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European Customer Service
Schiphol Boulevard 115
F Tower, Floor 6
Schiphol, Noord Holland
1118 BG Schiphol Airport
The Netherlands
+31 20 655 66 66
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2007 SUMMARY ANNUAL REPORT
Europe
18 Boulevard Royal
L-2449, Luxembourg
+352 26 20 57 40
PROLOGIS
World Headquarters
4545 Airport Way
Denver, CO 80239
www.prologis.com
303.567.5000
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Japan
Shiodome City Center
1-5-2 Higashi-Shinbashi
Minato-ku
Tokyo, Japan 105-7116
+81 3 6215 8480
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China
2708 Azia Center
1233 Lujiazui Ring Road
Pudong Shanghai, 200120
P.R. China
+86 21 6105 3999
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2007 Summary Annual Report
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global reach
S H A R E H O L D E R I N F O R M AT I O N
World Headquarters
Our unmatched global platform – more than 2,750 properties in 20 countries –
is complemented by a global base of strong customer relationships that
represents both stability and opportunity.
Cumulative Total Return
ProLogis
Based upon an initial investment of $100 on December 31, 2002,
4545 Airport Way
with dividends reinvested.
Denver, CO 80239 USA
303.567.5000
800.566.2706
$400
$350
$300
$250
$200
Annual Meeting
The Annual Meeting of Shareholders of ProLogis will be
held at the company’s world headquarters, identified above,
at 10:30 am Mountain Time on Friday, May 9, 2008.
$150
$100
$50
$0
02
03
ProLogis
04
05
06
07
S&P © 500 Index
NAREIT Equity REIT Index
Shareholders
As of February 22, 2008, ProLogis had in excess of 71,500
Dec 02
Dec 03
Dec 04
Dec 05
Dec 06
Dec 07
$100
$135
$190
$212
$284
$305
record and beneficial common shareholders.
NORTH AMERICA
ProLogis
Independent Registered Public Accounting Firm
EUROPE
KPMG LLP
ASIA
Denver, Colorado
NAREIT Equity
REIT Index
$100
$137
$180
$202
$273
$230
S&P © 500 Index
$100
$129
$143
$150
$173
$183
Transfer Agent
Quarterly Stock Price Ranges and Distributions
Computershare
New York Stock Exchange: PLD
P.O. Box 43010
Providence, RI 02940-3010
800.956.3378
781.575.3120 outside the United States
BELGIUM
UNITED
STATES
CZECH
REPUBLIC
UNITED
KINGDOM
2007 Stock Price
High
Quarter
First
Low
2006 Stock Price
Distribution
High
Low
Distribution
$72.08 $58.00
$0.46
$56.31 $46.29
$0.40
Shareholder account information may also be accessed
Second $67.99 $55.76
$0.46
$53.85 $46.66
$0.40
from its website at www.computershare.com.
Third
$66.86 $51.65
$0.46
$58.86 $52.05
$0.40
Fourth
$73.34 $59.37
$0.46
$65.81 $56.07
$0.40
Information Request
ProLogis’ audited consolidated financial statements are available
SWEDEN
upon request. The 2007 Annual Report on Form 10-K, as filed
FRANCE
CHINA
SPAIN
SOUTH
KOREA
with the Securities and Exchange Commission, and additional
This notice is provided to inform the shareholders of ProLogis
company materials can be obtained by calling the Investor Relations
of the capital gain portion of distributions received during 2007
information line at 800.820.0181 or by visiting the company’s
pursuant to Internal Revenue Code §857(b)(3)(C). This notice is
website at http://ir.prologis.com and clicking on the appropriate
being provided in addition to a 2007 Form 1099-DIV that has
sections of the site.
SLOVAKIA
Notice of Capital Gain Distribution
been mailed to all shareholders. The following table displays the
taxability of company distributions for the year ended December 31,
JAPAN
ROMANIA
GERMANY
HUNGARY
MEXICO
CANADA
Recently announced expansion
into United Arab Emirates
Design: Coates and Coates. Printing: Cenveo, Anderson Lithograph
ITALY
2007, and designates the portion of the distributions that are
Melissa Marsden
capital gain distributions.
SVP, Investor Relations and
POLAND
THE NETHERLANDS
Analyst Contact:
The tax treatment to shareholders of these distributions could
Corporate Communications
vary depending on the shareholder’s particular situation (i.e.,
303.567.5622
foreign, tax-exempt, etc.). Shareholders should consult their own
[email protected]
tax advisors regarding the treatment of these distributions.
ProLogis Dividend Reinvestment and Share Purchase Plan
offers the opportunity to purchase common shares directly or
Long-term
Unrecaptured
Section
1250 Gains
Taxable
Ordinary
Distributions
Long-term
Capital Gains
Common
48.13%
24.24%
10.83% 16.80%
Series C Preferred
57.85%
29.14%
13.01%
0%
Series F Preferred
57.86%
29.13%
13.01%
0%
Series G Preferred
57.86%
29.13%
13.01%
0%
The ProLogis Dividend Reinvestment and Share Purchase Plan
Class of Stock
Return of
Capital
through the reinvestment of dividends, at a 0% to 2% discount
from market price, as determined by the company. Copies of the
plan prospectus and enrollment forms are available from our
transfer agent, Computershare, at www.computershare.com
or by calling 800.956.3378.
This report was printed with soy-based inks on recycled paper that contains
30% post consumer waste. The paper was made using renewable wind power,
is Green Seal certified and acid free. Environmental savings achieved using this
paper: 114.09 trees preserved for the future, 329.46 lbs of waterborne waste
not created, 48,464 gallons of wastewater flow saved, 5,362 lbs solid waste not
generated, 10,558 lbs net greenhouse gases prevented and 80,816,640 BTUs
energy not consumed.
This 2007 Summary Annual Report, together with our audited financial statements
contained in Item 15 of our accompanying Form 10-K and Items 1, 6, 7, 7A, 8
and 9 of such Form 10-K, constitute our 2007 annual report to security holders.
local depth
Our more than 1,500 associates around the globe support ProLogis’ growth
through specialized expertise and deep understanding of local market
conditions as well as global distribution trends.
Erika Abe
Esther Acuna
Melody Adams
Richard Aguilera
Martha Aguirre
Mari Akers
Gwen Aldridge
Gyvonne Alexander
Scott Alexander
Gregory Allen
Maureen Allen
Steven Allen
Brenda Almaguer
Hector Alfredo Almaguer
Maria Alvarado
Shannon Ambrosius
Caroline Amphlett
Kathleen Amundsen
Gary Anderson
Samantha Anderson
Bert Angel
Juan Raul Angulo
Ted Antenucci
Joselito Antonio
Kyotaro Aoki
Aurora Apodaca
Sakie Arai
Marcos Arana
Anette Arensmann
Alexander Arentshorst
Fernando Alfonso Arjona
Cesar Armendariz Jr.
Ryan Armento
Greg Arnold
Adrian Arreola
Demetrio Arroyo
Luthfi Arsil
Jesus Arvizu
Louise Ashman
Azam Aslamy
John Aviles
Juan Ayala
Ryan Ayres
Gregory Azar Jr.
Marta Baca
Cynthia Badillo
Lianne Baessler
Hongtao Bai
Lee Balbach
Reka Balogh
Pawel Banach
Andre Banschus
Charles Barbata
Hoyt Barber
Michael Barenberg
Troy Bargman
Jenifer Barnes
Michael Barnicke
Wayne Barrett
Aidan Barry
Melissa Barry Bierfreund
Chris Bartunek
Craig Bass
Josiane Baubant
Greg Bauer
Sonja Baumberger
Susan Beagle
Marc Becker
Ruediger Beckmann
Kate Bedson
Timothy Beedle
Petronella Begany
Stefanie Bell
Anouar Ben Saada
Zuzana Benesova
Regilio Benschop
Andrea Benvenuti
Hocine Benzaid
Antoine Beraldi
Lou Berchicci
Donna Bergene
Olaf Berger
Matt Bernstein
Christopher Berry
Diane Berry
Jean Charles Berto
Oliver Bertram
John Bex
Jingbo Bi
Joanna Bialach
Alice Bilkova
Ellen Bird
Christian Bischoff
Kristen Bishop
Bob Bisnette
Christopher Black
Katie Black
Robin Black
Nicole Blake
Neus Blanco Garcia
Amy Bleibel
Erika Bloom
Agnieszka Bochniak
Catalin Bodeanu
Ewa Adrianna BodioZiolkowska
Mary Bolach
Matthew Bomar
Joy Bombardo
Deb Bonebrake
Claire Bonino
Victorio Boo
Brooke Borgen
Alexandra Borgogni
Borgogni Lopes
Rondi Boroos
Kim Boucher
Zakia Boumedienne
Elizabeth Bouton
Abdel Boutrik
Richard Boyd
David Boyer
Greg Bradley
Kathleen Brandenburg
Herman Brathwaite
Ildiko Braun
Nadine Bremerich
Leona Brenchley
Janice Brethower
James Brewer
Andrew Briley
Amy Brocato
James Brooks
Karen Brooks
Janis Broome
Dennis Brosius
Diane Brostuen
William Broughton
Eric Brown
Jessica Brown
Nicholas Brown
Michael Broxterman
Michaela Brunner
Stephen Bryan
Ornetta Buchanan
Jonathan Buck
Megan Buffington
Amanda Buie
Julie Bunce
Oana Burducea
Petra Buresova
Margaret Burgess
James Burrell
Vernon Burrows
Steven Buster
Matthew Butterworth
Edward Bynum
Matthew Byrom
Anissa Cabello
Claudia Cade
Feng Cai
Jerry Cai
Alicia Camacho
David Camarena
Michelle Cameron
Carlos Gabriel Valerio
Cano
Bertha Cantu
Federico Cantu Gonzalez
Brian Cardoza
Gustavo Cardozo
Andrew Carney
Cheryl Carpenter
Jayne Carpenter
Keith Carpenter
Lisa Carpenter
Theresa Carrigan
Michael Carrouth
Karen Carter
Peter Carter-Wall
Richard Casados
Peter Cassells
August Castille
Jorge Castro
Rose Catalano
James Cavanagh
Maria Celaya
Deborah Chamberlain
Julie Chan
Alex Chang
Anna Chapman
Gail Chapman
Michael Charles
Tyson Chave
James Cheer
Christianne Chen
David Chen
Fanny Chen
Fred Chen
Fred Chen
Joe Chen
Lynn Chen
Megan Chen
Polly Chen
Rebecca Chen
Rick Chen
Yongqiang Chen
Zoey Chen
Zoey Chen
Zuxiang Chen
Sabrina Chevy
Akiko Chiba
Clay Chilton
Anna Chmeilinska
Steve Cho
Hyungkyu Choi
Marta Chojnacka
Anna Chomicz
Stephen Chorey
Yoshiyuki Chosa
Florian Chouin
Susan Chu
Alex Chui
Cory Chung
Lisa Clark
Carolina Clemente
Linda Clinton
Christie Cobbett
James Cody
Leticia Cognet Ruivo
Daniel Cohen
Marie Colby
Linda Cole
Patricia Cole
Dan Colletto
Creighton Collins
Kylee Collins
Graciela Compean
Paul Congleton
Rick Conklin
Joseph Conroy
Kelley Cook
Dana Cooper
Jennifer Cooper
Linda Correll
Andrea Cortinovis
Wendy Cotterill
Maricela Covard
Danial Cox
Simon Cox
Carmen Crawford
Christophe Creuze
Lori Cronin
Kay Crouch
Jessica Crow
Benjamin Crowder
Lisa Crume
Danny Crunkleton
Jose Cuevas
Jenny Cupp
Alan Curtis
Cindy Curtis
Anna Czajkowska
Beata Czarmecak
Michal Czarnecki
Jaroslaw Czechowicz
Maja Dabrowska
Fei Dai
Marek Daiemianczyk
Stephan Dalbeck
Maurice Dalton
Micha Daniel
Neal Davidson
Joanne Davies
Donna Davis
Kenneth Davis
Don Dawson
Elliott Day
Leopold de Bie
Tracie De Feo
Michael de Jong-Douglas
François de La
Rochefouchauld
Therese de Marsilio Cores
Bianca de Ruiter
Anita Deal
Maciej Dedek
Martine
Dedessuslesmoutier
Cinthia DeHoyos
Mike Del Santo
Lindsay Delecki
Steve Deleplancque
Sandy Denn
Kelly Dergham
Deanne Desjardin
Derek DeVre
Juan Andres Diaz
Jesus Diaz De Leon
Kathleen Dice
Debra Dickey
Neil Dickinson
Kathy Dickson
Jurgen Diehl
Daniel Ding
Raymond Ding
Kara Dizmang
Anita Dobney
Alisha Dokshukin
Christine Dominguez
Mike Dominik
Judy Dong
Venkateshwar Donthinani
Andrew Doughtie
Kathy Dowell
Dennis Dozon
Milena Draca
Ioan Dracopol
Carmen Drollinger
Keith Drury
Yu Du
Yu Du
Harrison Duan
Harrison Duan
Megan DuBois
Kelly Dubose
Cheryl Ducharme
Vlad Dumitrescu
Richard Dunbar
John Duncan
Travis Durfee
Alena Dvorakova
Volker Eberhardt
Matthew Ebner
Cheryl Echols
Jeroen Eikenhorst
Scott Elrod
Mike Elsey
Janis Emanuel
Michael Englhard
Brian Erlanson
Nadine Ernst
Jerry Ervin
Nicole Esparza
Gisela Estrada
Nancy Estrada
Loren Fairchild
Petra Faltysova
Michelle Fan
Rhonda Fancher
George Fang
Gianluca Fantoni
Patrick Feeney
Jennifer Feldkamp
Rebecca Fender
Cunqiang Feng
Roxana Ferguson
John Ferguston Taylor
Ana Fernandez
Gloria Fernandez
Jorje Fernandez
Paulo Ferreira
Kristen Ferris
Stephen Ferris
Mark Fessler
Karla Fetter
Sharon Fields
Andrew Finke
Jeff Finnin
Patrizia Fiorentini
Marek Fischer
Scott Fischer
Marcus Flatau
Felip Flores
Lori Flores
Janice Flynn
Jeffrey Folkmann
Catherine Folwell
David Fontan
Julieta Forcade
John Foster
Brianna Fredericks
Silvia Frey
Cheryl Fruth
Christine Fu
Miyako Fukuchi
Kurt Fuller
Dariusz Gajewski
Stella Gambin
Zhiwei Gao
Francisco Garcia
Francisco (Paco) Garcia
Pedro Garcia
Guillermo Garcia-Ballerini
Jaime Garcia-Coudurier
Marta Gaska
Anna Gatti
Isabelle Gauthier
Sandee Gavin-Wicks
Helen Ge
Tiffany Ge
Ryan George
Julien Geyer
Joseph Ghazal
Rijk Giebel
Raymond Giffen
Jeremy Giles
Laura Gill
Patricia Gill
William Gilliam
Laurie Gilman
Joshua Gilmore
Jonathan Gimblett
Marie Christine Girardin
Rosie Gisi
Amy Glasscock
Kitty Glenn
George Glennie
Katarzyna Glowniak
Brenda Goforth
Przemyslaw Golanski
Amy Gomez
Eric Gomez
Jeffrey Gomm
Fabrice Gonton
Marianne Gonzales
Ricardo Gonzalez
Sandra Gorel
Karolina Gorgiel
Alan Goris
Arezki Goumeziane
Barbara Graffunder
Liliana Grau Borras
Nicole Gravius
David Grawemeyer
Maciej Gredziak
Michael Green
Suzanne Green
Gareth Gregory
Andrew Griffiths
Joseph Grimes
Denise Grode
Amanda Grogan
Gerald Grzybowski
Charlotte Gu
Chuan Gu
Guy Gu
Shaoyi Gu
Simple Gu
Qinsen Guan
Bruno Guandalini
Jessica Guerra
Holly Guinan
Nicolas Guitton
Jeanine Gulczynski
Laura Gunter
Venugopal Gupta
Michael Habermann
Melinda Hack
Rudolf Haemel
Yehudit Hager
Ranald Hahn
Christine Hall
Kenneth Hall
Jennifer Halpern
Linda Halsema
Tsutomu Hamamoto
Akihiro Hamano
Jordan Hamidi
Richard Hamilton
Royce Hamilton
Thomas Hamm
Christophe Hamon
Hamon
Heidi Han
Wenlan Han
Wenlan Han
Susan Hankinson
Billie Hanks
Cecelia Hannah
John Hanson
Tiffany Hanson
Tina Hanson
Ryoko Harada
Vera Harder
Charles Hargis
Larry Harmsen
Lisa Harris
Anni HartendorpSavolainen
Susan Harvey
George Hasenecz
Tamaki Hatsukaiwa
Stanislav Havrda
Takeshi Hayakawa
Fumiaki Hayano
Toshihiro Hayashi
Lori Haynes
Liming He
Kimberly Hebauf
Suzannah Heffernan
Eric Hein
Amy Henderson
Roland Hennebach
Thomas Henrikson
Corina Heredia
Chantal Hermand
Leopold Hermans
Irene Hernandez
Juan Hernandez
Alexander Heubes
Shannon Hickman
David Hicks
Mary Hicks
Michihiro Higashi
Jennifer Higgins
David Hill
Douglas Hill
Jeffrey Hill
Lynette Hill
Rhonda Hills
Kurt Hineline
Amanda Hines
Ayako Hirano
Lee Hix
An Hoang
Janea Hoey
Deborah Holleman
Kristine Holman
Wade Holt
Elizabeth Hooton
Andrea Hopper
David Horton
Eva Horvath
Takumi Hosoya
Jason Hou
Andrew Houghton
Frederick Howard
Dale Hoy
Janet Hoy
Michele Hromish
David Huajardo
Tony Huang
Wilson Huang
Kelly Hubble
Patrick Hudgens
Paul Hughes
Britney Hughn
Cara Hulan
Leslie Ann Hulse
Carol Hunter
Mary Hunter
Pamela Husted
Stacy Hutchcraft
Sally Hutchinson
Robert Huthnance
Raymond Iallonardo
Chikako Ibaraki
Koji Ide
Jim Ignacek
Noriyoshi Ikeuchi
Thomas Imperiale
Shigeru Inada
Katsuya Inami
Victoria Inglis
Debra Intorre
Stewart Irvine
Hideko Ishiguro
Kenji Ishijima
James Jachetta
Evelyn Lizzeth Jacinto
Chacon
Monte James
Sinclair Jared
Malika Jarif
Magdalena Jarominska
William Jarrett
Kimbrae Jasper
Samuel Jeffrey
Donna Jeffries
Simon Jenkins
Manfred Jenschke
Izabela Jesionek
Sunil Jhamb
Mindy Jia
Frank Jiang
Li Jiang
Weidong Jiang
Judith Jimenez
Linda Jin
Sherry Jin
So Yeon Jin
Jennifer Jisa
Kim Johnson
Neely Johnson
Paul Johnson
Rhonda Johnson
Amanda Jones
Jaime Jones
Patricia Jones
Shari Jones
Sharon Jones
Krzysztof Jopek
Phillip Joseph
Luis Jurado
Mark Jurgensen
Martin Kaatman
Yoshitaka Kagami
Brittany Kaire
Yuriko Kakizaki
Jagadeeshwar Kalagiri
Sachie Kamata
Angela Kane
Peter Kane
Kelly Kane-Carlson
Mark Kang
Sarah Kang
Katarzyna Kapler
Eliza Karwowska
Satoko Katakura
Elizabeth Kauchak
Tomomi Kawahara
Masaki Kawai
Akiko Kawakubo
Chie Kawase
Florence Ke
Oksana Keas
Ryan Keathley
Gordon Keiser
Randall Kelch
Blake Kelley
Donald Kelley
David Kellogg
David Kelly
Laszlo Kemenes
Junko Kemi
Agnieszka KempistaGolubowicz
Theresa Kenna
William Kennedy
Brandon Kent
Ildiko Keri
Doug Kiersey
Peggy Kiesel
Molly Killoran
Changhyun Kim
Euihoe Kim
Heunsoo Kim
Sungmin Kim
Youngtak Kim
Hirofumi Kimura
Kaori Kimura
Niels Kinderdijk
Christy Kinney
Mayumi Kino
Noriko Kitahara
Marianne Klaver
Amy Klein
Benjamin Klesinger
Anna Klimenko
Amy Knapp
Jennifer Knepp
Joshua Knight
Paul Knight
Bruce Knopf
Mary Knudson
Mayuko Kobayashi
Noriko Koda
Jeremy Koepf
Kenichi Koga
Atsuko Koide
Andrew Kolb
Anita Kolozsvari
Sanae Komiya
Robert Koncz
Toru Kondo
Lingyun Kong
Kristi Koning
Peter Koning
Justyna Kononowicz
Rita Konterski
Leonie Kooij
Wojciech Kosior
Celeste Kotick
Ulrike Kottolinsky
Krisztian Kovacs
Tunde Kovacs
Raphael Kowalczykowski
Takuro Koyama
Vaclav Krasanovsky
Agata Krasowska
Bob Kritt
John Kruse
Karolina Kucerova
Kimberley Kuehn
David Kuhles
Hartmut Kuhnapfel
Hidetoshi Kumada
Masayuki Kusakabe
Jaroslaw Kuzma
Maria La Torre
Eric Labaune
Lynn Ladewig
Ben Lai
Alexis Lam
Laurent Lamatiere
Scott Lamson
Krista Landerholm
Michael Landrum
Luke Lands
Zebulon Lang
Maire Imelda Langan
Israel Lango
Leslie Lanné
Anne LaPlace
Corinne Larre
Keith Larsen
Amy Latham
Sally Lau
Roberta Laudato
Dawn Lauer
Corinne Lavorel
Richard Lawrence
Jean Louis Lazuech
Thien-Kim Le
Belinda Lee
Caroline Lee
Charles Lee
Chi-Lien Lee
Diane Lee
Jana Lee
Ji Kang Lee
Joe Lee
Robbin Lee
Dylan Lee Meeuw Kjoe
Femma Leerink
Karen Leeuwen
Wim Leeuwen
Amina Legendre
Mia Leigh
Brenda Leighton
Regina Lemert
Dahlia Lemesh
Jean Michel Lemius
Leah Lemke
Kimberly Leroux
Janelie Letzig
Loren LeVasseur
Marc Levin
Mark Levy
Lidia Lewicka
Cathy Lewis
Chris Lewis
Mark Lewis
Cindy Li
Eric Li
Iris Li
Jianzhou Li
Junhua Li
Qing Li
Eric Liang
Rachel Liang
Samantha Liang
Baoyu Liao
Yanfen Liao
Stephen Liming
Miguel Limongi
Qing Lin
Rebecca LindhorstBallast
Craig Lindsay
Eileen Lindsay
Cherry Lissemore
Jason Liu
Jian Liu
Jiangang Liu
Joanna Liu
Xuedong Liu
Yingyu Liu
Bartosz lljin
April Lockley
Gregory Loesel
Adam Loew
Marianne Loh
Linda Lombardo
Melissa Lomeli
Richard Long
Zhanghua Long
Paul Loosmann
Stanislav Lopata
Valerie Lopes
Risa Paula Lopes
Monteiro
Azusena Lopez
Juan Lopez
Leopoldo Lopez
Jean Lopez Kalomas
Raquel Lopez Nogues
Franck Lot
Sherwin Louie
Kyle Low
Lawrence Lowder
Jordan Lu
Kity Lu
Louie Lu
Michelle Lu
Lauren Luan
Emilie Lucante
Jeffrey Lucas
Pascal Luciani
Al Luo
Mountain Luo
Yongfang Luo
Christine Lutter
Linda Ly
George Ma
Benazzouz Mabrouki
Diane Macaluso
Sarah MacCallum
Cynthia Machado
Patrycja Macuga
Jeanne Madden
Maciej Madejak
John Madison
Tomasz Madry
Emily Maehl
Levia Magalonga
Céline Maistrello
John Major
Celso Maldonado
Lisa Marie Maldonado
Abhijit Malkani
Terri Malone
Pat Maloney
Sandra Manley
Alvin Mann
Viki Mann
Darin Manning
Jahavi Mantri
Corinne Marie
William Mark
Tom Marko
Jacinto Marquez
Laveda Marr
Melissa Marsden
Brian Marsh
Matthew Marshall
Tina Marshall
Tom Marshall
Liliane Martin
Meredith Martin
Sheila Martin
Tracy Martin
Joann Martinez
Sarah Martinez
Santina Martino
Catherine Mary
Marika Mascolo
Patricia Massolini
Alexandre Masson
Sylvie Masterson
Krisztina Mate
Thomas Mathews
Jean Christophe Mathieu
Ross Matthews
Derek Maunsell
Janice Maxwell
Danita Mayweather
Leszek Andrzey Mazurek
Mathew McAfee
Robert McCann
Shawna McCarthy
Mason McCartney
Mark McClelland
Michael McClure
Gene McCluskey
Shannon McCorison
Kimberly McDowell
Andrew McGinley
Teri McGinn
Jennifer McHugh
Shawn McIntyre
Margaret McKee
Lonnie McKillip
Tony McLeese
Erin McMahon
Heather McNully
Jennifer McRoy
Philip Medina
Gert Jan Meerkerk
Ming Mei
Jesus Melendez
Henda Melliti
Lorena Mendez
Crispin Mendoza
Tieme Mennink
Reed Meyer
Steven Meyer
Margaret Meyers
Jesus Meza
Annie Mi
Tomas Micek
Samuel Michael
Higashi Michihiro
Masaki Miida
Karla Mika
Hisatake Miki
Masato Miki
Patricia Miksza
Jeff Miller
Steve Miller
Jacob Milligan
David Mills
Minoru Minamino
Clara Minelli
Janusz Miskiewicz
Sudip Mitra
Tatsuya Miyamoto
Suguru Miyauchi
David Mizell
Mary Moakes
Helen Mohlman
Laszlo Molnar
Florencia Tamara Mon
Eduardo Enrique Montes
Bill Moody
Kimberly Mooney
Darrin Moore
Gregory Moore
Peter Moran
Michelle Morgan
Rebecca Morgison
Daisuke Morita
John Morland
Jinan Moussalli
Oliwia Mrowiec
Linda Muenich
Naoya Mukozaka
Scott Mulkay
Simone Müller
Lakshmi Muniswamy
Cheryl Muniz
Yvette Munoz
Anna Murch
Carol Murphy
Diane Murphy
Jason Murphy
Julie Murray
Denise Musil
Christopher Myer
Vellanee Myers
Kiyoshi Nagasawa
Victoria Nagy
Hiroaki Nakagawa
Akio Nakamura
Kanako Nakamura
Hirofumi Nakano
Ayako Nakaso
Thomas Nam
Vuthy Nang
Sherry Napier
Jim Nass
Christel Nasso
Glenda Neans-Speck
Robert Needham
Jason Neff
Jeffrey Neitenbach
Ed Nekritz
Ann Nelson
Chris Nelson
Simon Nelson
James Neswold
Matthew Neumann
Enrique Nevarez
Huong Nguyen
Lisa Nguyen
Aaron Ni
Brad Niedermaier
Peter Nielsen
Helena Nikitina
Akiko Ninomiya
Massimo Nistico
Matthew Noonan
Eric Norguet
Zora Novakova
Zbigniew Nowak
Philip Nugent
Ko Nuijten
Miguel Nunez
John Nydegger
Susan Oberstein
Colleen O’Brien
Vincent O’Connell
Samantha Odneal
Yasutoshi Ogiwara
Osamu Ohashi
Nancy Ohm
Yukio Okubo
Alfonso Olague
Adan Olguin
Cristian Oller Angusto
Michelle Olson
Eric Omohundro
Olga Onwijn
Meagan Oppenheim
Tania Oryshchyn
Cheryl Ossmann
Dominika Ostrowska
Jeff Otoupalik
Yusuke Otsuka
Jack Ottinger
Angel Ovejas Rosa
Philip Owen
Tracey Owen
Erkan Ozturk
Zaira Padilla
Brandon Page
Lori Palazzolo
Attila Palicz
Denisa Palkova
Candy Pan
Steven Pan
Wayne Pan
Sharon Pangan
Soyoung Park
Peter Parkinson
Marimuthu Paskaran
Amy Pastor
April Patten
Carl Paulson
Christopher Paulson
Debra Payne
Thomas Payne
Gustavo Pedrayes
Christy Pedro
Kevin Pelech
Jakub Pelikan
Michael Pelletier
Sander Pen
Wei Peng
Roy Perdue
Marin Pere Morcillo
Just Pereboom
Ana Perez
Michael Perez
Rosalyn Perrone
Doris Perry
Bart Persyn
Mike Peters
Ricky Peters
Tim Peters
Sascha Petersmann
Bendeck Peterson
Janette Peterson
Marcus Petrella
Sarah Philpott
Jenifer Picard
John Picchiotti
Kenny Pierce
Joni Pike-Shank
Maria Pina
Andrea Pivok
Robert Plimpton
Aleksandra Plomien
Dolacka
Agnieszka Podsiadla
Laura Porter
Wayne Porter
Adam Post
Alison Powell
Melody Powell
Patrycja Pozniewska
Hemant Prabhu
Kimberly Price
Jan Prokop
Dariusz Krzysztof
Proniewicz
Mitchell Pruitt
Heather Purnell
Alan Puskas
Daniela Putineanu
Adrianne Puza
Zak Qi
Jun Qian
Lily Qu
Liliana Quinones
Samara Quinonez
Imran Qureshi
Barna Raduly
Gilberto Rafael
Walt Rakowich
Laura Eugenia Ramirez
Lioudmila Rastoptchina
Jan Ravensberg
Laurie Razzari
Graham Reece
Michael Reed
Tanya Reesman
Lindsay Rein
Betty Remstedt
Colette Renteria
Wendy Rentschler
Christopher Repass
Jose Luis Requena
Andre Reyes
Ruby Reyes
Jaime Reyes-Casillas
Clifford Reynolds
Scott Riccio
Rynagh Richards
Deborah Richardson
Heiko Richter
David Riefe
Cody Riles
Will Riley
Charla Rios
Pieter Ris
Angela Rishel
Toushann Rittenhouse
John Rizzo
Nancy Roach
Marika Roath-Hodgetts
Megan Robert
Lori Robertson
Leigh-Ann Rocha
Jim Rodrigues
Armida Rodriguez
Diane Rodriguez
Randy Roelling
Eduardo Rojo
Eduardo Roque
Aaron Rosdal
Jason Rose
Scott Rose
Janet Rosete Navarro
Christine Roskamp
David Ross
Rick Roth
Nigel Rowe
Pauline Roybal
Susana Ruacho
Marsha Rucker
Joseph Rudd III
Peter Ruijgrok
Maria Ruiz
Sandra Carmina Ruiz
Julie Rumbaut
Thomas Rushing
Mike Russell
Samuel Rymer
Katerina Rysnerova
Markus Saatkamp
Marzena Sadowska
Leonard Sahling
Fatimaby Saidyassine
Naoko Saito
Masahiro Sakashita
Joji Sakuma
Michael Samuel
Mario Sander
Laura Sandoval
John Sanford
Evelia Santana
Roopa Santhanam
Shannon Santos
Jean Luc Saporito
Alan Sarjant
Rie Sasabe
Tamotsu Sasaki
Hideyuki Sato
Seiji Sato
David Saunders
Joan Savage
Matthew Scellato
Paula Schader
Frank Schaffarczyk
Barbara Schenk
Noeleen Schmidt
Patricia Schmidt
Patrice Schnauber
Randall Schnetz
Dirk Schomacher
Terry Schons
Stephen Schorr
Spencer Schrack
Cal Schreiner
Judy Schultz
Frederick Schumacher
Jennifer Schumacher
Karen Schwall-Meyer
Jeff Schwartz
Tanika Scott
Julian Scurci
Keat Tatt See
Sarah Seeche
Keiko Seki
Lacy M. Sell
Joachim Sellau
Rachel Sero
Rodney Seyfried
Ishmahd Shabazz
Jason Shaffer
Sophie Shahrokh
Corinne Shalvoy
Cindy Shan
Sam Shan
Ping Shaog
Timothy Sharman
Louise Sharp
Michael Shaughness
Pamela Shaw
Mo Sheahan
Elizabeth Shelleda
Emily Shen
Jeffrey Shen
Sharon Shen
Scott Shepard
Patrick Shepardson
Mark Shepherd
Thomas Sheraden
Marci Sherburn
Armstrong Shi
Masako Shimazato
Noritaka Shioda
Osamu Shionozaki
Lynn Shipp
Yuko Shiraishi
Tricia Shirley
Seigo Shizume
Pieter Siers
Harry Sievers
Jeff Sillik
Margaret Silva
Milagros Silva
Amanda Simmons
Steven Simmons
Sonja Simons
Jared Sinclair
Gujral Singh
Matthew Reed Singleton
Katarina Skovjsova
Donald Skoyles
Elzbieta Skrodzka
Autumn Skrzyniarz
Artur Smigiera
Barry Smith
Chad Smith
Constance Smith
Donald Smith
Jessica Smith
LaChelle Smith
Patrick Smith
Phillip Smith
Reginald Smith
Robert Smith
Jeffrey So
Yoshimasa Soeda
Silvano Solis
Scott Song
Zhibiao Song
Jon Sorg
Simon Spencer
Ann Sperling
Martina Stachova
Andrea Staffan
Brenda Standke
Megan Stanley
William Staymates
Justin Steldt
Katarzyna Stempien
Mark Stephenson
Cristopher Stern
Alton Stevenson
Luke Stewart
Glenn Stock
Andrew Stoddard
Femke Stoffelen
Leslie Stone
Roxanne Stone
George Stoneroad
David Storer
Colleen Storm
Richard Strader
Leigh Strauss
Scott Strine
Scott Studzinski
Kimitaka Sugimoto
Sabina Suleac
Bill Sullivan
Chuck Sullivan
James Summerfield
Donna Sun
Ken Sun
Gilles Suzanne
Kevin Sweeney
Maciej Szamalek
Lukasz Szczesniak
Katalin Szeitli
Elena Szeremeta
Aneta Szewczak
Stanislawa Szwed
Emilia Szyszka
Rumiko Tada
Hirokuni Tadokoro
Ken Takagi
Sumie Takagi
Yoko Takahashi
Masumi Takayama
Sara Talaver Serrano
Hynek Talpa
Edvin Talundzic
Shigetoshi Tamura
Vincent Tan
Hitoshi Tanaka
Jiangdong Tang
Shaowei Tang
Aki Tanizumi
Rong Tao
Tony Tao
Jesus Tarin
Brenda Tarraf
Neville Teagarden
Arturo Tejeida
Sacha Telgenhof Oude
Koehorst
Ayako Terui
Marta Tesiorowska
Giridharan
Tharmananthar
Ed Theisen
Darlene Thomas
Judith Thomas
Leigh Thomas
Tiffany Thompson
Christine Thomson
Steven Timmons
Ting Yun Ting
Douglas Todd
Naoshi Tojo
Kevin Tolman
Wojciech Tomala
Drew Torbin
Takero Torigoe
Peter Torok
Anna Torres
Barbra Torres
Clara Torres
Diana Elizabeth Torres
Perez
Liliana Tosky-Nevarez
Maria de Jesus Tovar
Toni Tovar
Steve Treadwell
Juan Trejo
Nathalie Triolet
Radoslaw Trzepla
Kaz Tsutsumi
Andrew Tuckett
Kalen Tulipane
Gerald Tune
Ewelina Turlej
Robert Turner
Delilah Tyler
Tetsumasa Umeda
Mitsuyo Umezawa
Zach Ungerman
Miki Uruwashi
Ilayna Utley
Patrick Vader
Hubert Vaizand
Linda Valdez
Dalila Valls
Sandra van Deijl
Anja van den Berg
Daan van den Hoven
Paul van den Hoven
Jennifer van der Eem
Dennis van der Geer
Philippe Van der Haegen
Danielle van der lem
Robert van der Linden
Martine Vreeker van der
Wel
Bryan van der Zalm
Wim van Houten
Ingeborg van Liempt
Antoine van Ommeren
Gert van Veen
Linda van Velzen
Edward Vanasdale
Brenna VanHoven
Michael Varela
Patti Varney
Sherry Varney
Lourdes Vasquez
Edward Vazquez
Crista Velazquez
Ken Venable
Bram Verhoeven
Katharine Verkest
Angela Verkuyl
Pawan Verma
Aurore Veron
Jan Verschueren
Alejandra Villarreal
Fernando Villarreal
Monica Viloria-Smith
Anne Viramontes
Erika Vlasak
Jessica Volpe
David Von Tilius
Ravinder Vookanti
Marie Pierre Vuitton
Alexander Vulic
Meena Vuong
Bettina Wagener
Juliet Wales
Jordan Walker
Becky Wall
Stacey Wallace
John Walthier
Guangsheng Wan
Ally Wang
Angela Wang
Bing Wang
Cindy Wang
David Wang
Jessie Wang
Jiangchuan Wang
Jun Wang
Liang Wang
Linda Wang
Shiying Wang
Weijun Wang
Yuanzhi Wang
Mary Warren
Piotr Was
Eriko Watanabe
Robert Water
Lisa Watkins
Robert Watson
John Watts
Greg Weaver
Richard Webb
Alisa Weber
Christian Weber
Matthew Wei
Stephanie Wei
Wei Wei
Astrid Weiden
Pat Welsh
Mike Wenzell
PROLOGIS 2007
1
Ralf Wessel
Shelly Westmoreland
Paul Weston
Colin Wheildon
John Whelan
Glenn Whitaker
Peggy White
Sara Whittington
Chantal Wiatrowski
Claus Wichmann
Jeffery Wickliffe
Renee Widmont
Kelly Widner
Douglas Williams
Holley Williams
Jason Williams
Larry Williams
Matthew Williams
Monyett Williams
Naomi Williams
Stephanie Williams
Christina Williamson
Nadine Willis
Kate Willmont
Bartholomew Wilson
Karen Winkler
Brent Wirkkala
Justyna Witecka
Kevin Wittler
Barbara Wodarska
Bernard Wojtkowiak
Debra Wollett
Patti Womack
Jason Wong
James Wu
Mingjie Wu
Wendy Wu
Michael Wunnink
Desmond Wynne
Marla Wynnick
Colin Xia
Jane Xia
Richard Xia
Kevin Xiao
Belinda Xie
Samuel Xie
Sissy Xie
Chris Xing
Haitao Xu
Hardy Xu
Mary Xu
Nicola Xu
Sally Xu
Wenyan Xu
Mike Yamada
Chihiro Yamagishi
Hiroshi Yamamoto
Hiroshi Yamazaki
Jonas Yan
Cindy Yang
Henry Yang
Jensen Yang
Kent Yang
Tony Yang
Ivy Ye
Jing Yi
Yan Yin
Tony Yoon
Hitoshi Yoshida
Junichi Yoshinari
Emiko Yoshizawa
Andrea Young
Jennifer Young
Roberto Young
Tanya Young
Anping Yu
Kevin Yu
Hongwei Yue
Tomasz Zabost
Karolina Zajac
Christopher Zajaczkowski
Chad Zapf
Ewa Zawadzka
John Zeng
Najib Zeray
Carl Zhang
Celine Zhang
Elizabeth Zhang
Ingrid Zhang
Jack Zhang
Ke Zhang
Liping Zhang
Sebastian Zhang
Serena Zhang
Zhanwei Zhang
Allen Zhao
Angela Zhao
Danny Zhao
Fan Zhao
Di Zhong
Cathy Zhou
James Zhou
Jianning Zhou
Joe Zhou
Jane Zhu
Johnny Zhu
Joyce Zhu
Julie Zhu
Robert Zhu
Yao Zhu
Rafal Ziemiec
Kathleen Zima
Melanie Zimmerman
Carie Zoellner
Ilse Zoetemelk
Mark Zulver
Efrain Zuniga
Vincent Zuppa
business breadth
Through ProLogis’ property operations, development and investment
management segments, we have diversified our sources of income and
enhanced our financial stability.
Composition of Segment
Net Operating Income
(in billions)
$1.73
$1.33
$.78
Development CDFS
Investment Management
Property Operations
2
PROLOGIS 2007
’05
’06
’07
specialized expertise
Within each business segment, ProLogis’ in-house experts interact with
customers, communities and investors to drive our business decisions
and help us capture opportunities.
PROPE RT Y
MANAGE ME NT
GL OBAL E QUIT Y
RE L AT IONSHIPS
CUST OME R
RE L AT IONSHIPS
ProLogis
ASSE T
MANAGE ME NT
CONSTRUCT ION
MANAGE ME NT
GL OBAL
DE VE L OPME NT
PROLOGIS 2007
3
business interests
Our mission is to be the leading global provider of sustainable distribution
facilities to the world’s largest users of distribution space and to maximize
shareholder value through customer service, organizational excellence and
our commitment to corporate social responsibility.
25
%
growth in FFO per share
4
PROLOGIS 2007
2007 growth over 2006
societal interests
ProLogis is committed to improving the communities in which our
associates live and work through group volunteer efforts, charitable giving
and service programs.
school for every
five million square feet
built in China
PROLOGIS 2007
5
financial highlights
During 2007, ProLogis achieved strong improvement in all key business
measures, firmly establishing the foundation to support the next phase
of the company’s growth.
ProLogis Defined
Funds from Operations,
as Adjusted*
Total Revenue*
(per share)
(in billions)
$4.61
$6.42
$3.70
6
’06
PROLOGIS 2007
’07
$2.76
$1.98
’05
’06
’07
*As reported in FFO; includes CDFS disposition proceeds
’05
*Before $0.20 (2005) and $0.01 (2006) in certain charges
including impairment, relocation and merger integration charges
$2.71
• Increased ProLogis’ defined funds from operations
per share, as adjusted (FFO), to $4.61, up 24.6%
• Achieved record leasing of over 108 million square
feet of space, a 6.3% increase over 2006
from $3.70 in 2006, and net earnings per diluted
share to $3.94, up 18.7% from $3.32 in 2006
• Increased 2008 common distribution to a projected
rate of $2.07 per share, a 12.5% increase over 2007 –
• Grew total assets owned, managed and under develop-
the 14th consecutive increase
ment to $36.3 billion, up 36.0% from $26.7 billion
at the end of 2006
• Achieved total shareholder return of 7.4%, including
share price appreciation and distributions
• Began a record $4.1 billion of new industrial and
retail/mixed-use development, up 61.4% over 2006
Total Assets Owned,
Managed and Under
Development*
Distribution per Share
(in billions)
$36.33
$1.84
$1.60
$1.48
$26.65
’05
’06
’07
*Includes 100% of assets of ProLogis’ unconsolidated investees
$22.14
’05
’06
’07
PROLOGIS 2007
7
TO OUR SHAREHOLDERS
As I write this letter, economists, politicians
and business leaders around the globe are
pondering the state of the world’s major
economies. With credit markets in disarray
and financial markets experiencing unprecedented volatility, it seems prudent to reflect on
the importance of having a stable framework
to manage risk and support future growth.
LEVERAGING BREADTH AND DEPTH
In our CDFS development business, we began a
The year 2007 was an outstanding one for ProLogis
record $4.1 billion of new facilities supported by the
with strong financial performance and solid operating
strength of global demand in existing markets and our
fundamentals. But more important, it was a year in
expansion into major new logistics areas. During the
which we utilized the breadth of our global platform
year, we entered the Middle East with our first project
and leveraged the depth of our organization to position
in Dubai and initiated development in South Korea
ourselves for 2008 and beyond.
as well as in new, high-growth markets throughout
We significantly enhanced our investment management business with the formation of three new property
China, Japan, Central Europe and Mexico.
We acquired the industrial business of Parkridge,
funds, one each in the United States, Mexico and
our best competitor in Europe, and invested in
Europe. We also completed our first acquisition within
Parkridge’s retail and mixed-use business. In addition,
our South Korea fund and repositioned another fund,
we made substantial progress in our global retail and
recognizing our share of the increased value of those
mixed-use business through Catellus Development
properties over the past five years. In total, we secured
Group in the United States and our retail development
equity commitments that allow us to grow our invest-
joint venture that is building Wal-Mart centers in China.
ment management business to more than $33 billion
With the completion of two successful convertible
over the next three years, from $19 billion in assets
debt offerings, we raised more than $2.4 billion at very
under management at year end.
attractive interest rates and strengthened our financial
8
PROLOGIS 2007
position. We continue to see a flight to quality and
believe that credit is available for quality assets and
moderately leveraged business models. With our strong
balance sheet and our expanded investment management capacity, we have positioned ourselves well to
take advantage of current market opportunities.
MANAGING RISK
Turning to this year and beyond, we continue to
closely monitor market conditions. Globally, supply
and demand remain well balanced. While our U.S. outlook has become more cautious, markets are generally
stable with high occupancies and continued growth in
CAPTURING OPPORTUNITIES
rental rates. Additionally, industry fundamentals are
We have already seen that the tightening of credit is
much healthier than they were at the beginning of
causing a decline in speculative development by private
any other down cycle in recent memory. Nonetheless,
developers. This will provide stronger, better capitalized
we have shifted our U.S. development mix toward a
companies, such as ProLogis, with additional develop-
greater portion of preleased business and expect that
ment and acquisition opportunities.
80% to 85% of our development and investment capi-
In summary, given the potential we see across our
tal in 2008 will be deployed outside the United States.
global markets, we remain confident about our ability
While there is disagreement about the connection
to capitalize on our leading market presence. Most
between the U.S. economy and that of other countries,
important, we have deep, talented local teams across
it is important to bear in mind that the global market
the globe and are well positioned, financially and
for logistics space is not directly correlated to economic
organizationally, to take advantage of market condi-
growth. Rather, demand continues to be driven by func-
tions in 2008 and beyond.
tional obsolescence, growth in global trade – currently
My sincerest thanks to all ProLogis associates and
more than double the growth rate of global GDP – and the
our Board for their dedication and support, which allows
need for more cost-efficient distribution networks. We see
us to continue to drive value for our investors.
these as sustainable, secular trends – not cyclical ones.
We believe our leading presence in 118 of the
world’s largest logistics markets, including our top
position near major global ports, provides unmatched
geographic breadth, thereby mitigating the impact of
any single economy on our overall results. This cover-
Jeffrey H. Schwartz
Chairman and Chief Executive Officer
age enables us to address customers’ global supply
chain requirements and deploy our capital in only
the strongest markets.
PROLOGIS 2007
9
FINANCIAL PERFORMANCE
ProLogis achieved strong results in 2007,
growing FFO per share by 24.6%, to $4.61,
and increasing our projected 2008 annual
dividend to $2.07 per share, up 12.5%.
S T R O N G O P E R AT I N G R E S U LT S
currency gains. Development activity in 2007 was well
All three of our business segments performed well.
diversified, supported by strong demand across our global
In our operating property segment, same-store net
markets. We began $4.1 billion of new construction,
operating income was up 5.2%, driven by higher average
up from $2.5 billion in 2006, and ended the year with
occupancies and rent growth on expiring leases of 8.0%,
a CDFS pipeline of $7.6 billion.
compared with 2.6% in 2006. During the year, 78.2%
Continued strong leasing in this pipeline also drives
of our customers renewed their leases upon expiration –
growth in our investment management business as we
the highest annual level in the past 10 years.
recycle proceeds from contributions of CDFS properties
Our CDFS business was a significant driver of FFO
into new development and increase recurring manage-
growth in 2007, with $5.4 billion of contributions and
ment fees and our share of each fund’s FFO. Excluding
dispositions at overall 17.1% margins. As part of these
our share of gains related to the IPO of ProLogis European
contributions, we acquired the outstanding shares of
Properties and recapitalization of three North American
Macquarie ProLogis Trust and subsequently contributed
funds in 2006, investment management fund fees
the Trust’s properties to a new fund, recognizing $95.2
increased 29.7% and FFO from funds was up 49.4%.
million of gains, of which $68.6 million was in CDFS
We also enhanced our financial flexibility during
income and $26.6 million was in related foreign
the year, accessing both public and private debt under
challenging market conditions. We completed two
FFO from
CDFS Income*
Investment Management
Income and Fees*
(in millions)
(in millions)
(in millions)
$339.8
$254.1
demand for high-quality assets.
$163.2
$326.9
$233.3
$469.7
ments, reflecting continued strong institutional investor
William E. Sullivan
05 06 07
05 06 07
*As reported in FFO
*As reported in FFO,
including $68.6 million from MPR fund
repositioning in 2007
*As reported in FFO, including
incentive fees and gains recognized from fund recapitalization
of $159.1 in 2006
PROLOGIS 2007
placed $6.1 billion in fund and joint venture debt.
also raised $5.0 billion of third-party equity commit-
05 06 07
10
convertible note issuances totaling $2.4 billion and
To support our investment management business, we
$786.2
$787.9
$707.7
Property Operations*
Chief Financial Officer
ProLogis is uniquely positioned at the
intersection of stability and dynamic expansion.
The breadth of our operations throughout the
world’s major logistics markets provides a
stable platform for growth and helps insulate
us against the effects of any single region’s
economy, while our local market depth and
early entry into emerging markets positions
us to capture opportunities in the world’s
fastest growing economies.
At the same time, our diverse business
model, strong financial condition and access
to global private and public capital sources
ensures we have the financial resources
to drive future growth.
PROLOGIS 2007
11
ProLogis is well positioned
to benefit from growth in
global trade, with a presence
at 25 of the world’s 50 largest
seaports as well as land positions that enable us to develop
an additional 52 million square
feet of facilities in these critical markets.
GLOBAL REACH AND LOCAL DEPTH
ProLogis is the world’s largest provider of
distribution facilities with a presence in 118
markets throughout 13 countries in Europe,
four in Asia and three in North America.
This global breadth helps us serve more than
4,900 customers in the world’s major logistics
markets, while our local presence ensures we
understand and respond quickly to their needs.
PROLOGIS 2007
13
We further enhanced our diversification during
2007 by establishing a presence in five new cities in
inland China and undertaking our first development
project in Dubai. In addition, we are actively pursuing
several land acquisition opportunities in key logistics
markets in India. With the addition of these new and
prospective markets, we will have a presence in countries that represent more than 78% of global GDP.
These new markets, as well as many in Central
and Eastern Europe and Mexico, will be key drivers of
global economic growth over the next few decades due
ProLogis’ global development organization includes 340 engineers,
architects and project managers who oversee all aspects of construction. This group was responsible for starting more than $4.1 billion
of new projects in 2007 – a 61.4% increase over the prior year.
to increasing domestic consumption and significant
import/export activity. The pace of growth in global
trade during the past decade has been more than double that of growth in global GDP, leading to significant
EXPANDING GLOBAL PRESENCE
increases in the volume of goods moving through the
ProLogis’ geographic diversification is a key differentiator.
world’s major seaports and inland ports. This increase
While we face local, fragmented competition in most
in container traffic supports continued demand for
markets, there are no competitors with as expansive
ProLogis’ distribution facilities that are located in close
a global reach. For customers, this reach allows us to
proximity to major seaports and intermodal centers
support expansion and reconfiguration of their supply
where rail freight is offloaded for local distribution.
chains in the world’s major logistics markets. In fact,
To capitalize on these growth drivers, ProLogis relies
existing customers have consistently accounted for
on an organizational structure and service delivery system
more than half of the leasing in our newly developed
that closely integrates our local property operations,
space over the past several years. For zoning and enti-
development and global services associates. Our local
tlement authorities, it means we can bring high-quality,
teams build our business by focusing on the customer.
sustainable design standards to their communities and
We leverage those relationships through a single point
attract some of the world’s leading companies, such as
of contact for major global customers and are currently
DHL, Kraft, Sainsbury’s and Sanyo. And for investors,
serving 9 of our top 25 on three continents. Together,
our diverse platform means we are able to mitigate the
we believe our global reach and local depth will help
effects of any single country’s or region’s economy on
us expand our position as the world’s largest owner,
our overall financial results. With a presence in 20
manager and developer of distribution space.
countries, we are able to allocate our capital to those
markets with the greatest growth potential.
14
PROLOGIS 2007
Throughout the markets in
which ProLogis operates, we
have internal property management, maintenance and leasing
associates. These market professionals, such as Elizabeth
Kauchak, Indianapolis market
officer with ProLogis for 8
years, enable us to respond to
our customer’s space requirements and understand local
market drivers.
Strong global demand has
supported continued expansion
of ProLogis’ development
pipeline, which stood at $7.6
billion at year end. These properties provide a future source
of development profits and will
drive growth in investment
management income and fees.
BUSINESS BREADTH AND SPECIALIZED EXPERTISE
ProLogis’ unique business model
provides income from three primary business
segments – property operations, development
and investment management – encompassing
both our industrial and growing retail and
mixed-use activity. This breadth provides
greater opportunities for growth than typical
real estate operating models.
PROLOGIS 2007
17
BREADTH PROVIDES OPPORTUNITY
ProLogis’ three business segments provide diverse
revenue streams. Our property operations segment
comprises wholly owned distribution and retail properties. While we do not expect to significantly grow this
property base due to our contribution of properties into
ProLogis funds, we do anticipate future growth in this
segment driven by rental rate increases and stable occupancies supported by balanced supply and demand
of leasable space.
We grew our investment management business
during the year by more than 50%, to $19 billion of
assets under management. Institutional investor demand
for ProLogis property funds was strong in 2007, as our
Through Catellus Development Group and our retail joint ventures
in Europe and China, we are expanding into development of retail
centers. Our strong relationships with major customers, such as
Best Buy, Home Depot and Wal-Mart, create opportunities to
develop stores as well as warehouses.
equity partners obtain access to our pipeline of newly
built, well-leased assets and benefit from both profes-
Our development, or CDFS, business also had a
sional management and our ability to leverage global
record year, starting roughly $4.1 billion of new con-
customer relationships. ProLogis benefits by expanding
struction. Our local expertise allows us to closely
with less overall capital invested – generally retaining
monitor market conditions in real time and shift capital
20% to 25% ownership in each fund – allowing us to
to those regions with better fundamentals. In more
earn management fees and our share of fund FFO while
mature global markets, such as the United States, new
achieving higher returns on our invested capital. Our
construction supply and demand remain well balanced,
global network of experienced investment management
while in emerging markets, such as China, the lack of
professionals tapped new and existing private equity
modern space supports strong growth.
capital partners to form three new property funds and
A new area of focus is retail and mixed-use
reposition a fourth fund during 2007, securing commit-
development for which our share of investment in
ments that will allow us to grow assets under management
new projects was about $170 million in 2007. Our
to more than $33 billion.
Catellus Development Group has a specialized focus
In 2007, we realized some of the value created in
on redevelopment of former airports, military bases
our funds by purchasing the public shares of Macquarie
and factories. Also included in this amount is our share
ProLogis Trust, previously traded in Australia, and con-
of the investment in retail centers being developed by
tributing those assets to the repositioned fund. Going
SZITIC-CP, our joint venture partner in China, and new
forward, many of our recently formed funds have provi-
retail and mixed-use projects under development by
sions for periodic performance measurement, thereby
Parkridge, our partner in Europe.
helping to create a potential stream of recurring property
fund-related gains.
18
PROLOGIS 2007
Our customers continue to
reconfigure their supply chains
for greater efficiency, driving
demand for modern facilities,
such as ProLogis Marston
Gate in the United Kingdom.
We also see demand in more
mature markets supported by
functional obsolescence, while
emerging markets lack highquality distribution facilities.
Corporate social responsibility
is a core value of ProLogis.
Through our corporate giving,
community outreach, employee
involvement and education,
we are committed to building
healthy and productive relationships with our employees,
business partners and the
local communities in which
we operate.
BUSINESS INTERESTS AND SOCIETAL INTERESTS
ProLogis’ sustainability mission is clear –
we strive to be the leading global provider
of sustainable distribution facilities, while
maintaining a record of consistent, profitable
growth and creating an optimal balance
between shareholder value, the environment
and corporate social responsibility.
PROLOGIS 2007
21
highest standards of environmental construction and
provide our customers with distribution facility options
that further their own sustainability goals. In addition,
we are developing a set of rigorous design standards
that we will use to integrate similar design features
around the globe, thereby meeting or exceeding local
sustainable development certification programs.
We also believe in the importance of supporting
the communities in which we live and work. Around
the globe, ProLogis associates participate in a number
of volunteer efforts including Junior Achievement,
Wetlands restoration is one of the ways in which we minimize the
impact on the environment of our distribution parks. At ProLogis
Park Chanteloup outside Paris, France, we restored 95 acres of
wetlands and also developed a rainwater harvesting system to
supply water for park landscaping.
Habitat for Humanity, local childcare and school
development programs, children’s hospitals and food
banks. In 2007, we also contributed $5 million to the
ProLogis Foundation to be used to support these and
BALANCED APPROACH
other local charities and community service programs.
At ProLogis, sustainability is a business approach that
From an economic perspective, we are focused
balances environmental, societal and economic objec-
on sustaining our track record of industry-leading,
tives. We engage key stakeholders, such as customers,
long-term financial performance through our diversi-
employees, investors and the local communities in
fied business model, while furthering meaningful
which we operate, to solicit feedback and further our
corporate governance practices and adhering to the
understanding of the sustainability issues that are
highest ethical standards.
most relevant to them.
In April 2008, we will publish our second
ProLogis strives to be the leader in environmental
Sustainability Report in accordance with standards set
best practices in our industry. Starting in January 2008,
by the Global Reporting Initiative, a non-profit organi-
all of our new buildings constructed in the United States
zation sponsored by the United Nations Environmental
will be registered with the U.S. Green Building Council
Programme. To access the report and learn more about
to be considered for LEED (Leadership in Energy and
ProLogis’ global sustainability initiatives, please visit
Environmental Design) certification. By incorporating
www.prologis.com.
LEED design elements, we help to extend the functional life of our buildings, ensure they perform to the
22
PROLOGIS 2007
C O N D E N S E D C O N S O L I D AT E D S TAT E M E N T S O F E A R N I N G S
Years Ended December 31,
(In thousands, except per share data)
Revenues
Rental income
CDFS disposition proceeds
Developed and repositioned properties
Acquired property portfolios
Property management and other fees and incentives
Development management and other income
Total revenues
Expenses
Rental expenses
Cost of CDFS dispositions
Developed and repositioned properties
Acquired property portfolios
General and administrative
Depreciation and amortization
Other expenses
Total expenses
Operating income
Operating income (expense)
Earnings from unconsolidated property funds
Earnings from CDFS joint ventures and other unconsolidated investees
Interest expense
Interest income on notes receivable
Interest and other income, net
Total other income (expense)
Earnings before minority interest
Minority interest
Earnings before certain net gains
Gains recognized on dispositions of certain non-CDFS business assets
Foreign currency exchange gains, net
Earnings before income taxes
Income taxes
Current income tax expense
Deferred income tax expense (benefit)
Total income taxes
Earnings from continuing operations
Discontinued operations
Income attributable to disposed properties and assets held for sale
Losses related to temperature-controlled distribution assets
Gains recognized on dispositions
Non-CDFS business assets
CDFS business assets
Total discontinued operations
Net Earnings
Less preferred share dividends
Net Earnings Attributable to Common Shares
Weighted average common shares outstanding – Basic
Weighted average common shares outstanding – Diluted
Net earnings per share attributable to common shares – Basic
Continuing operations
Discontinued operations
Net earnings per share attributable to common shares – Basic
Net earnings per share attributable to common shares – Diluted
Continuing operations
Discontinued operations
Net earnings per share attributable to common shares – Diluted
Distributions per common share
2007
2006
2005
$1,067,865
$÷«910,202
$÷«584,352
2,530,377
2,475,035
104,719
26,670
6,204,666
1,286,841
–
211,929
37,420
2,446,392
1,140,457
–
66,934
25,464
1,817,207
288,569
239,221
162,245
1,835,274
2,406,426
204,558
308,971
24,963
5,068,761
1,135,905
993,926
–
153,516
286,807
13,013
1,686,483
759,909
917,782
–
118,166
186,605
8,633
1,393,431
423,776
94,453
11,165
(368,065)
8,066
25,935
(228,446)
907,459
(6,003)
901,456
146,667
7,915
1,056,038
93,055
50,703
(294,403)
16,730
18,248
(115,667)
644,242
(3,457)
640,785
81,470
21,086
743,341
46,078
6,421
(177,562)
6,781
10,724
(107,558)
316,218
(5,243)
310,975
–
15,979
326,954
68,349
550
68,899
987,139
84,250
(53,722)
30,528
712,813
14,847
12,045
26,892
300,062
5,704
–
24,311
–
24,191
(25,150)
52,776
28,721
87,201
1,074,340
25,423
$1,048,917
256,873
267,226
103,729
33,514
161,554
874,367
25,416
$«÷848,951
245,952
256,852
86,444
10,616
96,101
396,163
25,416
$÷«370,747
203,337
213,713
$÷÷÷÷«3.74
0.34
$÷÷÷÷«4.08
$÷÷÷«÷2.79
0.66
$÷÷÷«÷3.45
$÷÷÷«÷1.35
0.47
$÷÷÷÷«1.82
$÷÷÷÷«3.61
0.33
$÷÷÷÷«3.94
$÷÷÷÷«1.84
$÷÷÷«÷2.69
0.63
$÷÷÷«÷3.32
$÷÷÷«÷1.60
$÷÷÷«÷1.31
0.45
$÷÷÷÷«1.76
$÷÷÷÷«1.48
See ProLogis’ Annual Report on Form 10-K for Audited Consolidated Financial Statements and Notes.
PROLOGIS 2007
23
C O N D E N S E D C O N S O L I D AT E D B A L A N C E S H E E T S
December 31,
(In thousands)
2007
2006
Investments in and advances to unconsolidated investees
Cash and cash equivalents
Accounts and notes receivable
Other assets
Discontinued operations – assets held for sale
Total assets
$16,578,845
1,368,458
15,210,387
2,345,277
418,991
340,039
1,389,733
19,607
$19,724,034
$13,897,091
1,264,227
12,632,864
1,299,697
475,791
439,791
998,224
57,158
$15,903,525
Liabilities and Shareholders’ Equity
Liabilities
Debt
Accounts payable and accrued expenses
Other liabilities
Discontinued operations – assets held for sale
Total liabilities
Minority interest
$10,506,068
933,075
769,408
424
12,208,975
78,661
$ 8,386,886
518,651
546,129
1,012
9,452,678
52,268
100,000
125,000
125,000
2,577
6,412,473
100,000
125,000
125,000
2,509
6,000,119
(27,091)
302,413
396,026
7,436,398
$19,724,034
4,524
212,398
(170,971))
6,398,579
$15,903,525
Assets
Real estate
Less accumulated depreciation
Shareholders’ Equity
Series C preferred shares
Series F preferred shares
Series G preferred shares
Common shares
Additional paid-in capital
Accumulated other comprehensive income
Unrealized (losses) gains on derivative contracts
Foreign currency translation gains
Retained earnings (distributions in excess of net earnings)
Total shareholders’ equity
Total liabilities and shareholders’ equity
See ProLogis’ Annual Report on Form 10-K for Audited Consolidated Financial Statements and Notes.
24
PROLOGIS 2007
CO N D E N S E D C O N S O L I D A T E D S T A T E M E N T S O F S H A R E H O L D E R S ’ E Q U I T Y
AND COMPREHENSIVE INCOME
Years Ended December 31,
(In thousands)
Common shares – par value at beginning of year
Issuance of common shares in connection with mergers and acquisitions
Issuances of common shares under common share plans
Conversions of limited partnership units
Common shares – par value at end of year
Preferred shares at stated liquidation preference at beginning and end of year
Additional paid-in capital at beginning of year
Issuance of common shares in connection with mergers and acquisitions
Issuances of common shares under common share plans
Conversions of limited partnership units
Cost of issuing common shares
Change in receivable from timing differences on equity transactions
Cost of share-based compensation awards
Additional paid-in capital at end of year
Accumulated other comprehensive income at beginning of year
Foreign currency translation gains (losses), net
Unrealized (losses) gains on derivative contracts, net
Accumulated other comprehensive income at end of year
Distributions in excess of net earnings at beginning of year
Net earnings
FIN 48 adoption
Preferred share dividends
Common share distributions
Retained earnings (distributions in excess of net earnings) at end of year
Total shareholders’ equity at end of year
Comprehensive income attributable to common shares
Net earnings
Preferred share dividends
Foreign currency translation gains (losses), net
(Losses) gains on derivative contracts, net
Comprehensive income attributable to common shares
2007
2006
2005
$
2,509
48
19
1
$
2,577
$ 350,000
$6,000,119
339,449
37,417
4,444
(106)
247
30,903
$6,412,473
$ 216,922
90,015
(31,615)
$ 275,322
$ (170,971)
1,074,340
(9,272)
(25,423)
(472,648)
$ 396,026
$7,436,398
$
2,438
–
69
2
$
2,509
$ 350,000
$5,606,017
–
357,448
6,475
(76))
244
30,011
$6,000,119
$ 149,586
70,777
(3,441)
$ 216,922
$ (620,018)
874,367
–
(25,416)
(399,904)
$ (170,971)
$6,398,579
$
1,858
559
21
–
$
2,438
$ 350,000
$3,249,576
2,285,029
43,126
150
(1,395)
2,494
27,037
$5,606,017
$ 194,445
(70,076)
25,217
$ 149,586
$ (693,386)
396,163
–
(25,416)
(297,379)
$ (620,018)
$5,488,023
$1,074,340
(25,423)
90,015
(31,615)
$1,107,317
$ 874,367
(25,416)
70,777
(3,441)
$ 916,287
$ 396,163
(25,416)
(70,076)
25,217
$ 325,888
See ProLogis’ Annual Report on Form 10-K for Audited Consolidated Financial Statements and Notes.
PROLOGIS 2007
25
CO N D E N S E D C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W S
Years Ended December 31,
(In thousands)
Operating Activities
Net earnings
Minority interest share in earnings
Adjustments to reconcile net earnings to net cash provided
by operating activities
Straight-lined rents
Cost of share-based compensation awards
Depreciation and amortization
Equity in earnings from unconsolidated investees
Distributions from unconsolidated investees
Amortization of deferred loan costs
Amortization of debt premium, net
Gains recognized on dispositions of non-CDFS business assets
Gains recognized on dispositions of CDFS business assets
included in discontinued operations
Cumulative translation losses and impairment charge on disposed properties
Unrealized foreign currency exchange losses (gains)
Deferred income tax expense (benefit)
Impairment charges
Increase in accounts and notes receivable and other assets
Increase (decrease) in accounts payable and accrued expenses
and other liabilities
Net cash provided by operating activities
Investing Activities
Real estate investments
Purchase of ownership interest in property funds
Tenant improvements and lease commissions on previously leased space
Recurring capital expenditures
Cash consideration paid in Parkridge acquisition in 2007 and Catellus Merger
in 2005, net of cash acquired
Purchase of Macquarie ProLogis Trust (“MPR”), net of cash acquired
Proceeds from dispositions of real estate assets
Advances on notes receivable
Proceeds from repayments of notes receivable
Increase in restricted cash for potential investment
Investments in and advances to unconsolidated investees
Return of investment from unconsolidated investees
Net cash used in investing activities
Financing Activities
Proceeds from sales and issuances of common shares
under various common share plans
Distributions paid on common shares
Minority interest distributions
Dividends paid on preferred shares
Debt and equity issuance costs paid
Repayment of debt assumed in Catellus Merger
Net (payments) proceeds from lines of credit and short-term borrowings
Proceeds from issuance of debt to finance MPR and Parkridge acquisitions
Proceeds from issuance of senior convertible notes
Proceeds from issuance of senior notes, secured and unsecured debt
Payments on senior notes, secured debt, unsecured debt and assessment bonds
Net cash provided by financing activities
Effect of exchange rate changes on cash
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
2007
$ 1,074,340
6,003
2006
$
874,367
3,457
PROLOGIS 2007
$
396,163
5,243
(44,403)
23,934
311,867
(105,618)
74,348
10,555
(7,797)
(199,443)
(36,418)
21,567
298,342
(143,758)
99,062
7,673
(13,861)
(185,199)
(11,411)
22,615
204,378
(52,499)
47,514
5,595
(3,980)
(86,444)
(28,721)
–
16,229
550
13,259
(136,405)
(33,514)
–
(18,774)
(53,722)
–
(204,096)
(10,616)
26,864
(10,288)
12,045
–
(54,091)
216,338
1,225,036
72,201
687,327
(2,986)
488,102
(5,213,870)
–
(67,317)
(37,948)
(3,695,799)
(259,248)
(66,787)
(29,437)
(2,457,780)
–
(53,919)
(26,989)
(700,812)
(1,137,028)
3,618,622
(18,270)
115,620
–
(661,796)
50,243
(4,052,556)
–
–
2,095,231
(115,417)
73,723
(42,174)
(175,677)
146,206
(2,069,379)
(1,292,644)
–
1,516,614
–
59,991
–
(16,726)
48,652
(2,222,801)
46,855
(472,645)
(9,341)
(31,781)
(15,830)
–
(431,506)
1,719,453
2,329,016
781,802
(1,174,335)
2,741,688
29,032
(56,800)
475,791
$ 418,991
358,038
(393,317)
(11,576)
(19,062)
(13,840))
–
368,158
–
–
1,945,325
(588,844)
1,644,882
9,161
271,991
203,800
$ 475,791
45,641
(297,379)
(13,953)
(25,416)
(8,112))
(106,356)
1,348,023
–
–
890,011
(119,067)
1,713,392
(11,422)
(32,729)
236,529
$ 203,800
See ProLogis’ Annual Report on Form 10-K for Audited Consolidated Financial Statements and Notes (including information on supplemental non-cash
investing and financing activities).
26
2005
MANAGEMENT’S RESPONSIBILITY FOR
F I N A N C I A L S TAT E M E N T S
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Management is responsible for the preparation, integrity and
To the Board of Trustees and Shareholders of
objectivity of the condensed consolidated financial statements
ProLogis:
and other financial information presented in this report. The
We have audited, in accordance with the standards of the
accompanying condensed consolidated financial statements were
Public Company Accounting Oversight Board (United States),
prepared in accordance with accounting principles generally
the consolidated balance sheets of ProLogis and subsidiaries as
accepted in the United States of America, applying certain
of December 31, 2007 and 2006, and the related consolidated
estimates and judgments as required.
statements of earnings, shareholders’ equity and comprehensive
ProLogis’ internal controls are designed to provide reasonable
income, and cash flows for each of the years in the three-year
assurance as to the integrity and reliability of the financial
period ended December 31, 2007 (not presented herein); and in
statements and to adequately safeguard, verify and maintain
our report dated February 27, 2008, we expressed an unqualified
accountability of assets. Such controls are based on established
opinion on those consolidated financial statements.
written policies and procedures, are implemented by trained,
In our opinion the information set forth in the accompanying
skilled personnel with an appropriate segregation of duties and
condensed consolidated financial statements is fairly stated, in
are monitored through a comprehensive internal audit program.
all material respects, in relation to the consolidated financial
These policies and procedures prescribe that ProLogis and all
statement from which it has been derived.
its employees are to maintain the highest ethical standards in
its business practices throughout the world.
KPMG LLP, independent registered public accountants,
audited ProLogis’ 2007 financial statements. Their accompanying report is based on an audit conducted in accordance with
the standards of the Public Company Accounting Oversight Board
(United States), which include the consideration of ProLogis’
Denver, Colorado
February 27, 2008
internal controls to establish a basis for reliance thereon in determining the nature, timing and extent of audit tests to be applied.
The Board of Trustees exercises its responsibility for these financial
statements through its Audit Committee, which consists entirely
of independent, non-management Board members. One of the
responsibilities of the Audit Committee is to meet periodically
with the independent auditors and with ProLogis’ internal auditors,
both privately and with management present, to review accounting, auditing, internal controls and financial reporting matters.
C E O A N D C F O C E R T I F I C AT I O N S
In 2007, ProLogis’ chief executive officer provided to the
New York Stock Exchange (NYSE) the annual chief executive
officer certification regarding ProLogis’ compliance with the
NYSE’s corporate governance listing standards. In addition,
ProLogis’ chief executive officer and chief financial officer filed
with the U.S. Securities and Exchange Commission, as exhibits
to ProLogis’ 2007 Annual Report on Form 10-K, the SarbanesOxley Act Section 302 and 906 certifications regarding the
quality of ProLogis’ public disclosure.
Jeffrey H. Schwartz
Chairman and Chief Executive Officer
William E. Sullivan
Chief Financial Officer
PROLOGIS 2007
27
C O N D E N S E D C O N S O L I D AT E D S TAT E M E N T S O F F U N D S F R O M O P E R AT I O N S
Unaudited
Years Ended December 31,
(In thousands, except per share data)
Revenue
Rental income
CDFS disposition proceeds
Developed and repositioned properties
Acquired property portfolios
Property management and other fees and incentives
Development management and other income
Total revenues
Expenses
Rental expenses
Cost of CDFS dispositions
Developed and repositioned properties
Acquired property portfolios
General and administrative
Depreciation of corporate assets
Other expenses
Total expenses
2007
2006
2005
$1,079,960
$ 973,062
$ 649,530
2,736,151
2,475,035
104,719
26,670
6,422,535
1,532,807
–
211,929
37,420
2,755,218
1,240,950
–
66,934
25,464
1,982,878
292,064
265,361
179,815
2,018,523
2,406,426
204,558
10,882
24,963
4,957,416
1,465,119
1,205,912
–
153,516
9,326
13,013
1,647,128
1,108,090
1,007,659
–
107,164
7,153
25,236
1,327,027
655,851
149,400
18,991
(368,065)
34,001
24,299
(65,311)
–
(206,685)
127,905
57,853
(295,277)
34,978
1,531
(61,059)
–
(134,069)
96,261
8,449
(178,639)
17,505
1,914
(14,847)
(25,363)
(94,720)
1,258,434
25,423
6,003
$1,227,008
974,021
25,416
3,457
$ 945,148
561,131
25,416
5,243
$ 530,472
256,873
267,226
245,952
256,852
203,337
213,713
Other Income (Expenses)
FFO from unconsolidated property funds
FFO from CDFS joint ventures and other unconsolidated investees
Interest expense
Interest and other income, net
Foreign currency exchange gains (losses), net
Current income tax expense
Losses related to temperature-controlled distribution assets
Total other income (expense)
FFO
Less preferred share dividends
Less minority interest
FFO Attributable to Common Shares
Weighted average common shares outstanding – Basic
Weighted average common shares outstanding – Diluted
FFO per share attributable to common shares – Basic
FFO per share attributable to common shares – Diluted
28
PROLOGIS 2007
$
$
4.78
4.61
$
$
3.84
3.69
$
$
2.61
2.51
R E C O N C I L I AT I O N O F N E T E A R N I N G S T O F U N D S F R O M O P E R AT I O N S
Unaudited
Years Ended December 31,
(In thousands)
Reconciliation of Net Earnings to FFO
Net earnings attributable to common shares
Add (deduct) NAREIT defined adjustments
Real estate related depreciation and amortization
Adjustments to CDFS dispositions for depreciation
Gains recognized on dispositions of certain non-CDFS business assets
Reconciling items attributable to discontinued operations
Gains recognized on dispositions of non-CDFS business assets
Real estate related depreciation and amortization
Total discontinued operations
Our share of reconciling items from unconsolidated investees
Real estate related depreciation and amortization
Gains on dispositions of non-CDFS business assets
Other amortization items
Total unconsolidated investees
Total NAREIT defined adjustments
Subtotals – NAREIT defined FFO
Add (deduct) our defined adjustments
Foreign currency exchange losses (gains), net
Current income tax expense
Deferred income tax expense (benefit)
Reconciling items attributable to discontinued operations –
deferred income tax benefit
Our share of reconciling items from unconsolidated investees
Foreign currency exchange losses (gains), net
Deferred income tax expense (benefit)
Total unconsolidated investees
Total our defined adjustments
FFO attributable to common shares as defined by us
Funds From Operations
FFO is a non-Generally Accepted Accounting Principles (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 that GAAP net
earnings remains the primary measure of performance and that FFO is only
meaningful when it is used in conjunction with GAAP net earnings. 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.
2007
2006
2005
$1,048,917
$ 848,951
$ 370,747
298,089
(6,196)
(146,667)
277,481
466
(81,470)
184,792
–
–
(52,776)
2,896
(49,880)
(103,729)
11,535
(92,194)
(86,444)
11,399
(75,045)
99,026
(35,672)
(8,731)
54,623
149,969
1,198,886
68,151
(7,124)
(16,000)
45,027
149,310
998,261
57,766
(1,114)
(5,134)
51,518
161,265
532,012
16,384
3,038
550
(19,555)
23,191
(53,722)
(14,065)
–
12,045
–
–
(213)
1,823
6,327
8,150
28,122
$1,227,008
(45)
(2,982)
(3,027)
(53,113)
$ 945,148
298
395
693
(1,540)
$ 530,472
NAREIT’s FFO measure adjusts GAAP net earnings to exclude historical
cost depreciation and gains from the sale of previously depreciated properties.
In addition to the NAREIT adjustments, we exclude additional items from
GAAP net earnings, although not infrequent or unusual, that are subject to
significant fluctuations from period to period that cause both positive and
negative effects on our results of operations, in inconsistent and unpredictable
directions, such as deferred income tax, current income tax related to the reversal of any acquired tax liabilities in an acquisition, foreign currency exchange
gains/losses related to certain debt transactions, and foreign currency exchange
gains/losses from remeasurement of derivative instruments. We include gains
from dispositions of properties acquired or developed in our CDFS business
segment in our definition of FFO. We calculate FFO from our unconsolidated
investees on the same basis.
We believe our adjustments to GAAP net earnings that are included in
arriving at our FFO measure are helpful to management in making real estate
investment decisions and evaluating our current operating performance.
We believe these adjustments are also helpful to industry analysts, potential
investors and shareholders in their understanding and evaluation of our performance on the key measures of net asset value and current operating returns
generated on real estate investments. While we believe that our defined
FFO measure is an important supplemental measure, neither NAREIT’s nor
our measure of FFO should be used alone because they exclude significant
economic components of GAAP net earnings and are, therefore, limited as
an analytical tool.
PROLOGIS 2007
29
PROLOGIS BOARD
Jeffrey H. Schwartz
Chairman and
Chief Executive Officer
ProLogis
Jeffrey H. Schwartz
K. Dane Brooksher
K. Dane Brooksher
Former Chairman and
Chief Executive Officer
ProLogis
Stephen L. Feinberg 2
Chairman and
Chief Executive Officer
Dorsar Investment Co., Inc.
Stephen L. Feinberg
George L. Fotiades
George L. Fotiades1, 3
Chairman
Healthcare Investments
Diamond Castle Holdings
Christine Garvey 1, 3
Former Global Head of
Corporate Real Estate Services
Deutsche Bank AG London
Donald P. Jacobs1, 2
Dean Emeritus
Kellogg School of Management
Northwestern University
Christine Garvey
Donald P. Jacobs
Walter C. Rakowich
President and
Chief Operating Officer
ProLogis
Nelson C. Rising
Former Chairman and
Chief Executive Officer
Catellus Development Corp.
Walter C. Rakowich
Nelson C. Rising
D. Michael Steuert 1
Senior Vice President and
Chief Financial Officer
Fluor Corporation
J. André Teixeira3
Vice President – International
Research and Development
Campbell Soup Co.
D. Michael Steuert
J. André Teixeira
William D. Zollars 2, 3
Chairman, President and
Chief Executive Officer
YRC Worldwide Inc.
Andrea M. Zulberti 2
Former Managing Director
Barclays Global Investors
William D. Zollars
Andrea M. Zulberti
Audit Committee
Compensation Committee
3 Governance Committee
1
2
30
PROLOGIS 2007
PROLOGIS SENIOR
MANAGEMENT
Gary E. Anderson
Europe President and
Chief Operating Officer
Ted R. Antenucci
President and
Chief Investment Officer
Gary E. Anderson
Ted R. Antenucci
John C. Cutts
Vice Chairman – Europe
Larry H. Harmsen
MD – North American
Capital Deployment
Ming Z. Mei
China President
John C. Cutts
Larry H. Harmsen
Masato Miki
Japan Co-President
John P. Morland
MD – Global Human Resources
Edward S. Nekritz
General Counsel and Secretary
Ming Z. Mei
Masato Miki
Walter C. Rakowich
President and
Chief Operating Officer
(shown on page 30)
John R. Rizzo
MD – Global Construction
Jeffrey H. Schwartz
Chairman and
Chief Executive Officer
(shown on page 30)
John P. Morland
Edward S. Nekritz
Silvano Solis Vazquez
Regional Director – Mexico
Charles E. Sullivan
MD – North American
Capital Management
William E. Sullivan
Chief Financial Officer
John R. Rizzo
Silvano Solis Vazquez
Charles E. Sullivan
William E. Sullivan
Mike Yamada
Japan Co-President
MD – Managing Director
Mike Yamada
PROLOGIS 2007
31
Mission
Profile
Our mission is to be the leading global provider of sustainable
ProLogis is the world’s largest owner, manager and developer
distribution facilities to the world’s largest users of distribution
of distribution facilities, with operations in 118 markets across
space and to maximize shareholder value through customer serv-
North America, Europe and Asia. We have more than 500 million
ice, organizational excellence and our commitment to corporate
square feet of industrial space in over 2,750 properties, representing
social responsibility.
over $36 billion of assets owned, managed and under development.
Our customers include manufacturers, retailers, transportation
companies, third-party logistics providers and other enterprises
with large-scale distribution needs. Headquartered in Denver,
Colorado, we employ approximately 1,500 people worldwide.
Global Presence
North America
United States
Atlanta
Austin
Baltimore
Central Valley (CA)
Charlotte
Chicago
Cincinnati
Columbus
Dallas/Fort Worth
Denver
El Paso
Greenville
Houston
Indianapolis
Inland Empire
(So CA)
Jacksonville
Las Vegas
Los Angeles
Louisville
Memphis
Miami/
Ft. Lauderdale
Nashville
New Jersey/I-95
Norfolk
32
Europe
Orlando
Eastern
Pennsylvania
Phoenix
Portland
Reno
Salt Lake City
San Antonio
San Francisco –
East Bay
San Francisco –
South Bay
Seattle
St. Louis
Tampa
Washington D.C.
Mexico
Guadalajara
Juarez
Mexico City
Monterrey
Reynosa
Tijuana
Toluca
Canada
Toronto
PROLOGIS 2007
Belgium
Brussels
Czech Republic
Pilsen
Prague
Ostrava
France
Orleans
Metz
Le Havre
Paris
Marseille
Germany
Hamburg
Frankfurt
Cologne
Munich
Hungary
Budapest
Hegyeshalom
Asia
Italy
Milan
Padova
Rome
Turin
The Netherlands
Amsterdam
BeLux
Brabant
Tilburg
Rotterdam
Poland
Piotrkow
Wroclaw
Gdansk
Katowice
Warsaw
Poznan
Romania
Bucharest
Slovakia
Bratislava
Nove Mesto
Spain
Barcelona
Madrid
Valencia
Sweden
Gothenberg
Jonkoping
Norkopping
Stockholm
United Kingdom
Birmingham
Daventry
London
Wakefield
China
Beijing
Changsha
Chengdu
Chongqing
Dalian
Foshan
Guangzhou
Hangzhou
Jiaxing
Nanjing
Ningbo
Qingdao
Shanghai
Shenyang
Shenzhen
Suzhou
Tianjin
Wuhan
Wuxi
Japan
Fukuoka
Hiroshima
Nagoya
Niigata
Osaka
Sapporo
Sendai
Tokyo
South Korea
Seoul
United Arab
Emirates
Dubai
global reach
S H A R E H O L D E R I N F O R M AT I O N
World Headquarters
Our unmatched global platform – more than 2,750 properties in 20 countries –
is complemented by a global base of strong customer relationships that
represents both stability and opportunity.
Cumulative Total Return
ProLogis
Based upon an initial investment of $100 on December 31, 2002,
4545 Airport Way
with dividends reinvested.
Denver, CO 80239 USA
303.567.5000
800.566.2706
$400
$350
$300
$250
$200
Annual Meeting
The Annual Meeting of Shareholders of ProLogis will be
held at the company’s world headquarters, identified above,
at 10:30 am Mountain Time on Friday, May 9, 2008.
$150
$100
$50
$0
02
03
ProLogis
04
05
06
07
S&P © 500 Index
NAREIT Equity REIT Index
Shareholders
As of February 22, 2008, ProLogis had in excess of 71,500
Dec 02
Dec 03
Dec 04
Dec 05
Dec 06
Dec 07
$100
$135
$190
$212
$284
$305
record and beneficial common shareholders.
NORTH AMERICA
ProLogis
Independent Registered Public Accounting Firm
EUROPE
KPMG LLP
ASIA
Denver, Colorado
NAREIT Equity
REIT Index
$100
$137
$180
$202
$273
$230
S&P © 500 Index
$100
$129
$143
$150
$173
$183
Transfer Agent
Quarterly Stock Price Ranges and Distributions
Computershare
New York Stock Exchange: PLD
P.O. Box 43010
Providence, RI 02940-3010
800.956.3378
781.575.3120 outside the United States
BELGIUM
UNITED
STATES
CZECH
REPUBLIC
UNITED
KINGDOM
2007 Stock Price
High
Quarter
First
Low
2006 Stock Price
Distribution
High
Low
Distribution
$72.08 $58.00
$0.46
$56.31 $46.29
$0.40
Shareholder account information may also be accessed
Second $67.99 $55.76
$0.46
$53.85 $46.66
$0.40
from its website at www.computershare.com.
Third
$66.86 $51.65
$0.46
$58.86 $52.05
$0.40
Fourth
$73.34 $59.37
$0.46
$65.81 $56.07
$0.40
Information Request
ProLogis’ audited consolidated financial statements are available
SWEDEN
upon request. The 2007 Annual Report on Form 10-K, as filed
FRANCE
CHINA
SPAIN
SOUTH
KOREA
with the Securities and Exchange Commission, and additional
This notice is provided to inform the shareholders of ProLogis
company materials can be obtained by calling the Investor Relations
of the capital gain portion of distributions received during 2007
information line at 800.820.0181 or by visiting the company’s
pursuant to Internal Revenue Code §857(b)(3)(C). This notice is
website at http://ir.prologis.com and clicking on the appropriate
being provided in addition to a 2007 Form 1099-DIV that has
sections of the site.
SLOVAKIA
Notice of Capital Gain Distribution
been mailed to all shareholders. The following table displays the
taxability of company distributions for the year ended December 31,
JAPAN
ROMANIA
GERMANY
HUNGARY
MEXICO
CANADA
Recently announced expansion
into United Arab Emirates
Design: Coates and Coates. Printing: Cenveo, Anderson Lithograph
ITALY
2007, and designates the portion of the distributions that are
Melissa Marsden
capital gain distributions.
SVP, Investor Relations and
POLAND
THE NETHERLANDS
Analyst Contact:
The tax treatment to shareholders of these distributions could
Corporate Communications
vary depending on the shareholder’s particular situation (i.e.,
303.567.5622
foreign, tax-exempt, etc.). Shareholders should consult their own
[email protected]
tax advisors regarding the treatment of these distributions.
ProLogis Dividend Reinvestment and Share Purchase Plan
offers the opportunity to purchase common shares directly or
Long-term
Unrecaptured
Section
1250 Gains
Taxable
Ordinary
Distributions
Long-term
Capital Gains
Common
48.13%
24.24%
10.83% 16.80%
Series C Preferred
57.85%
29.14%
13.01%
0%
Series F Preferred
57.86%
29.13%
13.01%
0%
Series G Preferred
57.86%
29.13%
13.01%
0%
The ProLogis Dividend Reinvestment and Share Purchase Plan
Class of Stock
Return of
Capital
through the reinvestment of dividends, at a 0% to 2% discount
from market price, as determined by the company. Copies of the
plan prospectus and enrollment forms are available from our
transfer agent, Computershare, at www.computershare.com
or by calling 800.956.3378.
This report was printed with soy-based inks on recycled paper that contains
30% post consumer waste. The paper was made using renewable wind power,
is Green Seal certified and acid free. Environmental savings achieved using this
paper: 114.09 trees preserved for the future, 329.46 lbs of waterborne waste
not created, 48,464 gallons of wastewater flow saved, 5,362 lbs solid waste not
generated, 10,558 lbs net greenhouse gases prevented and 80,816,640 BTUs
energy not consumed.
This 2007 Summary Annual Report, together with our audited financial statements
contained in Item 15 of our accompanying Form 10-K and Items 1, 6, 7, 7A, 8
and 9 of such Form 10-K, constitute our 2007 annual report to security holders.
European Customer Service
Schiphol Boulevard 115
F Tower, Floor 6
Schiphol, Noord Holland
1118 BG Schiphol Airport
The Netherlands
+31 20 655 66 66
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Europe
18 Boulevard Royal
L-2449, Luxembourg
+352 26 20 57 40
PROLOGIS
World Headquarters
4545 Airport Way
Denver, CO 80239
www.prologis.com
303.567.5000
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Shiodome City Center
1-5-2 Higashi-Shinbashi
Minato-ku
Tokyo, Japan 105-7116
+81 3 6215 8480
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China
2708 Azia Center
1233 Lujiazui Ring Road
Pudong Shanghai, 200120
P.R. China
+86 21 6105 3999
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