Spain, Sweden
    and the United Kingdom and are generally pending contribution to
    a property fund or sale to a third party) and Asia (properties
    are located in China, Japan, Korea, and Singapore and are
    generally pending contribution to a property fund or sale to a
    third party).
    Fund management  representing the long-term
    investment management of property funds and the properties they
    own. We recognize our proportionate share of the earnings or
    losses from our investments in unconsolidated property funds
    operating in North America, Europe and Asia. Along with the
    income recognized under the equity method, we include fees and
    incentives earned for services performed on behalf of the
    property funds and interest earned on advances to the property
    funds, if any. We utilize our leasing and property management
    expertise to efficiently manage the properties and the funds,
    and we report the costs as part of rental expenses in the
    property operations segment. Each investment in a property fund
    is considered to be an individual operating segment having
    similar economic characteristics that are combined within the
    reportable segment based upon geographic location. Our
    operations in the fund management segment are in North America
    (Mexico and the United States), Europe (Belgium, the Czech
    Republic, France, Germany, Hungary, Italy, the Netherlands,
    Poland, Spain, Sweden, and the United Kingdom), and Asia (Japan).
    CDFS business  primarily encompasses our development
    of real estate properties that are subsequently contributed to a
    property fund in which we have an ownership interest and act as
    manager, or 109




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PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    sold to third parties. Additionally, we acquire properties with
    the intent to rehabilitate
    and/or
    reposition the property in the CDFS business segment prior to
    being contributed to a property fund. We engage in mixed-use
    development activities generally with the intention of selling
    the land or completed projects to third parties. We also have
    investments in several unconsolidated entities that perform
    development activities and we include our proportionate share of
    their earnings or losses in this segment. Additionally, we
    include fees earned for development activities performed on
    behalf of customers or third parties, interest income earned on
    notes receivable related to asset sales and gains on the
    disposition of land parcels when our development plans no longer
    include the parcels. 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 are in North America (Canada, Mexico and the
    United States), in Europe (Belgium, the Czech Republic, France,
    Germany, Hungary, Italy, the Netherlands, Poland, Romania,
    Spain, Sweden and the United Kingdom) and in Asia (China, Japan
    and Korea).       110




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
       Years Ended December 31,2006


2005


2004Revenues (1):Property operations (2):North America

$
818,211


$
566,293


$
495,509Europe


35,619



10,334



8,512Asia


31,903



12,904



5,469Total property operations segment


885,733



589,531



509,490Fund management (3):North America


117,532



56,348



48,037Europe


167,227



44,002



37,886Asia


20,225



12,662



7,754Total fund management segment


304,984



113,012



93,677CDFS business (4):North America


549,181



291,750



398,154Europe


451,154



383,179



675,908Asia


385,630



503,444



217,490Total CDFS business segment


1,385,965



1,178,373



1,291,552Total segment revenue


2,576,682



1,880,916



1,894,719Other  North America


41,986



11,338



Reconciling item (5)


(154,759
)


(58,530
)


(43,088
)Total revenues

$
2,463,909


$
1,833,724


$
1,851,631 111




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    Years Ended December 31,2006


2005


2004Net operating income:Property operations (6):North America

$
607,025


$
413,489


$
370,734Europe


24,961



6,162



3,176Asia


28,315



10,696



4,342Total property operations segment


660,301



430,347



378,252Fund management (3):North America


117,532



56,348



48,037Europe


167,227



44,002



37,886Asia


20,225



12,662



7,754Total fund management segment


304,984



113,012



93,677CDFS business (7)(8):North America


176,699



70,250



46,467Europe


108,079



71,329



93,032Asia


94,707



111,029



34,836Total CDFS business segment


379,485



252,608



174,335Total segment net operating income


1,344,770



795,967



646,264Other  North America


27,873



8,842



Reconciling items:Earnings (losses) from other
    unconsolidated investees


5,729



750



(990
)General and administrative expenses


(156,889
)


(107,164
)


(84,861
)Depreciation and amortization
    expense


(293,027
)


(191,945
)


(161,968
)Merger integration and relocation
    expenses


(2,723
)


(16,603
)


(6,794
)Other expenses


(459
)


(650
)


Interest expense


(294,403
)


(177,562
)


(152,551
)Interest and other income, net


18,248



10,724



5,721Total reconciling items


(723,524
)


(482,450
)


(401,443
)Total earnings before minority
    interest

$
649,119


$
322,359


$
244,821   112




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    December 31,2006


2005Assets (9):Property operations (10):North America (11)

$
7,960,432


$
7,530,062Europe


1,295,207



673,342Asia


633,623



106,069Total property operations segment


9,889,262



8,309,473Fund management (12):North America


416,909



368,206Europe


430,761



283,435Asia


134,170



103,679Total fund management segment


981,840



755,320CDFS business (13):North America


1,312,883



1,142,319Europe (11)


1,456,064



1,062,338Asia


802,464



535,190Total CDFS business segment


3,571,411



2,739,847Total segment assets


14,442,513



11,804,640Other  North America


488,987



901,281Reconciling items:Investments in and advances to
    other unconsolidated investees


114,547



27,281Cash and cash equivalents


475,791



203,800Accounts and notes receivable


129,880



38,864Other assets


194,649



150,314Discontinued
    operations  assets held for sale


57,158



Total reconciling items


972,025



420,259Total assets

$
15,903,525


$
13,126,180     (1)
    Includes revenues attributable to the United States for the
    years ended December 31, 2006, 2005 and 2004 of
    $1,484.8 million, $861.8 million and
    $905.7 million, respectively.(2)
    Includes rental income of our distribution and retail properties.(3)
    Includes fund management fees and incentive revenue and our
    share of the earnings or losses recognized under the equity
    method from our investment in unconsolidated property funds
    along with interest earned on advances to the property funds, if
    any.(4)
    Includes proceeds received on CDFS property dispositions, fees
    earned from customers and third parties for development
    activities, interest income on long-term notes receivable
    related to asset dispositions and our share of earnings or
    losses recognized under the equity method from our investment in
    CDFS joint ventures. 113




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
     (5)
    Amount represents the earnings or losses recognized under the
    equity method from our investments in unconsolidated property
    funds and CDFS joint ventures and interest income on long-term
    notes receivable related to asset dispositions. These items are
    not presented as a component of revenues in our Consolidated
    Statements of Earnings.  (6)
    
    Includes rental income less rental expenses of our distribution
    and retail properties. Included in rental expenses are the costs
    of managing the properties owned by the property funds.(7)
    
    Includes net gains or losses associated on CDFS property
    dispositions, fees earned from customers and third parties for
    development activities, interest income on long-term notes
    receivable related to asset dispositions, and our share of
    earnings or losses recognized under the equity method from our
    investment in CDFS joint ventures, offset partially by land
    holding costs and the write-off of previously capitalized
    pursuit costs associated with potential CDFS business assets
    when it becomes likely the assets will not be acquired.(8)
    
    Excludes a net gain of $33.5 million, $10.6 million
    and $32.7 million for the years ended December 31,
    2006, 2005 and 2004, respectively, associated with CDFS
    properties sold to third parties and presented as discontinued
    operations in our Consolidated Statements of Earnings. See
    Note 8.(9)
    
    Includes long-lived assets attributable to the United States as
    of December 31, 2006 and 2005 of $9.1 billion and
    $8.8 billion, respectively.  (10)
    
    Includes properties that were developed or acquired in the CDFS
    business segment that have not yet been contributed or sold of
    $3.1 billion and $1.4 billion for the years ended
    December 31, 2006 and 2005, respectively.(11)
    
    Goodwill of $200.4 million and $173.2 million as of
    December 31, 2006 and 2005, respectively was attributable
    to the property operations segment and $53.8 million and
    $56.2 million as of December 31, 2006 and 2005,
    respectively, was attributable to the CDFS business segment.(12)
    
    Represents our investments in and advances to the property funds.(13)
    
    Represents primarily land held for development, properties under
    development, other real estate investments, investments in CDFS
    joint ventures, and notes receivable related to asset
    dispositions.  19.
    Supplemental
    Cash Flow Information:    
    We received $128.0 million, $74.5 million and
    $115.5 million of equity interests in property funds from
    the contribution of properties to these property funds during
    2006, 2005 and 2004, respectively.
    In 2006 we received 3.9 million ordinary units in PEPR,
    valued at $68.6 million, representing the initial
    allocation of an incentive return we earned as manager of the
    property fund. See Note 4 for further discussion of this
    transaction.
    As partial consideration for properties we contributed in 2006
    to the North American Industrial Fund, we received ownership
    interests of $62.1 million, representing a 20% ownership
    interest, and the property fund assumed $677.2 million of
    secured debt and short-term borrowings. See Note 4 for
    further discussion of this transaction.
    In connection with the purchase in 2006 of the 80% ownership
    interests held by our fund partner in Funds II-IV, we
    assumed $418.0 million of secured debt (which was later
    assumed by the North American Industrial Fund). See Note 4
    for further discussion of this transaction. 114




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    
    Limited partnership units aggregating $6.5 million,
    $0.1 million and $0.9 million were converted into
    common shares in 2006, 2005 and 2004, respectively.
    During 2006, 2005, and 2004, we capitalized portions of the
    total cost of our share-based compensation awards of
    $8.4 million, $4.6 million and $7.4 million,
    respectively, to the investment basis of our real estate and
    other assets.
    As partial consideration for certain property contributions, we
    received: (i) $1.9 million, $32.6 million and
    $23.4 million in the form of notes receivable from ProLogis
    North American Properties Fund V in 2006, 2005 and 2004,
    respectively, (all of which has been paid); (ii) a
    $50.9 million note from a third party in 2005 (which was
    outstanding at December 31, 2005 and repaid during 2006);
    and (iii) the assumption of an outstanding mortgage note in
    the amount of $14.5 million from ProLogis North American
    Properties Fund VII in 2005.
    As partial consideration for the sale of a property, a third
    party assumed an outstanding mortgage note in the amount of
    $42.9 million in 2006.
    We assumed $141.6 million and $35.0 million of secured
    debt in 2006 and 2005, respectively, and operating receivables
    and liabilities of $19.0 million and $22.6 million,
    respectively, in 2006 in connection with the acquisition of
    properties.
    We recognized net foreign currency translation adjustments of
    $115.8 million in gains, $67.8 million in losses, and
    $46.3 million in gains in 2006, 2005 and 2004, respectively.    20.
    Subsequent
    Events:    
    We purchased the industrial business of Parkridge Holdings
    Limited (Parkridge) for £284.4 million
    ($556.9 million). We paid net cash of approximately
    £67.4 million ($131.9 million), issued
    4.8 million of our common shares (valued at $64.364 per
    share) and assumed debt payable to certain of our consolidated
    subsidiaries and certain other liabilities of
    £58.2 million ($113.9 million) and
    £1.7 million ($3.4 million), respectively. The
    notes, in the amount of £58.2 million, were issued by
    us in November 2006 to certain affiliates of Parkridge to
    finance the buyout of a Parkridge joint venture partner, the
    payoff of existing debt and fund other development costs that
    were incurred between the time of valuation and the closing of
    the transaction, and are included in Accounts and Notes
    Receivable in our Consolidated Balance Sheet at
    December 31, 2006. We may be required to make additional
    payments (primarily through the issuance of our common shares)
    of approximately £52.3 million ($102.4 million)
    upon the successful completion of pending land entitlements in
    the United Kingdom.
    We made an investment in Parkridges mixed-use and retail
    development business for £71.3 million
    ($139.7 million) paid in cash, which represents a 25%
    interest.
    Included in the acquisition of Parkridges industrial
    business was a 50% interest in a Central European distribution
    development joint venture. In a separate transaction, we
    acquired the remaining 50% interest in this joint venture from
    Parkridges partner for 345.2 million
    ($450.2 million) in cash, which includes
    246.3 million ($321.2 million) of debt that was
    paid at closing. 115




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##### Table of Contents



PROLOGIS
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS (Continued)
    The cash portion of the acquisition was funded with borrowings
    under our Global Line and a new $600.0 million
    multi-currency senior credit facility. The new senior facility
    has similar terms as the Global Line (as discussed in
    Note 13), except it bears interest at a variable rate based
    on LIBOR plus a margin.  21.
    Selected
    Quarterly Financial Data (Unaudited):    Three Months Ended,March 31,


June 30,


September 30,


December 31,2006:Total revenues

$
571,115


$
687,397


$
580,476


$
624,921Operating income

$
163,692


$
170,260


$
174,720


$
256,114Earnings from continuing operations

$
160,307


$
125,878


$
123,510


$
307,995Net earnings attributable to
    common shares

$
183,159


$
168,397


$
166,305


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

$
.75


$
.69


$
.68


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

$
.72


$
.66


$
.65


$
1.282005:Total revenues

$
427,591


$
465,404


$
525,906


$
414,823Operating income

$
94,251


$
118,336


$
117,269


$
100,061Earnings from continuing operations

$
67,709


$
93,622


$
87,740


$
57,132Net earnings attributable to
    common shares

$
55,074


$
77,169


$
129,402


$
109,102Net earnings per share
    attributable to common shares  Basic (1)

$
0.30


$
0.41


$
0.66


$
0.45Net earnings per share
    attributable to common shares  Diluted (1)

$
0.29


$
0.40


$
0.63


$
0.43     (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. 116




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM         KPMG LLP
    117




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##### Table of Contents



PROLOGIS
 SCHEDULE III 
    REAL ESTATE AND ACCUMULATED DEPRECIATION
 December 31, 2006
  Initial Cost to



Gross Amounts At Which CarriedProLogis

Costs Capitalized

as of December 31, 2006




Date ofNo. of

Encum-



Building &

Subsequent



Building &



Accumulated


Construction/Description

Bldgs.

brances

Land

Improvements

To Acquisition

Land

Improvements

Total (a,b)

Depreciation (c)


Acquisition(In thousands, as applicable)Industrial Operating
    Properties (d)North American
    Markets:United States:Atlanta, GeorgiaAtlanta NE Distribution Center

8

(e)


5,582


3,047


27,059


6,276


29,412


35,688


(10,862
)

1996, 1997Atlanta West Distribution Center

18

(e)


10,336


48,444


14,025


10,147


62,658


72,805


(18,353
)

1994, 1996, 2005, 2006Berkeley Lake Dist Ctr

1




2,178


8,712


155


2,209


8,836


11,045


(160
)

2006Carter-Pacific Business Center

3




556


3,151


1,467


556


4,618


5,174


(1,990
)

1995Cedars Distribution Center

1




1,366


7,739


3,069


1,692


10,482


12,174


(2,862
)

1999Douglas Hill Distribution Center (d)

5




16,647


46,825


30,461


16,647


77,286


93,933


(1,689
)

2005, 2006Greenwood Ind Park (d)

1




3,989





17,426


3,989


17,426


21,415





2006Horizon Dist Ctr

1




2,846


11,385





2,846


11,385


14,231


(206
)

2006International Airport Industrial
    Center

9




2,939


14,146


7,925


2,972


22,038


25,010


(8,748
)

1994, 1995LaGrange Distribution Center

1




174


986


727


174


1,713


1,887


(821
)

1994Midland Dist Ctr

1




1,919


7,679





1,919


7,679


9,598


(139
)

2006Northeast Industrial Center

4




1,109


6,283


2,888


1,050


9,230


10,280


(4,211
)

1996Northmont Industrial Center

1




566


3,209


1,057


566


4,266


4,832


(1,861
)

1994Peachtree Commerce Business Center

5




1,519


7,253


1,752


1,519


9,005


10,524


(2,478
)

1994, 2006Piedmont Court Distribution Center

2




885


5,013


2,553


885


7,566


8,451


(3,274
)

1997Plaza Industrial Center

1




66


372


192


66


564


630


(244
)

1995Pleasantdale Industrial Center

2




541


3,184


1,155


541


4,339


4,880


(1,871
)

1995Riverside Distribution Center

3




2,533


13,336


2,575


2,556


15,888


18,444


(4,275
)

1999South Royal Distribution Center

1




356


2,019


58


356


2,077


2,433





2002Tradeport Distribution Center

3

(e)


1,464


4,563


7,312


1,479


11,860


13,339


(4,919
)

1994, 1996Weaver Distribution Center

2




935


5,182


1,499


935


6,681


7,616


(2,960
)

1995Westfork Industrial Center

10

(e)


2,483


14,115


3,132


2,442


17,288


19,730


(6,864
)

1995Total Atlanta, Georgia

83




60,989


216,643


126,487


61,822


342,297


404,119


(78,787
)Austin, TexasCorridor Park Corporate Center

6




1,652


1,681


15,449


2,113


16,669


18,782


(6,944
)

1995, 1996Montopolis Distribution Center

1




580


3,384


1,342


580


4,726


5,306


(2,297
)

1994Rutland Distribution Center

2




460


2,617


899


462


3,514


3,976


(1,460
)

1993Southpark Corporate Center

5




1,137





8,636


1,137


8,636


9,773


(3,601
)

1994, 1995Walnut Creek Corporate Center

10




2,171


2,632


19,170


2,225


21,748


23,973


(8,554
)

1994, 1995, 1996Total Austin, Texas

24




6,000


10,314


45,496


6,517


55,293


61,810


(22,856
)Charlotte, North CarolinaBarringer Industrial Center

3




308


1,746


1,101


308


2,847


3,155


(1,205
)

1994Bond Distribution Center

2




905


5,126


1,684


905


6,810


7,715


(2,911
)

1994Carowinds Distribution Center

1




3,600


20,400





3,600


20,400


24,000


(5,242
)

1999Charlotte Commerce Center

10

(e)


4,341


24,954


8,131


4,342


33,084


37,426


(15,265
)

1994Charlotte Distribution Center

9

(e)


4,578





26,578


6,096


25,060


31,156


(9,557
)

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

3




948


3,030


4,057


947


7,088


8,035


(1,551
)

1997, 2006Northpark Distribution Center

2

(e)


1,183


6,707


1,988


1,184


8,694


9,878


(3,056
)

1994, 1998West Pointe Bus Ctr (d)

2




4,851





13,382


4,851


13,382


18,233





2006Total Charlotte, North Carolina

32




20,714


61,963


56,921


22,233


117,365


139,598


(38,787
)  118




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##### Table of Contents



PROLOGISSCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  (continued)December 31, 2006Initial Cost to



Gross Amounts At Which CarriedProLogis

Costs Capitalized

as of December 31, 2006




Date ofNo. of

Encum-



Building &

Subsequent



Building &



Accumulated


Construction/Description

Bldgs.

brances

Land

Improvements

To Acquisition

Land

Improvements

Total (a,b)

Depreciation (c)


Acquisition(In thousands, as applicable)Chicago, IllinoisAddison Distribution Center

1




646


3,662


784


640


4,452


5,092


(1,678
)

1997Alsip Distribution Center

2




2,093


11,859


8,252


2,549


19,655


22,204


(9,269
)

1997, 1999Arlington Heights Dist Ctr

1




831


3,326


20


831


3,346


4,177





2006Bedford Park Industrial Center

1




941


4,907


817


941


5,724


6,665


(246
)

2005Bensenville Distribution Center

2




1,668


9,448


5,307


1,667


14,756


16,423


(6,769
)

1997Bolingbrook Distribution Center (d)

6




16,178


73,755


2,444


16,177


76,200


92,377


(7,360
)

1999, 2003, 2006Des Plaines Distribution Center

3




2,158


12,232


4,813


2,159


17,044


19,203


(6,776
)

1995, 1996Elk Grove Distribution Center (d)

27




25,298


114,010


16,651


25,198


130,761


155,959


(21,105
)

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

1




713


4,043


929


713


4,972


5,685


(1,663
)

1997Glendale Heights Distribution Center

3




3,903


22,119


1,913


3,903


24,032


27,935


(6,223
)

1999Glenview Distribution Center

2




1,156


6,550


1,318


1,156


7,868


9,024


(2,700
)

1996, 1999Gurnee Distribution Center (d)

2

(e)


1,847


10,466


296


1,847


10,762


12,609





2005I-294 Distribution Center (d)

1




858





7,096


858


7,096


7,954





2005I-80 Morris (d)

1




4,690





19,869


4,690


19,869


24,559





2006Itasca Distribution Center

3




1,613


9,143


1,094


1,613


10,237


11,850


(3,381
)

1996, 1997, 1998Lombard Distribution Center

1




1,170


6,630


309


1,170


6,939


8,109


(1,864
)

1999Minooka Distribution Center

1

(e)


10,403


27,247


15,275


10,403


42,522


52,925


(1,806
)

2005Mitchell Distribution Center

1




1,236


7,004


1,894


1,236


8,898


10,134


(3,728
)

1996North Avenue Distribution Center

2




3,201





8,996


2,047


10,150


12,197


(3,387
)

1997, 1998Northlake Distribution Center

1




372


2,106


737


372


2,843


3,215


(1,003
)

1996Pleasant Prairie Distribution Center

1




1,314


7,450


2,396


1,315


9,845


11,160


(2,052
)

1999ProLogis Park 57

1




686


3,885


1,313


686


5,198


5,884


(618
)

2004Romeoville Distribution Center

6

(e)


23,731


96,764


451


23,731


97,215


120,946


(5,632
)

1999, 2005South Holland Distribution Center

2




1,156


6,550


883


1,156


7,433


8,589


(2,111
)

1999West Chicago Distribution Center

1




3,125


12,499


21


3,125


12,520


15,645


(504
)

2005Woodale Distribution Center

1




263


1,490


413


263


1,903


2,166


(680
)

1997Woodridge Distribution Center

14

(e)


49,508


198,032


1,776


49,508


199,808


249,316


(8,563
)

2005Total Chicago, Illinois

88




160,758


655,177


106,067


159,954


762,048


922,002


(99,118
)Cincinnati, OhioAirpark Distribution Center

2

(e)


1,128





11,785


1,716


11,197


12,913


(4,130
)

1996Capital Distribution Center I

4




1,750


9,922


3,710


1,751


13,631


15,382


(5,878
)

1994Capital Distribution Center II

5

(e)


1,953


11,067


4,209


1,953


15,276


17,229


(6,753
)

1994Capital Industrial Center I

10




1,039


5,885


4,497


1,105


10,316


11,421


(4,549
)

1994, 1995Constitution Distribution Center

1




1,465


8,301


598


1,465


8,899


10,364


(2,316
)

1999Dues Drive Distribution Center

1




921


5,218


1,807


921


7,025


7,946


(362
)

2003Empire Distribution Center

3

(e)


529


2,995


2,180


529


5,175


5,704


(2,126
)

1995Enterprise Distribution Center

1




1,275


7,222


35


1,275


7,257


8,532


(50
)

2005Fairfield Business Center

1




348


1,971


591


381


2,529


2,910


(244
)

2004Fairfield Commerce Center (d)

1




1,558


8,831


1,256


1,558


10,087


11,645





2004Fairfield Distribution Center

1




586


3,319


1,074


586


4,393


4,979


(15
)

2002Mosteller Distribution Center (d)

1




473


2,678


1,029


483


3,697


4,180





2004Production Distribution Center

2




717


2,717


2,702


824


5,312


6,136


(1,654
)

1994, 1998Sharonville Distribution Center

3

(e)


1,761





12,351


2,424


11,688


14,112


(2,994
)

1997, 1998Springdale Commerce Center

3




421


2,384


2,017


421


4,401


4,822


(1,875
)

1996Total Cincinnati, Ohio

39




15,924


72,510


49,841


17,392


120,883


138,275


(32,946
)  119




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##### Table of Contents



PROLOGISSCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  (continued)December 31, 2006Initial Cost to



Gross Amounts At Which CarriedProLogis

Costs Capitalized

as of December 31, 2006




Date ofNo. of

Encum-



Building &

Subsequent



Building &



Accumulated


Construction/Description

Bldgs.

brances

Land

Improvements

To Acquisition

Land

Improvements

Total (a,b)

Depreciation (c)


Acquisition(In thousands, as applicable)Columbus, OhioBrookham Distribution Center

2




5,964


23,858


1,378


5,965


25,235


31,200


(1,040
)

2005Canal Pointe Distribution Center

1




1,237


7,013


1,816


1,268


8,798


10,066


(1,865
)

1999Capital Park South Distribution
    Center

3

(e)


1,588





23,888


1,980


23,496


25,476


(8,212
)

1996Charter Street Distribution Center

1

(e)


1,245


7,055


301


1,245


7,356


8,601


(1,864
)

1999Columbus West Industrial Center

1




295


1,899


682


295


2,581


2,876


(1,105
)

1995Corporate Park West (d)

3

(e)


1,079


6,117


3,138


1,080


9,254


10,334


(1,935
)

1996, 2004Etna Dist Ctr (d)

1




1,633





16,217


1,633


16,217


17,850





2006Fisher Distribution Center

1

(e)


1,197


6,785


2,423


1,197


9,208


10,405


(4,312
)

1995Foreign Trade Center I

5

(e)


6,527


36,989


5,287


6,992


41,811


48,803


(10,896
)

1999McCormick Distribution Center

5

(e)


1,664


9,429


5,226


1,664


14,655


16,319


(5,881
)

1994New World Distribution Center

1




207


1,173


1,913


207


3,086


3,293


(1,576
)

1994South Park Distribution Center

2

(e)


3,344


15,182


279


3,343


15,462


18,805


(2,035
)

1999, 2005Westbelt Business Center

5




2,271


9,862


990


2,242


10,881


13,123


(1,427
)

1998, 2006Wingate Distribution Center

1




152


859


287


152


1,146


1,298


(398
)

1994Total Columbus, Ohio

32




28,403


126,221


63,825


29,263


189,186


218,449


(42,546
)Dallas/Fort Worth, TexasAlliance Distribution Center

1

(e)


3,653


14,613





3,653


14,613


18,266


(629
)

2005Carter Industrial Center

1




334





2,412


334


2,412


2,746


(958
)

1996Centerport Distribution Center

1




1,250


7,082


445


1,250


7,527


8,777


(1,946
)

1999Dallas Corporate Center

10




5,161





32,280


5,460


31,981


37,441


(10,902
)

1996, 1997, 1998, 1999Enterprise Distribution Center

3




2,719


15,410


549


2,719


15,959


18,678


(3,994
)

1999Freeport Corp Ctr (d)

1




555





3,925


555


3,925


4,480





2006Freeport Distribution Center

4




1,393


5,549


4,870


1,440


10,372


11,812


(3,423
)

1996, 1997, 1998Great Southwest Distribution Center

38

(e)


39,449


173,329


14,530


37,983


189,325


227,308


(30,662
)

1995, 1996, 1997, 1998,
    1999, 2000, 2001, 2002, 2005Lone Star Distribution Center

1




512


2,896


1,242


511


4,139


4,650


(1,319
)

1996Northgate Distribution Center

8

(e)


12,928


57,757


5,626


13,809


62,502


76,311


(7,907
)

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

1




5,058





19,929


3,880


21,107


24,987


(2,890
)

2001Plano Distribution Center

7




3,915


22,186


1,854


3,915


24,040


27,955


(6,143
)

1999Redbird Distribution Center

2




1,095


6,212


1,461


1,096


7,672


8,768


(2,340
)

1994, 1999Royal Distribution Center

1




811


4,598


565


811


5,163


5,974


(923
)

2001Stemmons Distribution Center

1




272


1,544


655


272


2,199


2,471


(890
)

1995Stemmons Industrial Center

11




1,820


11,705


4,345


1,819


16,051


17,870


(6,260
)

1994, 1995, 1996, 1999Trinity Mills Distribution Center

7




4,453


27,346


2,322


4,405


29,716


34,121


(9,044
)

1996, 1999, 2001Valwood Business Center

6

(e)


4,661


21,823


1,078


4,538


23,024


27,562


(2,570
)

2001, 2006Valwood Distribution Center

5




3,811


21,341


2,155


3,810


23,497


27,307


(6,036
)

1999Total Dallas/Fort Worth, Texas

109




93,850


393,391


100,243


92,260


495,224


587,484


(98,836
)Denver, ColoradoDenver Business Center

6




1,507


8,302


9,007


1,506


17,310


18,816


(6,829
)

1992, 1994, 1996, 2002Havana Distribution Center

1




401


2,281


788


401


3,069


3,470


(1,661
)

1993Moline Distribution Center

1




327


1,850


799


327


2,649


2,976


(1,153
)

1994Moncrieff Distribution Center

1




314


2,493


1,086


314


3,579


3,893


(1,712
)

1992Pagosa Distribution Center

1




406


2,322


951


406


3,273


3,679


(1,571
)

1993ProLogis Park 70 (d)

1




2,128





11,335


2,252


11,211


13,463


(158
)

2005Stapleton Business Center

12

(e)


34,634


139,256


1,478


34,635


140,733


175,368


(6,072
)

2005  120




---



##### Table of Contents



PROLOGISSCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  (continued)December 31, 2006Initial Cost to



Gross Amounts At Which CarriedProLogis

Costs Capitalized

as of December 31, 2006




Date ofNo. of

Encum-



Building &

Subsequent



Building &



Accumulated


Construction/Description

Bldgs.

brances

Land

Improvements

To Acquisition

Land

Improvements

Total (a,b)

Depreciation (c)


Acquisition(In thousands, as applicable)Upland Distribution Center I

6




808


4,421


11,533


821


15,941


16,762


(7,144
)

1992, 1994, 1995Upland Distribution Center II

6




2,456


13,946


4,527


2,489


18,440


20,929


(8,499
)

1993, 1994Total Denver, Colorado

35




42,981


174,871


41,504


43,151


216,205


259,356


(34,799
)El Paso, TexasBilly the Kid Distribution Center

1




273


1,547


1,148


273


2,695


2,968


(1,062
)

1994Goodyear Distribution Center

1




511


2,899


775


511


3,674


4,185


(1,318
)

1991Northwestern Corporate Center

5




981





18,421


2,168


17,234


19,402


(5,616
)

1992, 1993, 1994, 1997Pan American Distribution Center

1




196


1,110


999


196


2,109


2,305


(116
)

2002Vista Corporate Center

4




1,945





11,993


1,946


11,992


13,938


(4,708
)

1994, 1995, 1996Vista Del Sol Industrial Center

4




996





19,545


2,056


18,485


20,541


(6,387
)

1995, 1997, 1998Total El Paso, Texas

16




4,902


5,556


52,881


7,150


56,189


63,339


(19,207
)Houston, TexasBlalock Distribution Center

2




595


3,370


992


595


4,362


4,957


(422
)

2002Brittmore Distribution Center

2




1,838


10,417


1,037


1,838


11,454


13,292


(3,433
)

1999Crosstimbers Distribution Center

1




359


2,035


1,120


359


3,155


3,514


(1,217
)

1994Hempstead Distribution Center

3




1,013


5,740


1,840


1,013


7,580


8,593


(3,339
)

1994Hobby Business Park

1




721


2,885


81


721


2,966


3,687


(127
)

2005Jersey Village Corp Ctr (d)

1




1,056





6,746


1,056


6,746


7,802





2006Kempwood Business Center

4




1,746


9,894


1,695


1,746


11,589


13,335


(2,665
)

2001Northpark Dist Ctr (d)

1




1,148


4,591


104


1,148


4,695


5,843





2006Perimeter Distribution Center

2




813


4,604


944


813


5,548


6,361


(1,589
)

1999Pine Forest Business Center

12




4,111


22,356


5,751


4,111


28,107


32,218


(11,059
)

1993, 1995Pine North Distribution Center

2




847


4,800


645


847


5,445


6,292


(1,650
)

1999Pine Timbers Distribution Center

2




2,956


16,750


2,625


2,956


19,375


22,331


(5,897
)

1999Pinemont Distribution Center

2




642


3,636


572


642


4,208


4,850


(1,272
)

1999Post Oak Business Center

15




3,005


15,378


7,143


3,005


22,521


25,526


(10,119
)

1993, 1994, 1996Post Oak Distribution Center

7




2,115


12,017


5,675


2,039


17,768


19,807


(8,836
)

1993, 1994South Loop Distribution Center

5




1,051


5,964


3,802


1,052


9,765


10,817


(4,555
)

1994Southland Distribution Center

1




1,209


6,849


894


1,209


7,743


8,952


(387
)

2002Sugarland Corporate Center (d)

1




452





2,970


452


2,970


3,422





2005West by Northwest Industrial Center
    (d)

17




4,916


7,980


42,581


5,019


50,458


55,477


(17,339
)

1993, 1994, 1995,
    1996, 1997, 1998, 2006White Street Distribution Center

1




469


2,656


1,295


469


3,951


4,420


(1,342
)

1995Total Houston, Texas

82




31,062


141,922


88,512


31,090


230,406


261,496


(75,248
)I-81 Corridor, PennsylvaniaHarrisburg Distribution Center

1




2,243


12,572


672


2,243


13,244


15,487


(1,030
)

2004Harrisburg Industrial Center

1




782


6,190


856


782


7,046


7,828


(859
)

2002Kraft Distribution Center

1




2,457


13,920


70


2,457


13,990


16,447


(3,586
)

1999Lehigh Valley Distribution Center

6




9,387


52,723


1,391


9,387


54,114


63,501


(4,301
)

2004Middleton Distribution Center

1

(e)


4,190


23,478


272


4,190


23,750


27,940


(1,881
)

2004Northport Industrial Center

1




395


21,707


2,785


1,869


23,018


24,887


(2,699
)

2002Quakertown Dist Ctr (d)

1




6,966





27,582


6,966


27,582


34,548





2006Total I-81 Corridor, Pennsylvania

12




26,420


130,590


33,628


27,894


162,744


190,638


(14,356
)  121




---



##### Table of Contents



PROLOGISSCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  (continued)December 31, 2006Initial Cost to



Gross Amounts At Which CarriedProLogis

Costs Capitalized

as of December 31, 2006




Date ofNo. of

Encum-



Building &

Subsequent



Building &



Accumulated


Construction/Description

Bldgs.

brances

Land

Improvements

To Acquisition

Land

Improvements

Total (a,b)

Depreciation (c)


Acquisition(In thousands, as applicable)Indianapolis, IndianaAirport Business Center

2




600


3,406


5,682


934


8,754


9,688


(2,299
)

1999Eastside Distribution Center

2




1,204


6,820


1,234


1,275


7,983


9,258


(2,274
)

1995, 1999Logo Court Distribution Center

1




3,352


18,678


316


3,352


18,994


22,346


(1,504
)

2004North by Northeast Distribution
    Center

1




1,058





7,221


1,059


7,220


8,279


(2,557
)

1995Park 100 Industrial Center

14




4,948


28,691


8,793


4,900


37,532


42,432


(14,476
)

1994, 1995Park Fletcher Distribution Center

9




2,687


15,224


5,793


2,785


20,919


23,704


(8,250
)

1994, 1995, 1996Shadeland Industrial Center

3




428


2,431


2,352


429


4,782


5,211


(1,893
)

1995Total Indianapolis, Indiana

32




14,277


75,250


31,391


14,734


106,184


120,918


(33,253
)Las Vegas, NevadaBlack Mountain Distribution Center

2




1,108





7,407


1,206


7,309


8,515


(2,424
)

1997Cameron Business Center

1

(e)


1,634


9,256


251


1,634


9,507


11,141


(2,484
)

1999Hughes Airport Center

1




876





3,277


910


3,243


4,153


(1,220
)

1994Las Vegas Corporate Center (d)

8

(g)


6,468





32,849


6,555


32,762


39,317


(8,585
)

1994, 1995, 1996, 1997, 2006Placid Street Distribution Center

1

(e)


2,620


14,848


52


2,620


14,900


17,520


(3,845
)

1999South Arville Center

1




1,440


8,160


225


1,440


8,385


9,825


(2,172
)

1999West One Business Center

4




2,468


13,985


1,481


2,468


15,466


17,934


(5,698
)

1996Total Las Vegas, Nevada

18




16,614


46,249


45,542


16,833


91,572


108,405


(26,428
)Louisville, KentuckyAirpark Commerce Center

4




1,583


8,971


5,485


1,583


14,456


16,039


(6,201
)

1998Cedar Grove Distribution Center

1

(e)


3,775


15,098


9


3,775


15,107


18,882


(651
)

2005Commerce Crossings Distribution
    Center

1

(e)


1,912


7,649





1,912


7,649


9,561


(329
)

2005I-65 Meyer Distribution Center (d)

1




2,801





13,413


2,801


13,413


16,214





2006Louisville Distribution Center

2




680


3,402


4,631


689


8,024


8,713


(2,638
)

1995, 1998Riverport Distribution Center

1

(e)


1,515


8,585


2,722


1,515


11,307


12,822


(2,336
)

1999Total Louisville, Kentucky

10




12,266


43,705


26,260


12,275


69,956


82,231


(12,155
)Memphis, TennesseeAirport Distribution Center

18




6,536


36,998


10,968


6,536


47,966


54,502


(18,461
)

1995, 1996, 1999Centerpointe Distribution Center

3




2,497


14,151


1,843


2,497


15,994


18,491


(3,627
)

2001Delp Distribution Center

10




4,886


27,687


7,546


4,886


35,233


40,119


(13,472
)

1995, 1997, 1999Fred Jones Distribution Center

1




125


707


267


125


974


1,099


(447
)

1994Memphis Distribution Center

1




480


2,723


338


481


3,060


3,541


(430
)

2002Olive Branch Distribution Center

2




2,892


16,389


2,028


2,892


18,417


21,309


(5,064
)

1999Raines Distribution Center

1




1,635


9,264


3,980


1,635


13,244


14,879


(5,832
)

1998Southpark Distribution Center

1




859


4,866


465


859


5,331


6,190


(217
)

2003Southwide Industrial Center

4




725


4,105


1,351


724


5,457


6,181


(1,445
)

1999Willow Lake Distribution Center

1




613


3,474


306


613


3,780


4,393


(1,064
)

1999Total Memphis, Tennessee

42




21,248


120,364


29,092


21,248


149,456


170,704


(50,059
)Nashville, TennesseeBakertown Distribution Center

2




463


2,626


680


463


3,306


3,769


(1,387
)

1995I-40 Industrial Center

4




1,711


9,698


1,358


1,712


11,055


12,767


(3,767
)

1995, 1996, 1999  122




---



##### Table of Contents



PROLOGISSCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  (continued)December 31, 2006Initial Cost to



Gross Amounts At Which CarriedProLogis

Costs Capitalized

as of December 31, 2006




Date ofNo. of

Encum-



Building &

Subsequent



Building &



Accumulated


Construction/Description

Bldgs.

brances

Land

Improvements

To Acquisition

Land

Improvements

Total (a,b)

Depreciation (c)


Acquisition(In thousands, as applicable)Interchange City Distribution
    Center (d)

17




8,107


38,553


14,204


8,862


52,002


60,864


(11,661
)

1994, 1995, 1996,
    1997, 1998, 2001, 2003Space Park South Distribution Center

15




3,499


19,830


9,050


3,499


28,880


32,379


(12,838
)

1994Total Nashville, Tennessee

38




13,780


70,707


25,292


14,536


95,243


109,779


(29,653
)New JerseyBellmawr Distribution Center

1




212


1,197


391


211


1,589


1,800


(455
)

1999Brunswick Distribution Center

2




870


4,928


2,158


870


7,086


7,956


(3,339
)

1997Chester Distribution Center

1




548


5,320





548


5,320


5,868


(2,805
)

2002Clearview Distribution Center

1




2,232


12,648


525


2,232


13,173


15,405


(4,696
)

1996Clifton Business Center

1




2,014


11,317





2,014


11,317


13,331


(488
)

2005Exit 10 Distribution Center

6




22,738


126,961





22,738


126,961


149,699


(5,475
)

2005Exit 8A Distribution Center (d)

2

(e)


20,558


44,103


25,680


20,718


69,623


90,341


(1,912
)

2005Kilmer Distribution Center

4

(e)


2,526


14,313


2,708


2,526


17,021


19,547


(6,150
)

1996Meadowland Distribution Center

5

(e)


12,526


80,219





12,526


80,219


92,745


(19,485
)

2002, 2005Meadowland Industrial Center

8

(e)


5,676


32,167


15,460


5,677


47,626


53,303


(22,904
)

1996, 1997, 1998Mt. Laurel Distribution Center

3




826


4,679


1,472


826


6,151


6,977


(1,586
)

1999Pennsauken Distribution Center

3




376


2,132


391


384


2,515


2,899


(731
)

1999Port Reading Business Park (d)

1




4,138





22,528


4,138


22,528


26,666





200538




75,240


339,984


71,313


75,408


411,129


486,537


(70,026
)Orlando, Florida33rd Street Industrial Center

9




1,980


11,237


3,844


1,980


15,081


17,061


(6,084
)

1994, 1995, 1996Chancellor Distribution Center

1




380


2,156


1,256


380


3,412


3,792


(1,520
)

1994Consulate Distribution Center

3




4,148


23,617


963


4,148


24,580


28,728


(6,420
)

1999La Quinta Distribution Center

1




354


2,006


1,664


354


3,670


4,024


(1,456
)

1994Orlando Central Park

3




1,378





10,054


1,871


9,561


11,432


(2,866
)

1997, 1998Orlando Corporate Center (d)

1




959





6,430


959


6,430


7,389





2006Princeton Oaks Distribution Center

1

(e)


900


5,100


22


900


5,122


6,022


(1,317
)

1999Titusville Industrial Center

1




283


1,603


487


283


2,090


2,373


(780
)

1994Total Orlando, Florida

20




10,382


45,719


24,720


10,875


69,946


80,821


(20,443
)Phoenix, Arizona24th Street Industrial Center

2




503


2,852


1,437


561


4,231


4,792


(2,077
)

1994Alameda Distribution Center

2

(e)


3,872


14,358


1,326


3,872


15,684


19,556


(667
)

2005Buckeye Road Industrial Center

2




1,236


4,988


72


1,236


5,060


6,296


(221
)

2005Hohokam 10 Industrial Center

6




4,258


7,467


13,179


4,258


20,646


24,904


(6,887
)

1996, 1999I-10 West Business Center

3




263


1,525


684


263


2,209


2,472


(1,042
)

1993Kyrene Commons Distribution Center

3




2,369


5,475


559


1,093


7,310


8,403


(2,682
)

1992, 1998, 1999Kyrene Commons South Distribution
    Center

2




1,096





5,972


1,163


5,905


7,068


(1,742
)

1998Martin Van Buren Distribution Center

6




572


3,285


1,729


572


5,014


5,586


(2,344
)

1993, 1994Papago Distribution Center

3




4,828


20,017


741


4,829


20,757


25,586


(1,972
)

1994, 2005Roosevelt Distribution Center

1

(e)


1,766


7,065





1,766


7,065


8,831


(304
)

2005University Dr Distribution Center

1




683


2,735


16


683


2,751


3,434


(118
)

2005Watkins Distribution Center

1




242


1,375


478


243


1,852


2,095


(736
)

1995Wilson Drive Distribution Center

1

(e)


1,273


5,093





1,273


5,093


6,366


(219
)

2005Total Phoenix, Arizona

33




22,961


76,235


26,193


21,812


103,577


125,389


(21,011
)  123




---



##### Table of Contents



PROLOGISSCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  (continued)December 31, 2006Initial Cost to



Gross Amounts At Which CarriedProLogis

Costs Capitalized

as of December 31, 2006




Date ofNo. of

Encum-



Building &

Subsequent



Building &



Accumulated


Construction/Description

Bldgs.

brances

Land

Improvements

To Acquisition

Land

Improvements

Total (a,b)

Depreciation (c)


Acquisition(In thousands, as applicable)Portland, OregonArgyle Distribution Center

3




946


5,388


1,094


946


6,482


7,428


(2,986
)

1993Columbia Distribution Center

2




550


3,121


1,009


551


4,129


4,680


(1,747
)

1994PDX Corp Ctr North Phase II (d)

2

(g)


4,103





8,477


4,103


8,477


12,580





2006PDX Corporate Center East

2

(g)


1,785





7,072


2,100


6,757


8,857


(2,257
)

1997PDX Corporate Center North

7

(g)


2,405





11,944


2,542


11,807


14,349


(4,560
)

1995, 1996Southshore Corporate Center (d)

6

(e)(g)


14,846


52,299


7,760


15,058


59,847


74,905


(1,886
)

2005, 2006Wilsonville Corporate Center

6




2,963





13,525


2,964


13,524


16,488


(5,300
)

1995, 1996Total Portland, Oregon

28




27,598


60,808


50,881


28,264


111,023


139,287


(18,736
)Reno, NevadaGolden Valley Distribution Center

3




2,975


13,686


10,942


4,451


23,152


27,603


(3,106
)

1996, 1998, 2005Meredith Kleppe Business Center

5




1,573


8,949


3,359


1,573


12,308


13,881


(5,245
)

1993Packer Way Distribution Center

2




506


2,879


1,487


506


4,366


4,872


(2,177
)

1993Spice Island Distribution Center

1




435


2,466


2,285


435


4,751


5,186


(1,361
)

1996Vista Industrial Center

10




9,566


40,036


13,944


9,566


53,980


63,546


(12,255
)

1994, 1995, 2001Total Reno, Nevada

21




15,055


68,016


32,017


16,531


98,557


115,088


(24,144
)Salt Lake City, UtahCentennial Distribution Center

2




1,149





9,151


1,149


9,151


10,300


(3,560
)

1995Crossroads Corporate Center (d)

1




284





7,189


926


6,547


7,473





2005Salt Lake International
    Distribution Center

2




1,367


2,792


9,673


1,364


12,468


13,832


(4,757
)

1994, 1996Total Salt Lake City, Utah

5




2,800


2,792


26,013


3,439


28,166


31,605


(8,317
)San Antonio, Texas10711 Distribution Center

2




582


3,301


1,748


582


5,049


5,631


(2,406
)

1994City Park East Distribution Center

3




1,002


5,676


903


1,002


6,579


7,581


(276
)

2003Coliseum Distribution Center (d)

3




1,547


923


9,578


1,584


10,464


12,048


(2,366
)

1994, 2006Distribution Drive Center

1




473


2,680


1,007


473


3,687


4,160


(1,983
)

1992I-35 Business Center

4




663


3,773


2,277


663


6,050


6,713


(2,804
)

1993Macro Distribution Center

3




1,705


9,024


1,912


1,705


10,936


12,641


(604
)

2002Perrin Creek Corporate Center

6




1,716





10,386


1,634


10,468


12,102


(3,876
)

1995, 1996Rittiman East Ind Park (d)

7




5,938


23,756


66


5,939


23,821


29,760





2006Rittiman West Ind Park (d)

2




1,237


4,950


51


1,237


5,001


6,238





2006San Antonio Distribution
    Center I

13




2,154


12,247


8,420


2,154


20,667


22,821


(9,978
)

1992, 1993, 1994San Antonio Distribution
    Center II

3




945





6,615


885


6,675


7,560


(2,799
)

1994San Antonio Distribution
    Center III

4




1,176


6,571


3,105


1,176


9,676


10,852


(3,875
)

1996Tri-County Dist Ctr (d)

1




950





7,634


950


7,634


8,584





2006Woodlake Distribution Center

2




248


1,405


1,253


248


2,658


2,906


(1,089
)

1994Total San Antonio, Texas

54




20,336


74,306


54,955


20,232


129,365


149,597


(32,056
)San Diego, CaliforniaSan Diego Industrial Center

13




8,685


16,128


1,363


8,684


17,492


26,176


(702
)

2005Total San Diego, California

13




8,685


16,128


1,363


8,684


17,492


26,176


(702
)San Francisco (Central
    Valley), CaliforniaCentral Valley Distribution Center
    (d)

4




6,935


34,316


4,551


6,935


38,867


45,802


(7,201
)

1999, 2002, 2003Central Valley Industrial Center

4

(e)(g)


11,418


48,726


5,912


11,868


54,188


66,056


(8,657
)

1999, 2002, 2005Manteca Distribution Center

1

(e)


9,280


27,841


55


9,280


27,896


37,176


(1,203
)

2005  124




---



##### Table of Contents



PROLOGISSCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  (continued)December 31, 2006Initial Cost to



Gross Amounts At Which CarriedProLogis

Costs Capitalized

as of December 31, 2006




Date ofNo. of

Encum-



Building &

Subsequent



Building &



Accumulated


Construction/Description

Bldgs.

brances

Land

Improvements

To Acquisition

Land

Improvements

Total (a,b)

Depreciation (c)


Acquisition(In thousands, as applicable)Patterson Pass Business Center

5




2,496


4,885


9,764


2,496


14,649


17,145


(5,334
)

1993, 1997, 1998Tracy Distribution Center (d)

1




2,802


6,539


267


2,802


6,806


9,608





2004Total Central Valley, California

15




32,931


122,307


20,549


33,381


142,406


175,787


(22,395
)San Francisco (East Bay),
    CaliforniaAlvarado Business Center

10

(e)


20,739


62,595


523


20,739


63,118


83,857


(2,710
)

2005Barrington Business Center

3




1,741


9,863


1,352


1,741


11,215


12,956


(3,019
)

1999East Bay Industrial Center

1




531


3,009


550


531


3,559


4,090


(1,619
)

1994Eigenbrodt Way Distribution Center

1

(e)


393


2,228


445


393


2,673


3,066


(1,214
)

1993Hayward Commerce Center

4




1,933


10,955


1,859


1,933


12,814


14,747


(5,476
)

1993Hayward Commerce Park

7




1,968


11,167


3,327


1,968


14,494


16,462


(6,611
)

1994Hayward Distribution Center

6

(e)


2,906


19,165


4,022


3,327


22,766


26,093


(10,404
)

1993Hayward Industrial Center

13

(e)


4,481


25,393


5,169


4,481


30,562


35,043


(13,444
)

1993Livermore Distribution Center

4

(e)


8,992


26,976


597


8,992


27,573


36,565


(1,169
)

2005Oakland Industrial Center

3

(e)


8,234


24,704


426


8,235


25,129


33,364


(1,044
)

2005Regatta Business Park

2

(e)


7,688


23,063





7,688


23,063


30,751


(993
)

2005San Leandro Distribution Center

3

(e)


1,387


7,862


1,297


1,387


9,159


10,546


(4,171
)

1993Total San Francisco (East
    Bay), California

57




60,993


226,980


19,567


61,415


246,125


307,540


(51,874
)San Francisco (South Bay),
    CaliforniaBayside Business Center

2

(g)


2,088





5,048


2,088


5,048


7,136


(2,201
)

1996Bayside Corporate Center

7

(g)


4,365





18,569


4,365


18,569


22,934


(8,369
)

1995, 1996Bayside Plaza I

12

(g)


5,212


18,008


3,499


5,216


21,503


26,719


(9,333
)

1993Bayside Plaza II

2

(g)


634





3,380


634


3,380


4,014


(1,784
)

1994Gateway Corporate Center

11

(g)


7,575


24,746


7,329


7,575


32,075


39,650


(14,524
)

1993, 1996Mowry Business Center

4




5,933





19,610


7,815


17,728


25,543


(5,748
)

1997, 1998Overlook Distribution Center

1




1,573


8,915


31


1,573


8,946


10,519


(2,318
)

1999Pacific Commons Industrial Center

7

(e)(g)


30,107


90,416


329


30,107


90,745


120,852


(3,894
)

2005Pacific Industrial Center

6

(e)


21,676


65,083


4,566


25,294


66,031


91,325


(2,809
)

2005Shoreline Business Center

8

(g)


4,328


16,101


2,222


4,328


18,323


22,651


(7,771
)

1993Shoreline Business Center II

2

(g)


922





5,914


922


5,914


6,836


(2,566
)

1995Spinnaker Business Center

12

(g)


7,043


25,220


4,811


7,043


30,031


37,074


(12,927
)

1993Thornton Business Center

5




3,988


11,706


7,240


3,989


18,945


22,934


(7,194
)

1993, 1996Trimble Distribution Center

5




2,836


16,067


3,560


2,836


19,627


22,463


(8,529
)

1994Total San Francisco (South
    Bay), California

84




98,280


276,262


86,108


103,785


356,865


460,650


(89,967
)Seattle, WashingtonAndover East Business Center

2




535


3,033


611


535


3,644


4,179


(1,551
)

1994Fife Corporate Center

3




4,059





11,401


4,209


11,251


15,460


(3,955
)

1996Kent Corporate Center

2

(g)


2,882


1,987


9,950


3,276


11,543


14,819


(4,668
)

1995Van Dorens Distribution Center

2

(g)


2,473





9,920


3,111


9,282


12,393


(3,570
)

1995, 1997Total Seattle, Washington

9




9,949


5,020


31,882


11,131


35,720


46,851


(13,744
)South FloridaAirport West Distribution Center

2




1,253


3,825


3,281


1,974


6,385


8,359


(2,023
)

1995, 1998Boca Dist Ctr

1




1,474


5,918





1,474


5,918


7,392


(90
)

2006CenterPort Distribution Center

3




2,083


11,806


666


2,083


12,472


14,555


(3,426
)

1999Copans Distribution Center

2




504


2,857


535


504


3,392


3,896


(1,254
)

1997, 1998Dade Distribution Center

1




2,589


14,670





2,589


14,670


17,259


(713
)

2005  125




---



##### Table of Contents



PROLOGISSCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  (continued)December 31, 2006Initial Cost to




Gross Amounts At Which CarriedProLogis


Costs Capitalized

as of December 31, 2006




Date ofNo. of

Encum-



Building &


Subsequent



Building &



Accumulated


Construction/Description

Bldgs.

brances

Land

Improvements


To Acquisition

Land

Improvements

Total (a,b)

Depreciation (c)


Acquisition(In thousands, as applicable)North Andrews Distribution Center

1




698


3,956



101


698


4,057


4,755


(1,654
)

1994Port Lauderdale Distribution Center

2




896






8,341


2,205


7,032


9,237


(1,827
)

1997ProLogis Park I-595

2

(e)


1,998


11,326



107


1,999


11,432


13,431


(1,511
)

2003Total South Florida

14




11,495


54,358



13,031


13,526


65,358


78,884


(12,498
)Southern CaliforniaAnaheim Industrial Center

13

(e)


32,275


59,983



140


32,275


60,123


92,398


(2,587
)

2005California Commerce Center

1

(e)


4,201


7,802



66


4,201


7,868


12,069


(337
)

2005Crossroads Business Park (d)

8

(e)


56,343


95,951



9,725


56,344


105,675


162,019


(4,133
)

2005, 2006Fullerton Industrial Center

2

(e)


8,238


15,300



14


8,239


15,313


23,552


(659
)

2005Industry Distribution Center

7

(e)(g)


50,268


93,355



341


50,268


93,696


143,964


(4,041
)

2005Inland Empire Distribution Center
    (d)

7

(e)


52,379


84,275



36,165


53,134


119,685


172,819


(6,267
)

1999, 2005Kaiser Distribution Center

7

(e)(g)


120,885


224,599



1


120,886


224,599


345,485


(9,520
)

2005Los Angeles Industrial Center

2

(e)


3,777


7,015






3,777


7,015


10,792


(302
)

2005Mid Counties Industrial Center

14

(e)


45,864


87,107



7,900


45,830


95,041


140,871


(3,563
)

2005, 2006Mill Street Spec Distribution
    Center (d)

1




1,232


31,842



1,268


1,232


33,110


34,342





2005Orange Industrial Center

2

(e)


5,930


11,014






5,930


11,014


16,944


(474
)

2005Rancho Cucamonga Distribution Center

6

(e)(g)


51,283


95,241



33


51,283


95,274


146,557


(4,101
)

2005Redlands Commerce Center (d)

1




14,173






16,924


13,813


17,284


31,097





2005Redlands Dist Ctr (d)

3




18,176


43,423



20,704


18,176


64,127


82,303





2006Santa Ana Distribution Center

2

(e)


4,318


8,019



31


4,318


8,050


12,368


(345
)

2005South Bay Distribution Center

2

(e)


9,907


18,398






9,907


18,398


28,305


(792
)

2005Tustin Industrial Center

2

(e)


4,553


8,456



46


4,553


8,502


13,055


(365
)

2005Vernon Distribution Center

15

(e)


25,439


47,250



1,126


25,441


48,374


73,815


(2,042
)

2005Total Southern California

95




509,241


939,030



94,484


509,607


1,033,148


1,542,755


(39,528
)St. Louis, MissouriEarth City Industrial Center

8

(e)


3,375


19,144



6,726


3,375


25,870


29,245


(9,581
)

1997, 1998Hazelwood Distribution Center

2




847


4,802



759


847


5,561


6,408


(1,559
)

1997, 1999Westport Distribution Center

3




761


4,310



1,296


761


5,606


6,367


(1,897
)

1997Total St. Louis, Missouri

13




4,983


28,256



8,781


4,983


37,037


42,020


(13,037
)Tampa, FloridaAdamo Distribution Center

6




2,105


11,930



1,743


2,105


13,673


15,778


(2,833
)

1995, 2001Commerce Park Distribution Center

4




811


4,597



1,384


811


5,981


6,792


(2,850
)

1994Eastwood Distribution Center

1




122


690



127


122


817


939


(365
)

1994Lakeland Distribution Center

1




938


5,313



1,261


938


6,574


7,512


(2,681
)

1994Lakeland Interstate Bus Park (d)

1




1,515






5,855


1,515


5,855


7,370





2006Orchid Lake Industrial Center

1




41


235



44


41


279


320


(110
)

1994Plant City Distribution Center

1




206


1,169



268


206


1,437


1,643


(587
)

1994Sabal Park Distribution Center

8

(e)


3,180


10,364



15,018


3,516


25,046


28,562


(6,500
)

1996, 1997, 1998, 2002Silo Bend Distribution Center

4




2,887


16,358



3,460


2,887


19,818


22,705


(8,093
)

1994Silo Bend Industrial Center

1




525


2,975



742


525


3,717


4,242


(1,562
)

1994Tampa East Distribution Center

10




2,700


15,302



2,896


2,541


18,357


20,898


(7,983
)

1994Tampa East Industrial Center

2




332


1,880



574


332


2,454


2,786


(1,057
)

1994Tampa West Distribution Center

13




2,995


16,829



3,883


3,040


20,667


23,707


(9,061
)

1994, 1995Tampa West Industrial Center

3




355


(9
)


5,976


635


5,687


6,322


(1,976
)

1996, 1998Total Tampa, Florida

56




18,712


87,633



43,231


19,214


130,362


149,576


(45,658
)  126




---



##### Table of Contents



PROLOGISSCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  (continued)December 31, 2006Initial Cost to




Gross Amounts At Which CarriedProLogis

Costs Capitalized


as of December 31, 2006




Date ofNo. of

Encum-



Building &

Subsequent




Building &



Accumulated


Construction/Description

Bldgs.

brances

Land

Improvements

To Acquisition


Land

Improvements

Total (a,b)

Depreciation (c)


Acquisition(In thousands, as applicable)Washington D.C./Baltimore, Maryland1901 Park 100 Drive

1




2,409


7,227


8



2,409


7,235


9,644


(111
)

2006Airport Commons Distribution Center

2

(e)


2,320





9,963



2,360


9,923


12,283


(3,423
)

1997Ardmore Distribution Center

3




1,431


8,110


1,542



1,431


9,652


11,083


(4,108
)

1994Ardmore Industrial Center

2




984


5,581


1,211



985


6,791


7,776


(3,078
)

1994Concorde Industrial Center

4

(e)


1,538


8,717


2,518



1,538


11,235


12,773


(4,616
)

1995De Soto Business Park

5




1,774


10,055


4,880



1,774


14,935


16,709


(6,766
)

1996Edgewood Distribution Center (d)

1




4,244


12,732


4,497



4,244


17,229


21,473





2005Eisenhower Industrial Center

3

(e)


1,240


7,025


2,334



1,240


9,359


10,599


(4,063
)

1994Fleet Distribution Center

8

(e)


3,198


18,121


2,707



3,115


20,911


24,026


(8,458
)

1996Gateway Bus Ctr (d)

2




3,762





9,052



3,762


9,052


12,814





2006Gateway Distribution Center

2




192





4,400



831


3,761


4,592


(969
)

1998Hampton Central Distribution Center

2




1,769





10,374



2,251


9,892


12,143


(3,161
)

1996, 1997Hickory Ridge Distribution Center

2

(e)


15,988


47,964


7



15,988


47,971


63,959


(1,744
)

2005Meadowridge Distribution Center

1

(e)


1,757





6,159



1,902


6,014


7,916


(1,520
)

1998Patapsco Distribution Center

1




270


1,528


1,394



270


2,922


3,192


(1,267
)

1995White Oak Distribution Center

1




3,986


24,107


7



3,986


24,114


28,100


(3,014
)

2002Winchester Distribution Center

1




3,286


13,142


(2
)


3,286


13,140


16,426


(566
)

2005Total Washington D.C./Baltimore,
    Maryland

41




50,148


164,309


61,051



51,372


224,136


275,508


(46,864
)OtherShawnee Distribution Center

1




2,858


11,432






2,858


11,432


14,290


(492
)

2005Stone Fort Distribution Center

4




2,063


11,688


2,585



2,063


14,273


16,336


(5,930
)

1994Topeka Distribution Center

1




108


430


15



108


445


553


(20
)

2005Valley Industrial Center
    (Brownsville, Texas)

1




363





3,750



363


3,750


4,113


(1,081
)

19977




5,392


23,550


6,350



5,392


29,900


35,292


(7,523
)Mexico:GuadalajaraCedros-Jalisco Dist Ctr (d)

2




3,701


20,972


182



3,719


21,136


24,855





2006Total Guadalajara, Mexico

2




3,701


20,972


182



3,719


21,136


24,855


JuarezDel Norte Industrial Center

1




1,041


7,827


2,385



1,381


9,872


11,253


(13
)

2002Independencia Industrial Center (d)

2




3,214





6,811



3,182


6,843


10,025





2005Los Aztecas Industrial Center

1




148


837


419



33


1,371


1,404


(384
)

1999Ramon Rivera Industrial Center

1




445





3,353



2,246


1,552


3,798


(394
)

2000Rio Bravo Industrial Center

1




349


1,979


343



410


2,261


2,671


(490
)

2001Salvacar Industrial Center (d)

5




3,017





12,217



3,480


11,754


15,234


(1,114
)

1998, 1999, 2000, 2002, 2005Total Juarez, Mexico

11




8,214


10,643


25,528



10,732


33,653


44,385


(2,395
)Mexico CityCedros-Tepotzotlan Dist Ctr (d)

9

(e)


9,809


55,582


276



9,843


55,824


65,667





2006JLP Dist Ctr (d)

1

(e)


1,099


6,227


32



1,104


6,254


7,358





2006Nor-T Dist Ctr (d)

7

(e)


10,960


62,106


267



10,986


62,347


73,333





2006Oriente Dist Ctr (d)

2

(e)


1,425


8,073


42



1,432


8,108


9,540





2006Xhala Dist Ctr (d)

1

(e)


2,920


16,546


83



2,930


16,619


19,549





2006Total Mexico City, Mexico

20




26,213


148,534


700



26,295


149,152


175,447


  127




---



##### Table of Contents



PROLOGISSCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  (continued)December 31, 2006Initial Cost to



Gross Amounts At Which CarriedProLogis

Costs Capitalized

as of December 31, 2006




Date ofNo. of

Encum-



Building &

Subsequent



Building &



Accumulated


Construction/Description

Bldgs.

brances

Land

Improvements

To Acquisition

Land

Improvements

Total (a,b)

Depreciation (c)


Acquisition(In thousands, as applicable)MonterreyMonterrey Industrial Park (d)

6




4,427


3,785


12,087


4,756


15,543


20,299


(3,498
)

1997, 1998, 2005, 2006Total Monterrey, Mexico

6




4,427


3,785


12,087


4,756


15,543


20,299


(3,498
)ReynosaColonial Industrial Center (d)

2




943


1,574


3,098


670


4,945


5,615





1999, 2000Del Norte Industrial Center

2




809





7,165


1,065


6,909


7,974


(2,467
)

1998Del Norte Industrial Center II
    (d)

2




2,114





14,167


2,114


14,167


16,281





2005, 2006Pharr Bridge Ind Ctr (d)

2




1,011





7,485


1,011


7,485


8,496





2006Pharr Bridge Industrial Center (d)

3




2,347





14,875


2,347


14,875


17,222





2004, 2005, 2006Reynosa Industrial Center (d)

4




1,415


921


10,492


1,856


10,972


12,828


(3,158
)

1997, 1998, 1999Villa Florida Industrial Center(d)

1




2,527


14,314


7


2,527


14,321


16,848





2004Total Reynosa, Mexico

16




11,166


16,809


57,289


11,590


73,674


85,264


(5,625
)Canada:TorontoMississauga Gateway Ctr (d)

3




16,371





45,749


16,372


45,748


62,120





2006Total Toronto, Canada

3




16,371





45,749


16,372


45,748


62,120


Subtotal North American Markets

1,353




1,625,461


5,157,869


1,737,006


1,650,867


6,869,469


8,520,336


(1,259,075
)European MarketsBelgium:Vilvoorde Dist Ctr (d)

1










9,632





9,632


9,632





2006Willebroek Dist Ctr (d)

2




5,104





18,884


5,104


18,884


23,988





2006Total Belgium

3




5,104





28,516


5,104


28,516


33,620


Czech Republic:Prague East Distribution Center (d)

3




3,832





17,425


4,043


17,214


21,257





2005, 2006Prague West (d)

1




1,189





6,217


1,189


6,217


7,406





2006Total Czech Republic

4




5,021





23,642


5,232


23,431


28,663


France:Isle dAbeau Distribution
    Center (d)

2




10,271


25,447


7,052


10,366


32,404


42,770





2002, 2006Le Havre Distribution Center (d)

3




1,398





32,162


1,412


32,148


33,560


(1,055
)

2003, 2006Macon Dist Ctr (d)

1




2,065





22,299


2,065


22,299


24,364





2006Metz Distribution Center (d)

1




1,070


6,500


364


1,119


6,815


7,934


(489
)

2004Moissy Cramayel Distribution Center
    (d)

6




4,730





77,152


5,906


75,976


81,882





2005, 2006Total France

13




19,534


31,947


139,029


20,868


169,642


190,510


(1,544
)Germany:Bingen Dist Ctr (d)

1




3,449





11,796


3,449


11,796


15,245





2006Dradenau Distribution Center (d)

1




80





14,425





14,505


14,505





2005Frankfurt Riederhof Distribution
    Center (d)

1




7,320





16,571


7,830


16,061


23,891


(1,092
)

2003Krefeld Distribution Center (d)

1




2,143





11,042


2,752


10,433


13,185


(921
)

2002  128




---



##### Table of Contents



PROLOGISSCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  (continued)December 31, 2006Initial Cost to



Gross Amounts At Which CarriedProLogis

Costs Capitalized

as of December 31, 2006




Date ofNo. of

Encum-



Building &

Subsequent



Building &



Accumulated


Construction/Description

Bldgs.

brances

Land

Improvements

To Acquisition

Land

Improvements

Total (a,b)

Depreciation (c)


Acquisition(In thousands, as applicable)Malsch Dist Ctr (d)

1




2,149





7,738


2,149


7,738


9,887





2006Peine Dist Ctr (d)

1




2,141





13,165


2,141


13,165


15,306





2006Total Germany

6




17,282





74,737


18,321


73,698


92,019


(2,013
)Hungary:Budapest Distribution Center (d)

1




1,302





9,368


1,435


9,235


10,670





2005Total Hungary

1




1,302





9,368


1,435


9,235


10,670


Italy:Bologna Dist Ctr (d)

1




4,413





11,009


4,413


11,009


15,422





2006Lodi Distribution Center (d)

2




7,996


35,613


1,682


11,628


33,663


45,291





2005, 2006Padua Distribution Center (d)

1




2,724





11,583


3,023


11,284


14,307





2005Romentino Distribution Center (d)

2




3,758





28,509


3,758


28,509


32,267





2006Total Italy

6




18,891


35,613


52,783


22,822


84,465


107,287


Netherlands:Venlo Dist. Ctr. (d)

1




2,750





8,929


2,750


8,929


11,679





2006Total Netherlands

1




2,750





8,929


2,750


8,929


11,679


Poland:Blonie Distribution Center (d)

3




3,565





21,935


3,711


21,789


25,500





2005, 2006Chorzow Dist Ctr (d)

3




5,868





41,990


5,869


41,989


47,858





2006Piotrkow Dist Ctr (d)

1




711





4,761


711


4,761


5,472





2006Poznan II Distribution Center
    (d)

3




3,792





20,673


3,937


20,528


24,465





2005, 2006Teresin Distribution Center (d)

2




2,151





25,421


2,376


25,196


27,572


(545
)

2004, 2005Wroclaw Distribution Center (d)

3




5,847





23,326


6,054


23,119


29,173





2005, 2006Total Poland

15




21,934





138,106


22,658


137,382


160,040


(545
)Spain:Penedes Dist Ctr (d)

1




6,767





11,981


6,767


11,981


18,748





2006Total Spain

1




6,767





11,981


6,767


11,981


18,748


Sweden:Haninge AB Dist Ctr (d)

1




1,889





12,979


1,889


12,979


14,868





2006Total Sweden

1




1,889





12,979


1,889


12,979


14,868


United Kingdom:Ardra Road, Edmonton Distribution
    Center (d)

1




13,715





18,964


15,267


17,412


32,679





2005Campbell Road Distribution Center
    (d)

1




7,391





19,432


11,678


15,145


26,823





2004Crewe Dist Ctr (d)

1




11,643





25,431


11,643


25,431


37,074





2006Didcot Distribution Center (d)

1




9,512





13,246


10,564


12,194


22,758





2005Dunstable Dist Ctr (d)

2




69,500





52,672


69,500


52,672


122,172





2006Fort Dunlop Distribution
    Center (d)

1




6,640





1,208


7,848





7,848





2001Hayes Dist Ctr (d)

1




6,985





8,819


6,985


8,819


15,804





2006Houghton Main Dist Ctr (d)

1




8,993





30,474


8,993


30,474


39,467





2006Kings Lynn Coldstore Distribution
    Center

1




16,435


5,325


2,707


18,462


6,005


24,467


(6,026
)

2003Marston Gate Dist Ctr (d)

1




2,806





6,595


2,806


6,595


9,401





2006North Kettering Distribution Center
    (d)

1




28,768





49,443


28,768


49,443


78,211





2006Peterborough Dist. Ctr. (d)

1




17,941





37,027


17,941


37,027


54,968





2006  129




---



##### Table of Contents



PROLOGISSCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  (continued)December 31, 2006Initial Cost to



Gross Amounts At Which CarriedProLogis

Costs Capitalized

as of December 31, 2006




Date ofNo. of

Encum-



Building &

Subsequent



Building &



Accumulated


Construction/Description

Bldgs.

brances

Land

Improvements

To Acquisition

Land

Improvements

Total (a,b)

Depreciation (c)


Acquisition(In thousands, as applicable)Stafford Dist Ctr (d)

3




27,080





46,595


27,080


46,595


73,675





2006Swindon Dist Ctr (d)

1




11,994





18,174


11,994


18,174


30,168





2006Wellingborough Distribution Center
    (d)

2




15,731





38,431


16,468


37,694


54,162





2005, 2006Total United Kingdom

19




255,134


5,325


369,218


265,997


363,680


629,677


(6,026
)Subtotal European Markets

70




355,608


72,885


869,288


373,843


923,938


1,297,781


(10,128
)Asian MarketsChina:Guangzhou Baopu Dist Center (d)

5




6,738


23,190


2


6,739


23,191


29,930


(196
)

2006Guangzhou Distribution Center (d)

1




1,067





4,077


1,106


4,038


5,144


(134
)

2005ProLogis Park Minghang (d)

1




741


3,633





741


3,633


4,374


(40
)

2006ProLogis Park Puyun (d)

2




3,538





9,989


3,538


9,989


13,527


(294
)

2006Taopu Distribution Center (d)

5




8,787





19,693


8,512


19,968


28,480


(835
)

2005, 2006Total China

14




20,871


26,823


33,761


20,636


60,819


81,455


(1,499
)Japan:ProLogis Park Amagasaki (d)

1




34,499





80,031


34,499


80,031


114,530





2006ProLogis Park Ichikawa

1







8,151








8,151


8,151


(741
)

2006ProLogis Park Koshigaya II (d)

1




19,351





30,795


19,351


30,795


50,146





2006ProLogis Park Maishima I (d)

1




18,002





68,495


18,002


68,495


86,497





2006ProLogis Park Maishima II (d)

1




16,282





39,547


16,282


39,547


55,829





2006ProLogis Park Tokyo II (d)

1




80,131





86,704


80,131


86,704


166,835





2006ProLogis Park Tsumori (d)

1




9,281


5,513





9,281


5,513


14,794





2006Total Japan

7




177,546


13,664


305,572


177,546


319,236


496,782


(741
)Korea:ProLogis Park Deokpyung (d)

1




5,062


9,253





5,061


9,254


14,315





2006Total Singapore

1




5,062


9,253





5,061


9,254


14,315


Singapore:Changi South Distribution Center (d)

1







11,598


982





12,580


12,580


(855
)

2004Total Singapore

1







11,598


982





12,580


12,580


(855
)Subtotal Asian Markets

23




203,479


61,338


340,315


203,243


401,889


605,132


(3,095
)Total Industrial Operating
    Properties (d)

1,446




2,184,548


5,292,092


2,946,609


2,227,953


8,195,296


10,423,249


(1,272,298
)Retail operating
    propertiesDenver, ColoradoBelcaro Shopping Center

1




3,758


15,036


2


3,758


15,038


18,796


(485
)

2005Total Denver, Colorado

1




3,758


15,036


2


3,758


15,038


18,796


(485
)  130




---



##### Table of Contents



PROLOGISSCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  (continued)December 31, 2006Initial Cost to



Gross Amounts At Which CarriedProLogis

Costs Capitalized

as of December 31, 2006




Date ofNo. of

Encum-



Building &

Subsequent



Building &



Accumulated


Construction/Description

Bldgs.

brances

Land

Improvements

To Acquisition

Land

Improvements

Total (a,b)

Depreciation (c)


Acquisition(In thousands, as applicable)Los Angeles/Orange County,
    CaliforniaNewport Retail Center

1




4,478


10,450





4,478


10,450


14,928


(337
)

2005Woodland Retail Center

3




10,376


24,208


163


10,375


24,372


34,747


(782
)

2005Total Los Angeles/Orange County,
    California

4




14,854


34,658


163


14,853


34,822


49,675


(1,119
)San Francisco (East Bay),
    CaliforniaEB Bridge Shopping Center

8

(e)(g)


23,041


81,693


1


23,042


81,693


104,735


(2,638
)

2005Granada Shopping Center

1




2,604


9,232


20


2,604


9,252


11,856


(298
)

2005Total San Francisco (East
    Bay), California

9




25,645


90,925


21


25,646


90,945


116,591


(2,936
)San Francisco (South Bay),
    CaliforniaPacific Commons Retail Center (d)

13




27,669


62,358


30,099


33,551


86,575


120,126


(1,855
)

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

13




27,669


62,358


30,099


33,551


86,575


120,126


(1,855
)Total Retail Operating Properties

27




71,926


202,977


30,285


77,808


227,380


305,188


(6,395
)Total Operating Properties

1,473




2,256,474


5,495,069


2,976,894


2,305,761


8,422,676


10,728,437


(1,278,693
)Properties Under Development
    (o)North American
    Markets:United States:Austin, TexasMueller Regional Retail

5




12,716





13,334


26,050





26,050





2006Total Austin, Texas

5




12,716





13,334


26,050





26,050


Chicago, IllinoisI-55 Distributions Center

1




5,443





17,040


22,483





22,483





2006Total Chicago, Illinois

1




5,443





17,040


22,483





22,483


Cincinnati, OhioPark I-275

1




6,294





12,907


19,201





19,201





2006Total Cincinnati, Ohio

1




6,294





12,907


19,201





19,201


Columbus, OhioEtna Distribution Center

1




1,668





14,246


15,914





15,914





2006Total Columbus, Ohio

1




1,668





14,246


15,914





15,914


Dallas, TexasFreeport Corporate Center

1




545





4,202


4,747





4,747





2006Lancaster Distribution Center

1




2,775





5,981


8,756





8,756





2006Northgate Distribution Center

1










60


60





60





2006Total Dallas, Texas

3




3,320





10,243


13,563





13,563


Houston, TexasJersey Village Corporate Center

1




1,780





4,035


5,815





5,815





2006Total Houston, Texas

1




1,780





4,035


5,815





5,815


  131




---



##### Table of Contents



PROLOGISSCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  (continued)December 31, 2006Initial Cost to



Gross Amounts At Which CarriedProLogis

Costs Capitalized

as of December 31, 2006



Date ofNo. of

Encum-



Building &

Subsequent



Building &



Accumulated

Construction/Description

Bldgs.

brances

Land

Improvements

To Acquisition

Land

Improvements

Total (a,b)

Depreciation (c)

Acquisition(In thousands, as applicable)I-81 Corridor (E. Pennsylvania)Park 33 Distribution Center

1




12,113





622


12,735





12,735




2006Total I-81 Corridor (E.
    Pennsylvania)

1




12,113





622


12,735





12,735


Louisville, KentuckyI-65 Meyer Distribution Center

1




1,671





1,878


3,549





3,549




2006Total Louisville, Kentucky

1




1,671





1,878


3,549





3,549


Memphis, TennesseeDeSoto Distribution Center

2




4,992





2,714


7,706





7,706




2006Total Memphis, Tennessee

2




4,992





2,714


7,706





7,706


New JerseyStults Distribution Center

1




829





120


949





949




2005Port Reading Business Park

1




6,175





410


6,585





6,585




2006Total New Jersey

2




7,004





530


7,534





7,534


Orlando, FloridaOrlando Corporate Center

1




701





4,965


5,666





5,666




2005Total Orlando, Florida

1




701





4,965


5,666





5,666


Portland, OregonClackamas Distribution Center

1




700





2,376


3,076





3,076




2006Total Portland, Oregon

1




700





2,376


3,076





3,076


Reno, NevadaTahoe-Reno Industrial Center

1




2,813





9,048


11,861





11,861




2006Total Reno, Nevada

1




2,813





9,048


11,861





11,861


San Antonio, TexasEisenhauer Distribution Center

3




1,199





340


1,539





1,539




2006Perrin Creek Corporate Center

1




241





1,828


2,069





2,069




2006Total San Antonio, Texas

4




1,440





2,168


3,608





3,608


Central Valley, CaliforniaPatterson Pass Business Center

1




1,024





1,840


2,864





2,864




2006Tracy II Distribution Center

1










415


415





415




2006Total Central Valley, California

2




1,024





2,255


3,279





3,279


Southern CaliforniaRedlands Distribution Center

1




12,126





1,103


13,229





13,229




2006Mill Street Distribution Center

1




580





853


1,433





1,433




2006Total Southern California

2




12,706





1,956


14,662





14,662


Tampa, FloridaSabal Park Distribution Center

1




877





5,304


6,181





6,181




2006Total Tampa, Florida

1




877





5,304


6,181





6,181


  132




---



##### Table of Contents



PROLOGISSCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  (continued)December 31, 2006Initial Cost to



Gross Amounts At Which CarriedProLogis

Costs Capitalized

as of December 31, 2006



Date ofNo. of

Encum-



Building &

Subsequent



Building &



Accumulated

Construction/Description

Bldgs.

brances

Land

Improvements

To Acquisition

Land

Improvements

Total (a,b)

Depreciation (c)

Acquisition(In thousands, as applicable)Washington D.C./BaltimoreGateway Business Center

2




4,136





229


4,365





4,365




2006Chesapeake Distribution Center

1




6,405





285


6,690





6,690




2006Total Washington D.C./Baltimore

3




10,541





514


11,055





11,055


Mexico:GuadalajaraEl Salto Distribution Center

1




3,304





30


3,334





3,334




2006Total Guadalajara, Mexico

1




3,304





30


3,334





3,334


JuarezIndependencia Center

1




1,292





2,342


3,634





3,634




2006Los Aztecas Industrial Center

1




564





1,464


2,028





2,028




2006Ramon Rivera Lara Industrial Center

1




615





1,500


2,115





2,115




2006Total Juarez, Mexico

3




2,471





5,306


7,777





7,777


Mexico CityCedros-Tepotzotlan Distribution
    Center

1




10,325





3,054


13,379





13,379




2006JLP Distribution Center

1




5,018





1,215


6,233





6,233




2006Total Mexico City, Mexico

2




15,343





4,269


19,612





19,612


MonterreyMonterrey Airport

2




3,984





3,479


7,463





7,463




2006Total Monterrey, Mexico

2




3,984





3,479


7,463





7,463


Canada:TorontoMississauga Gateway Center

3




18,038





6,148


24,186





24,186




2006Total Toronto, Canada

3




18,038





6,148


24,186





24,186


Subtotal North American Markets

44




130,943





125,367


256,310





256,310


European Markets:Czech Republic:Uzice Distribution Center

2




5,838





3,960


9,798





9,798




2006Total Czech Republic

2




5,838





3,960


9,798





9,798


France:Clesud Grans Miramas Distribution
    Center

1




1,314





6,768


8,082





8,082




2006Grenoble Distribution Center

1




1,121





4,863


5,984





5,984




2006Total France

2




2,435





11,631


14,066





14,066


Germany:Dradenau Distribution Center

1










4,938


4,938





4,938




2006Hassfurt Distribution Center

1




494





3,120


3,614





3,614




2006Munich Distribution Center

2




15,700





16,646


32,346





32,346




2006Total Germany

4




16,194





24,704


40,898





40,898


  133




---



##### Table of Contents



PROLOGISSCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  (continued)December 31, 2006Initial Cost to



Gross Amounts At Which CarriedProLogis

Costs Capitalized

as of December 31, 2006



Date ofNo. of

Encum-



Building &

Subsequent



Building &



Accumulated

Construction/Description

Bldgs.

brances

Land

Improvements

To Acquisition

Land

Improvements

Total (a,b)

Depreciation (c)

Acquisition(In thousands, as applicable)Hungary:Budapest Park

1




1,078





648


1,726





1,726




2006Budapest Park Phase II

1




1,430





8,518


9,948





9,948




2006Hegyeshalom Distribution Center

1




116





1,948


2,064





2,064




2006Total Hungary

3




2,624





11,114


13,738





13,738


Netherlands:Tilburg Distribution Center

3




11,439





8,015


19,454





19,454




2006Total Netherlands

3




11,439





8,015


19,454





19,454


Poland:Chorzow Distribution Center

4




4,966





11,110


16,076





16,076




2006Gdansk Distribution Center

2




3,000





8,308


11,308





11,308




2005, 2006Janki Distribution Center

1




3,539





218


3,757





3,757




2006Poznan II Distribution Center

2




3,167





2,899


6,066





6,066




2006Warsaw II Distribution Center

2




2,694





1,442


4,136





4,136




2006Warsaw III Distribution Center

1




2,716





7,608


10,324





10,324




2006Wroclaw Distribution Center

4




10,142





14,601


24,743





24,743




2006Wroclaw II Distribution Center

1




1,746





8,700


10,446





10,446




2006Total Poland

17




31,970





54,886


86,856





86,856


Romania:Bucharest Distribution Center

2




3,576





15,843


19,419





19,419




2006Total Romania

2




3,576





15,843


19,419





19,419


Spain:Massalaves Distribution Center

1




2,302





185


2,487





2,487




2006Tarancon Distribution Center

1




3,283





397


3,680





3,680




2006Total Spain

2




5,585





582


6,167





6,167


Sweden:Gothenburg Distribution Center

1




3,377





18,257


21,634





21,634




2006Total Sweden

1




3,377





18,257


21,634





21,634


United Kingdom:Corby Distribution Center

1




1,914





12,536


14,450





14,450




2006Hayes Distribution Center

3




21,714





13,614


35,328





35,328




2006Hemel Hempstead

1




14,928





2,997


17,925





17,925




2004North Kettering Distribution Center

1




16,579





21,356


37,935





37,935




2006Pineham Distribution Center

1




16,105





570


16,675





16,675




2006Stafford Distribution Center

1




9,552





5,304


14,856





14,856




2006Wellingborough Distribution Center

1




17,582





2,671


20,253





20,253




2006Total United Kingdom

9




98,374





59,048


157,422





157,422


Subtotal European Markets

45




181,412





208,040


389,452





389,452


  134




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##### Table of Contents



PROLOGISSCHEDULE III  REAL ESTATE AND ACCUMULATED
    DEPRECIATION  (continued)December 31, 2006Initial Cost to



Gross Amounts At Which CarriedProLogis

Costs Capitalized

as of December 31, 2006




Date ofNo. of

Encum-



Building &

Subsequent



Building &



Accumulated


Construction/Description

Bldgs.

brances

Land

Improvements

To Acquisition

Land

Improvements

Total (a,b)

Depreciation (c)


Acquisition(In thousands, as applicable)Asian Markets:China:Beijing Airport Phase I
    Distribution Center

1




2,349





6,305


8,654





8,654





2005ProLogis Park Chongqing

1




1,294





99


1,393





1,393





2006ProLogis Park Minghang

4




4,732





209


4,941





4,941





2006ProLogis Park TEDA Distribution
    Center

6




3,599





7,503


11,102





11,102





2005, 2006ProLogis Park Yunpu

1




405





3,146


3,551





3,551





2006Sanshan Distribution Center

4




3,445





344


3,789





3,789





2006Total China

17




15,824





17,606


33,430





33,430


Japan:Chiba Distribution Center

1




21,835





1,132


22,967





22,967





2006ProLogis Park Aichi Distribution
    Center

1




24,787





12,878


37,665





37,665





2006ProLogis Park Ichikawa

1




22,819





19


22,838





22,838





2006ProLogis Park Narita III

1




18,391





1,085


19,476





19,476





2006ProLogis Park Osaka II

1




27,063





61,277


88,340





88,340





2006ProLogis Park Sendai

1




8,942





10,403


19,345





19,345





2006ProLogis Park Sugito II

1




25,419





41,187


66,606





66,606





2006Tomisato Distribution Center

1




8,214





199


8,413





8,413





2006Total Japan

8




157,470





128,180


285,650





285,650


Subtotal Asian Markets

25




173,294





145,786


319,080





319,080


Total Properties Under Development
    (o)

114




485,649





479,193


964,842





964,842


GRAND TOTAL





$
2,742,123

$
5,495,069

$
3,456,087

$
3,270,603

$
8,422,676

$
11,693,279


(1,278,693
)  135




---



##### Table of Contents



Schedule III 
    Footnotes
     Total per Schedule III

$
11,693,279Land held for development


1,397,081Land subject to ground leases and
    other


472,412
(e)(g)Other investments


391,227
(h)Total per consolidated balance
    sheet

$
13,953,999
(i)   12/31/2006
      Total accumulated depreciation per
    Schedule III

$
1,278,693Accumulated depreciation on other
    investments


1,513Total per Consolidated Balance
    Sheet

$
1,280,206            136




---



##### Table of Contents



Schedule III 
    Footnotes (continued)
     2006


2005


2004Real estate assets:Balance at beginning of year

$
11,875,130


$
6,333,731


$
5,854,047Acquisitions of operating
    properties, transfers of development completions from CIP and
    improvements to operating properties


3,345,394



5,414,725



1,441,703Basis of operating properties
    disposed of


(1,636,116
)


(1,188,407
)


(1,253,290
)Change in properties under
    development balance


80,497



308,642



171,122Change in land held for
    development balance


352,039



449,041



86,666Change in land subject to ground
    leases and other


(320,256
)balance






538,095



Change in capitalized
    preacquisition costs balance


257,311



19,303



33,483Balance at end of year

$
13,953,999


$
11,875,130


$
6,333,731Accumulated
    Depreciation:Balance at beginning of year

$
1,118,547


$
989,221


$
847,221Depreciation expense


248,484



174,244



149,127Balances retired upon disposition
    of operating properties


(86,825
)


(44,918
)


(7,127
)Balance at end of year

$
1,280,206


$
1,118,547


$
989,221  137




---



##### Table of Contents



SIGNATURES
      By:
    /s/  JEFFREY
    H. SCHWARTZ   Chief Executive Officer and Trustee
      Signature

Title

Date/s/  JEFFREY
    H. SCHWARTZJeffrey
    H. Schwartz

Chief Executive Officer and Trustee

February 27, 2007/s/  WALTER
    C. RAKOWICHWalter
    C. Rakowich

President, Chief Operating Officer
    and Trustee

February 27, 2007/s/  DESSA
    M. BOKIDESDessa
    M. Bokides

Executive Vice President and Chief
    Financial Officer

February 27, 2007/s/  JEFFREY
    S. FINNINJeffrey
    S. Finnin

Senior Vice President and Chief
    Accounting Officer

February 27, 2007/s/  K.
    DANE
    BROOKSHERK.
    Dane Brooksher

Chairman and Trustee

February 27, 2007/s/  STEPHEN
    L. FEINBERGStephen
    L. Feinberg

Trustee

February 27, 2007/s/  GEORGE
    L. FOTIADESGeorge
    L. Fotiades

Trustee

February 27, 2007/s/  CHRISTINE
    N. GARVEYChristine
    N. Garvey

Trustee

February 27, 2007/s/  DONALD
    P. JACOBSDonald
    P. Jacobs

Trustee

February 27, 2007/s/  NELSON
    C. RISINGNelson
    C. Rising

Trustee

February 27, 2007/s/  D.
    MICHAEL
    STEUERTD.
    Michael Steuert

Trustee

February 27, 2007/s/  J.
    ANDRÉ
    TEIXEIRAJ.
    André Teixeira

Trustee

February 27, 2007 138




---



##### Table of Contents



Signature

Title

Date/s/  WILLIAM
    D. ZOLLARSWilliam
    D. Zollars

Trustee

February 27, 2007/s/  ANDREA
    M. ZULBERTIAndrea
    M. Zulberti

Trustee

February 27, 2007  139




---



##### Table of Contents



Rule 12b-32,
  ExhibitNumber



Description1.1



Sales Agreement dates
    February 27, 2007, between ProLogis and Cantor
    Fitzgerald & Co.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



Amended and Restated Bylaws of
    ProLogis dated March 15, 2005 (incorporated by reference to
    Exhibit 3.1 to ProLogis
    Form 8-K
    filed on March 21, 2005).3.4



Articles Supplementary
    Classifying and Designating the Series F Cumulative
    Redeemable Preferred Shares of Beneficial Interest (incorporated
    by reference exhibit 4.2 to ProLogis
    Form 8-K
    dated December 24, 2003).3.5



Articles Supplementary
    Classifying and Designating the Series G Cumulative
    Redeemable Preferred Shares of Beneficial Interest (incorporated
    by reference exhibit 4.3 to ProLogis
    Form 8-K
    dated December 24, 2003).3.6



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).3.7



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).3.8



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).3.9



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



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).4.3



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).4.4



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).4.5



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).4.6



7.875% Note due May 15,
    2009 (incorporated by reference to exhibit 4.4 to
    ProLogis
    Form 8-K
    dated May 9, 1995).4.7



7.95% Note due May 15,
    2008 (incorporated by reference to exhibit 4.2 to
    ProLogis
    Form 10-Q
    for the quarter ended June 30, 1996).4.8



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).4.9



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).4.10



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).4.11



Collateral Trust Indenture, dated
    as of July 22, 1993, between Krauss/Schwartz Properties,
    Ltd. and NationsBank of Virginia, N.A., as Trustee (incorporated
    by reference to exhibit 4.10 to ProLogis
    Form 10-K
    for the year ended December 31, 1994). 140




---



##### Table of Contents



ExhibitNumber



Description4.12



First Supplement Collateral Trust
    Indenture, dated as of October 28, 1994, among ProLogis
    Limited Partnership-IV, Krauss/Schwartz Properties, Ltd., and
    NationsBank of Virginia, N.A., as Trustee (incorporated by
    reference to exhibit 10.6 to ProLogis
    Form 10-Q
    for the quarter ended September 30, 1994).4.13



7.625% Note due July 1,
    2017 (incorporated by reference to exhibit 4 to
    ProLogis
    Form 8-K
    dated July 11, 1997).4.14



Form of 7.10% Promissory Note due
    April 15, 2008 (incorporated by reference to
    exhibit 4.27 to ProLogis
    Form 10-K
    for the year ended December 31, 1999).4.15



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).4.16



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).4.17



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).4.18



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).4.19



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).4.20



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).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



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).10.3



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).10.4



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).10.5*



Share Option Plan for Outside
    Trustees (as Amended and Restated Effective September
    May 18, 2004) (incorporated by reference to
    exhibit 10.1 to ProLogis
    Form 8-K
    dated May 18, 2003).10.6



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).10.7



Amended and Restated Agreement of
    Limited Partnership of ProLogis Limited Partnership-III, dated
    as of October 28, 1994, by and among ProLogis, as general
    partner, and the limited partners set forth therein
    (incorporated by reference to exhibit 10.3 to
    ProLogis
    Form 10-Q
    for the quarter ended September 30, 1994).10.8



Amended and Restated Agreement of
    Limited Partnership of ProLogis Limited Partnership-IV, dated as
    of October 28,1994, by and among ProLogis IV, Inc., as
    general partner, and the limited partners set forth therein
    (incorporated by reference to exhibit 10.4 to
    ProLogis
    Form 10-Q
    for the quarter ended September 30, 1994). 141




---



##### Table of Contents



ExhibitNumber



Description10.9



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).10.10



Agreement of Limited Partnership
    of Meridian Realty Partners, L.P. (incorporated by reference to
    exhibit 99.1 to ProLogis Registration Statement
    No. 333-86081).10.11*



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).10.12*



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).10.13*



Special Equity Agreement between
    ProLogis and Irving F. Lyons III, dated as of March 5,
    2003 (incorporated by reference to exhibit 10.29 to
    ProLogis
    Form 10-K
    for the year ended December 31, 2002).10.14



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).10.15



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).10.16



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).10.17



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).10.18



First Amendment to the Special
    Equity Agreement dated as of March 5, 2003 by and between
    ProLogis and Irving F. Lyons III entered into as of
    September 22, 2005 (incorporated by reference to
    Exhibit 10.2 to ProLogis
    Form 8-K
    filed on September 26, 2005). 142




---



##### Table of Contents



ExhibitNumber



Description10.19



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).10.20



Forms of Executive Protection
    Agreements entered into between ProLogis and Jeffrey H. Schwartz
    and Walter C. Rakowich (incorporated by reference to
    Exhibit 10.1 to ProLogis
    Form 8-K
    filed on March 21, 2005).10.21



Forms of Executive Protection
    Agreements entered into between ProLogis and Robert J. Watson,
    Steven K. Meyer and Edward S. Nekritz (incorporated by reference
    to Exhibit 10.2 to ProLogis
    Form 8-K
    filed on March 21, 2005).10.22



Forms of Executive Protection
    Agreements entered into between ProLogis and M. Gordon
    Keiser, Jr., Paul C. Congelton, Masato Miki, Miki Yamada
    and Ming Z. Mei (incorporated by reference to Exhibit 10.3
    to ProLogis
    Form 8-K
    filed on March 21, 2005).10.23



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).10.24



ProLogis 2006 Long-Term Incentive
    Plan (incorporated by reference to exhibit 10.2 to
    ProLogis
    Form 8-K
    filed on June 2, 2006)10.25



Amended and Restated Employment
    Agreement, dated May 26, 2006, entered into between
    ProLogis and Ted R. Antenucci (incorporated by reference to
    exhibit 10.1 to ProLogis
    Form 8-K
    filed on June 2, 2006).10.26



Executive Protection Agreement,
    dated May 31, 2006, entered into between ProLogis and Ted
    R. Antenucci (incorporated by reference to exhibit 10.3 to
    ProLogis
    Form 8-K
    filed on June 2, 2006).10.27



Executive Protection Agreement,
    dated December 21, 2006, entered into between ProLogis and
    Dessa M. Bokides (incorporated by reference to exhibit 10.1
    to ProLogis
    Form 8-K
    filed on December 22, 2006).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. 143




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##### Table of Contents



ExhibitNumber



Description32.1



Certification of Chief Executive
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.32.2



Certification of 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, 2001 to 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.    *
    
    Management Contract or Compensatory Plan or Arrangement 144